TMI Tax Updates - e-Newsletter
October 29, 2020

Case Laws in this Newsletter:

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

Articles

1. Ed.Cess, SHE Cess and KKC cannot be transited to GST

   By: Alkesh Jani

2. INTEREST ON BELATED PAYMENT OF TAX NOT LEVIABLE WHEN SUFFICIENT BALANCE OF INPUT TAX CREDIT IS AVAILABLE

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Frequently Asked Questions on Manufacture and Other Operations in Customs Warehouse (Updated on 27th October 2020)

2. 15th Finance Commission interacts with Chairmen of previous Finance Commissions

3. India hosts meeting of SCO Ministers handling economy and foreign trade

4. GIFT IFSC prescribes framework for listing of Depository Receipts

5. Patents (Amendment) Rules, 2020- streamlining of the requirements related to filing of Form 27 and submission of verified English translation of priority documents

6. Shri Piyush Goyal calls upon the global community to ensure timely and equitable availability of vaccines and medicines for COVID-19, in sufficient quantities and affordable prices;

7. IFSCA Authority Board approves two Regulations

8. Payment Date Extended for Vivad se Vishwas Scheme

Notifications

Income Tax

1. 85/2020 - dated 27-10-2020 - IT

U/s 3 of Direct Tax Vivad se Vishwas Act, 2020 Payment Date Extended for Vivad se Vishwas Scheme

SEZ

2. G.S.R. 678(E) - dated 23-10-2020 - SEZ

Special Economic Zones (Amendment) Rules, 2020

Circulars / Instructions / Orders

Income Tax

1. 18/2020 - dated 28-10-2020

Clarifications in respect of the Direct Tax Vivad se Vishwas Act, 2020

DGFT

2. TRADE NOTICE NO. 32/2020-2021 - dated 28-10-2020

Submission of data to RoDTEP Committee

3. Trade Notice No.: 31/2020-21 - dated 27-10-2020

Procedure and Criteria for submission and approval of applications for export of Nitrile/NBR Gloves

Customs

4. 48/2020 - dated 27-10-2020

Manufacturing and other operations undertaken in bonded warehouses under Section 65 of the Customs Act, 1962

Highlights / Catch Notes

GST

• Petitioner Loses Tax Benefits Due to Notification Amendments; No Discrimination Found, Benefits Withdrawn from October 23, 2017.

  Case-Laws - HC : Rebate claim - import / export of goods under Advance Authorization (AA) License - The petitioner has availed benefits under Advance Authorization License scheme as per the Notification No. 18/2015 which was amended by Notification No. 79/2017 dated 13th October 2017 and paid integrated tax on the goods procured by the petitioners for the export purpose. - Considering the effect of the Notification No. 54/2018, the contentions raised on behalf of the respondents that there is no discrimination qua the petitioner is tenable in law, as by the amendment made by Notification No. 54/2018 it clearly denied the benefit which is granted to the petitioner by the Notification No. 39/2018 was withdrawn as the same was not made applicable from 23rd October, 2017. - HC
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• Respondent Violates CGST Act by Not Passing ITC Benefits to Buyers, NAPA Confirms Price Reduction Failure.

  Case-Laws - NAPA : Profiteering - purchase of flats - allegation of Respondent had not passed on the benefit of Input Tax Credit (ITC) to them by way of commensurate reduction in prices of the flats - contravention of Section 171 (1) of the CGST Act, 2017 proved - NAPA
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Income Tax

• Section 164(1) of Income Tax Act: Determining Trusts for Taxation at Maximum Marginal Rate Based on Beneficiary Clarity.

  Case-Laws - HC : Assessment of trust - Determinate Trust or indeterminate Trust - Section 164(1) - That Section comes into play only where any income or any part thereof is not specifically receivable on behalf of or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown, and in such case, the relevant income, or part of the relevant income shall be charged at the maximum marginal rate. - HC
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• Interest from unutilized capital and borrowed funds linked to plant setup capitalized and offset against pre-operative expenses.

  Case-Laws - AT : Interest earned from the unutilized capital subsidy and equity - Interest earned from the borrowed funds (short term temporary deposits) - interest from borrowed funds temporarily deposited in banks [STD] is inextricably linked to the setting up of the plant. Hence, the interest from the borrowed funds has been rightly capitalized and set off against the pre-operative expenses - AT
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• Assessee's Appeal on Depreciation Claim Restored to CIT(A) Due to Lack of Diligence in Attendance.

  Case-Laws - AT : Claim of depreciation as an application of income towards the income earned by the assessee society - It was the bounded duty of the parties i.e. assessee as well as the Department to appear before the Ld. CIT(A). Since, this was the assessee’s appeal, therefore it was all the more important for the assessee to appear before Ld. CIT(A). However, the assessee had not acted with due diligence - Matter restored before CIT(A) - AT
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• Tax Dispute Over Unexplained Jewellery: Assessee Challenges 100% Taxation, Cites CBDT Instruction No. 1994 on Permissible Limits.

  Case-Laws - AT : Unexplained jewellery - By no stretch of imagination if tax is at all due the same is equivalent to 100% value of the jewellery found. Furthermore, the Revenue authorities cannot also show ignorance of the permissible limit of jewellery holdings as prescribed by the CBDT Instruction No. 1994. Assessee has duly brought on record affidavits of the family members owning jewellery. Just because the claim is made otherwise then by revised return the said claim does not seize to be a claim to be adjudicated as long as the claim is made. - AT
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• Double Taxation Avoidance Agreement Takes Precedence Over Income Tax Act, Highlights Importance of International Agreements in TDS Applications.

  Case-Laws - AT : TDS u/s 195 - Rates specified in Section 206AA - The Special Bench held that DTAA overrides the Act, even if it is inconsistent with the Act. DTAAs are entered into between two nations in good faith and are supposed to be interpreted in good faith. Otherwise it would amount to the breach of Article 253 of the constitution - AT
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• Assessee Challenges Unexplained Money Addition, Claims Brother Owns Account; Submits Supporting Letter and Affidavit.

  Case-Laws - AT : Additions towards amount lying in bank account as unexplained money - the assessee right from beginning has made it very clear that the bank account belongs to his brother and he was named only as a second holder for the purpose of nomination and for the sake of convenience. To justify his claim, the assessee has filed a letter and affidavit from his brother - AO was erred in making additions towards amount lying in bank account as unexplained money of the assessee. - AT
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• Notional Interest on Doubtful Loans Should Not Be Added to Income Under Mercantile Accounting System.

  Case-Laws - AT : Accrual of income - Addition being notional interest income - Where the principle amount of loan/advance is doubtful of recovery interest thereon cannot be accrued and added to income even under the mercantile system of accounting. - AT
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Corporate Law

• High Court Dismisses Petition for Relief in Non-Filing of Annual Return Amid Corporate Insolvency Resolution Process.

  Case-Laws - HC : Disqualification of Director - The petitioners have duly accepted the fact of non-filing of Annual Return and Financial statement; however, attributes it to be officers of the Company. The Company has also been put under Corporate Insolvency Resolution Process - Relief sought cannot be granted - Petition dismissed - HC
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Service Tax

• Appellants Can Use Cenvat Credit on Inputs and Services Before March 1, 2006; No Lapse in Notifications.

  Case-Laws - AT : Cenvat Credit - The issue is no longer res integra; there is no provision under Notifications 1/2006 or 15/2004 that such credit legally availed prior to 1.3.2006, under the provisions of CCR,2004, would lapse. Therefore, the appellants are eligible to utilise the cenvat credit, availed by them, on inputs/input services, prior to 1.3.2006. - AT
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• Proof of Delivery Required for Appeal Timeline Calculation, Dispatch Alone Is Insufficient per Commissioner (Appeals) Guidelines.

  Case-Laws - AT : Delay in filing of appeal - Proof of delivery of adjudication order - Department has to prove the delivery of the orders and dispatch of the order is not sufficient for the purpose of calculating the period of limitation for filing the appeal before the Commissioner (Appeals). - AT
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VAT

• Tax Exemption on Firewood Applies Only When Used as Fuel; Strict Interpretation Required for Eligibility.

  Case-Laws - HC : Benefit of exemption - Once the firewood is put to any other use than as fuel, it would not be entitled to exemption of tax. It is trite that an exemption notification has to be construed strictly. A person claiming exemption provision to relieve him of tax liability must explain clearly that he is covered by the relevant provision - HC
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Case Laws:

• GST

• 2020 (10) TMI 1101
  Direction to the respondents to permit participation of the petitioner company in the sale process initiated by the sale notice - HELD THAT:- Issue notice to respondent No.2, returnable on 21.01.2021.

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• 2020 (10) TMI 1100
  Liability of GST - filing of 3B returns for the period - E-way Bill facility locked on GST portal - HELD THAT:- Stand over to 29.10.2020.

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• 2020 (10) TMI 1099
  Rebate claim - import / export of goods under Advance Authorization (AA) License - N/N. 79/2017 -Customs, dated 13th October 2017 - whether the amendment made by the Notification No. 54/2018 dated 9th October 2018 amending subrule (10) of Rule 96 of the CGST Rules is valid or not? HELD THAT:- Rule 96 of the CGST Rules provides for procedure of refund of Integrated Tax paid on goods or services exported out of India, as per Section 54 of the CGST Act. Rule 96 (10) as it originally existed, when the Rules came into force provided that the persons claiming refund of Integrated Tax paid on export of goods or services should not have received supplies on which the supplier has availed the benefit from Government of India, Ministry of Finance, under Notification No. 48/2017 dated 18th October 2017 or Notification No. 40 of 2017 dated 23rd October 2017 or Notification No. 41 of 2017 Integrated Tax (Rate), dated 23rd October 2017 or Notification No. 78 of 2017 Customs dated 30th October 2017 or the Notification No. 79 of 2017customs dated 13th October 2017. On conjoint readings of the provision of Section 16 of the IGST Act, Section 54 of CGST Act and Rule 96 (10) of CGST Rules, which is substituted by Notification No. 54/2018 dated 9th October 2018, it is apparent that the person who has availed the benefits of Notification No. 48/2017 dated 18th October 2017 and other Notifications as stated in sub -rule 10 shall not have the benefit of claiming refund of integrated tax paid on exports of goods or services. The petitioner has availed benefits under Advance Authorization License scheme as per the Notification No. 18/2015 which was amended by Notification No. 79/2017 dated 13th October 2017 and paid integrated tax on the goods procured by the petitioners for the export purpose. Considering the effect of the Notification No. 54/2018, the contentions raised on behalf of the respondents that there is no discrimination qua the petitioner is tenable in law, as by the amendment made by Notification No. 54/2018 it clearly denied the benefit which is granted to the petitioner by the Notification No. 39/2018 was withdrawn as the same was not made applicable from 23rd October, 2017. The grievance of the petitioner raised in this petition is therefore taken care of. However, it is also made clear that Notification No. 54/2018 is required to be made applicable w.e.f. 23rd October, 2017 and not prior thereto from the inception of the Rule 96(10) of the CGST Act. Therefore, in effect Notification No. 39/2018 dated 4th September, 2018 shall remain in force as amended by the Notification No.54/2018 by substituting sub -rule (10) of Rule 96 of CGST Rules, in consonance with sub -section (3) of Section 54 of the CGST Act and Section 16 of the IGST Act - The Notification No. 54/2018 is therefore held to be effective w.e.f. 23rd October 2017.

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• 2020 (10) TMI 1098
  Maintainability of petition - appealable order or not - Section 107 of the Central Goods and Services Tax Act, 2017 - allegation that the impugned order is without the opportunity of being heard as contemplated under the proviso to Rule 92[3] of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- There is no dispute that the proviso contemplates right of hearing and this hearing has not been extended to the petitioner. It is settled law that the procedural safeguards have to be strictly adhered to, and in the absence of specific procedural safeguards, the principles of natural justice will have to be complied with. The provisions of Proviso to Rule 92[3] stipulate a right to be heard; and in the present case, this right, as accepted by the learned Additional Government Advocate, is not extended to the petitioner. Therefore, the order cannot be sustained and is required to be quashed on this short ground, and the case remanded for reconsideration. The proceedings are restored for consideration by the fourth respondent - matter on remand.

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• 2020 (10) TMI 1097
  Profiteering - purchase of flats - allegation of Respondent had not passed on the benefit of Input Tax Credit (ITC) to them by way of commensurate reduction in prices of the flats - contravention of Section 171 (1) of the CGST Act, 2017 - penalty - HELD THAT:- The Respondent is executing his Aangan project in Gurgaon, Haryana which has been approved under the AHP 2013 . The said AHP was notified under Section 9A of the Haryana Development and Regulation of Urban Areas Act, 1975 vide Notification No. PF-27/48921 dated 19.08.2013 issued by the Town and Country Planning Department, Government of Haryana to facilitate creation of affordable housing stock in the urban areas of the State. The above project has three phases out of which the Angan Phase-I project is subject matter of the present proceedings. It has also been revealed that the Applicants No. 1, 2 3 had complained to the Haryana State Screening Committee on Anti-profiteering on 16.10.2018, 24.09.2018 and 31.10.2018 respectively that the above Respondent was not passing on the benefit of ITC to them on the flats which they had purchased from him in the project, as per the provisions of Section 171 of the above Act. The above 3 complaints were examined by the Standing Committee on Anti-profiteering in its meeting held on 27.12.2018 and were forwarded to the DGAP for detailed investigation as per the provisions of Rule 129 (1) of the CGST Rules, 2017. This Authority hereby determines the profiteered amount as Rs. 6,24,48,008/- as per the provisions of Section 171 (1) read with Rule 133 (1) of the above Rules which includes GST @ 12% or 8% on the base profiteered amount of Rs. 5,71,81 ,399/-. The above amount shall be paid by the Respondent to the eligible buyers as per the details given in Annexure-17 of the DGAP s Report dated 14.06.2019 within a period of 3 months from the date of passing of this order along with interest @18% per annum from the date from which the above amount was collected by him from the buyers till the payment is made failing which it shall be recovered by the concerned Commissioner CGST/SGST and paid to the eligible buyers. The above amount is also inclusive of an amount of Rs. 4,32,315/- including the GST which is the profiteered amount in respect of the Applicant No. 1 to 5 as per the details given at Sr.No. 78, 119, 329, 341 and 465 of Annexure-17. The ITC for the balance period of the project shall also be passed on by the Respondent otherwise the buyers shall be at liberty to approach the State Screening Committee Haryana for claiming benefit of ITC. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 read with Sub-Section 171 (1) further orders that the Respondent shall reduce the price to be realized from the buyers of the flats commensurate with the benefit of ITC received by him. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his present project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section. However, since the provisions of Section 171 (3A) have come in to force w.e.f. 01.01.2020 whereas the period during which violation has occurred is w.e.f. 01.07.2017 to 31.12.2018, hence the penalty prescribed under the above Section cannot be imposed on the Respondent retrospectively. Accordingly, Show Cause Notice directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him is not required to be issued.

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• Income Tax

• 2020 (10) TMI 1096
  Penalty u/s 271(1)(c) - ITAT set aside the order passed by the CIT(Appeals) as well as by the AO and allowed the appeal preferred by the assessee - HELD THAT:- Revenue could not dispute the position that the order of the Tribunal [ 2019 (8) TMI 1122 - ITAT BANGALORE] is based on the decision rendered by this Court in CIT VS. SSA S EMERALD MEADOWS[ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] . Since the order of the Tribunal is based on the decision rendered by a Bench of this Court, in our opinion, no substantial question of law arises for consideration in this appeal.

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• 2020 (10) TMI 1095
  Assessment of trust - Determinate Trust or indeterminate Trust - Whether Tribunal was right in law in holding that the assessee as a discretionary trust ignoring the fact that the beneficiaries and their share of interest in the trust are determinable at all points of time? - Tribunal held that the provisions of Section 160 is not applicable and the assessee is liable to be taxed on the entire income? - as per tribunal entire receipt is taxable in the hands of assessee even though the income and expenditure have been distributed and intimated to the beneficiaries? HELD THAT:- In the light of the decision of this Court in the case of CIT vs. M/s.TVS Shriram Growth Fund [ 2020 (10) TMI 665 - MADRAS HIGH COURT ] section 164 of the Act gets attracts only when the shares of the beneficiaries are unknown, which is manifest from the marginal heading of that Section itself, viz., Charge of tax where the share of the beneficiaries unknown. That Section comes into play only where any income or any part thereof is not specifically receivable on behalf of or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown, and in such case, the relevant income, or part of the relevant income shall be charged at the maximum marginal rate. In order to attract Section 164(1) of the Act, the beneficiaries on whose benefit, such income or such part thereof is receivable are indeterminate and unknown. Thus substantial questions of law are to be answered in favour of the assessee.

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• 2020 (10) TMI 1094
  Exemption u/s 11 - income received by the appellant such as advertisement income from the souvenir, seminar surplus etc. are in the nature of commercial transaction and cannot be considered as charitable purpose - Tribunal held that the appellant is not entitled for the benefit of Section 11, merely because the appellant received certain additional amounts - what was dominant object of the trust? - organisations which were having their objects of general public utility - HELD THAT:- Fact remains that the assessee is a non-profit entity viz., a charitable public trust and in the light of being a such organisation/institution, the registration of the assessee has not been cancelled or withdrawn till date. Unless and until there is a factual finding rendered by the authority, benefit could not have been denied to the assessee. As we have found that both the authorities or the Tribunal have examined this aspect and merely gone by the first proviso to Section 2(15) of the Act, we are inclined to interfere with the orders passed by the authorities and the Tribunal and remand the matter for fresh consideration. Appeal is allowed and the impugned order passed by the Tribunal as well as the order passed by CIT(A) and the assessment order are set aside and the matter is remanded to the Assessing Officer to take a fresh decision bearing in mind the legal principles laid down by the Courts and Tribunal in various decisions as referred.

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• 2020 (10) TMI 1093
  Provision for warranty - allowable revenue expenditure - HELD THAT:- In case of doubt and debate, Income Tax Authorities should have asked for the basis and the formula/criteria applied by the respondent/assessee to compute provision for warranty. On the other hand without disputing the computation, disallowance was made by holding that actual expenditure on warranty claims and not provision for warranty was allowable as expenditure. This proposition is wrong and incorrect. Improvement in technology would not justify disallowance of claim/expenditure on account of provision for warranty, though in a given case on basis of data it could be relevant factor in making the calculations. In view of the decision of the Supreme Court in Rotork Controls India (P.) Ltd. s case [ 2009 (5) TMI 16 - SUPREME COURT ] and decision in respondent-assessee s case we do not find any good ground or reason to accept the aforesaid contention of the Revenue. Marketing expenditure - whether above expenditure is allowable as a revenue expenditure incurred wholly and exclusively for the purposes of the business u/s 37 (1) - HELD THAT:- On examination of the issue before the lower authorities it is apparent that identical issue has been entered by the coordinate bench in assessee s own case for assessment year 2003 04 , wherein claim of the assessee was allowed and the issue reached to the doorstep of the honourable High Court [ 2018 (9) TMI 877 - DELHI HIGH COURT ] and order of the coordinate bench was confirmed. DR could not show us any reason or change in the facts and circumstances of the case. Therefore, respectfully following the decision of the coordinate bench which is been upheld by the honourable High Court on the identical circumstances and facts of the case, we allow ground wherein the marketing expenses on free of cost phones issued to the employees as well as the service centre dealers claimed by the assessee as revenue expenditure, disallowed by the AO holding it to be capital expenditure, direct the learned assessing officer to delete the disallowance of the whole expenditure and also Simultaneously to withdraw grant of 25% depreciation thereof. Addition on account of closing stock of free of cost phones - closing stock of the assessee has been computed after excluding free issue of phones of 15,554 numbers - HELD THAT:- Respectfully following the decision of the coordinate bench in assessee s own case for earlier years, where revenue could not show any change in the facts and circumstances of the case of the minuscule amount in comparison to the total turnover of disputed stock, we allow ground number 4 of the appeal of the assessee and direct the learned assessing officer to delete the addition on account of inclusion of closing stock of free of cost phones issued. Addition on account of provision for obsolescence of inventory - HELD THAT:- Assessing officer has not done any exercise on his part, the disallowance proposed by the AO constantly being deleted by the learned dispute resolution panel in subsequent years also, we allow ground number 5 of the appeal for assessment year 2004 05 and ground number 4 for assessment year 2005 06 direct the learned assessing officer to delete the disallowance of 25% of the provision for obsolescence of inventory for both the years. Non consideration of the foreign exchange gain while computing the deduction u/s 80 HHE - HELD THAT:- The issue squarely covered in favour of the assessee by the decision of Novell Software Development (I) (P.) Ltd. [ 2013 (7) TMI 120 - KARNATAKA HIGH COURT ] 90% of the foreign-exchange gain cannot be reduced from the profits and gains of the business of the export of software while calculating deduction u/s 80 HHE of the income tax act. Accordingly ground number 8 of the appeal for assessment year 2004 05 filed by the assessee is allowed.

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• 2020 (10) TMI 1092
  Rectification of mistake - double disallowance of Lease Rent - HELD THAT:- Assessee arrived at business income after making disallowance of Lease Rent and although the assessee claimed the deduction of Lease Rent while computing Income from House Property but it resulted in net loss under the head Income from House Property and Net Taxable Income as worked out accordingly. AO has started the computation by taking the figure of income which is after making disallowance of Lease Rent and again disallowed Lease Rent therefore, it is a clear case of double disallowance of Lease Rent because the loss worked out under the head Income from House Property and consequent lesser taxable income worked out by the assessee is not given effect to by the AO. Under these facts, we accept that there is apparent mistake in tribunal order in saying that there is no double disallowance of Lease Rent - We rectify this mistake - M. P. of the assessee is allowed.

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• 2020 (10) TMI 1091
  Interest earned from the unutilized capital subsidy and equity - Capital or revenue receipt - HELD THAT:- CIT(A) has followed the Tribunal s order in assessee s own case for AY 2009-10 AY2010-11 while giving relief to the assessee by treating the interest earned from the unutilized capital subsidy and equity as capital receipt. Since there is no change in fact or law and we note that the interest from the unutilized capital subsidy and equity are inextricably linked with the process of setting up of the project i.e. integrated petrochemicals complex at Pipalkota, District Dibrugarh, Assam and has only commenced/set up/operation in February, 2016 (AY 2016-17), by relying on the ratio of the decision of CIT Vs. Bokaro Steels Ltd. [ 1998 (12) TMI 4 - SUPREME COURT] and Karnataka Power Corporation [ 2000 (7) TMI 72 - SUPREME COURT] we are of the opinion that the Ld. CIT(A) rightly allowed the claim of assessee. Interest earned from the borrowed funds (short term temporary deposits) - claim of capitalizing interest received by assessee from short term deposit (herein after referred as STD ) of unutilized borrowed funds - HELD THAT:- Utilization of the funds available with the assessee is strictly governed by the objects set up by the Articles of Association of company. A perusal of the object clause indicates that there is no scope for the assessee to utilize any funds available for any purpose other than that stated in the Articles of Association - interest earned on the deposits had to be mandatorily invested in the project/business of the assessee and in the facts as discussed we note that interest from borrowed funds temporarily deposited in banks [STD] is inextricably linked to the setting up of the plant. Hence, the interest from the borrowed funds has been rightly capitalized and set off against the pre-operative expenses and, therefore, we rely on the decision of the Hon ble Supreme Court in Bokaro Steels Ltd. and Karnataka Power Corporation (supra), hold that the interest earned from the borrowed funds/STD which is inextricably linked to the setting up of the plant need to be treated as a capital receipt.

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• 2020 (10) TMI 1090
  Condonation of delay - delay of 51 days - HELD THAT:- Assessee has explained cause of delay, therefore, in the facts and circumstances of the case, we condone the delay of 51 days in filing the present appeal and admit the appeal for hearing. Claim of depreciation as an application of income towards the income earned by the assessee society - CIT(A) had passed an ex-parte order - HELD THAT:- As noticed that CIT(A) had passed an ex-parte order as nobody appeared on behalf of the assessee before CIT(A). On perusal of the order, we also noticed that initially the appeal was fixed for hearing and was adjourned from time to time on various occasions, but none attended on behalf of the assessee. As noticed that throughout the assessee remained non-cooperative despite availing several opportunities, therefore CIT(A) passed the impugned order, thereby taking into consideration, the statement of facts and the material placed on record. It was the bounded duty of the parties i.e. assessee as well as the Department to appear before the Ld. CIT(A). Since, this was the assessee s appeal, therefore it was all the more important for the assessee to appear before Ld. CIT(A). However, the assessee had not acted with due diligence - aside the impugned order of the ld. CIT(A) and remand the matter back to the record of the ld. CIT(A) for deciding the appeal afresh on merits - Appeal of the assessee allowed for statistical purposes only.

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• 2020 (10) TMI 1089
  Addition u/s. 68 - Addition on account of share capital and share premium as Unexplained cash credit - onus to prove - HELD THAT:- Assessee had discharged the initial onus of proving the fulfilment of primary ingredients of Sec.68. The onus, thus, shifted on Ld. AO to rebut the assessee s stand as well as documentary evidences by bringing on record cogent material to dislodge the same. Except for relying on a third-party statement, which was never confronted to the assessee, there is no other material to support the conclusion that the said transactions were unexplained cash credit. No opportunity of cross-examination was ever provided to the assessee and in fact, no further investigations were done by Ld. AO to support his conclusion. Therefore, additions could not be sustained in the eyes of law. As rightly noted by Ld. CIT(A), in terms of the decision of Gagandeep Infrastructure P. Ltd. [ 2017 (3) TMI 1263 - BOMBAY HIGH COURT] proviso to Sec.68 requiring assessee to prove the source of source was applicable only from AY 2013-14 onwards only and therefore, the assessee could not be obligated to prove the source of source for AY 2010-11. We concur with the reliance of Ld. CIT(A) on this binding judicial precedent for the said proposition. Since there is allegation by Ld. AO that the three entities were being managed as well as controlled by Shri Shirish Chandrakant Shah whereas the said party, in the sworn affidavit, has already denied having advanced any accommodation entry to the assessee. Additions made Ld. AO u/s 68 could not be sustained in the eyes of law and hence, rightly deleted by Ld. CIT(A). - Decided in favour of assessee.

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• 2020 (10) TMI 1088
  Validity of reassessment proceedings - reasons to believe - HELD THAT:- Since the assessee was found to be one of the beneficiary, the case was reopened within 4 years from end of relevant assessment year as per due process of law by issuance of statuary notices u/s 148 as well u/s 143(2) 142(1). Original return filed by the assessee was not subjected to scrutiny assessment. It is quite discernible that Ld. AO was clinched with specific tangible information as to possible escapement of income. Nothing more, in our opinion, was required at this stage to reopen the assessment proceedings. Therefore, we do not find any substance in legal grounds raised before us. Ground Nos. 1 to 3 stand dismissed Rejection of books would stand dismissed in view of the fact that Ld. AO has made specific item-wise additions without disturbing the overall financial results shown in the audited financial statements. Ground Nos. 1 to 4 stands dismissed. Estimation of income - Bogus purchases - AO estimated an addition of 12.5% against suspicious purchases - HELD THAT:- The assessee s accounts were duly audited wherein various stock register as well as quantitative details of traded goods were furnished. As uncontroverted fact that not even a single piece of diamond was found at the premises of the suspicious suppliers which came to light during search / survey proceedings. The said aforesaid facts would justify the stand of AO in rejecting the profits shown on these purchases and make estimated additions to account for undeclared profit element earned by the assessee on these purchase transactions. As rightly concluded that the said purchase-sale transactions recorded in the books would not reflect true picture of profits earned by the assessee on these transactions and purchase rate as mentioned in the supplier s sale invoices could not be accepted. Estimation of profit - assessee has reflected overall Gross profit (GP) Rate of 6.65% during the year as against corresponding rate of 6.11% in preceding year. AR has stated that since the profit earned on these suspicious transactions is 7.25%, no further addition should be made. We are not inclined to accept the said plea. Assessee was dealing in low margin commodity like diamond which attract lower VAT rate of 1% and in view of the overall GP rate reflected during the year, we restrict the estimation to 2% of aggregate purchase Addition of Unsecured Loans, interest commission - HELD THAT:- Nothing was brought on record to suggest any cash got exchanged between the assessee and the lenders. In the background of stated facts, it could very well be said that the assessee had duly discharged the onus of proving the fulfilment of primary ingredients of Sec.68. The onus, thus shifted on revenue, to controvert the same by bringing on record cogent material to dislodge the documentary evidences submitted by the assessee. However, except for third party statements, the revenue is not cinched with any specific evidence against the assessee to declare the said loans as the money of the assessee brought into the books by way of unexplained cash credit. No effective investigation is shown to have been carried out by the revenue to dislodge the assessee s documentary evidences. Addition of unexplained cash credit could not be sustained in the eyes of law. Consequently, interest disallowance as well as commission / brokerage addition as made against the same would not survive. Disallowance u/s 14A - HELD THAT:- While computing the said disallowance, only those investments which have fetched exempt income during the year are to be considered. Overall disallowance could not exceed the exempt income earned by the assessee during the year. Therefore, we direct Ld. AO to re-compute the said disallowance considering only those investments which have fetched exempt income during the year. Ground No.9 stands partly allowed. Disallowance u/s 36(1)(iii) - interest free loans given to partners - nexus of borrowed funds vis- -vis capital withdrawals - HELD THAT:- Assessee firm has not provided any interest on credit balances of partners capital in earlier years and likewise it has also not charged the interest on debit balances during the year. Partners had credit balances in all earlier three years whereas debit balances have arisen only due to the withdrawals during the year. Assessee s financial statements for the year, as placed on record, would show that there is overall reduction in secured and unsecured loans during the year whereas sundry creditors for goods and expenses have shown hefty increase which would lead to a conclusion that the withdrawals were funded out of credit float enjoyed by the assessee. Further, the assessee has reflected taxable income of Rs. 204.42 Lacs which could be said to have accrued evenly throughout the year. Therefore, unless direct nexus of borrowed funds vis- -vis capital withdrawals was established, no such disallowance u/s 36(1)(iii) could have been made. We find that Ld. AO has failed to bring on record this nexus - Decided in favour of assessee.

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• 2020 (10) TMI 1087
  Bogus purchases - Estimation of income - investigations carried out by the Investigation Wing, Mumbai as well as on the basis of statements recorded U/s 132(4) - HELD THAT:- There is nothing on record to show that the ITO had not disclosed to the assessee, the material he had collected from the Investigation Wing of the Income Tax Department. ITO/AO is not bound by any technical rules of law of evidence. It is open to him to collect materials to facilitate the assessment even by private enquiry but if he desires to use the said material so collected, then in that eventuality, the assessee must be informed of the material and must be given an adequate opportunity of explaining it. In this case, the A.O. had informed the assessee in respect of material collected by him and had also provided adequate opportunity to the assessee of explaining the same. Even otherwise, from the records, we also noticed that in the statement of Shri Bhanwal Lal Jain recorded U/s 132(4) of the Act, it was specifically admitted that they were involved in providing bogus entries by issuing accommodation bills. AR could not point out any material on record to show that the above concerns from whom the purchases made, were in fact carrying out any commercial activity and were maintaining stocks. Presumption of correctness is attached with the statement recorded U/s 132(4) of the Act as the said statement was recorded by the officials of the IT department during discharge of their official duties and since the said statement is recorded on oath, therefore, the presumption of correctness is attached with the said statement until it is rebutted or uprooted by the assessee. We also noticed that the ld. CIT(A) while reaching to the conclusion on the basis of material placed on record had held that since the assessee has failed to justify the purchases made by him, therefore, had rightly invoked the provisions of Section 145(3) - since the assessee failed to substantiate the purchases of Rs. 90,42,850/-, therefore, keeping in mind, the better trading results declared by the assessee, a lumpsum addition of Rs. 10.00 lacs were sustained. - Decided against assessee.

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• 2020 (10) TMI 1086
  Unexplained jewellery - Jewellery offered in original Return of income and said income was not withdrawn by filing Revised return of Income - whether said jewellery did not belong to assessee but belonged to the family members and that there is no estoppel against statute? - HELD THAT:- As during the statement on oath under section 132(4) of the IT Act the assessee has duly submitted that the jewellery found in their lockers belong to the family members. In course of assessment proceedings the assessee has duly given details about the jewellery found in the search belonging to other family members. The very fact that the assessee was made to pay tax equivalent to 100% value of undisclosed jewellery clearly shows that the Revenue authorities have taken advantage of the assessee not being aware of his rights properly. By no stretch of imagination if tax is at all due the same is equivalent to 100% value of the jewellery found. Furthermore, the Revenue authorities cannot also show ignorance of the permissible limit of jewellery holdings as prescribed by the CBDT Instruction No. 1994. Assessee has duly brought on record affidavits of the family members owning jewellery. Just because the claim is made otherwise then by revised return the said claim does not seize to be a claim to be adjudicated as long as the claim is made. Hon ble Supreme Court s decision in the case of Shelly Products [ 2003 (5) TMI 4 - SUPREME COURT] , supports the proposition that if the assessee has erroneously paid more tax than he was legally required to do, he is entitled to claim the refund, as otherwise it would be violative of Article 265. Thus hold that the jewellery found was within the limit fixed by CBDT as per Instruction No. 1994 dated 11.5.1994. The authorities below have erred in rejecting the assessee s claim - Decided in favour of assessee.

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• 2020 (10) TMI 1085
  Depreciation claim on motor vehicles - Personal use v/s business use - Disallowance of claim as vehicles were purchased in the name of the directors of the assessee company - HELD THAT:- As decided in assessee s own case [ 2019 (1) TMI 1816 - ITAT PUNE] there cannot be any disallowance of personal expenses for cars on account of personal use by the director. It has been further held that no disallowance can be made even by treating such expenditure as not having been incurred for the business purpose - there can be no disallowance on account of personal use by the director-employees of the assessee. Such an amount can be treated as a perquisite in the hands of the employees - Decided in favour of assessee. Disallowance u/s.80IA(4) - As per AO Assessee had claimed deduction u/s.80IA(4)(iii) of the Act without complying with the provisions of the Act and Income Tax Rules - HELD THAT:- This issue is also covered in favour of the assessee by the order of Pune Bench of the Tribunal [ 2018 (8) TMI 1993 - ITAT PUNE] wherein placing reliance on the decision of the Hon ble Jurisdictional High Court in the case of CIT Vs. Paul Brothers [ 1992 (10) TMI 5 - BOMBAY HIGH COURT] wherein held unless the relief claimed in the first year of undertaking is withdrawn, the AO cannot withhold the relief for the subsequent years. As claim is allowed for first year of undertaking, the AO cannot withdraw the deduction - Decided in favour of assessee.

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• 2020 (10) TMI 1084
  Bogus purchases - enquiries from the VAT Department - AO also found that both the parties have not reported any sales to the assessee in their respective returns filed to the VAT Department for the sales made to the assessee - HELD THAT:- We are disallowing the purchases but on the other side we are treating the sales of such purchases as genuine - none of the authorities below has doubted on the sales made by the assessee against such purchases. We find force in the contention of the Learned AR that an element of profit can be added to the total income of the assessee prevent the loss if any to the revenue on account of such purchases. In the construction activity, it is the prevailing practice that the assessee makes purchases of the raw materials from the grey market and further made bogus purchases to record the same in the books of accounts. Accordingly, we don t incline to disallow purchases treating them as bogus in the given facts and circumstances. Determine the element of profit embodied in such purchases - In the interest of justice and fair play and to prevent any leakage to the revenue, we are of the view that the justice will be served the assessee as well as to the revenue if income of the assessee is enhanced by 5% on such purchases. Accordingly, we direct the AO to make the addition @ 5% on such bogus purchases. Addition on account of commission expenses - HELD THAT:- AO was aware of all the details of the commission agents such as the addresses, PAN but he has not taken any confirmation from such agents about the genuineness of the commission received by them. The assessee by furnishing the requisite details about the commission agent shifted its onus upon the AO to prove that commission expenses was not incurred in the course of the business. AO was under the obligation to provide the opportunity for the cross-examination of the statement obtained from the flat owners to the assessee as well as to the commission agents before arriving at the conclusion that there was no involvement of the commission agents in selling the flats to the flat owners. In our considered view, the statement obtained at the back of the assessee of the flat owners cannot be a ground for making the disallowance in the given facts and circumstances - Decided in favour of assessee. Addition on account of on money - random enquiries from ten persons who have purchased flats/shops in the projects developed by the assessee, found that the buyers have made the payment for the purchase of the flats/shops through cash and cheques in the ratio of 40% to 50% - HELD THAT:- AO in the remand proceedings vde letter dated 16thJune 2014 has verified all the ten owners of the flats/shops in response to the summon issued under Section 131 of the Act and reached to the conclusion that there was no cash involved in the purchase of flats/shops. Assessee has not received any cash against the sale of the flats/shops from the buyer. Accordingly, we do not find any infirmity in the order of the Learned CIT(A) and, thus, we decline to interfere in his order. Hence, the ground of appeal of the Revenue is dismissed.

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• 2020 (10) TMI 1083
  Violation of Rule 46A - CIT(Appeals) non affording opportunity to the AO - Income from other sources - permitted method of valuation - assessee is a domestic company engaged in the business of internet services and infrastructure management services and assessee issued 19500 shares and received share premium - CIT(Appeals) deleted the addition made by the AO - HELD THAT:- As agreed by both the parties that there was a violation of Rule 46A of the Income Tax Rules, 1962 (Rules), in as much as the CIT(A) did not confront the material that was placed before him to substantiate the valuation under the DCF method adopted by the Assessee in its report of valuation. The ld. counsel for the assessee, however, submitted that what was filed before the CIT(Appeals) was only financial statements to substantiate the valuation as made by the assessee. In our view, when the basis of conclusion of CIT(Appeals) is the financial statements filed by the assessee before him, it was incumbent upon the CIT(A) to have confronted the material filed before him to the AO in accordance with the mandate of Rule 46A of the I.T. Rules, 1962. Since there is a violation of Rule 46A of the Rules, the issue should be remanded back to the CIT(Appeals) for fresh consideration after affording opportunity to the AO. - Decided in favour of revenue for statistical purposes.

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• 2020 (10) TMI 1082
  Provisions for future expenses disallowed - AO was of the opinion that such type of contingent liabilities were not deductible - HELD THAT:- Nature of provisions considered by this Tribunal in preceding years are not similar to future claim provided for by assessee during the year under consideration - assessee submitted details of work, which was to be incurred by assessee in preceding year against which, provision was made. Also that before this Tribunal assessee demonstrated that, the provisions were subsequently debited at the end of the year as the expenditure had been incurred by assessee in respect of the same. In the interest of Justice, we remand the issue to Ld.AO to verify the submissions of assessee in light of the contract entered into with BMRCL. Assessee is directed to furnish all requisite details in support of its claim. Ld.AO is then directed to consider the claim of assessee in accordance with law. Grounds raised by revenue stands allowed for statistical purposes

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• 2020 (10) TMI 1081
  Penalty u/s 271(1)(c) - AO held that the assessee had concealed the particulars of income because the interest earned from the fixed deposit was not included as income under the head income from other source in the return of income and levied minimum penalty - HELD THAT:- The issue of netting off of the interest or treating the interest income earned by the assessee as taxable under the head income from other source is a debatable issue considering the facts and circumstances of the case of the assessee. assessee has taken one possible view which was rejected by the Ld. Revenue Authorities - assessee had brought out all the facts before the Revenue along with the return of income. Therefore, at the most it can be only treated as a claim of the assessee which may not be sustainable in law. We are of the considered view that the ratio laid down in the case of CIT vs. Reliance Petroproduct (P.) Ltd [2010 (3) TMI 80 - SUPREME COURT ] will be squarely applicable to the case of the assessee wherein held Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that, by itself, would not attract the penalty under section 271(1)(c) - Decided in favour of assessee.

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• 2020 (10) TMI 1080
  Penalty u/s 271(1)(c) - information from the Sales Tax Department, Government of Maharashtra about bogus purchases made by the assessee - HELD THAT:- Instead of disallowing the entire purchases AO had only added the profit element embedded in such purchases which clearly suggests that the assessee, in fact, had made purchases, though, the source of such purchases may not have been established for whatever may be the reason. Even assuming that the assessee was unable to prove the source of such purchases, what might have escaped assessment is only the profit element embedded in such purchases. For that reason only, the Assessing Officer has estimated the profit element embedded in such purchases @ 12.5% and added back to the income of the assessee. Additions of such estimated profit by no means would lead to an inference that the assessee has either furnished inaccurate particulars of income or concealed its income. That being the case, the provisions of section 271(1)(c) cannot be pressed into action - Decided in favour of assessee.

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• 2020 (10) TMI 1079
  Disallowance u/s. 36(1)(v) on account of unapproved Gratuity Expenses - AO was of the view that in the assessee s case, the contribution is made to an unapproved Gratuity Fund, therefore deduction u/s. 36(1)(v) of the Act cannot be claimed - HELD THAT:- Payment made by the assessee to the Life Insurance Corporation under Group Gratuity Scheme would be an allowable expenditure as held in the case of Shri Sajjan Mills [ 1985 (10) TMI 2 - SUPREME COURT ] therefore respectfully following above we allow ground no. 1 raised by the assessee. Disallowance u/s. 40(a)(ia) on account of non-deduction of TDS - scope of amendment - whether Disallowance should be restricted to 30% of the total disallowance as per amended provision of Income Tax Act? - whether insertion of second proviso to Sec. 40(a)(ia) is retrospective or prospective in nature? - HELD THAT:- The said issue raised by the assessee is no longer res integra, recently in the case of Shree Choudhary Transport Company [ 2020 (8) TMI 23 - SUPREME COURT] held that amendment in the second proviso to Sec. 40(a)(ia) is prospective in nature. Hence the amendment in the second proviso to Sec. 40(a)(ia) is prospective in nature therefore, disallowance should not be restricted to 30% of the total disallowance therefore we dismiss the ground raised by the assessee.

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• 2020 (10) TMI 1078
  TDS u/s 195 - Rates specified in Section 206AA - plea of the Assessee that the payments made to non-resident were not chargeable to tax and therefore the Assessee was not under any obligation to deduct TDS - Requirement to furnish Permanent Account Number - rate at which tax has to be deducted is not at higher rate as prescribed by Sec. 206AA at the rate applicable as per the Treaty for Double Taxation Avoidance (DTAA) between India and the country of which the payees were tax residents - whether Sec. 206AA of the Act has a non obstante clause and therefore it overrides the rates prescribed in DTAA? - whether the assessee has to deduct tax at source at the rates prescribed in section 206AA in case the payees are unable to furnish their PANs, even in cases where tax liability arises out of the treat? HELD THAT:- As in the case of Sanofi Pasteur [ 2013 (2) TMI 589 - ANDHRA PRADESH HIGH COURT ] as observed that DTAA being a sovereign matter, the machinery provisions cannot override or control that. Reliance was also placed on the decision of the Hon ble Karnataka High Court in the case of Kaushallaya Bai [ 2012 (6) TMI 451 - KARNATAKA HIGH COURT ] wherein it has held that the provisions of section 206AA are to be read down. The Special Bench held that DTAA overrides the Act, even if it is inconsistent with the Act. DTAAs are entered into between two nations in good faith and are supposed to be interpreted in good faith. Otherwise it would amount to the breach of Article 253 of the constitution. As in the case of Danisco India Private Limited [ 2018 (2) TMI 1289 - DELHI HIGH COURT ] held that where reciprocating states mutually agree upon acceptable principles for tax treatment, the provision in Section 206AA (as it existed) has to be read down to mean that where the deductee i.e. the overseas resident business concern conducts its operation from a territory, whose Government has entered into a Double Taxation Avoidance Agreement with India, the rate of taxation would be as dictated by the provisions of the treaty. No merit in the appeals of the Revenue

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• 2020 (10) TMI 1077
  Additions towards amount lying in bank account as unexplained money - additions towards amount lying in HSBC bank account, on the sole ground that the assessee is owner of the bank account and he is having beneficial interest in money lying in said bank account - HELD THAT:- A close look at the provisions of section 69A it is abundantly clear that in order to bring any money or other valuable articles within the ambit of said section, the Ld. AO has to prove that the money is belong to the assessee. Initial burden is on the assessee to prove that the money or other valuable articles found in his position is not belongs to him. In the present case, one has to see, whether the money found in HSBC bank account is belongs to the assessee or his brother. In this case, the assessee right from beginning has made it very clear that the bank account belongs to his brother and he was named only as a second holder for the purpose of nomination and for the sake of convenience. To justify his claim, the assessee has filed a letter and affidavit from his brother stating that his brother Mr.Dipak V. Galani is the owner of the bank account and he was opened a bank account in his capacity as a non resident in the year 1998. Bank account was opened by his brother as a first account holder and the assessee was included in the bank account as a second account holder, which is very clear from the base documents relied upon by the Ld. AO, where the assessee name appears as a second account holder. Base documents itself clearly states the creation of identity of the assessee as date of 19/06/2003, and it is clearly stated therein that assessee account holder No.2. The passport detail of assessee as per base documents clearly shows him to be residing at Vienna (as place of having establishment) with place of birth as Baroda. The legal address in base documents is taken from the birth place mentioned in the passport as permanent address, otherwise the address of the assessee in Vienna is also mentioned in passport as taken is present address. Thus it is very clear that the bank account in the name of assessee and is brother and his brother as account holder No.1 is clearly established the fact that bank account is belongs to his brother, but not to the assessee and this fact has been further strengthened by the letter of the assessee s brother, dated 09/03/2015, where he has categorically accepted the ownership of bank account and money lying in said bank account. These facts have been disregarded by the Ld. AO without providing any basis for the same. Account was opened in 1998, when the assessee himself and Mr. Dipak Galani permanently resided in outside India for 30 years and had no intention to come to India at that time. Further, both of them have no source of income in India, during the course of their residence abroad. Therefore, we are of the view that entire motive as presented by the Ld. AO defines all logic of opening of a secret bank account in Geneva, by NRI to stash unaccounted income taxable in India fails. AO mechanically disregarding all explanations furnished by the assessee as to the ownership of the account along with the corroborative materials is contrary to the settled position of law, because, once assessee has provided a reasonable explanation about ownership, then the onus was on the Ld. AO to establish that account belongs to the assessee. Thus assessee right from day one has disowned the bank account. Further, the brother of the assesee has filed a letter to the Ld. AO along with affidavit and claimed that the bank account is opened by him in his capacity as NRI and whatever money lying in bank account is belongs to him. AO was erred in making additions towards amount lying in bank account as unexplained money of the assessee. Additions made towards return on investments @17% PA on year basis - HELD THAT:- Once, it was established that bank account was not belongs to assessee and he was not a beneficial owner, then further additions towards estimated return of income on said unexplained money is arbitrary - account was opened by the Appellant s brother with the British Bank of Middle East. Therefore, the reliance placed by the AO on the account opening information appearing on the website of HSBC Bank cannot be relied upon. Further, the account was opened by the Appellant s brother in 1998, whereas the website information sought to be relied upon by the AO pertains to accounts sought to be opened at about the time of the assessment proceedings, i.e. around 2013. Such reliance on website information is impermissible as the same is merely based on fanciful presumptions. The AO has not brought any material on record to justify the use of account opening information as at time of assessments to presume and arrive at the conclusion that the same would be applicable to an account alleged to have been opened by the Appellant 15 years earlier. Owning the bank account and the investment by Non Resident out of sources of funds available abroad is still not taxable in India. AO has failed to point out any iota of evidence to prove that the funds of USD 3 million invested in opening bank account represent income from undisclosed sources earned/ accrued to appellant in 1998. The Appellant has no sources of income in India up to 2002 and the same has already been assessed on record in assessment proceedings earlier. The statement of Assets and liabilities and Income has been filed on record - having established that Appellant is NON-RESIDENT in AY 1999-2000 and complete absence of any source of taxable income in India, the addition u/s 69 made by AO in AY 1999-2000 on account of investment of USD 3 million in opening the bank account with HSBC and consequent estimation of return of investment @ 17% PA as Unexplained Investment is highly unjustified. Addition made towards bank account in the name of the assessee is incorrect. Accordingly, we direct the Ld. AO to delete additions made towards amount lying in bank account. Similarly addition made towards estimated return of investments @17% on said additions is also incorrect. Accordingly, we direct the Ld. AO to delete additions made towards estimated return of investments for all assessment years. - Decided in favour of assessee.

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• 2020 (10) TMI 1076
  Accrual of income - Addition being notional interest income - Revenue recognition method - system of accounting - computed @17.95% on loan advanced to group concern - HELD THAT:- Where the principle amount of loan/advance is doubtful of recovery interest thereon cannot be accrued and added to income even under the mercantile system of accounting. Our view is fortified from the decision in the case of CIT v. Motor Credit Co. P. Ltd. [ 1980 (4) TMI 64 - MADRAS HIGH COURT]. Hon ble High Court of Delhi in the case of CIT v. Goyal M.G. Gases (P) Ltd. [2007 (7) TMI 241 - DELHI HIGH COURT] has held that when the realization of even the principal amount of loan was in jeopardy, there could not be any real accrual of income by way of interest, even as per the mercantile system of accounting. Thus on given set of facts there is no accrual of interest even though the assessee s following the mercantile system of accounting and the charge of notional interest by the AO/CIT(A) is bad on facts and deserves to be deleted. We direct accordingly. Appeal of the assessee is allowed.

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• 2020 (10) TMI 1075
  TP Adjustment - comparable selection - assessee is aggrieved with the removal of 2 comparable companies that is CG Vak and R Systems - HELD THAT:- TPO applied turnover filter and the various courts have held that turnover filter is a important filter which is a tool to eliminate large entities which enjoys considerable advantage with their huge revenue generation ability and capability to absorb fixed overheads - turnover of CG Vak is 59 times lessar than the assessee. It is one of the reason that this company s revenues are coming down and its profits also declining. Since this company failed in revenue filter and as submitted by the Ld DR that this segment is declaring consistent losses over the years, we do not see any reason to include this as comparable company. Accordingly, contention of the assessee is rejected. R Systems - We notice from the submissions of the Ld AR that R systems has disclosed their financial information and revenue generation from BPO segment. The financial information clearly indicate that this company has BPO segment and declared their financial results segment-wise. Thus this company is functionally comparable with this assessee company. The separate BPO segment financial results is available for the period January to December. Since the financial results are available only for Jan-December, we notice from the decisions of the coordinate benches that it has consistently approved the method of working out the segmental data from the existing records and obtaining last quarter i.e., January to March from R Systems to compile the data for the period April to March and then directing the TPO to make the analysis of comparability study by including this company as comparable company - refer this issue back to TPO/AO to include this company as comparable company and work out the segmental data for the period April to March 2010. Risk adjustment - Whether the assessee has any marketing and technical risk compared to comparables ?- HELD THAT:- Assessee is a captive service provider and earned income out of the transaction by cost plus basis. It can be seen that the assessee has encountered the risk of having a single customer, whereas the same cannot be said with regard to comparables. The comparables may be dealing in market and therefore they were prone to the marketing and technical risks. They may have incurred certain expenditure on marketing in order to mitigate the risk. Therefore, the risk encountered by the assessee cannot be said to be equal risk attached to the comparables in such a situation. TPO output to have calculated the risk adjustment. Working capital adjustment - HELD THAT:- Since TPO has not calculated the risk adjustment and working capital adjustment to the net margin of the comparables for bringing them on par with the assessee company. Even though assessee has made its submission before TPO as well as DRP. Therefore we are inclined to remit this issue also back to the file of TPO/AO to calculate the risk adjustment and working capital adjustment by collecting the relevant information. Accordingly ground raised by the assessee is allowed for statistical purpose.

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• 2020 (10) TMI 1074
  Passing final assessment order without passing of draft assessment order - non-compliance with the mandatory provision contained in Section 144C(1) - assessee contented that AO in the second round of the extant proceedings flowing from the order of the Tribunal restoring the issue for a fresh determination, ought to have first passed the draft order before the final order, which he did not - HELD THAT:- As admittedly no draft order has been passed in the second round of proceedings in the instant case, wherein the AO directly proceeded to pass the final assessment order, we declare the assessment order as invalid. See - TURNER INTERNATIONAL INDIA PVT. [ 2017 (5) TMI 991 - DELHI HIGH COURT ] - Decided in favour of assessee.

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• Customs

• 2020 (10) TMI 1073
  Imposition of penalty - principal argument of Revenue is that by virtue of the proviso to Section 114A of the Act, 1962, separate penalty cannot be imposed on the person under Section 112 of the Act when the very same person has been penalized under Section 114A - HELD THAT:- Whether redemption in the redemption fine and penalty was justified or not is essentially a finding of fact and no material has been adduced by the Revenue to establish that the order of the Tribunal was perverse. Appeal dismissed.

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• Corporate Laws

• 2020 (10) TMI 1072
  Summon Order - applicants argued that the impugned summoning order is a proforma order passed over printed proforma with no application of judicial mind - HELD THAT:- Whatever is in other cases is with regard to facts involved in those cases and in criminal case parity of this kind may not be claimed. Rather what is ground for filing this application and where is abuse of process of law has to be mentioned for having indulgence of this court. Hence under above pretext, this file reveals that this complaint was filed by Registrar of Companies u/s 211(3A)(3C) of the Companies Act, 1956 read with AS-15 and AS-13 against Gopal Das Bansal and three others with this contention that Mammon Concast was incorporated as Private Limited on 24.5.2010 under Companies Act having its registered office at 144, Kaveri Kunj, Phase II, Kamla Nagar, Agra. As per memorandum of Companies Registration Book Gopal Das Bansal, Shashank Goyal, Sagar Bansal and Anup Kumar Goyal are Directors of this Company. Hence they are responsible for the act of Company, as per the provisions of Section 211(3A)(3C) of the Companies Act, 1956, and under section 5 of the Companies Act. They will be treated as officers in default. A Judicial Magistrate is not required to pass order on the analytical analysis of fact and evidence at the stage of passing order u/s 204 Cr.P.C. - The mere requirement is that the Magistrate has to see as to whether prima-facie case is there to proceed further or not. In the present case, complaint was filed by Registrar of Companies with accusations and documentary evidence in support of it, which were Inspection report submitted by the office of Regional Director (NR), Ministry of Corporate Affairs, New Delhi. Hence there was sufficient prima-facie case to proceed further and pass summoning order. This was not under abuse of process of law. Application dismissed.

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• 2020 (10) TMI 1070
  Disqualification of Director - non-filing of financial statements and annual returns - Section 92 and Section 137 of the Companies Act, 2013 - HELD THAT:- Evident it is from the pleadings that the Company in question did not file its financial statements and annual return for the financial years 2015-16, 2016-17 and subsequent financial years. It is also an admitted fact that the petitioners were noticed on 25.5.2017, 23.4.2018 by the Registrar of Companies regarding non-filing of financial statements and annual returns for financial years 2015-16, 2016-17 and 2017-18. Section 92 and Section 137 of the Companies Act, 2013 mandates filing of Annual Return and the Financial Statements with the Registrar. These provisions also contemplate penal action for non-compliance thereof. The petitioners have duly accepted the fact of non-filing of Annual Return and Financial statement; however, attributes it to be officers of the Company. The Company has also been put under Corporate Insolvency Resolution Process w.e.f 20.7.2017 under Section 9 of the Code 2016 vide order passed by the National Company Law Tribunal, Ahmedabad. The petitioners having inhered the disqualification have resulted in alleged disqualification which in given facts cannot be faulted with - Furthermore the relief sought by the petitioners to drop all civil and criminal actions if any taken by the Registrar of Companies besides being preemptive are contingent in nature which cannot be granted in a petition under Article 226 of the Constitution as the petitioners fail to establish breach of any legal right. Petition dismissed.

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• Insolvency & Bankruptcy

• 2020 (10) TMI 1071
  Scheme of the special Statute - Fraudulent / malicious petition - It is the case of the petitioner that simultaneously, there also an execution of Deferred Payment Facility Agreement dated 15.11.2010 between CD and respondent No.3 which is a financial company in the name of BMW India Financial Services Private Limited. - principles of natural justice - HELD THAT:-This Insolvency and Bankruptcy Code, 2016 is the Act to consolidate and amend laws relating to re- organization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such person, who promote entrepreneurship, availability of credit and balance, the interest of stake holders including alteration in the order of priority of payment of Government dues and to establish an insolvency and bankruptcy board of India and for matters connected therewith and incidental thereto. The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in a very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non- payment of even part thereof or an installment amount. The Code gets triggered the moment default is of Rs. 1 lakh or more in view of Section 4 of the Code. The corporate insolvency resolution process may be triggered even by the corporate debtor itself or a Financial Creditor or Operational Creditor. A clear distinction is made by the Code between debt owned to Financial Creditors and Operational Creditors. The Code has further prescribed that when it comes to Financial Creditor, triggering the process under Section 7 becomes relevant under the explanation to Section 7(1), a default is in respect of financial debt owned by any Financial Creditor of the Corporate Debtor, it needs to be a debt owned to the applicant Financial Creditor. A debt may not be due if it is not payable in law or in fact, but the moment the adjudicating authority is satisfied that a debt has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the default within seven days of the receipt of the notice from the adjudicating authority. In the instant case, the financial creditor, namely, BMW Indian Financial Services Private Limited has presented the petition being Company Petition (IB) No.161 of 2017, in which a clear opportunity of hearing is given to the petitioner and the corporate debtor, as well. The corporate debtor i.e. CD has filed detailed objection raising multiple contentions. Petition dismissed.

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• 2020 (10) TMI 1069
  Stay to the Look Out Circular (LOC) issued against the Applicant/Petitioner - Permission to travel abroad at the earliest - HELD THAT:- Admittedly, the Applicant has been at the helm of the affairs of the UIL since its incorporation as stated in para 5 of the Writ Petition. UIL has availed various credit facilities from consortium of Banks comprising of Respondent No.3-State Bank of India (Lead Bank), Central Bank of India, Bank of Maharashtra, Indian Overseas Bank, UCO Bank, Dena Bank, Andhra Bank, ICICI Bank, IDBI Bank, Bank of Baroda, Oriental Bank of Commerce. The financial facilities availed of by UIL were to the tune of Rs. 2,500 crores. The loan account of the UIL was classified as NPA on 2 October 2016 and the outstanding dues of UIL as of today are stated to be close to Rs. 3,300 crores. On further query as regards Mr. Prateek Gupta who is also one of Directors of UIL as also the guarantor (and against whom also the Complaint is filed by the Respondent No.3-SBI) and who is stated to be the son of the Applicant, it is stated that he is also residing abroad. Perusal of the medical papers of the Applicant shows that the Applicant is not suffering from any serious illness and which cannot be treated in Mumbai. If the Applicant is permitted to travel abroad, the likelihood of securing her presence in Mumbai seem remote, if investigation is to be carried out by CBI. In the Interim Application, the Applicant has averred in paragraph 17 that due to the suspension of Air Travel on account of Covid-19 pandemic, no family member of the Applicant was able to travel to Mumbai. Now that the Air Travel restrictions are easing and/or in the process of being eased, the Applicant s family members can travel to Mumbai to be with her. Interim Application is dismissed.

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• 2020 (10) TMI 1068
  Maintainability of application - initiation of CIRP - Appellant submitted that the Adjudicating Authority erred in going into the defence that the Corporate Debtor Company had internal disputes with one of the directors and that such defence put up by the Corporate Debtor could be looked into to refuse to admit the Application under Section 9 of I B Code, 2016 - HELD THAT:- The stand taken by the Corporate Debtor shows that the branch office of Corporate Debtor had not communicated with the head office and they wanted to verify and confirm the transactions. The internal disputes of the directors would not be relevant for throwing out of the Application under Section 9 of I B Code, 2016. In any case, that was not a dispute which was raised or communicated to the Operational Creditor any time before Notice under Section 8 was sent. In the facts of the matter, we find that the Adjudicating Authority erred in approaching the Application under Section 9 and the form submitted in a manner as if a plaint was being examined or it was some suit. Considering the format and particulars required to be given in the format, if the Application is complete, it is required to be admitted unless the Corporate Debtor shows Pre-Existing Dispute. Here the dispute raised was that there was no dealing between the Corporate Debtor and the Operational Creditor; that there was no agreement. However, the same Corporate Debtor had in reply referred to its dispute with the branch office and stated that they wanted to verify the transaction. The matter remanded to the Adjudicating Authority - appeal allowed by way of remand.

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• 2020 (10) TMI 1067
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is apparent from record that there was a Pre-Existing Dispute between the Parties. When there were clear documents raising disputes, it was not appropriate for the Adjudicating Authority to enter into procedure in the nature of Trial of Civil Suit. It was a matter which would require adjudication before the appropriate Court. The Impugned Order itself shows that the Operational Creditor was aware regarding the dispute relating to sub-contract and pleaded before the Adjudicating Authority that it was with good intention to get the work completed, that the Operational Creditor had sub-contracted work. Whether or not Operational Creditor could sub-contract was issue for appropriate Court to decide. Nature of Proceedings under Section 9 of IBC are summary disputed questions of facts already raised before Notice under Section 8 of IBC, cannot be investigated. Thus, there was a pre-existing dispute in this matter when Demand Notice under Section 8 was issued - application cannot be admitted.

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• Service Tax

• 2020 (10) TMI 1066
  Application for withdrawal of application - benefit of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 availed - HELD THAT:- In view of the Scheme having been availed by the Assessee, the Appeals arising out of the Order passed by the learned Tribunal and the subsequent order dated 8.8.212 passed on the Application for Rectification are dismissed as withdrawn.

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• 2020 (10) TMI 1065
  Construction Services - full amount received towards provision of services - N/N. 1/2006 -ST dated 01.03.2006 - benefit denied on the ground that Cenvat credit was availed under N/N. 15/2004 dated 10.09.2004, in the month of March 2006 - construction of residential complexes - period from 16.06.2005 to 30.09.2007 - Time Limitation. Whether the demand of service tax of Rs. 1,03,22,449, on the full amount received towards provision of services, is justified denying the benefit of notification 1/2006 -ST dated 01.03.2006 claimed, on the ground that Cenvat credit was availed under Notification 15/2004 dated 10.09.2004, in the month of March 2006? - HELD THAT:- The contention of the appellant is not correct because the Notification No.15/2004 dated 10.09.2004 automatically gets nullified after the introduction of notification No.01/2006 dated 01.03.2006; therefore the question of availment of notification no.15/2004 and notification no 01/2006 for the month of March 2006 does not arise; even though the cenvat credit pertained to the period only upto 28.02.2006 the same is not eligible for utilization for the month of March 2006 and onwards. Whereas the appellant submits that the restriction in taking cenvat credit of service tax on input services has commenced only from 01.03.2006; from this date onwards the appellant is barred from taking cenvat credit of service tax on input services; cenvat credit, availed, on input services under the provisions of Rule 3(1) of the Cenvat Credit Rules, 2004 till 28.02.2006 does not lapse; the appellant is permitted by Rule 4 of the Cenvat Credit Rules, 2004 to utilize such cenvat credit; Rule (4)(e) allows the appellant to utilize the cenvat credit so taken for payment of service tax on any output service. The issue is no longer res integra; there is no provision under Notifications 1/2006 or 15/2004 that such credit legally availed prior to 1.3.2006, under the provisions of CCR,2004, would lapse. Therefore, the appellants are eligible to utilise the cenvat credit, availed by them, on inputs/input services, prior to 1.3.2006. we find that to that extent demand is not sustainable. Whether the Appellant is a service provider rendering services of construction of residential complexes , in terms of Section 65 (30) (a) of the Finance Act, 1994 read with Section 65 (105) (zzzh)ibid and as to whether, the demand of Service Tax of Rs. 6,79,14,900 for the period from 16.06.2005 to 30.09.2007 against the appellants is tenable? - HELD THAT:- The learned adjudicating authority has relied heavily on the fact that the agreement is a tripartiate agreement; the appellants are rendering service to the ultimate buyers of the flats; suitable advances were taken from the customers, therefore, the appellants cannot be held to be developers doing service to themselves as explained in Board Circular No.108/02/2009 dated 29.1.2009 and to that extent the Circular is not applicable in their case - what is to be seen is whether the contract was a service contract simplicitor or a works contract. Learned Commissioner had no occasion to follow the judgment of Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] - Going by the facts and circumstances of the case, it is found that the contracts are composite contracts and therefore, not leviable to service tax before 1.6.2007. The show-cause notice proposes to demand service tax on construction of residential complexes service after 1.6.2007, even though they are works contracts being composite in nature. Whether the show cause Notice is time barred? - HELD THAT:- The show-cause notice proposes to demand service tax on construction of residential complexes service after 1.6.2007, even though they are works contracts being composite in nature. Therefore, service tax demand after 1.6.2007 also cannot be confirmed - Learned advocate for the appellants has also raised the issue of limitation and submits that the facts are known to the Department when the audit was conducted in 2007 and therefore, the show-cause notice is time barred. Appeal allowed.

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• 2020 (10) TMI 1064
  Delay in filing of appeal - Proof of delivery of adjudication order - 100% EOU STPI - Refund of unutilized CENVAT credit - input services used for providing the output services exported during the period October 2009 to March 2010 - rejection on the ground of time limitation - Section 37C of Central Excise Act, 1944 - HELD THAT:- As per the respondent, the Order-in-Original dt. 29/02/2012 was issued on 09/03/2012 and the appellant has filed the appeal before the Commissioner on 05/02/2013 which is beyond the period as prescribed in Section 85(3A) of the Finance Act, 1994. We further find that the Department has not been able to establish by any cogent evidence that the Order-in-Original was actually delivered to the appellant. Further we find that the appellant was not aware of the issuance of the Order-in-Original dt. 29/02/2012 and they wrote 3 follow-up letters dt. 11/07/2012, 21/08/2012 and 17/10/2012 enquiring about the status of the adjudication. These letters, in spite of the fact that they were received by the Department, were not responded to at all by the Department and the Department did not inform the appellant regarding the status of their adjudication. Not only this, the appellant has also filed a RTI application before the CBEC but the same has not yielded any result. The High Court of Rajasthan in the case of M/S RP CASTING PVT LTD VERSUS THE CUSTOM, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI AND ANR [ 2016 (6) TMI 996 - RAJASTHAN HIGH COURT] and M/S. VINOD CHOUDHARY VERSUS UNION OF INDIA OTHERS [ 2016 (5) TMI 834 - RAJASTHAN HIGH COURT] have also categorically held that the Department has to prove the delivery of the orders and dispatch of the order is not sufficient for the purpose of calculating the period of limitation for filing the appeal before the Commissioner(Appeals). The appeal of the appellant is within time from the date of receipt of Order-in-Original - case remanded to the Commissioner(Appeals) - appeal allowed by wayof remand.

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• Central Excise

• 2020 (10) TMI 1063
  Calculation of Interest for delayed payment of Excise Duty - relevant date - period of dispute is September, 2005 to March, 2015 - whether the demand of interest is to be calculated from the date of clearance of goods upto the date of actual payment of duty or from the date of determination of due amount till actual date of payment of duty? HELD THAT:- Similar issue arose before the Division Bench of this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, CHENNAI VERSUS LUCAS TVS LTD. [ 2009 (12) TMI 828 - CESTAT CHENNAI ] wherein the facts were that vide adjudication orders dated 9.1.1995 and 10.02.1995, the demand of over Rs. 34 lakhs was determined. These demands were set aside by the Commissioner (Appeals) vide an order dated 20.06.1995. The order-in-appeal was set aside by the Tribunal and the matter was remanded to the Commissioner (Appeals) vide Final Order dated 24.01.1997. The demand was re-confirmed by the Commissioner (Appeals) vide order dated 26.12.2000. It was the contention of the Revenue that since the demand of Rs. 34 lakhs, earlier confirmed in Jan., /Feb., 1995, although set aside by the Commissioner (Appeals) earlier in June, 1995, was restored by the subsequent order of the Commissioner (Appeals) dated 26.12.2000. As the determination of the duty had taken effect in Jan./Feb., 1995, therefore, due to delay in payment of duty, the assessee was liable to pay interest from August, 1995. This Tribunal held that final determination can be said to have been made on 26.12.2000 with passing of the order of the Commissioner (Appeals) after remand. In the facts of the present case also, the Commissioner (Appeals) has redetermined the duty liability by his order dated 28.02.2015, as the demand was set aside for the period 14.01.2007 to 09.03.2010 and only re-determined for the period August, 2005 to Jan. 2007 - the appellant /assessee is liable to pay interest for one month i.e. from 1.3.2015 to 31.03.2015, which they have admittedly paid. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (10) TMI 1062
  Compounding of offences - penalty proceedings - Whether the Assessing Officer was justified in adopting a gross profit higher than that conceded in the returns and books and accounts on the mere ground of compounding having been made of the offence detected by the Intelligence Wing? HELD THAT:- The Assessing Officer ought to have looked at the total number of brands sold by the assessee and the ones which are in higher demand. This would have indicated whether the 13 brands, the gross profit of which was adopted by the Intelligence officer, were the most moving brands in the Bar of the dealer. The Assessing Officer ought to have applied his mind and not adopted the findings in the penalty proceedings as conclusive. As to the stock variation having resulted only an equal addition; the Assessing Officer could have made a further addition for the variations undetected, which were probable. Having not done that, the State cannot argue that the enhancement of gross profit is also taking into account the stock variation; which reasoning, in any event, is not available in the order of the Assessing Officer. The question of law has to be answered in favour of the assessee and against the Department - Revision allowed.

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• 2020 (10) TMI 1061
  Eligibility for Sales Tax Exemption - time limitation - exemptions to industrial units or reduction in tax, payable on the sale or purchase - non-submission of loan document before due dates - HELD THAT:- The pith and substance of the contention of the respondents, throughout from Exts.P12, P19, P21 and 22 had been that the petitioner did not fulfill the conditions of not having submitted an application for loan before 1.1.2000 and the land having purchased on 1.12.2001 entailing into dis-entitlement of exemption, in my view is wholly preposterous and fallacious, much less erroneous that neither the District level Committee nor the State Level Committee noticed the documents and the submissions of the petitioner, extensively. The Hon ble Supreme Court in a matter of similar nature Pepsico India Holdings P.Ltd. case [ 2009 (5) TMI 529 - SUPREME COURT ] , while applying the question of interpretation of the notification observed that the notification dated 3.11.1999 was issued in terms of an industrial policy; whereto exemption was to be granted for a period of seven years and it was observed that obtaining of provisional registration in respect of SSI unit was sufficient. It is deemed appropriate to fix the time line in taking the decision, which is fixed as forty five (45) days from the date of receipt of certified copy of this judgment - petition allowed.

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• 2020 (10) TMI 1060
  Denial of issuance of Form- C by the concerned authority - benefit of concessional rate of tax - purchase of High Speed Diesel - HELD THAT:- There is nothing to prejudice the review petitioners. This Court had only set aside the circular dated 11.10.2017, issued by the State of Jharkhand in its Commercial Taxes Department, denying the issuance of Form- C , to the writ petitioners and as a necessary consequence thereof, held the writ petitioners entitle to refund of the tax deposited by them. Since it was brought to the notice of this Court that pursuant to the Form- C issued in obedience of the interim orders passed by this Court, provisional credit notes had also been issued to the writ petitioners by the review petitioner Oil Company, we made it clear that the provisional credit notes shall be given effect to, and in any case, if the CST has been deposited to the State Exchequer, the respective Oil Companies shall be entitled to claim the refund thereof. There is no occasion for review of the Judgment and Order dated 28.8.2019 passed by this Court in W.P.(C) No. 6048 of 2017 and the analogous matters, rather, if the refund of the CST deposited to the State Exchequer in the State of West Bengal is refused by the State authorities of West Bengal, it is open to the writ petitioners or even to the review petitioners to approach the appropriate forum for the required relief. We only want to make it clear that so far as the State of Jharkhand is concerned, in paragraph-27 of our Judgment, we have already given the liberty even to the review petitioners to claim the refund from the authorities concerned, if the amount of CST had already been deposited by them in the State Exchequer. Review application dismissed.

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• 2020 (10) TMI 1059
  Benefit of exemption - use of firewood as fuel or as Raw Material - demand of additional tax against the petitioner in the assessment under Section 12(4) of the Orissa Sales Tax Act - whether exemption from taxation granted to sale of firewood can be extended to sale of firewood to be used as raw material for manufacturing of paper? HELD THAT:- Entry of Firewood at serial no. 13B of the Schedule to the exemption notification No. 20206-CTA-14/76F dated the 23rd April, 1976 intended the such firewood to be used as fuel and not as a raw material for manufacturing of paper. Once the firewood is put to any other use than as fuel, it would not be entitled to exemption of tax. It is trite that an exemption notification has to be construed strictly. A person claiming exemption provision to relieve him of tax liability must explain clearly that he is covered by the relevant provision. Unlike ordinary taxing statute, in the event of ambiguity, an exemption clause or provision has to be construed in favour of revenue. There are no merits in this revision petition so as to warrant any interference - revision petition dismissed.

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• Indian Laws

• 2020 (10) TMI 1058
  Enforcement of security interest created on the secured assets by the respondents - HELD THAT:- When the action has been taken by the competent authority as per the procedure prescribed by law and the person affected has a knowledge leaving no ambiguity or confusion in initiating proceedings under the provisions of the SARFAESI Act by the secured creditor, in our considered view, such action taken thereof cannot be held to be bad in law merely on raising a trivial objection which has no legs to stand unless the person is able to show any substantial prejudice being caused on account of the procedural lapse as prescribed under the Act or the rules framed thereunder still with a caveat that it always depends upon the facts of each case to decipher the nature of the procedural lapse being complained of and the resultant prejudiced if any, being caused and there cannot be a straitjacket formula which can be uniformly followed in all the transactions. Adverting to facts of the instant case, we are of the view that the objection raised by the respondents was trivial and technical in nature and the appellant (secured creditor) has complied with the procedure prescribed under the SARFAESI Act. At the same time, the objection raised by the respondents in the first instance, at the stage of filing of a Securitisation Application before DRT under the SARFAESI Act is a feeble attempt which has persuaded the Tribunal and the High Court to negate the proceedings initiated by the appellant under the SARFAESI Act, is unsustainable more so, when the respondents are unable to justify the error in the procedure being followed by the appellant (secured creditor) to be complied with in initiating proceedings under the SARFAESI Act. Appeal allowed.

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• 2020 (10) TMI 1057
  Vacation of interim order - vacation of stay on operation and execution of the settlement of FL 5 Shop Pithoragarh No.1 B in favour of the Appellant - HELD THAT:- There is no allegation of malafides on the part of the Government. The only ground on which the High Court interfered with the license is on the basis of the purported loss caused to the revenue. In spite of the Division Bench being informed that there is absolutely no loss to the revenue in view of the recovery proceeding initiated against Sh. Balkar Singh, the interim order was not vacated. As a consequence, the Appellant was prevented from continuing with his business in spite of paying the amount of Rs. 3 lakhs per day to the Department. Interference with a valid license granted in accordance with rules is unwarranted. The First Respondent has misled the High Court by contending that he is willing to offer a higher amount. Such an offer should not have been entertained as he did not participate in the resettlement process. If such petitions are encouraged, there will be no finality to any license or permission granted by the Government, especially when there is no complaint of any malafides, favoritism or nepotism. The Orders of High Court set aside - Appellant shall be permitted to continue with the business activity of running the foreign liquor shop forthwith, subject to compliance of the terms of resettlement - Writ Petition filed by the Petitioner being frivolous in nature is, therefore, dismissed with cost of Rs. 1,00,000/- to be paid to the Appellant within a period of four weeks from today.

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