TMI Tax Updates - e-Newsletter
October 5, 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. TCS on Sales of any Goods on receipt basis and Accounting Treatment

   By: BHALCHANDRA THIGALE

2. FOREIGN DIRECT INVESTMENT IN INDIA – RECENT TREND

   By: DR.MARIAPPAN GOVINDARAJAN

3. PROFITEERING CONFIRMED BUT PENALTY STILL NOT IMPOSABLE - ELDECO INFRASTRUCTURE CASE

   By: Dr. Sanjiv Agarwal

News

1. GST taxpayers get relief in implementation of e-invoice

2. INDIA’S MERCHANDISE TRADE: Preliminary Data for September, 2020

3. Two more States successfully implement reforms, get additional borrowing permission of ₹ 7,376 crore

Notifications

GST

1. G.S.R. 611(E) - dated 1-10-2020 - CGST

Corrigendum – Notification No. 72/2020-Central Tax, dated the 30th September, 2020

2. 73/2020 - dated 1-10-2020 - CGST

Seeks to notify a special procedure for taxpayers for issuance of e-Invoices in the period 01.10.2020 - 31.10.2020

GST - States

3. 38/1/2017-Fin(R&C)(04/2020-Rate) - dated 1-10-2020 - Goa SGST

Amendment in Notification No. 38/1/2017-Fin(R&C)(12/2017- Rate), dated 30th June, 2017

4. 79/GST-2 - dated 1-10-2020 - Haryana SGST

Amendment of notification no.47/ST-2, dated 30.06.2017 under the HGST Act, 2017

5. 54/2020-State Tax - dated 15-9-2020 - Jharkhand SGST

Seeks to amend Notification No. 29/2020 – State Tax, dated the 25th June, 2020

6. 41/2020 – State Tax - dated 15-9-2020 - Jharkhand SGST

Seeks to extend the due date for furnishing of FORM GSTR 9/9C for FY 2018-19 till 30th September, 2020

7. F A 3-51-2019-1-V-(61) - dated 28-9-2020 - Madhya Pradesh SGST

Seeks to amend Notification No. FA-3-51-2019-1-V- (29), Dated 04th May 2020

8. F. 12(46)FD/Tax/2017-III-242 - dated 30-9-2020 - Rajasthan SGST

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

9. F.1-11 (91 )-TAX/GST/2020 (Part-III) - dated 30-9-2020 - Tripura SGST

Seeks to notify class of registered persons for the purpose of e-invoice.

Income Tax

10. 82/2020 - dated 1-10-2020 - IT

Income-tax (22nd Amendment) Rules, 2020

Money Laundering

11. G.S.R. 609(E) - dated 1-10-2020 - PMLA

Seeks to amend Notification No. G.S.R. 382(E) dated 27 June 2006

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/DF4/CIR/P/2020/192 - dated 1-10-2020

Review of provisions regarding valuation of debt and money market instruments due to the COVID - 19 pandemic.

2. SEBI/HO/MIRSD/DOP/CIR/P/2020/193 - dated 1-10-2020

Standard Operating Procedure in the cases of Trading Member / Clearing Member leading to default - Extension of timeline for submission of the Undertaking cum Indemnity bond by the Trading members (TMs) / Clearing Members (CMs) for all the bank accounts

3. SEBI/HO/MRD/DCAP/CIR/P/2020/190 - dated 1-10-2020

Framework for monitoring of foreign holding in Depository Receipts

Income Tax

4. F.No.225/155/2020/ITA.II - dated 29-9-2020

Information relating to GST return in Form 26AS as per Rule 114-I of Income-tax Rules, 1962

Companies Law

5. 35/2020 - dated 29-9-2020

Filings under section 124 and section 125 of the Companies Act 2013 r/w IEPFA (Accounting, Audit, Transfer and Refund) Rules 2016 in view of extension of CFSS 2020

Highlights / Catch Notes

GST

• Petitioner Challenges Best Judgment Assessment Orders Under CGST Act, Section 62; Appeals Suggested as Appropriate Remedy.

  Case-Laws - HC : Best judgment assessment u/s 62 of the CGST Act - contention of petitioner is that in view of the returns subsequently filed within the period permitted u/s 62, these assessment orders had to be withdrawn as contemplated under the said Section - The remedy of the petitioner against the said assessment orders lies in approaching the statutory appellate authority against the said orders - HC
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Income Tax

• Rule 8D Disallowance Limited to Exempt Income; Assessing Authority Must Justify Unacceptability of Taxpayer's Expenditure Apportionment.

  Case-Laws - HC : Assessment u/s 14A r.w.r. 8D - the disallowance under Rule 8D of the IT Rules read with Section 14A of the Act can never exceed the exempted income earned by the Assessee during the particular assessment year and further, without recording the satisfaction by the Assessing Authority that the apportionment of such disallowable expenditure made by the Assessee with respect to the exempted income is not acceptable for reasons to be assigned the Assessing Authority, he cannot resort to the computation method under Rule 8D of the Income Tax Rules, 1962. - HC
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• Tribunal Rules Foreign Exchange Derivative Loss Not Disallowed as Speculative Loss.

  Case-Laws - HC : Loss incurred on foreign exchange derivative - Addition as speculative loss - Tribunal was right in its finding that the loss incurred on foreign exchange derivative cannot be disallowed holding it to be a speculative loss. - HC
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• High Court Overturns Disallowance of Foreign Travel Expenses Deemed Business-Related; CIT-A and Tribunal Decision Reversed.

  Case-Laws - HC : Disallowance towards foreign travel - expenditure as wholly and exclusively for the business - Bonafides and genuineness of the expenses incurred by the assessee towards foreign travel was never in doubt before the assessing officer or before the CIT-A or before the Tribunal, thus, we have no hesitation to hold that the disallowance done by the CIT-A, as affirmed by the Tribunal, is erroneous. - HC
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• Court Orders Fresh Recalculation of Capital Gains: Focus on Acquisition Cost & FMV u/ss 48/49 & 55 of IT Act.

  Case-Laws - HC : Computation of capital gain - computation of cost of acquisition - FMV determination - To avoid any miscarriage of justice and to allow a fresh recomputation of "cost of acquisition" or cost of improvement properly under Section 48/49 and Section 55 of the Act in the facts and circumstances of the case, we dispose of the present Appeal by setting aside the order of the Income Tax Appellate Tribunal to that extent. - HC
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• Fringe Benefit Tax Exemption: Business Necessity Expenses Like Visa Fees Not Subject to FBT as They Offer No Employee Benefit.

  Case-Laws - HC : Fringe benefit tax on expenditure - FBT - Expenditure has been incurred for business necessity and not for providing any domestic benefit or amenity to the employee. The payment for visa and other charges are statutory obligations and fringe benefit tax cannot be levied - HC
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• In-house training and loan repayments not subject to fringe benefit tax u/s 115WB(2)(H).

  Case-Laws - HC : FBT - Deemed expenditure chargeable to fringe benefit tax u/s 115WB(2)(H) - there was no fringe benefit in in-house training expenditure - repayment of loan obtained for purchase of acquisition of assets cannot be brought within the purview of fringe benefit tax - HC
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• Section 40A(3) Disallowance: Cash payments via truck drivers not protected u/r 6 DD(k) due to lack of direct contract.

  Case-Laws - AT : Disallowance under section 40A(3) - Cash purchase - cash payments through truck drivers - According to the assessee, the truck driver acts as an agent of the assessee. - There is no privity of contract between the person receiving the sums in cash and the assessee and the truck driver. Such payments are not protected under rule 6 DD (k) of the Rules. On this premise, we reject contention of the assessee. - AT
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• Eligibility for Tax Deduction Confirmed for Paddy Milling u/s 80IB(11A) Including Integrated Business Activities.

  Case-Laws - AT : Deduction u/s 80IB(11A) - milling of the paddy - integrated business of handling, storage and transportation of the food grains - The activities involving the cleaning, steaming, soaking, drying, polishing, grinding etc.are covered by the expression “handling” and the assessee is certainly conducting such activities which would entitle to the benefit of deduction under section 80IB(11A) of the Act - AT
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• No TDS on Charges Retained by Credit Card Companies for Payment Gateway Transactions u/s 194H.

  Case-Laws - AT : TDS u/s 194H - “payment to Gateways” - Non deduction of tds - the “sale made on the basis of a credit card” is the transaction of the merchant establishment and that the credit company only facilitates the electronic payment for a certain charge and the commission retained by the credit card company is therefore in the nature of normal banking charges and not in the nature of commission/brokerage for acting on behalf of the merchant establishment. - No TDS liability - AT
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• Inconsistent Accounting Practices Lead to Disallowed Professional Costs Provision in Company Accounts, Rules Appellate Authority.

  Case-Laws - AT : Disallowance of provision for professional cost - Accounts of the company are audited by reputed CA firm and therefore it cannot be said that it is an inadvertent error. Even if the same is considered as an inadvertent error, the assessee has not taken any step to revise the return of income. Therefore, we fully concur with the findings of the Ld. CIT(A) that assessee has not adopted consistent accounting principle on year to year basis and it is not open to the assessee to claim the expense on provision basis in one year and on accrual basis in the other year. - AT
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• Draft Assessment Order Void Due to Premature Demand Notice and Penalty Proceedings u/s 144C.

  Case-Laws - AT : Proceedings initiated u/s 144C - legality of the order by framing the so-called draft assessment order - while framing the said draft assessment order, the AO not only issued and served demand notice, but has also initiated the penalty proceedings. - no hesitation to hold that the proceedings, when the demand notice was issued and served upon the assessee and penalty proceedings were simultaneously initiated making all subsequent proceedings and orders non-est. - AT
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• Revision u/s 263: Employee Land Purchase Recorded as Loans Deemed Erroneous, Prejudicial to Revenue Interests.

  Case-Laws - AT : Revision u/s 263 - Purchase of land in the name of Employees showing the sum as loan to employees - Additions u/s 69/69B - Non conversion of limited scrutiny assessment into complete scrutiny assessment - an order not made in accordance with an order, direction or instruction issued u/s. 119, is deemed to be erroneous and prejudicial to the interests of Revenue - Direction issued in the revision order sustained. - AT
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Indian Laws

• Judges Must Diligently Fulfill Duties Without Avoiding Cases Due to Pessimism or Workload Challenges.

  Case-Laws - HC : The judicial discipline demands that the Judge should do his duty and must not succumb to pessimism and it is not expected from him to sit leisurely with his pen down and to say that he will not hear the cases because the record is voluminous and the time at his disposal is limited. It will be a folly not to make an attempt and to sit idle abdicating one’s duty. - HC
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Service Tax

• Freezing Bank Account Unlawful Without Show Cause Notice; No Tax Due Without Formal Assessment per Finance Act, 1994 Section 72.

  Case-Laws - HC : Freezing of Bank Account of petitioner - No SCN was issued - Mere making of such statements of the officers of the assessee by themselves cannot lead to any conclusion that certain amount has been determined as due from the Petitioner. Finance Act, 1994 provides for various provisions for making assessment for determining the amount of service tax required to be paid by the service provider, including best judgment assessment under Section 72 which provision can be invoked when there is failure to furnish the return or failure to assess the tax. Without there being an assessment, no conclusion can be reached that any amount has become due to be paid. - HC
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• Cenvat Credit Denied for Employee-Benefit Services Post-April 2011 Amendment to 'Input Service' Definition.

  Case-Laws - AT : CENVAT Credit - input services - since some portion of the disputed Cenvat credit was availed by the appellant after amendment of the definition of ‘input service’ w.e.f. 01.04.2011 for the alleged personal benefit of its employees, as per the statutory provisions, the Cenvat credit shall not be available on the disputed services. - AT
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Case Laws:

• GST

• 2020 (10) TMI 110
  Principles of Unjust Enrichment - Amount refunded to consumer welfare fund instead of the petitioner - inverted duty structure - HELD THAT:- Since in the present case quashing of the Circular dated 18th November, 2019 is not sought but only an interpretation has been placed upon it and reliance on Jian International (supra) can be placed before the respondents, this Court directs the petitioner to take all its pleas in the replies to the show cause notice, deficiency memo and representation seeking credit of refund in his account. The present writ petition and pending application stand disposed of with the aforesaid directions. Though it is clarified that all the rights and contentions of parties are left open, yet it is directed that the replies and representations filed by the petitioner shall not be rejected/dismissed on the ground of limitation.

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• 2020 (10) TMI 109
  Release of detained goods - allegation of non-production of copy of the invoice that ought to have accompanied the transportation of the goods - HELD THAT:- Although it is the case of the petitioner that he had subsequently produced a soft copy of the invoice, the finding in Ext.P4(c) is that the soft copy of the invoice itself showed that the invoice was generated after the commencement of the transportation - The detention cannot be said to be unjustified. The learned counsel for the petitioner however prayed that he be permitted to clear the goods and the vehicle on furnishing a bank guarantee for the amount demanded in Ext.P4(c) notice. Taking note of the said submission, the respondents are directed to release the goods and the vehicle to the petitioner on the petitioner furnishing a bank guarantee for the amount demanded in Exts.P4(c) and P4(d). The respondents shall thereafter proceed to pass the final order in GST MOV-09 under Section 129(3) of the GST Act. Petition disposed off.

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• 2020 (10) TMI 108
  Best judgment assessment under Section 62 of the CGST Act - contention of petitioner is that in view of the returns subsequently filed within the period permitted under Section 62, Ext.P1 series of assessment orders had to be withdrawn as contemplated under the said Section - HELD THAT:- There are force in the contention of the learned Government Pleader for the respondents that the returns in respect of the period aforementioned were filed beyond the period of one month stipulated under Section 62 of the Act. It would follow, therefore, the petitioner cannot aspire for the benefit of getting the assessment orders passed on best judgment basis set aside, as contemplated under Section 62 of the Act. The remedy of the petitioner against the said assessment orders lies in approaching the statutory appellate authority against the said orders - The writ petition is dismissed in its challenge against the assessment orders without prejudice to the right of the petitioner to move the first appellate authority in its challenge against the said assessment orders. The recovery steps pursuant to the assessment orders impugned in this writ petition shall be kept in abeyance for a period of one month so as to enable the petitioner to move the appellate authority, in the meanwhile. Application disposed off.

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• 2020 (10) TMI 107
  Extension of time for filing the revised TRAN-1 for the period April, 2017 - June, 2017 - Rule 120A under the CGST Act, 2017 - HELD THAT:- Issue Notice. To await the judgment of the Supreme Court in UNION OF INDIA VERSUS BRAND EQUITY TREATIES LIMITED AND ORS. ETC. ETC. [ 2020 (6) TMI 517 - SC ORDER ] - list on 14th December, 2020.

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• 2020 (10) TMI 106
  Extension of time limit for making payment - permission to make payment in 6 monthly installments - applicant has not been able to adhere and honour the undertaking filed before this Court - HELD THAT:- We were inclined to take a very strict view of the matter because once an undertaking on oath is filed before this Court, it is expected of the person giving such undertaking to comply with the same as the non-compliance would entail the consequences of contempt. We could have not only rejected this Civil Application but, in the process, even the interim relief would have stood vacated. However, with a view to give one opportunity to the writ-applicant, we extend the time period by a further period of six weeks to enable the applicant to comply with the undertaking and deposit the amount as directed in the order dated 19th February 2020. Application disposed off.

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• 2020 (10) TMI 105
  Validity of SCN - Appealable order or not - Annexure- AG and Annexure- AH to the writ petition - period from July-2017 to April-2018 - HELD THAT:- Insofar as Annexure- AG dated 06.03.2020 is concerned, the petitioner to file appeal as provided under Section 112 of the CGST Act. The clarification circular produced along with memo dated 10.09.2020 provides for filing of appeal within three months from the date of constitution of the Tribunal or the date on which the President enters office. As on this date, the Tribunal has not been constituted. Thus, the petitioner is directed to file an appeal against the impugned order bearing No.GST A.No.19-24/2019-20 A-II ADC No.39-44/ADC/AII/GST/2020 dated 06.03.2020, Annexure- AG within three months from the date of constitution of the Tribunal or within three months from the date of President enters office. Annexure- AH dated 04.06.2020 is a show cause notice. The petitioner to reply to the said show cause notice bringing to their notice discrepancy therein as noted above. The said reply shall be filed within two weeks. Thereafter, the Adjudicating Authority shall consider the objection filed if any, adjudicate the issue in question and pass orders in accordance with law. No precipitative action shall be taken by the respondents in pursuance to Annexure- AH dated 04.06.2020 till Adjudicating Authority passes an order. Petition disposed off.

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• 2020 (10) TMI 104
  Validity of service of notice - Release of confiscated goods along with truck - service of notice issued in the Form GST MOV-10 calling upon the writ applicant to show-cause as to why the goods along with the vehicle seized under Section 129 of the Act should not be confiscated under Section 130 of the Act, 2017 - HELD THAT:- We need not delve much into the facts of this case as we are of the view that the final order of confiscation in Form GST MOV-11 is yet to be passed. We expect the writ applicant to appear before the authority and make good his case that the goods and the vehicle is not liable to be confiscated under Section 130 of the Act. Ultimately, if the show-cause notice in the Form GST MOV-10 is discharged, then that would be the end of the matter. However, in the event if final order of confiscation in the Form GST MOV-11 is passed, then the writ applicant will have the remedy of filing a statutory appeal under Section 107 of the Act. As on date, we are considering a limited question whether the goods and the conveyance should be ordered to be released subject to certain terms and conditions pending the confiscation proceedings. We are inclined to order release of the goods and the vehicle on the condition that the writ applicant shall deposit the amount of Rs. 06,64,000/- within a period of one week from the date of the receipt of the copy of this order with the concerned authority and shall also furnish Bank Guarantee of the amount of Rs. 18,44,634/-. If these two conditions are fulfilled, then the authority concerned shall immediately release the goods and the vehicle - Application disposed off.

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• 2020 (10) TMI 50
  Unfreezing of Bank Account of petitioner - refund of GST/ IGST - HELD THAT:- From Sub-section (5) of Section 110 of Customs Act, it is evident that the said provision was inserted in the statute with effect from 1st August, 2019. Besides, from the tone and tenor of the sub-section it is apparent that it is not a procedural provision per se; rather it is coercive in nature, though the procedure is also laid down for giving effect to the said provision. Being a coercive provision, there has to be strict compliance to the procedure laid down. In such circumstances and having regard to its very nature, such a provision can only have prospective operation and not retrospective operation. Infact, the concerned Finance Act makes it explicit by making the provision effective from a prospective date i.e. from 1st August, 2019. Letter from the office of the Principal Commissioner of Customs to the Branch Manager of IDFC Bank was issued on 1st March, 2019 for freezing of the bank account of the petitioner. This was prior to insertion of sub-section (5) in Section 110 with effect from 1st August, 2019. Therefore, it is quite clear that this provision could not have been invoked for freezing the bank account of the petitioner - Learned counsel for the respondents could not show any other provision in the Customs Act which empowers or authorizes the customs department to freeze the bank account of a person other than sub-section (5) of Section 110. Such attachment of bank account of the petitioner on 1st March, 2019 and its continuation thereafter being in breach of Section 110(5) is therefore, without any authority of law. Refund of GST/IGST - HELD THAT:- The alert has been placed on the IEC of the petitioner on the basis of materials which are presently under investigation of the customs department. For the said reason, refund of IGST/GST dues has also been held up. However, we feel that the investigation needs to be expedited and taken to its logical conclusion one way or the other because extreme measures such as placing of alert on IEC and withholding of IGST/GST dues can not be continued for an indefinite period. The same cannot be continued ad-infinitum merely on the basis of suspicion, howsoever strong such suspicion may be. In the absence of such material, referring to any person as a hardened criminal that too in a sworn affidavit filed before the High Court is not proper. The affiant or for that matter any one swearing affidavit before the court should be careful in making averments which in any event should be restrained. Respondents are directed to unfreeze the bank account of the petitioner - Respondents are also directed to complete the investigation into the allegations against the petitioner within a period of three months from the date of receipt of a copy of this order - Placing of alert on Import Export Code of the petitioner or claim of refund of IGST/GST would be subject to outcome of such investigation. Petition allowed.

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• Income Tax

• 2020 (10) TMI 103
  Non-payment of the third instalment by the petitioner under the Income Tax Declaration Scheme, 2016 - Extension of period for completing payments under the declarations made vide sub-Section (1) of Section 183 of the Finance Act, 2016 - appropriate instructions connected to the Notification dated 13th September, 2019 and numbered as S.O. 4455(E) of the Ministry of Finance, Department of Revenue, Government of India - HELD THAT:- Such payment is required to be completed on and by 31st January, 2020, together with the applicable interest. This Court is of the further view that the prayer of the petitioner for extension of time deserves to be attended to by the Revenue Authority under the Notification dated 13th December, 2019 since such prayer was live and pending during the period of subsistence of the Notification entitling the petitioner to retrospective consideration. In the backdrop of the above discussion, on the particular facts of this case, the issue is remanded to the respondent no.2/the Principal Commissioner of Income Tax to consider the same on merits in the context of the observations made hereinabove. It is expected that the above directed exercise shall be completed not later than a period of six weeks from the date of communication of this order.

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• 2020 (10) TMI 102
  Assessment u/s 14A r.w.r. 8D - Disallowance as exceeded by the exempted income earned by the Assessee - Non recording satisfaction by the Assessing Authority that the expenditure incurred to earn exempted income, as computed by the Assessee - whether Assessing Authority cannot even resort to computation of such disallowance under Rule 8D of the Rules? - HELD THAT:- Obviously such disallowance has far exceeded the exempted income in the form of dividends even though computed at the rate of 0.5% of the average investment made by the Assessee. In our opinion, the same is not permissible at all, because this average disallowance as computed under Rule 8D could be disallowed only if Assessee had actually earned Dividend income in excess of such amount of disallowance, that too after recording reasons for rejecting the apportionment of expenditure so incurred or claim that no such expenditure was incurred to earn that much of Dividend income was validly rejected by the Assessing Authority. We do not find any such reasons even recorded by the Assessing Authority in the present case. We cannot approve even the larger disallowance proposed by the Assessee himself in the computation of disallowance under Rule 8D made by him. These facts are akin to the case of Pragati Krishna Gramin Bank [ 2018 (6) TMI 1283 - KARNATAKA HIGH COURT] . Negative figure of disallowance cannot amount to hypothetical taxable income in the hands of the Assessee. Disallowance of expenditure incurred to earn exempted income has to be a smaller part of such income and should have a reasonable proportion to the exempted income earned by the Assessee in that year, which can be computed as per Rule 8D only after recording the satisfaction by the Assessing Authority that the apportionment of such disallowable expenditure u/s 14A made by the Assessee or his claim that no expenditure was incurred is validly rejected by the Assessing Authority by recording reasonable and cogent reasons conveyed to Assessee and after giving opportunity of hearing to the Assessee in this regard. Dispose of the present appeal by answering question of law in favour of the Assessee and against the Revenue and by holding that the disallowance under Rule 8D of the IT Rules read with Section 14A of the Act can never exceed the exempted income earned by the Assessee during the particular assessment year and further, without recording the satisfaction by the Assessing Authority that the apportionment of such disallowable expenditure made by the Assessee with respect to the exempted income is not acceptable for reasons to be assigned the Assessing Authority, he cannot resort to the computation method under Rule 8D of the Income Tax Rules, 1962.

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• 2020 (10) TMI 101
  Revision u/s 263 - selecting the case for limited scrutiny through CASS to consider two issues namely were substantial increase in capital in a year and the sale consideration of the property in the income tax return was less than the sale consideration of the property reported in AIR - HELD THAT:- We find that both the issues, which were the basis for exercise of the powers u/s 263 were, in fact, the issues, which were considered by the AO in the limited scrutiny culminating in the order of assessment u/s 143(3) of the Act dated 23.12.2016. When the PCIT issued the show cause notice dated 13.11.2018 calling upon the assessee to explain with regard to the increase in capital and also conversion of preference shares during the relevant years, the assessee gave a reply dated 02.1.2019. This has been extracted by the Tribunal in paragraph 3.2 of the impugned order. We find the explanation to be cogent and in fact, the factual matrix was appreciated by the Tribunal to hold that the PCIT could not have invoked the revisionary jurisdiction u/s 263 mainly on the ground that substantial increase in capital investment reflected by the assessee in his balance sheet as compared to the preceding year. Entire issue is factual and no substantial question of law flows from the contention raised by the Revenue before us. In the case of Maithan International [ 2015 (4) TMI 479 - CALCUTTA HIGH COURT ] decision is not only distinguishable on facts, but also does not render any assistance to the Revenue. In the case on hand, no such finding has been recorded by the PCIT in the order dated 03.1.2019. No substantial question of law arising for consideration in this appeal.

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• 2020 (10) TMI 100
  Loss incurred on foreign exchange derivative - Addition as speculative loss - HELD THAT:- As decided in M/s.Celebrity Fashion Ltd. [2020 (9) TMI 1022 - MADRAS HIGH COURT] loss incurred on account of cancellation of forward contracts was not speculative losses falling within the provisions of Section 43(5). Tribunal was right in its finding that the loss incurred on foreign exchange derivative cannot be disallowed holding it to be a speculative loss. In any event, the Tribunal remanded the matter to the AO for a limited purpose, which has been clearly indicated in paragraph 7 of the impugned order. For the foregoing reasons, we find no ground to interfere with the impugned order passed by the Tribunal. - Decided against revenue.

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• 2020 (10) TMI 99
  Disallowance towards foreign travel - expenditure as wholly and exclusively for the business of the appellant and thus not allowable u/s 37 - travel to own subsidiary companies - HELD THAT:- Subsidiaries in the foreign country were exclusive companies, which dealt only with the products of the assessee. The products, which were manufactured by the assessee were shipped to the subsidiaries in the foreign country in the knock down condition and they were to reassemble the same and the products were marketed under the Trade mark Elgi . - There was no reason as to why the CIT- A had disallowed a portion of the expenditure without noting the fact that the expenditure was incurred by the assessee to safeguard the interest of the assessee, the holding company and its normal business expenditure of the holding company. CIT-A failed to note that all those expenditure incurred by the assessee, the holding company was to keep the subsidiary companies in the foreign country to continue to do their business. Tribunal, which tested the finding of the CIT-A did not assign any reasons as to why the expenditure was not for the benefit of the assessee, the holding company. The order passed by the Tribunal is devoid of reasons. Though the assessee was able to produce their annual report along with accounts prepared in accordance with AS-18 that there was a gradual increase in sales compare to the early years by the subsidiary companies in the foreign country, the Tribunal in a single stroke held that it is not convinced with the stand taken by the assessee. Bonafides and genuineness of the expenses incurred by the assessee towards foreign travel was never in doubt before the assessing officer or before the CIT-A or before the Tribunal, thus, we have no hesitation to hold that the disallowance done by the CIT-A, as affirmed by the Tribunal, is erroneous. Allowable revenue expenses - Expenses paid to M/s Stehlin and Associates, Paris, France in connection with acquisition of M/s Belair, France - AO opined that the expenditure was incurred towards acquisition of a French company and it is not related to the assessee s business earnings and income and the expenditure was incurred in connection with the new unit feasibility and acquisition of a capital asset and not allowable u/s 37(1) - HELD THAT:- As relying on Bombay Dyeing Manufacturing Company Limited [ 1996 (2) TMI 8 - SUPREME COURT] assessee had incurred expenditure by way of professional fees to M/s Stehlin and Associates, Paris, France. The said question was answered in favour of the assessee and it was held that expenditure incurred towards professional charges of the solicitor s firm was deductable as revenue expenditure. Nature of expenses - Repairs and Maintenance towards machinery - revenue or capital expenditure - HELD THAT:- As beneficial to refer to the decision of the Division Bench of this Court in Commissioner of Income Tax Vs. Neyveli Lignite Corporation Ltd. [ 2016 (4) TMI 675 - MADRAS HIGH COURT] wherein, it is held that each machine should be treated independently as such and not as mere part of an entire composite machinery of the spinning mill. The said question was answered in favour of the assessee As gone into the working of the various parts of the Holyroid machine and examining the photos, it was held that the CNC control can only be termed as part of the machine and cannot be itself a machine. Further, the CIT-A noted that the manufacturer had recommended to the assessee to go for electronic systems modification without modifying the machine technology and machine specifications. The CITA perused the literature, the design of the CNC system, which was furnished in the form of a floppy disk and held in favour of the assessee - one more important fact which needs to be noted is the cost of the full machine, was Rs. 534 Lakhs in the year 1985 and the cost of the same machine, full machine, at the time when CITA decided the appeal, i.e., in the year 2014, was Rs. 1250 Lakhs. This is also a very relevant factor, which needs to be borne in mind while approving the finding rendered by the CITA. Tribunal had erroneously stated as if the assessee for the first time had placed photographs and materials and held that the matter has to be remanded to the assessing officer, when the fact remains that the entire material along with the detailed write-up was placed before the assessing officer and also before the CIT-A, who had done a thorough factual examination and granted relief to the assessee. Therefore, the order of the Tribunal in remanding the matter to the assessing officer was wholly unjustified.

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• 2020 (10) TMI 98
  Depreciation on Floor Space Index (FSI) @ 10% - Whether grant of additional FSI is not in the nature of any kind of assets until and unless the additional flooring/building is constructed, therefore, not eligible for depreciation in this case? - HELD THAT:- This issue has been decided by us in the connected appeal i.e. Income Tax Appeal [ 2020 (9) TMI 928 - BOMBAY HIGH COURT] arising out of the same common order of the Tribunal for the assessment year 2006-2007. It has been held that no substantial question of law arises on this issue from the order of the Tribunal. Following the said order we dismiss the present appeal of the revenue by holding that no substantial question of law arises from the order of the Tribunal. Depreciation on intangible assets - HELD THAT:- Same question already been answered by this Court in the case of the assessee itself in [ 2018 (12) TMI 1338 - BOMBAY HIGH COURT] the only difference being that at that stage the assessee was known as Tulip Hospitality Services Limited. It has been held that it is not a substantial question of law.

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• 2020 (10) TMI 97
  Addition u/s 68 - unexplained cash credits - Tribunal restricting the addition to the extent of 2% of the total credits - as per revenue assessee has failed to prove the source of credits, genuineness and creditworthiness of depositors - HELD THAT:- CIT(A) thought fit to compute the profit at the rate of 8% of the turnover. However, the Tribunal noticed that such computation was without any basis or materials on record. Ultimately, the Tribunal thought fit to estimate the income at the rate of 2% of the amount deposited with the bank. If such is the view of the Tribunal,, then, in our opinion, we should not disturb the same. No substantial question of law.

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• 2020 (10) TMI 96
  Assessment u/s. 153A - Absence of any incriminating material related to the given assessment year found during search - addition as unaccounted profit in respect of land transactions as bad debts - HELD THAT:- Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. Question of law as proposed by the Revenue cannot be termed as a substantial question of law. As in the case of Principal Commissioner of Income-tax-4 vs. Saumya Construction (P.) Ltd [ 2016 (7) TMI 911 - GUJARAT HIGH COURT] as rightly pointed out by the learned counsel for the respondent, the controversy involved inthe present case stands concluded by the decision of this court in the case of Commissioner of Income-tax-1 v. Jayaben Ratilal Sorathia [ 2013 (7) TMI 850 - GUJARAT HIGH COURT] wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the AO can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. - Decided against revenue.

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• 2020 (10) TMI 95
  Estimation of income - bogus purchases to the extent of 5% - information received from the Maharashtra Sales Tax Department that the assessee had made bogus purchases - reopening of assessment - HELD THAT:- If the Appellate Tribunal in the overall facts of the case and having regard to the materials on record thought fit to make ad hoc addition at the rate of 5% of such purchases, then, the Tribunal could not be said to have committed any serious error warranting any interference in this appeal. No substantial question of law.

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• 2020 (10) TMI 94
  Validity of assessment u/s. 153A - absence of any incriminating material related to the given assessment year found during search - Whether assessment u/s.153A cannot be made for that assessment year for which assessment has been concluded on the date of search and not abated? - HELD THAT:- Tribunal is right in holding that once it is held that the assessment has attained finality, then, the Assessing Officer, while passing independent assessment order under Section 153A read with Section 143(3) of the Act cannot disturb the assessment/reassessment, which has attained finality unless the materials gathered in the course of the proceedings u/s 153A of the Act establish that the relief s granted in the final assessment/reassessment were contrary to the facts coming during the course of Section 153A proceedings. Tribunal noticed that there was no record to indicate that any material was unearthed during the course of Section 153A proceedings and in such circumstances, the Assessing Officer, while passing the order under Section 153A read with Section 143(3) of the Act, 1961 could not have disturbed the assessment order. See Shri Rajnibhai Jivraj Desai [ 2020 (3) TMI 495 - ITAT AHMEDABAD] - No substantial question of law.

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• 2020 (10) TMI 93
  Computation of capital gain - computation of cost of acquisition - FMV determination - sanctity of SRO s guideline value for the understanding/for the determination of the fair market value - Tribunal sustaining the average value adopted on the consideration of the SRO s guideline value and the Chartered Engineer s valuation report to quantify the cost of acquisition being the fair market value as on 01.04.1981 - HELD THAT:- Land of 3 acres in question, which was in the form of collateral security with SBI, has been settled by Mrs.Susila Ammal in favour of the Assessee and to clear off that debt, the sale of the land in question alongwith other parts of the land had to be undertaken in the settlement of dues to the SBI under the OTS Settlement. While there is no doubt that the said contribution of the Assessee to the extent of the land settled in his favour would be part of cost of acquisition or cost of improvement of the asset acquired by him as per Section 48 and Section 55 computation of the same deserves to be gone by the Tribunal, being a fact finding body, to find out whether the said sum vide the Table quoted above is correct amount or not and whether the advance of Rs. 4 Crores received from the Purchaser M/s.Martin Group on 19.8.2009 vide Demand Draft payable to ASREC (India) Limited is correct fact or not. High Court cannot be expected to do such a computing exercise under Section 260-A of the Act. Therefore, a remand of the case to the Tribunal is necessary, since these aspects of facts do not seem to have been properly placed before the Tribunal, as they are sought to be argued before us now with the documents placed on record of the High Court under the directions of the court. We are of the opinion that a miscarriage of justice may happen, if all these facts are ignored even at this stage. Assessee ought to have argued his case before the learned Tribunal on the relevant facts and evidence as otherwise, the finding of facts rendered by the learned Tribunal will be binding on the High Court while disposing the Appeals under Section 260-A - But, even on prima facie perusal of these facts before us, we are not inclined to ignore these facts which unfortunately, the Tribunal also could not take into account for either they were not placed before the learned Tribunal properly or even if they were placed before it, the learned Tribunal did not choose to go into all those details in a more detailed manner. To avoid any miscarriage of justice and to allow a fresh recomputation of cost of acquisition or cost of improvement properly under Section 48/49 and Section 55 of the Act in the facts and circumstances of the case, we dispose of the present Appeal by setting aside the order of the Income Tax Appellate Tribunal to that extent. Regarding computation of Capital Gain in the hands of the Assessee and to compute the cost of acquisition properly in the light of the decision of R.M.Arunachalam, etc. v. CIT [ 1997 (7) TMI 5 - SUPREME COURT] we remit the matter back to the learned Income Tax Appellate Tribunal to decide the Appeal of the Assessee on that ground once again. Questions with regard to Capital Gain Tax liability and computation of cost of acquisition are answered in the aforesaid manner and the computation part is remitted back to the learned Tribunal

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• 2020 (10) TMI 92
  Fringe benefit tax on expenditure incurred towards visa charges and others u/s 115WB(2)(F) 115WB(2)(q) - Whether the expenses incurred towards visa charges and others are not liable for fringe benefit tax as the same was legitimate business expenditure? - HELD THAT:- Assessee has incurred expenditure on visa charges. The aforesaid expenditure does not render any benefit to the employees in the guise of foreign travel or tour. The visa s and other related expenditure had been incurred by the employer to send its employees to the work place abroad for the purposes of business for scientific tenures and not to move around the country for sight seeing. Expenditure under the head tours and travels is normally recurring in nature but, in the instant case, the employees of the assessee had not under taken frequent tours and travels. The expenses have been incurred for visa charges to make the employees eligible to undertake an entry to foreign country and stay at the work place in that country. Expenditure has been incurred for business necessity and not for providing any domestic benefit or amenity to the employee. The payment for visa and other charges are statutory obligations and fringe benefit tax cannot be levied - Aforesaid charges have not been paid as consideration for payment and therefore, the same cannot be subjected to levy of fringe benefit tax. The concurrent findings of facts have been recorded by the CIT (Appeals) and Tribunal on the basis of meticulous appreciation of evidence on record, the aforesaid findings cannot be said to be perverse. - Decided in favour of assessee.

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• 2020 (10) TMI 91
  Deemed expenditure chargeable to fringe benefit tax u/s 115WB(2)(H) - Principal component of the EMI payment for cars purchased on lease finance basis - Whether the Tribunal was correct in allowing relief to assessee, when the expenses are not by any stretch of imagination, in the nature of inhouse training expenses whereby the relaxation provided in Question No.51 of FAQ in Circular No.8/2005 dated 29.08.2005 of CBDT would not be available to the assessee? - HELD THAT:- As from conjoint reading of provisions of Section 115WB(2)(C) and Circular No.8/2005 dated 29.08.2005, it is evident that expenditure incurred in imparting in-house training to employees is excluded from the ambit of fringe benefit tax. Other incidental expenses such as boarding, lodging, traveling and conveyance expenses would be liable to fringe benefit tax. Assessee had produced the documents before the authorities to show that it has incurred expenses for imparting training to its employees. Tribunal has rightly held that there was no fringe benefit in in-house training expenditure. Tribunal, on the basis of material available on record, has also recorded a finding that repayment of loan obtained for purchase of acquisition of assets cannot be brought within the purview of fringe benefit tax and it is only actual running and maintenance expenditure of the cars taken on finance lease which is liable for fringe benefit tax. The aforesaid finding of fact does not suffer from any perversity. So far as in-house expenses incurred by the assessee for training of the employees cannot be subjected to fringe benefit tax as the finding on the aforesaid issue was held in favour of the assessee for the Assessment Year 2008-09 by the Commissioner of Income Tax (Appeals) which was accepted by the revenue. - Decided against revenue.

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• 2020 (10) TMI 90
  Dismissing appeal of the assessee on the grounds of limitatio n - appeal as preferred against the intimation u/s 143(1) - appeal was filed with learned CIT(A) with delay of 3417 days beyond the time prescribed u/s 249(2) - rectification application u/s 154 filed with AO beyond four years from the end of the financial year in which intimation u/s 143(1) was issued by the AO and hence AO was right in dismissing rectification application u/s 154 of the 1961 Act filed by the assessee - HELD THAT:- We have observed that jurisdictional error has taken place at the end of learned CIT(A) as he has dismissed the first appeal of the assessee in limine on the short grounds of limitation that the appeal is filed late by assessee before learned CIT(A) late by 3417 days beyond the time prescribed u/s 249(2) of the 1961 Act , thereby erring on the ground as the order which was assailed by assessee before him was an order dated 16.08.2018 passed by AO u/s 154 of the 1961 Act dismissing rectification application dated 08.01.2018 filed by assessee , and not the intimation dated 29.03.2009 issued by the AO u/s 143(1) of the 1961 Act. Jurisdictional error has taken place at the end of learned CIT(A) and the end of justice demands that the appellate order dated 21.05.2019 passed by learned CIT(A) be set aside and all the issues raised by assessee before learned CIT(A) in its first appeal filed on 05.09.2018 before learned CIT(A) stand restored for fresh adjudication of all the said issues by learned CIT(A) in set aside proceedings, as directed by us.

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• 2020 (10) TMI 89
  Capital gain computation - allowable expenses u/s 48(1) - CIT(A) accepted gain on sales of shares as long-term capital gain and allowed deduction u/s 54EC but expenses claimed on sale of such shares on account of litigation and travelling expenses was rejected on the ground that the assessee could not substantiate the incurring of such expenses - HELD THAT:- CIT(A) rejected the claim of the assessee on the ground that the assessee could not substantiate its claim that the travel and litigation expenses should be deducted for computing long term capital gain. It is the submission of the ld. counsel that various details furnished before the CIT(A) were not properly gone through by him and he has not passed any comments on that - assessee also filed certain additional evidences and submitted that these evidences go to the root of the matter of the issue in hand. In the interest of justice we admit the additional evidences and restore the issue to the file of the AO with a direction to adjudicate the issue relating to allowability of deduction of such traveling and litigation expenses from the long term capital gain earned by the assessee. AO shall decide the issue afresh in accordance with the law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground raised by the assessee is accordingly allowed for statistical purposes. Disallowing the Long Term Capital Loss incurred by the appellant on sale of Preference Shares held by it for more than 12 months - HELD THAT:- Perusal of the assessment order shows that the AO nowhere has confronted the assessee regarding the sale of such shares at Rs. 10/- per share which were purchased at a price of Rs. 100/-. The order of the CIT(A) is also silent on this issue - restore the issue to the file of the AO with the direction to go through the various evidences including the additional evidence filed before the Tribunal which are admitted by us and decide the issue afresh and in accordance with the law - Ground No.2 by the assessee is accordingly allowed for statistical purposes.

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• 2020 (10) TMI 88
  Deduction u/s 80IB(11A) - Denial of claim as assessee is not engaged in the integrated business of handling, storage and transportation of the food grains and also that the assessee put to use at Bahalgarh unit the plant and machinery containing more than 20% of the old plant and machinery and thereby violated the conditions stipulated in 80IB (2) - HELD THAT:- In plain English handling includes any process not amounting to manufacture of the treatment of the product with a view to deal with the same to achieve a desired purpose. In a sense it includes all the activities preparatory and auxiliary in nature. Merely because the word processing is occurring in 80IB(11A) of the Act in respect of the fruits or vegetables, it does not exclude all the processes from meaning of handling . The word has to be understood in its contextual sense and merely because the learned assessing officer does not agree with the assessee to include the milling of the paddy is covered by handling , it does not take away the other activities from the meaning of handling, so long as such activities keep nexus with the objective for which the benefit is intended. Whether or not the de-husking of paddy would form part of the handling, we shall deal with it a little later. In our opinion, the activities carried out by the assessee certainly form part of the expression handling. . The activities involving the cleaning, steaming, soaking, drying, polishing, grinding etc.are covered by the expression handling and the assessee is certainly conducting such activities which would entitle to the benefit of deduction under section 80IB(11A) of the Act. Alternative prayer of the Ld. DR that the activity of processing the paddy to rice and subsequent packing and marketing is a distinct from the integrated business of storage, handling and transportation of food grains and therefore, the expenses relatable to such a distinct and separate activity cannot be allowed under section 80IB(11A) - Since undoubtedly the provisions of section 80IB(11A) of the Act are applicable to the activities of the assessee like clearing, steaming, soaking, drying, polishing and grinding it can also be not denied that de-husking the paddy would significantly enhance the life of the food grain, thereby reduces the loss of food grain and contributes to the preservation of food grains - we are unable to understand how this particular process does not fit in the expression handling - de-husking of the paddy to convert it into rice is also an integral part of reducing the post-harvest food grain loss. There is no material was either examined by AO before reaching the conclusion as to the uses of old machinery nor the same is produced before us, in support of such conclusion. In the absence of any reasons to show the contrary, we find it difficult to take a different view from the view taken by the Ld. CIT(A) that without undertaking any exercise to ascertain the instances of old plant and machinery being used at Bahalgarh, AO presumed that plant and machinery for Bahalgarh unit was used prior to 1/4/2001 and was transferred to Bahalgarh unit subsequently. Such unfounded observations of AO cannot be one of the bases to deny the deduction under section 80IB(11A) of the Act. Occurrence of the expression industrial undertaking in subsections(2)to (5) in juxtaposition to the same in subsection (11) and relaxing the conditions stipulated under clause (iii) of subsection(2)and subsections 3 to 5 makes it amply clear that the industrial undertakings are treated separate from other businesses or undertakings . For the purpose of testing the eligibility under section 80IB(11A) there is no need to look into 80IB (2) of the Act, and non-fulfilment of condition stipulated vide clause (iii) thereof cannot be a ground for denying the deduction u/s 80IB(11A). Assessee cannot be denied the deduction under section 80IB(11A) of the Act either in respect of the activities conducted by the assessee to meet the demand of the section, namely, deriving income from the integrated business of handling, storage and transportation of food grains or for non-compliance with the conditions depleted under section 80IB (2) of the Act. We do not find anything illegality are regularity either in the reasoning or the conclusions reached by the Ld. CIT(A) on this aspect, and while confirming the same find the grounds numbe r1 to 3 of Revenue s appeal devoid of merits and reliable to be dismissed. Addition u/s 69 - unaccounted receipts and payments taxable in the hands of the assessee, as unaccounted income on the basis of seized documents - CIT- A deleted the addition - HELD THAT:- It is always open for the assessing officer to show that the amount surrendered by the individuals was in respect of their own undisclosed income independent of the entries in the seized documents, basing on which now the learned Assessing Officer wants to tax the company. Without undertaking any such exercise, it is not permissible for the learned Assessing Officer to proceed to tax the company for the very same amount, basing on suspicions. We find substance in the contentions raised on behalf of the assessee and hold that inasmuch as the amount covered by the entries in the seized documents was already offered to tax by the promoters/directors of the assessee company in their individual returns of income and has already been accepted by AO taking into consideration the entries in the seized documents vis-a-vis the trading accounts as well as the peak arrived on the basis of such entries, it is not open for the learned Assessing Officer to tax the same again in the hands of the company. Consequently, we find that the findings of the Ld. CIT(A) not suffer any legality or irregularity and no interference with the same is warranted. Disallowance under section 40A(3) - cash payments to various concerns in violation of provisions of section 40A(3) - HELD THAT:- According to the assessee, the truck driver acts as an agent of the assessee. By no stretch of imagination can we say that the truck driver who operates the track pursuant to the agreement between the assessee and the transport contractor would be the agent of the assessee. Even otherwise also, we are not prepared to accept such an argument because such acceptance would render the provisions under section 40A(3) nugatory and every payment could be taken out of the purview of section 40A(3) of the Act by delivering the cash to some intermediary calling him as an agent. There is no privity of contract between the person receiving the sums in cash and the assessee and the truck driver. Such payments are not protected under rule 6 DD (k) of the Rules. On this premise, we reject contention of the assessee. Alternative plea of assessee to the effect that in certain instances, the assessing officer has proceeded to disallow expenses without first verifying if the aggregate payments were made to a single person on a single day and if the pre-requisites of section 40A(3) of the Act were fulfilled does not seem to have been taken before the Ld. CIT(A) and at this stage it is difficult to accept the same because the assessee does not produce any material to show that any such instances had taken place. In the absence of any such material prima facie to show that, as a matter of fact, the learned Assessing Officer had proceeded to disallowed expenses without any verification of the aggregate payments to a single person on a single day, we cannot countenance such plea. Disallowance under section 40(a)(ia) - Scope of amendment - HELD THAT:- We find it difficult to understand that the amended provisions under section 40(a)(ia) of the Act would address the hardships that would be resulting subsequent to the amendment, leaving apart the hardship that had caused earlier, thereto. The considered opinion that the amended provision under section 40(a)(ia) of the Act has to be understood as creative in nature and introduce you to reduce the new hardship caused to the assessee on the disallowance of the entire amount of expenditure both prior and subsequent to such amendment. What follows naturally in view of the decision in the case of CIT VS. Gold Coin Health Food (P) Ltd, [ 2008 (8) TMI 5 - SUPREME COURT] the presumption goes in favour of the retrospective operation of this curative or declaratory amendment. Shorter deduction of tax at source - HELD THAT:- The issue is a squarely covered by the decision of the Hon ble Calcutta High Court in the case of CIT VS.SK Tekriwal [ 2012 (12) TMI 873 - CALCUTTA HIGH COURT] and following the same, we hold that no disallowance is permissible in cases where there has been a shortfall in deduction of tax as the same is not covered by the provisions of section 40(a)(ia) of the Act. Set-aside the impugned findings of the authorities below on the aspect of disallowance arising out of the non-deduction of tax at source as detailed supra, and remand the issue to the file of the learned Assessing Officer to apply the restriction on the disallowance in terms of section 40(a)(ia) of the Act, as amended by the Finance Act, 2014. Addition made on account of the foreign trip of the family members of the directors/promoters of the assessee company - HELD THAT:- Expenditure on travel of wives and the directors abroad when they have accompanied the directors on business is an allowable expenditure and consequently directed the assessing officer to allow the expenditure on the travel of the voice of the directors when they have accompanied the directors on foreign visits of verification. Since there is no change in this position, and there is no reason for us not to accept the findings of the learned DRP in assessee s own case for the assessment years 2008-09 and 2009-10. In the circumstances, we find merit in the contentions of the assessee on this aspect. Addition made under 14A of the Act read with Rule 8D of the Rules - HELD THAT:- No ground to sustain addition made under 14A of the Act read with Rule 8D as it cannot be said that any borrowed funds could have been utilised to make such investment incurring any interest expenditure.

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• 2020 (10) TMI 87
  Assessment u/s 153A - no incriminating documents or assets were found during the search - Addition unexplained cash deposit u/s 68 - HELD THAT:- Since in this case assessment was already completed prior to the date of search as not disputed by the authorities below and no material was found during the course of search, therefore, the issue is covered in favour of the assessee by the above Judgments MEETA GUTGUTIA PROP. M/S. FERNS N PETALS [ 2017 (5) TMI 1224 - DELHI HIGH COURT ]. No preference can be given to the Judgments of Hon ble Kerala High Court and Hon ble Allahabad High court as against the Judgments of Hon ble Jurisdictional Delhi High Court. In view of the above, the Departmental appeal stands dismissed.

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• 2020 (10) TMI 86
  Assessment u/s 153C - Addition based on some incriminating material found during the course of search or not? - disallowance on account of additional payment and disallowance u/s 40A(3) - HELD THAT:- When an assessment is initiated u/s 153C of the Act it is necessary that already assessed income can be tempered only when there is some incriminating material which has a capacity of upward assessment of already assessed income. Such is the mandate of the decision of CIT Vs Sinhgadh Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT ] as well CIT Vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ]. Addition on account of disallowance of additional payment is made without any incriminating material found during the course of search. Same is the case of disallowance u/s 40A(3) - Decided in favour of assessee. Whether the assessment order should have been passed by AO u/s 153C on it has been correctly passed by the assessing officer u/s 143 (3) of the act? - Admittedly, no notice u/s 153C of the Act was issued to the assessee for this assessment year. Instead notice u/s 143(2) of the Act was issued and assessment order was passed u/s 143(3) of the Act. Therefore merely mentioning that order as been passed u/s 153A of that without issuing any notice u/s 153C of the act we are not in a position to hold that the learned assessing officer has passed the assessment order u/s 153A of the act. - Decided in favour of assessee.

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• 2020 (10) TMI 85
  Correct head of income - treatment of rental income received on account of letting out the surplus area of factory building - income from house property or income from other sources - Standard deduction u/s.24 against income earned on letting out of industrial shed along with office while holding such income as Income from house property - HELD THAT:- CIT(A) while deciding the issue has considered various decisions including the decision of M/s. Universal Plast Ltd. others [ 1999 (3) TMI 15 - SUPREME COURT] relied on by the revenue in the grounds of appeal and after considering the totality of the facts of the case has given a finding that there is no activity carried out by the assessee except in the capacity of a normal owner of property carrying out normal maintenance and repairs and providing the standard facilities such as power, clean drinking water etc. and came to the conclusion that such income should be treated as income from house property. In view of the detailed reasoning given by the Ld. CIT(A) while treating the income as income from house property and considering the fact that in the past also such income was accepted by the revenue as income from house property. we do not find infirmity in the order of the Ld. CIT(A) on this issue - Decided against revenue. Addition u/s 14A u/s 8D(2)(ii) - CIT-A allowed part claim - HELD THAT:- We find the Ld. CIT(A) while directing the AO to reduce the interest income from the gross interest and thereafter compute the disallowance u/s 8D(2)(ii) has followed the decision of Morgan Stanley India Securities [ 2017 (6) TMI 864 - ITAT MUMBAI] - Decided against revenue. Disallowance of expenses incurred for payment to Shri K.Shrinivas Shri Dinesh N. Jain - assessee failed to substantiate genuineness of services rendered by these persons in sale of shares - CIT- A deleted the addition - HELD THAT:- We find Ld. CIT(A) deleted the addition on the ground that such expenditure was approved by the Board Resolution which includes for payment of the remuneration in connection with the sale of the shares. He has further given a finding that Shri K Shri Niwas and Shri Dinesh N Jain had declared such income and paid taxes @ 30% whereas the assessee company was liable to tax @ 20% on the capital gain and therefore the intention of the assessee can not be considered as malafide. Shri K Shri Niwas who is a Mechanical Engineer and a diploma holder in advance management program from IIM, Bangalore is a professional director associated with the assessee company and does not hold any shares of the company. Similarly Shri Dinesh Nandan Jain has a long association with the promoters of Kenmore Vikas and is not a shareholder in the company. He has considered the role of Shri K Shri Niwas and Shri Dinesh Nandan Jain in the transaction and after considering the nature of services has allowed the claim - claim of the assessee was not based on 37(1) but u/s 57(iii) and the expenditure was incurred by the assessee for earning the huge capital gain. Since the Ld. CIT(A) has passed a detailed order giving reasons and since Ld. DR could not controvert the findings given by the Ld. CIT(A), therefore, we do not find any infirmity in the same - Decided against revenue.

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• 2020 (10) TMI 84
  Addition on account on profit on sale of asset - Whether appellant is in a position to establish the genuineness of the transaction as the whole amount of profit has been shown on the income side of Profit and Loss Account? - assessee has claimed higher deduction towards Profit on sale of Assets to the tune of Rs. 16,02,336/- - HELD THAT:- Our attention was drawn to computation of income, wherein, Rs. 16,02,336/- was deducted from the income towards Profit on sale of assets while computing income chargeable to tax. DR on the other hand submitted that the matter as now contended by learned counsel for the assessee before tribunal requires verification by the authorities below and the issue can be restored to the file of the AO. This issue needs to be restored to the file of the AO for verification of the claim of the assessee as made out by the learned counsel for the assessee as detailed above. The assessee is directed to produce all the necessary evidences before the AO to substantiate its claim Additions of Prior Period Expenses - AO has disallowed the said expenses on the ground that the assessee has not produced any proof to show that these expenditure were crystallized during the year - contention of the assessee that the assessee has voluntarily suo motu disallowed the said expenses while computing income chargeable to tax and CIT(A) was pleased to direct the AO to verify the genuineness of the claim made by the assessee and delete the same while computing the income chargeable to tax - HELD THAT:- As observed that the assessee has claimed prior period expenses in its P L A/c which the assessee has claimed to have voluntarily disallowed the same in computation of income while filing of the return of income with Revenue if that be so, there cannot be double disallowance of the said expenses as the same is not permissible under the provisions of the 1961 Act. AO is directed to verify the claim of the assessee and grant adequate relief to the assessee, in case, the assessee has suo motu voluntarily disallowed the Prior Period Expenses while filing the return of income and action of the AO while framing scrutiny assessment has led to double disallowance of the same expenses. Additions of payment made towards earned leaves of the employees - Whether appellant has all the details with respect to payment made towards the said expenditure? - HELD THAT:- Additional evidences go to the root of the matter which are to be admitted in the interest of the justice. We have observed that the assessee did not filed these details of employees to whom earn leave was paid before the AO but had filed details of 10 employees along with relevant vouchers to whom earn leave was paid before Ld.CIT(A) but its submissions were not accepted by Ld.CIT(A) as complete details were not furnished nor confirmations were filed by the assessee. Now the assessee has come forward and submitted complete details along with vouchers pertaining to 187 employees to whom Earned Leave of Rs. 13,36,142/- was paid during the previous year relevant to impugned AY . However, these vouchers and details are to be verified by the authorities below and in the interest of justice and in fairness to both the rival parties, we are inclined to restore this matter to the file of the AO for de-novo adjudication. Appeal of assessee allowed for statistical purposes.

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• 2020 (10) TMI 83
  Adhoc disallowance of expenses - disallowing of car expenses as appellant is not in a position to substantiate the claim of vehicle used exclusively for purpose of business as no log book is maintained - addition based on survey proceedings conducted - HELD THAT:- Acts as emerging during survey proceedings including sworn statements made by assessee therein, personal element in usage of Motor Cars could not be ruled out. No disallowance was offered by the assessee in respect of the same while filing the return of income. Similarly, the labor-welfare expenses and conveyance expenses were claimed on the basis of self-made vouchers and the assessee could not produce satisfactory evidences in support of the same. Some adhoc disallowance is justified on the facts and circumstances. Keeping in view the assessee s turnover, profits reflected during the year, we restrict the Motor Car disallowance to 20% - adhoc disallowance against unverifiable expenses is estimated @5%. The assessee would be entitled for relief of 25% u/s 80-IB against both the items. AO is directed to recompute the income of the assessee in terms of our above adjudication. The appeal stands partly allowed.

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• 2020 (10) TMI 82
  Levy of penalty u/s 271(1)(c) - defective notice - Non specification of charge - whether the charge is that the assessee has furnished inaccurate particulars of income or it was for concealing particulars of such income in as much as a bare perusal of the said show cause notice clearly reveal that the inappropriate words/unwanted charge has not been struck off? - HELD THAT:- In the instance case, we find that the penalty proceedings have been initiated during the course of assessment proceedings for concealing the particulars of income regarding long term capital gains on sale of immovable property and therefore, as far as recording of satisfaction during the course of assessment proceedings, there is no ambiguity. In the instant case, we find that in the show-cause notice, AO has not initiated the penalty on a specific charge and has talked about either concealment of income or furnishing of inaccurate particulars of income, however, while levying the penalty, AO has talked about both concealment of income and furnishing of inaccurate particulars of income. AO has not specified in the penalty order as to how it is a case of applicability of both the charges in the facts and circumstances of the present case. We therefore find that it is a case of lack of application of mind by the AO both at the time of initiation and final levy of penalty and the AO has failed to give a decisive finding even at the time of passing the penalty order. It is a case where the assessee has not disclosed long term capital gains on sale of an immovable property, therefore, it is a case of concealment of income whereas the AO has held the same to be a case of concealment of income as well as furnishing of inaccurate particulars of income - Decided in favour of assessee.

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• 2020 (10) TMI 81
  TDS u/s 194H - payment to Gateways - Non deduction of tds - As per assessee terms and conditions under which the Gateway has rendered services to the customers were invariably recorded in the agreements between the company and the respective Gateways, which establish that the company, on the one hand, and Gateways on the other hand, were independent parties in their respective fields and, therefore, there was no necessity of deducting any TDS - CIT-A deleted the disallowance - HELD THAT:- CIT(A) has followed the decisions of the coordinate benches of this Tribunal in own case wherein it has been held that the sale made on the basis of a credit card is the transaction of the merchant establishment and that the credit company only facilitates the electronic payment for a certain charge and the commission retained by the credit card company is therefore in the nature of normal banking charges and not in the nature of commission/brokerage for acting on behalf of the merchant establishment. DR has not been able to rebut the decisions of the Tribunal with any decision of the appellate forums to the contrary - No reason to interfere with the order of CIT(A) in deleting the disallowance made by the AO u/s 40(a)(ia) - also noticed that the Gateways have offered the income to tax in their hands in their respective returns of income. Therefore, the proviso to section 40(a)(ia) is applicable and for this reason also, the disallowance cannot be sustained. - Decided in favour of assessee.

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• 2020 (10) TMI 80
  Rectification u/s 154 - deduction u/s 80IA - HELD THAT:- We hold that deduction u/s 80IA is to be allowed from the gross total income and should not be restricted to the net business income of the assessee. Such an issue cannot be decided in the proceedings u/s 154 as only such mistakes which are apparent from the record can be rectified and the law is clear that deduction u/s 80IA is to be allowed from the gross total income. Therefore, there is no mistake apparent from the record which needed rectification u/s 154 of the Act.

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• 2020 (10) TMI 79
  Disallowance of provision for professional cost - Non adoption of consistent accounting principle - whether the above provision represents the liability incurred for the period and hence is an allowable deduction? - HELD THAT:- A perusal of the audited account of the company shows that the assessee had a huge loss in the immediately preceding assessment year and probably for this reason the assessee had not made any provision for professional cost. As during the current year such loss has substantially reduced and in the subsequent years assessee has started showing income. No merit in the arguments of the Ld. Counsel for the assessee that inadvertently owing to clerical error no provision was made in financial year 2008-09 relevant to assessment year 2009-10. Accounts of the company are audited by reputed CA firm and therefore it cannot be said that it is an inadvertent error. Even if the same is considered as an inadvertent error, the assessee has not taken any step to revise the return of income. Therefore, we fully concur with the findings of the Ld. CIT(A) that assessee has not adopted consistent accounting principle on year to year basis and it is not open to the assessee to claim the expense on provision basis in one year and on accrual basis in the other year. As the assessee is not adopting consistent accounting principle on year to year basis. No infirmity in the order of the Ld. CIT(A) confirming the disallowance made by the AO - Decided against assessee.

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• 2020 (10) TMI 78
  Penalty u/s 271(1)(c) - Defective notice - inappropriate words have not been struck off from the penalty notice - HELD THAT:- Absence of non-striking of the inappropriate words in the notice issued u/s 274 r.w.s. 271(1)(c) - A perusal of the penalty notice issued under section 274 read with 271 which has already been reproduced in the preceding paragraphs shows that the inappropriate words have not been struck off and it is not clear as to under which limb of provisions of section 271(1)(c) the AO has initiated penalty proceedings, i.e., for concealment or furnishing of inaccurate particulars of income. Similarly, the subsequent notice issued by the AO on 2nd June 2017 does not show anything and the AO simply asked the assessee to show cause as to why penalty u/s 271(1)(c) should not be imposed in your case. We find merit in the argument of the ld. counsel that the AO is not sure as to under which limb he has initiated penalty proceedings u/s 271(1)(c) of the Act, i.e., for concealment of income or for furnishing inaccurate particulars of income. We find identical issue had come up before in the case of PCIT vs M/s Sahara India Life Insurance Company Limited. [ 2019 (8) TMI 409 - DELHI HIGH COURT] - We hold that the penalty proceedings initiated by the AO is not in accordance with law and, therefore, the same has to be quashed. - Decided in favour of assessee.

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• 2020 (10) TMI 77
  Disallowance u/s 14A read with Rule 8D(ii) - AO has not recorded the satisfaction stating that why the claim of the assessee that it has incurred on account of in admissible expenditure u/s 14A - HELD THAT:- The issue is squarely covered by the decision of the honourable Delhi High Court in case of Eicher Motors [ 2017 (9) TMI 1043 - DELHI HIGH COURT] we direct the learned assessing officer to delete the disallowances u/s 14 A of the act by invoking rule 8D without recording of satisfaction. Addition on account of reclassification of income from income from house property to income from business and profession - HELD THAT:- The court has considered that decision that where the main objection the company is buying and developing land and properties and promoting and developing markets and some rent is turned out of that, the character of that income shall be income from house property. Therefore, in this case too, the assessee company is a developer and hence, in the case of Chennai Properties [ 2015 (5) TMI 46 - SUPREME COURT] is rendered in the context of the company which is formed with the main object of renting up of the properties. In view of the above, respectfully following the decision of coordinate Bench of the ITAT in the case of assessee for AY 2005-06, we confirm the order of CIT(A) in taxing the rental income as income from house property. In the result the ground of the revenue s appeal is dismissed. Addition on account of notional rent/additional annual lighting value in respect of the vacant and leased out properties - HELD THAT:- Bonafide lease agreement between the appellant and third parties cannot be disregarded without having any adverse information in this regard and based on conjectures and surmises. Hence, the addition made by the Assessing Officer on this issued is deleted. Notional addition made by the Assessing Officer under the head income from house property on account of notional income u/s 23(1) (a) of the Income Tax Act is deleted. Disallowance on account of depreciation claimed on DLF Centre building - HELD THAT:- CIT(A) has observed that this very issue arose in the preceding year and relief allowed at the first appellate stage was accepted by the revenue as no appeal was filed against the same before ITAT. In the light of above position and as per the decision of Hon ble Supreme Court in the case of CIT v. J K Charitable Trust [ 2008 (11) TMI 8 - SUPREME COURT] , the revenue could not be permitted to agitate the very same issue in the year under reference. Accordingly, the order of CIT(A) is confirmed. Addition prior period expenditure - HELD THAT:- The special auditor has held so because of the reason that the actual travelling has taken in the previous year. Naturally, it is a matter of common sense for the purpose of LTA claim, the travelling of the employees is prior to the claims submitted by the employees. As received by the assessee from its employees during this period and after following the decision in the case of CIT vs. Shriram Piston [ 2008 (5) TMI 631 - DELHI HIGH COURT] the disallowance is deleted. The reliance of the ld. AR on the decision of Modipan Ltd. [ 2010 (12) TMI 836 - DELHI HIGH COURT] is also apt as the expenditure are settled during the year. Further genuineness of these expenditure is not in doubt and allowabaility of these expenditure is also not in question except classifying them as prior period expenses and there is no difference in rate of taxes for respective years. In the result, we confirm the order of the CIT (A) in deleting the addition on account of prior period expenditure Disallowance of SEZ deduction u/s 80IAB - HELD THAT:- In the present case, the assessee moved an application for setting up of SEZ project which was duly approved as Developer by BOA. The cost incurred on development of bare shell building was disclosed as stock and revenue was recognized as per POCM. Under these circumstances, the income from sale of building is purely in the nature of business income. The assessee is engaged in organized activity of development of infrastructure facility in SEZ and as such operations ostensibly are in the nature of business in terms of section 2(13) of the Income tax Act, 1961. Thus, re-characterising the income as short-term capital gain by the AO is rejected. Coming to another alternative finding of the ld. AO that, since the land has been leased for 49 years, therefore, the income from sale of bare shell building should also be bifurcated and proportionate recognized over a period of 49 years. We find that the Ld. CIT (A) has discussed this issue in detail and has held that the lease is only in respect of land and same cannot be applied on transfer of building. Recognition of revenue relating to real estate projects is governed by AS-7 and the assessee has been consistently following POCM which has accepted by the Tribunal in assessee s own case for AY 2006-07. Hence, such a reasoning of the AO to disallow proportionate deduction cannot be sustained. Thus, in view of our finding given above, the order of the ld. CIT (A) in allowing the claim of benefit u/s.80IAB is confirmed and consequently the ground raised by the Revenue is dismissed. Disallowance of deduction for short allocation of overheads to SEZ division - HELD THAT:- On perusal of the expenditure and the orders of the lower authorities, it is apparent that the director s salary is being paid to the directors of the company including a commission thereof is for the purpose of managing the business of the DLF assessee. For the protection of the interest of the company even if the directors have given their time for looking after other group activities it is merely a shareholders activity. Advertisements, salary and wages, leave encashment expenditure and printing expenses etc. are all pertaining to the business of the company. No evidence / instances have been cited by AO that any of this expenditure has not been incurred by the company and they are not related to the business of the assessee. It may happen that by incurring certain expenditure by the assessee for the purpose of his business may result into some indirect benefit to the group companies but that cannot be the ground for disallowance of that expenditure in the hands of the assessee. CIT (A) relying upon the decision in the case of Nestle India Ltd. vs. DICT [ 2007 (4) TMI 299 - ITAT DELHI-F] has deleted the addition. We do not find any infirmity in the order of the CIT (A) and revenue could not controvert the fact of any expenditure with instances that these are not incurred by the assessee wholly and exclusively for the purposes of the business of the assessee. Hence, we confirm the order of the CIT (A) deleting the addition. Disallowance of expenses not incurred wholly and exclusively for business purposes and operational expenditure - HELD THAT:- Expenditure on maintenance and operation of the helicopter and aircraft and chartering of aircraft and other routine expenditure were expended for the purposes of the business. As held by him that assessee is a public limited companies are distinct assessable entity as per the definition of person u/s two (31) of the act therefore it cannot be stated that the expenditure identified as expended by the directors and other employees of the company is personal in nature because of the limited company is an in animated person and there cannot be anything personal about such an entity. As followed the decision in case of Sayaji Iron and engineering Co Ltd [ 2001 (7) TMI 70 - GUJARAT HIGH COURT] and deleted the addition/disallowance. DR could not show us any reason to state that the expenditure incurred by the assessee on such travel expenditure of aircraft and helicopter can be considered as a personal expenditure of a company. There were no contrary decision is pointed out before us. In view of this we do not find any infirmity in the order of the learned CIT A in deleting the above disallowance. Addition on account of short charging of interest from the subsidiaries and further disallowed a sum of on account of not charging of interest on loans given to related parties for business purposes - disallowances that the assessee has given funds borrowed at a higher rates from financial institution and banks to group entities at lower rates which is distorting the correct taxable profits of the company - HELD THAT:- Once the genuineness of the borrowing is proved and the interest is paid on the borrowing it is not within the powers of the learned assessing officer disallowed the deduction either on the ground that the rate of interest is unreasonably high of that the assessee had himself charged the lower rate of interest on the money which it has advanced. The learned departmental representative could not controvert the above finding of the learned CIT A. In view of this, we confirm the order of the learned CIT capital and dismiss ground of the appeal. Non-ending back of the disallowance of the items to the competition of total income - HELD THAT:- With respect to this the learned CIT A has directed the learned assessing officer to go through the necessary evidences filed during the assessment proceedings and delete the addition if it is found that the assessee has already offered the above amount for the taxation. No reason why the learned assessing officer is aggrieved with the direction of the learned CIT A. The learned that authorised representative further submitted that no such direction has been carried out by the learned assessing officer given by the learned CIT A. We direct the learned assessing officer to carry out the necessary verification is required by the order of the learned CIT A. No reason that how the assessing officer is aggrieved when the matter is set aside to his file for verification. Disallowance of expenses of the rates and taxes and legal and professional expenses which were treated as a capital expenditure - HELD THAT:- Application u/s 154 filed by the assessee before the AO pointing out the above double disallowance, we direct the learned assessing officer to consider the above application and if the fact of double disallowance is found to be correct, then to determine the correct income of the assessee, suitably adjust the total income of the assessee by passing an appropriate order. In view of this additional ground raised by the assessee is admitted, adjudicated and set aside to the file of the learned assessing officer allowing it accordingly

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• 2020 (10) TMI 76
  Proceedings initiated u/s 144C - legality of the order by framing the so-called draft assessment order - AO has completed proceedings by issuing demand notice and initiating penalty proceedings simultaneously - upward adjustment on TP matter and additions on corporate tax matter - HELD THAT:- Assessment proceedings concluded on 21.12.2018 and, therefore, any orders passed thereafter are non-est. Provisions of section 144C of the Act triggers a series of steps prescribed in sub-section (2) to section 12 and as can be seen from the most relevant sub-sections (3) and (13) the assessment is complete either under subsection (3) or sub section (13). Facts on record show that on 21.12.2018, the Assessing Officer quantified the taxable income and determined tax payable by issuing and serving demand notice u/s 156 of the Act. In our considered opinion, this action of the Assessing Officer has brought the proceedings to an end and the proceedings initiated u/s 144C of the Act stand concluded. A perusal of Section 144C shows that AO shall, at the first instance, forward a draft of the proposed order of assessment and on receiving such order, the assessee may approach the DRP by raising objections. If the assessee accepts the variation, then the AO shall proceed by framing the final assessment order and if the objections are raised before the DRP, then, upon receipt of directions issued by the DRP, the assessee shall complete the assessment. However, we find that while framing the said draft assessment order, the AO not only issued and served demand notice, but has also initiated the penalty proceedings. As relying on PERFETTI VAN MELLE (INDIA) PVT. LTD VERSUS THE A.C.I.T CIRCLE 3 (1) GURGAON [ 2020 (8) TMI 273 - ITAT DELHI] no hesitation to hold that the proceedings culminated on 21.12.2018 when the demand notice was issued and served upon the assessee and penalty proceedings were simultaneously initiated making all subsequent proceedings and orders non-est. Ground No. 1 of assessee allowed

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• 2020 (10) TMI 75
  Revision u/s 263 - Purchase of land in the name of Employees showing the sum as loan to employees - Benami Property - Additions u/s 69/69B - Non conversion of limited scrutiny assessment into complete scrutiny assessment - Whether the assessment was made u/s 153A or u/s 143(3) - non-recording of satisfaction and any notice u/s. 153A(1) - HELD THAT:- The question is not if an assessment u/s. 153A (1) r/w. section 153C could be, even assuming so, being itself a very precarious and tenuous issue, made, but validity of the assessment as made. That there is no basis, factual or legal, for an assessment u/s. 153A(1) r/w s. 153C in the instant case, has been made abundantly clear. Revision u/s 263 - Failure on the part of AO to convert into complete scrutiny - HELD THAT:- No difference could be drawn between the two categories of assessments limited and comprehensive, except the Board Instruction limiting the scope of inquiry in one category of assessments. However, what when the Board Instruction itself enjoins him to get the said scope extended in the appropriate cases? And which aspect is not in dispute; rather, patent from the Board Instruction. Now, it cannot be that one Board instruction is binding and the other not, or one part of it is binding and the other not. That would clearly be ludicrous and without any legal basis; in fact, would make an order stating so as self-contradictory. As afore-noted, vide the amendment afore-referred, an order not made in accordance with an order, direction or instruction issued u/s. 119, is deemed to be erroneous and prejudicial to the interests of Revenue. There is, it may be appreciated, no absolute bar in law for extension of scope of inquiry, but only one formulated by the Board, as a matter of policy, toward better management of tax assessments. The same therefore itself provides for extension of the said scope in appropriate cases. Not only is the said Instruction binding, not observing its mandate makes an assessment made in disregard thereof as infirm and, accordingly, liable for revision u/s. 263. In view of the foregoing, the direction by the ld. Pr. CIT for adjudicating the issue/s in accordance with law, i.e., without any fetter, cannot be faulted with.

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• 2020 (10) TMI 49
  Finance expenses - Allowable business expenses - CIT(A) deleting the addition made on account of disallowance u/s 14A on the ground that no exempt income was received during the previous year which is against the CBDT circular No. 05/2014 - HELD THAT:- Appeal raised by the revenue are not emanating either from the AO s order or from the CIT(A) s order. DR also admitted that these grounds are not emanating from the assessment order, as the additions made by the AO were u/s 40(a)(ia) and 36(1)( va) of the Act and no disallowance/addition was made u/s 14A of the Act. In view of the same, the appeal of the revenue is dismissed as not maintainable. Appeal of the revenue is dismissed.

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• Customs

• 2020 (10) TMI 74
  Attachment of Bank Accounts - case of petitioner is that attachment of the bank account has continued beyond the statutorily permissible period and therefore should be interfered with - HELD THAT:- There are no good reason to sustain the communication dated 19th April, 2018 as more than two years have elapsed since the bank account was frozen - sub-section (5) of Section 110 speaks of provisional attachment. Dictionary meaning of provisional is arranged or existing for the present, possibly to be changed later ; Black s Law Dictionary, Eight Edition, has defined it as temporary or conditional . Therefore, the statute has provided a definite time line beyond which the attachment becomes bad in law. The impugned communication dated 19th April, 2018 is hereby set aside and quashed - Respondents are directed to allow petitioner to operate its bank account with IndusInd Bank - Petition allowed - decided in favor of petitioner.

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• 2020 (10) TMI 73
  Release of detained and seized goods - kerosene / diesel - prohibited goods or not - large scale mis-declaration of goods as mineral hydrocarbon oil with a view to smuggle in kerosene / diesel by some importers - waiver of demurrage charges incurred till release of the goods - HELD THAT:- The goods in question have been seized under section 110 of the Customs Act. From a reading of sub-section (1) of section 110, it is evident that seizure of a good is not an end in itself. It is a means to an end. The end is confiscation, if justified and warranted. From the pleadings it is seen that the goods were put on hold and thereafter seized in the first week of January, 2020. Considering that the goods in question, be it mineral hydrocarbon oil as claimed by the petitioner or kerosene / high speed diesel as claimed by the respondents, are highly inflammable and hazardous, a proceeding related thereto is required to be decided expeditiously. The adjudicating authority is required to decide whether goods are liable for confiscation or not; adjudication cannot be kept pending. He may also have to decide whether the goods should be sold or not having regard to the hazardous and inflammable nature of the goods. Petitioner is granted liberty to file appeal before the CESTAT under section 129-A(1)(a) of the Customs Act against the order dated 31.08.2020 - If such appeal is filed within a period of four weeks from today and an application is made for early hearing, CESTAT shall decide the appeal within a period of four weeks thereafter considering the limited nature of the grievance of the petitioner. Petition disposed off.

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• 2020 (10) TMI 72
  Levy of penalty under Section 112 of the Customs Act, 1962 - Smuggling - Bangladesh Currency - cross-examination of the persons on the basis of whose statements the appellant has been made a co-accused, denied - violation of principles of Natural Justice - HELD THAT:- In the absence of cross-examination of Shri Manoj Roy, his statement do not appear to inspire confidence for use as a reliable evidence to impose penalty upon the appellant in these proceedings - Hon ble Supreme Court in the case of ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [ 2015 (10) TMI 442 - SUPREME COURT ] have categorically held that not allowing the appellant to cross-examine the persons by the Adjudicating Authority, though the statements of those persons were made the basis of the impugned order, tantamounts to serious flaw which makes the order a nullity inasmuch as it amounted to violation of principles of natural justice because of which the appellant was adversely affected. The case of the Revenue remains disapproved as the investigation is inconclusive and insufficient in the absence of corroborative/substantial evidences. The case is only based on the statement of Shri Manoj Roy and on assumption, presumption or suspicion. As no case has been established by the Revenue through reliable evidences, directly or indirectly connecting the appellant in connection with the seized Bangladesh currency Taka, the penalty imposed on the appellant is unwarranted - the penalty Rs. 5,44,000/- imposed under Section 112 of the Customs Act, 1962 on Shri Dipak Kumar Agarwala is set aside. Appeal allowed - decided in favor of appellant.

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• 2020 (10) TMI 71
  Levy of Penalty u/s 114(i) of the Customs Act 1962 - Smuggling - Red Sanders - retraction of statements - preponderance of probability - HELD THAT:- The statements have been recorded under Section 108 of the Customs Act, 1962 and the provisions thereof have been explained to the appellants and the retractions are held to be an afterthought. Therefore, the statements of the appellants and those of the co-accused have evidentiary value in the proceedings before us. We find that the appellants have also taken a plea that the CBI has not found any evidence to proceed against them and have not filed any FIR against them and therefore, the proceedings against them under Customs Act also need to be discharged. The proceedings under CrPC and proceedings under Customs Act, 1962 are on a different footing. The standard of proof in a criminal proceeding is proof beyond doubt whereas in the adjudication proceedings, the standard of proof is preponderance of probability. The role of Shri Mohammad Altaf has been established with a reasonable degree of evidence so as to establish the offence under Customs Act, 1962 in adjudication proceedings. We find that Shri Mohammad Altaf has involved himself in the act of smuggling of red sanders. Ongoing through the facts of the case, we are convinced that Shri Mohammad Altaf has played a pivotal role in the smuggling of red sanders. He has not only negotiated with the suppliers, the middleman, the exporters and the logistics persons in the export of red sanders but also has invested certain amount in the business - The Advocate representing Shri Mohammad Altaf pleaded that there is some discrepancy in the amount stated to have been invested by Shri Altaf. Shri Altaf is alleged to have invested Rs. 50, 00, 000/- as per his own statement whereas Shri Meghani reported the same to be Rs. 12, 50,000/-. However, this goes to prove that Shri Mohammad Altaf has invested certain amount with a view to have pecuniary gain in the business. The retractions made by Shri Altaf have no substance and have been rightly held to be an afterthought by the Adjudicating Authority. The role played by Shri Mohammad Altaf is evident in the case and looking into the fact that he is a responsible officer of the Customs Department, entrusted with the responsibility of curbing smuggling activities, we find that the appellant has not made out any case for proving the allegations to be wrong and baseless. It is a clear case of the fence eating the crop and therefore, need to be treated with circumspection - the investigation has to a reasonable extent came out with evidence that can be analysed and accepted on the principles of preponderance of probability - the penalty imposed on Shri Mohammad Altaf, under Section 114 (i) of Customs Act, 1962, is upheld, but quantum is reduced. The other appellant Shri Ali Imran Shafiullah Khan, had a role in tampering with the seals and loading that container with red sanders with the help of Dilip (Deepak Joshi),Sheru, Nayan Singh (driver arranged by Sheru) and Arif. It has not been brought on record as to the amount of financial benefit that accrued to the appellant. Under the circumstances, we find that penalty of Rs. 25, 00,000/- imposed on Shri Ali Imran Shafiullah Khan is on the higher side. While finding that the role played by Shri Khan is brought out with reasonable evidence, we are inclined to reduce the penalty to Rs. 5, 00,000/-. Other pleas not considered. Appeal allowed in part.

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• 2020 (10) TMI 70
  Provisional release of the seized goods on execution of Bond and on furnishing of bank guarantee - Section 110 A of the Customs Act, 1962 - HELD THAT:- As per section 110A, the Adjudicating Authority may, pending the final order, release the goods to the owner on taking a bond from him in the proper form with such security and conditions as the Adjudicating Authority may require. Thus, the Adjudicating Authority has to take a decision and the owner of the goods is required to be apprised of the reasons culminating in the provisional release order. In the present case, it transpires that the office put up a note indicating the value of bond and the value of bank guarantee/security and this note has merely been signed by the Commissioner. It also needs to be noted that even the note was not supplied with the order. Such a procedure does not satisfy the requirement of Section 110A of the Customs Act. The order passed by the Commissioner must indicate application of mind and contain reasons for passing an order for provisional release. Each case has to be considered on the basis of the facts brought to the notice of the Commissioner. There is no hesitation in observing that the communication dated April 27, 2020 for provisional release of goods should be set aside - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2020 (10) TMI 69
  Approval of the Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- Upon considering the approval accorded by the members and creditors of the Petitioner companies to the proposed Scheme, and the affidavit filed by the Ld. Regional Director, Northern Region, Ministry of Corporate Affairs, the Official Liquidator NCT of Delhi and the Income Tax Department, there appears to be no impediment in sanctioning the present Scheme - Consequently, sanction is hereby accorded to the Scheme under Section 230 to 232 of the Companies Act, 2013. The scheme is approved.

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• Insolvency & Bankruptcy

• 2020 (10) TMI 68
  Withdrawal of a Resolution Plan post approval - It is submitted on behalf of Appellant that there is no basis or justification for the finding that the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016 has no power or jurisdiction to allow withdrawal of a Resolution Plan post approval from the Committee of Creditors - HELD THAT:- It appears that in terms of the impugned order the Adjudicating Authority has rejected the prayer emanating from the Resolution Applicant seeking withdrawal of the Resolution Plan, which had been approved by the Committee of Creditors and in respect whereof application under Section 31 of the I B Code filed by the Resolution Applicant was pending consideration before the Adjudicating Authority. The Adjudicating Authority was of the view that it had no jurisdiction to permit withdrawal of a Resolution Plan, which had been duly approved by the Committee of Creditors. It has also been influenced by the fact that an issue of similar nature was sub-judice before the Hon ble Apex Court. The sanctity of resolution process has to be maintained and the Resolution Applicant whose Resolution Plan has been approved by Committee of Creditors cannot be permitted to withdraw its Resolution Plan. Provision for submission of a Performance Bank Guarantee by a Resolution Applicant while submitting its Resolution Plan, as required under the amended provisions of IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 is a step in this direction but may not be deterrent enough to prevent a Successful Resolution Applicant from taking a U-turn - The approved Resolution Plan admittedly does not have a provision which could be treated as a contract of personal service rendering the same unenforceable or of a nature in respect of which specific performance cannot be an appropriate remedy. This feature of the plan also distinguishes it from the one which was the subject matter in the aforestated Appeal decided by this Appellate Tribunal. The Appellant has failed to demonstrate that the impugned order suffers from any legal infirmity - Appeal being devoid of merit is dismissed.

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• 2020 (10) TMI 67
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The loan has not been repaid by the CD which is due and payable and Hon ble Supreme Court In M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. [ 2017 (9) TMI 58 - SUPREME COURT ] held that there is difference between Section 9 of IBC, 2016 and Section 7 IBC, 2016. The moment it is established that there is a default in payment of Financial debt by the Corporate Debtor, which is due and payable and the application is complete and no disciplinary proceedings is pending against the proposed RP then the Adjudicating Authority has no option but to admit the application. So far dispute is concerned like Section 9 of the IBC, 2016, there is no scope to raise the disputes. Therefore, the averments made in the reply and Written submission of the Corporate Debtor that Financial Creditor has already taken the possession of the immovable property which sale proceed would be sufficient to satisfy the debt is not liable to be accepted. The application is complete and the loan has been disbursed and the same has not been repaid by the Corporate Debtor, therefore there is default in payment of debt, there is no disciplinary proceedings pending against the RP. Application is admitted - moratorium declared.

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• 2020 (10) TMI 66
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- Mere plain reading of the provision show that Section 5(6) define the Dispute whereas Section 8(2)(a) and (b) deals with existence of Dispute and mode to prove the repayment debt and that is the reason the Operational Creditor submitted that Corporate Debtor has taken both the plea i.e. Existence of Dispute as well as repayment of debt. As per the definition of Dispute, it is either existence of amount of debt or quality of goods or service or breach of representation or warranty - So far the contention of the Operational Creditor that Corporate debtor has not raised the quality of goods therefore, it is not a dispute is concerned, it is true that Corporate debtor has not raised the quality of goods but they raised the existence of amount of debt, which in our opinion, come under the definition of Dispute and this has been raised by the Corporate Debtor prior to the issuance of Demand notice and also in reply to the Demand Notice as required U/S 8(2)(a) of IBC. Operational Creditor has not stated anywhere about the notices, which are issued prior to the issuance of demand notice and it has come to the notice of Operational Creditor that Corporate Debtor is claiming upon the documents and on the basis of that documents, Corporate Debtor claimed that statement of accounts is confirmed and several correspondence have been made and there is no debt due as on 01.04.2018. Operational Creditor has not explain why they have not sent the rejoinder to the reply filed by the Corporate Debtor in response to the legal notice and why they have not disclosed about these documents in the main application, which have been referred in the reply to the legal notice dated 11.08.2018 rather Operational Creditor raised this issue that these documents are forged and fabricated, when Corporate Debtor appeared and filed the reply and enclosed all the documents along with the reply. In the present case, the Corporate Debtor has enclosed documents prior to the issuance of demand notice and all these documents referred by the Corporate Debtor in the reply to the legal notice dated 28.08.2018, therefore, before issuance of demand notice or before filing this application, Operational Creditor was aware with the facts that the Corporate Debtor are placing reliance upon these documents and on the basis of that Corporate Debtor claimed that there is no outstanding due, which is payable by the Corporate Debtor to the Operational Creditor as confirmation of accounts have been settled between the parties and one M/s. Prominent Metals Pvt. Ltd. But Operational Creditor has not referred this facts in the application but after filing of the Reply by the Corporate Debtor this plea has been taken by the Operational Creditor that those documents are forged and fabricated and signed by the persons, who are not authorised to sign, therefore, we can safely say the documents upon which Corporate Debtor placed reliance their genuineness is disputed by the Operational Creditor themself. There are pre-existing dispute raised by the Corporate debtor and even Operational Creditor raised the dispute regarding the genuineness of documents - Application dismissed.

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• 2020 (10) TMI 65
  Maintainability of application - initiation of CIRP - Corporate Debtor unable to liquidate its financial debt - existence of debt and dispute or not - HELD THAT:- If it is established that default has occurred and no disciplinary proceeding is pending against the IRP and application is complete then Adjudicating Authority has no option but to admit the application otherwise if any of the condition is lacking then application is liable to be rejected. Whether there is any dispute or not, this question is not required to be considered while considering the claim of Financial Creditor U/S 7 of IB Code. When we shall consider the case in hand and the aforesaid decision and the provision then we find that in this case in hand, it is admitted fact that respondent had entered into an agreement and which is duly sanctioned by the applicant vide sanctioned letter dated 22.02.2018 and Channel Finance Facility was executed and modified on 09.03.2018 06.07.2018 and in that agreement, the name and address of the sellers is mentioned i.e. Vedanta and Hindalco and payment was directly made to the Vedanta and Hindalco in lieu of goods supplied to the respondent. Therefore, the contention of the respondent that payment has not been made directly to him is not liable to be accepted rather direction was given in Channel Finance Agreement - Ld. Counsel for applicant submitted that legal notice as well as recall of loan notice was also sent to the respondent, under such circumstances, we have no option but to reject the contention of the respondent and we accept the contention of the applicant that loan was duly sanctioned and disbursed but Debt has not be repaid and since there is default and application filed by the applicant is complete, Application is liable to be admitted. Petition admitted - moratorium declared.

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• 2020 (10) TMI 64
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- This Adjudicating Authority is satisfied that, (a) The Corporate Debtor has availed the loan/credit facility from the Petitioner for payment to the Employer - Sardar Sarovar Narmada nigam Ltd, the amounts towards issuance of bank guarantee and creation of fixed deposit receipt (FDR) in favour of the Employer for the execution of the works under the Case Tender. (b) Existence of debt above Rs. One Lac; (c) Debt is due; (d) Default has occurred on 10.10.2017 (e) Petition had been filed on 06.06.2018 which is within the limitation period; (f) Copy of the Application filed before the Tribunal has been sent to the Corporate Debtor and the application filed by the Petitioner Under Section 7 of IBC is found to be complete for the purpose of initiation of Corporate Insolvency Resolution Process against the Corporate-Debtor-Company. Hence, the present IB Petition is admitted - the date of admission of this petition is 03.06.2020.

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• 2020 (10) TMI 63
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Debt or not - existence of debt and dispute or not - HELD THAT:- As per the General Agency Agreements from 2003 to 2017 between the Operational Creditor and the Corporate Debtor, the Corporate Debtor acted as an agent of the former in India, and collected various payments due from the customers of the Operational Creditor and remitted the same to the Operational Creditor. The Operational Creditor has annexed various invoices and debit notes with the Petition as evidence of the claimed amount. As the Corporate Debtor is an agent and service provider of the Operational Creditor, the amounts due under these transactions would fall within the ambit of operational debt as defined in section 5(21) of the Insolvency and Bankruptcy Code, 2016. As regards the financial status of the Corporate Debtor, it has contended that this condition does not exist, that it is a going concern and can repay its debts from its existing and probable assets. However, a perusal of its latest Audited Financial Statement shows that the Company has incurred losses including cash losses and the net worth of the Company is negative. Further, from its Independent Auditors report it is seen that a material uncertainty exists that may cast a doubt on its ability to continue as a going concern. Further, while admitting the debt owed to the Operational Creditor, Corporate Debtor submits that in order to resolve the issue it offered to settle the amounts due, after adjusting all the receivables within a period of two years, by selling the immovable assets standing in the name of the Corporate Debtor. Application admitted - moratorium declared - Post the case for report of IRP on 15th July 2020.

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• 2020 (10) TMI 62
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of Operational debt and dispute or not - HELD THAT:- Date of invoice is from 16.12.2014 to 29.04.2015. Date of first default is 26.06.2015 - Application is filed within the limitation period as the date of default is 26.06.2015 and the date of filing this petition under Section 9 of IBC is 26.06.2018. the last payment received from the corporate debtor was on 28.11.2017 for INR. 1,99,996.46. This Adjudicating Authority is satisfied that, a) Existence of operational debt is above Rs. One Lac; b) Debt is due; c) Default has occurred on 26.06.2015 Petition has been filed within the limitation period as the date of default started 26.06.2015 and the petition has been filed on 26.06.2018 and the last payment received from the corporate debtor was on 28.11.2017 for INR. 1,99,996.46.00 d) Existence of dispute prior to the notice issued by the Operational Creditor is not found. Application admitted - moratorium declared.

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• 2020 (10) TMI 61
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The Operational Creditor has repeatedly spurned the offer of the Corporate Debtor to make payment of the principal sums due. However, in the interest of justice and because the Corporate Debtor has, during the course of hearings, repeatedly expressed its intention to settle the principal sum due, we hereby direct the Corporate Debtor to make payment of the principal sum due within a period of fifteen days from the date of pronouncement of this order. We leave it to the wisdom of the Operational Creditor to accept such principal sum due from the Corporate Debtor The object of the Code is not advanced by surprising the Corporate Debtor with a claim for interest firstly by claiming that it was as per industry practice and thereafter making a pitch that it was as per MSME Act, when the Operational Creditor was confronted with a question posed by this Bench as to how the claim for interest was sustainable when neither the purchase order nor the invoices carried a provision therefor. In the present case, the claim for interest has been brought against the Corporate Debtor even though it was never put on notice that the Operational Creditor was registered under MSME Act. The present petition fails and therefore, the same is rejected - petition dismissed.

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• 2020 (10) TMI 60
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The Financial Creditor has succeeded in proving that the debt is due and payable and the Corporate Debtor has failed to prove that the debt claimed by the Financial Creditor is not due and payable under any law or under any facts. The application is otherwise complete. All the requirements to be meted out under Section 7(3) of the Code seen produced in the case in hand - The Financial Creditor being succeeded in proving that all the requirements to be meted out under Section 7(3) of the Insolvency Bankruptcy Code, 2016 has been meted out and that the claim of the Financial Creditor is not barred by law of limitation and that the debt is due and payable by the Corporate Debtor not been paid by the Corporate Debtor, this application is liable to be admitted. Application admitted - moratorium declared.

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• Service Tax

• 2020 (10) TMI 59
  Violation of Principles of Natural Justice - freezing of Bank Account of petitioner - contention of the Petitioner is that no show-cause notice was issued under Section 73 or 73A of the Finance Act, 1994 to the Petitioner and also noo assessment order has been passed before freezing the bank account of the Petitioner - HELD THAT:- Where any amount payable by a person to the credit of the Central Government under service tax is not paid, the Central Excise Officer may recover the amount by issuing notice in writing requiring any other person from whom money is due or may become due to such person or who holds or may subsequently hold money for or on account of such person, to pay to the credit of the Central Government. An analysis of the above provision would reveal that the crucial expressions to be noticed are any amount payable , is not paid and shall proceed to recover . A notice under Section 87(b)(i) is in the form of a garnishee notice. It is in that context that the above three expressions would have to be understood and applied - thus, before proceeding to recover the amount by issuing garnishee notice under Section 87(b)(i), the amount has to be first determined and quantified and thereafter not paid by the person required to make the payment as per law. Thus the garnishee notice has to be preceded by determination of the amount due and not paid. The amount payable has to first crystallize. In the present case, Respondents are relying on two statements made by officials of the Petitioner; one on 19.12.2019 and the other on 13.02.2020. Mere making of such statements by themselves cannot lead to any conclusion that certain amount has been determined as due from the Petitioner. Finance Act, 1994 provides for various provisions for making assessment for determining the amount of service tax required to be paid by the service provider, including best judgment assessment under Section 72 which provision can be invoked when there is failure to furnish the return or failure to assess the tax. Without there being an assessment, no conclusion can be reached that any amount has become due to be paid. In the absence of such determination of the tax due, recourse to Section 87 of the Finance Act, 1994 would certainly be premature and cannot be justified. The Respondents are directed to forthwith withdraw the restraint on the Petitioner s bank account so that Petitioner s account with the State Bank of India, Madam Cama Road, State Bank Bhavan, Mumbai can be made functional for the Petitioner - petition allowed - decided in favor of petitioner.

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• 2020 (10) TMI 58
  SVLDR scheme - recovery of short paid duty in terms of interest contemplated under Section 87 of Finance Act, 1994 - HELD THAT:- This Court, without going into the other aspects relating to the 2019 Scheme, would confine this lis to the validity of the recovery notice issued by respondent No.4 as per Annexure-M. When this matter was heard at length, this Court had directed Sri K.V. Aravind, learned counsel appearing for the respondent Nos.1 to 5 to secure instructions in regard to break-up payments made by the petitioner. The petitioner has made payments in the months of April, May, June, till December, 2017 and on all these dates several payments are made towards the declared amount. If these payments are taken note of, then the computation of interest determined by the respondent No.4 runs contrary to Section 110 of Service Tax Voluntary Compliance Encouragement Scheme, 2013. On perusal of these payments made by the petitioner, prima facie, this Court finds that the interest is computed on the declared amount. In fact this Court is of the view that the interest should have been computed on unpaid dues and not on declared amount. Since the impugned notice clearly gives an indication that interest is levied without taking note of partial payments, I am of the view that the order under challenge is not sustainable and the same needs to be quashed with a direction to the respondent No.4 to re-compute the interest by taking note of the payments made on various dates towards the declared amount. Keeping open the contentions raised by the petitioner, writ petition is disposed of directing the respondent No.4 to re-compute the interest by taking note of the payments made on various dates by the petitioner towards the declared amount. The impugned recovery notice issued vide Annexure-M is quashed. The respondent - Bank is directed to permit the petitioner to operate the Bank Account over and above Rs. 5 lakhs - Petition disposed off.

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• 2020 (10) TMI 57
  CENVAT Credit - input services - Health Insurance service - Cargo Handling service - Photography Services - period 2009-10 to 2011-12 (up to February, 2012) - denial on the ground of nexus - rejection of refund claim - provisions of Rule 14 ibid at the stage of availment of alleged Cenvat credit not invoked - incorrect application of formula as prescribed under Notification No. 5/2006 C.E. (N.T.) dated 14.03.2006. CENVAT Credit - denial on account of nexus - HELD THAT:- Insofar as the definition of input service is concerned, Rule 2(l) ibid defining the said term undergone an amendment vide Notification No. 3/2011 C.E. (N.T.), dated 01.03.2011, w.e.f. 01.04.2011. Under the unamended provisions (effective up to 31.03.2011), the phrase activities relating to business was specifically finding place in the inclusive part of the definition of input service . The inclusive definition in a fiscal statute is a well recognized device to enlarge the meaning of the word defined and it expands the meaning of the basic definition - In the present case, since some portion of the disputed Cenvat credit was availed by the appellant after amendment of the definition of input service w.e.f. 01.04.2011 for the alleged personal benefit of its employees, as per the statutory provisions, the Cenvat credit shall not be available on the disputed services. The impugned order has not quantified the service tax amount availed by the appellant before 01.04.2011 and the period thereafter. Thus, the matter is required to be examined at the original stage for ascertaining the quantum of Cenvat credit availed by the appellant for the period after 01.04.2011 and if such availment of credit is in context with the services for personal use or consumption of the employees, then the benefit of Cenvat credit should not be available to the appellant - matter on remand. Refund of CENVAT credit - non-invocation of provisions of Rule 14 ibid at the stage of availment of alleged Cenvat credit - HELD THAT:- In the present case, it is an undisputed fact on record that the department had not proceeded against the appellant for effecting recovery of the allegedly availed irregular Cenvat credit, by taking recourse to Rule 14 ibid read with Section 73 ibid. On the other hand, the department had raised the issue of non-establishment of nexus between the input services and exported output service for the first time, while adjudicating the subject refund claims filed under Rule 5 ibid by the appellant - In view of the settled position of law, there is no requirement of establishing one to one correlation between the input services and the output service. Based on adoption of prescribed formula, the refund application alone should be processed and settled by the department and the aspect of direct nexus or correlation between the input service and output service should not be looked into for such purpose - there are no merits in the impugned orders, insofar as the refund benefit was denied to the appellant on the ground of non-establishment of direct nexus between the input services and the output service exported by it - Refund allowed - decided in favor of assessee. Incorrect application of formula as prescribed under Notification No. 5/2006 C.E. (N.T.) dated 14.03.2006 - HELD THAT:- Since, the specific issue regarding adoption of the formula prescribed under Rule 5 ibid has not been discussed by the authorities below, the matter should be remanded to the original authority for a fresh finding on the issue, whether the requirement of the said rule has actually been complied with by the appellant - matter on remand. Appeal allowed in part and part matter on remand.

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• Central Excise

• 2020 (10) TMI 56
  Interest on Delayed Refund of CENVAT Credit - non payment of interest to the appellant after three months from the date of filing of original refund claim i.e. 19.09.2016 till its realisation - HELD THAT:- In this case, it is in fact on record that the adjudicating authority has sanctioned the refund claim under Section 11B of Central Excise Act, 1944 and the said part of the order has attained finality as the revenue had not challenged the said order before any appellate authority. In that circumstances, in the impugned order mere mentioning that the adjudicating authority has erroneously sanctioned refund claim under Section 11B of the Act shall not make the order of the adjudicating authority on better footing. The fact is on record that the adjudicating authority sanctioned refund claim under Section 11B of the act, therefore, provisions 11BB of Central Excise Act, 1944 are attracted to the facts of this case for entertaining the claim of interest - the appellant is entitled to claim interest on delayed refund. From which date the appellant is entitled to claim interest on delayed refund? - HELD THAT:- It is a settled law of by the Hon ble Apex Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] that assessee is entitled to claim interest on delayed refund after three months from the date of filing of refund claim before the authorities till its realization. The appellant is entitled to claim interest after three months from the date of filing of refund on 19.09.2016 till its realization - Appeal allowed - decided in favor of appellant.

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• 2020 (10) TMI 55
  Time Limitation - CENVAT Credit - credit denied on the premise as per Notification No. 02/14-CE (N.T) dt. 20.01.2014, the appellant was not entitled to avail credit prior to the Notification No. 02/14 (N.T) dt. 20.01.2014 in terms of Notification No. 01/10-CE dt. 6.02.2010 - HELD THAT:- There is no provision in law for the appellant to file invoices before the department in time. In that circumstances, as the assessee was allowed credit by the adjudicating authority although the revenue has filed appeal against those orders before the Commissioner (Appeals). In that circumstances, when the adjudicating authorities are having a divergent views, the extended period of limitation is not invokable in the facts and circumstances of this case. Admittedly, in the case in hand, the show cause notice has been issued by invoking extended period of limitation, therefore, the denial of credit is barred by limitation - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (10) TMI 52
  Admissibility of additional evidence - Input Tax credit - stock transfer sales - months of January, February and March, 2007 - Whether, additional evidence could be adduced by the assessee at the appellate stage which is not permissible under Section 67 of the Uttarakhand Value Added Tax Act? HELD THAT:- Even though an important question of law may arise for consideration, we do not think it appropriate to entertain this petition only because a paltry sum of Rs. 54,445/- is involved - Even though every single rupee is important for the State and for the assessee, but keeping in view the quantum involved and also in view of the prevalent pandemic in the country, we do not think it appropriate that this Court should venture into answering this question of law. Petition dismissed.

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• 2020 (10) TMI 51
  Levy of Penalty - non-deposit of admitted tax under the VAT Act and the CST Act within the time allowed - HELD THAT:- The tribunal has rightly come to the conclusion that the assessing officer as well as the first appellate authority committed an error in imposing the penalty on the assessee (respondent herein), even though, the first appellate authority reduced the penalty by 50%, the same was unjustified. It is not found appropriate to entertain these revisions. Even otherwise, we do take judicial notice of the pandemic that prevails in the country and the huge burden on the respondent and others. We are also aware of the fact that the delayed payment made by the assessee also included the interest for the said period. Therefore, there is no financial loss that has accrued to the revenue. It is only a penalty for belated payment that has been imposed. There are no good ground to entertain these revisions - revision dismissed.

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• Indian Laws

• 2020 (10) TMI 54
  Claim for damages - reduction in the rate of interest from 16% per annum to 9% per annum as applicable to future interest i.e. from the date of the Award, 16.03.1998, till the date of the judgment - nonpayment of commission and failure to handover the vacant possession of the premises to the respondents - HELD THAT:- As per Clause 10 of both the Agreements, in case of any dispute, it was incumbent on the appellants to handover vacant possession of the premises to the respondents. On this issue, it is clear that disputes had arisen between the parties. However, it is an admitted position that possession of the premises was not handed over to the respondents by the appellants until the arbitration proceedings had commenced and has, in fact, only been handed over on 13 March 2000. Therefore, the Arbitrator framed Issue No. 15A regarding damages payable to the respondents. The Learned Arbitrator has rejected the plea of the appellants that they had to close the business because of the obstructionist tactics adopted by the respondents and for that reason the business activities remained closed from April, 1991 to November, 1995. On a detailed consideration of the materials on record, the Learned Arbitrator had come to the conclusion that the appellants are liable to pay the damages. After finding the appellants liable to pay damages, the Learned Arbitrator has arrived at the quantum of damages as per the statement of accounts, furnished by the appellants based on their audited accounts, that too after deduction of TDS for a period of preclosure i.e. 15.08.1990 to 22.02.1991 and postclosure i.e. November 1995 to November 1997. The payment of damages for the closure period i.e. March 1991 to October 1995 has been arrived at as an average of commission actually paid preclosure and the commission payable postclosure as per the statement of accounts of the appellants, after deducting TDS. The Division Bench of the High Court while dismissing the appeal has reduced the rate of interest from 16% per annum to 9% per annum from the date of the Award till the date of its judgment, subject to the appellants paying the decretal amount to the respondents on or before 30.06.2010 - the rate of interest is reduced from 16% per annum to 9% per annum from the date of the Award till this date, subject to the appellants paying the complete decretal amount to the respondents on or before 31.12.2020 failing which the Award along with interest would stand as it is. Appeal allowed in part.

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• 2020 (10) TMI 53
  Application of early hearing - Leave to appeal - Dishonor of Cheque - trial of Scheduled Offence - acuittal of respondents - whether the petitions for leave to appeal should be heard at an early date or not? HELD THAT:- The interest of justice demands that so far as possible, part-heard matters should not be left inconclusive and if the Bench has the time to hear further arguments, those should be heard and decided as expeditiously as possible - Great pains have been taken by the learned counsels for the respondents to explain to this court that there are other matters which require the attention of this court. In some of the cases, convicts are languishing in jail and their appeals should be heard and decided first. It is good on the part of the learned counsels for the respondents to apprise this Court that how it should proceed with the cases pending in the court but let the learned counsels be also reminded of the fact that they being the officers of this Court, should assist in part-heard cases so that these are not left undecided and need not be heard afresh by a new Bench, thus, causing unnecessary loss to the public exchequer and wastage of judicial time. It is reiterated that this Court is conscious of its duty and welcomes the suggestions given by the learned counsels but at the same time, is of the opinion that it is in the interest of administration of justice that so far as possible, this Court should make all endeavours to conclude the part-heard matters before it demits the office. The judicial discipline demands that the Judge should do his duty and must not succumb to pessimism and it is not expected from him to sit leisurely with his pen down and to say that he will not hear the cases because the record is voluminous and the time at his disposal is limited. It will be a folly not to make an attempt and to sit idle abdicating one s duty. It is advisable to perform one s duty irrespective of the fact whatever conclusion the petitions reach. This Court, therefore, will not fail in its duty and expects all the learned counsels to cooperate and assist this Court in deciding the matters expeditiously. The applications moved for early hearing of the leave petitions are allowed.

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