Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 5, 2021
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Classification of services - rate of GST - works contract - original works pertaining to railways - first high speed rail line i.e. bullet train in times to come and for this Mumbai-Ahmedabad High Speed Rail Corridor - the ‘Work Contract’ allotted to the appellant by M/s.RITES ltd. undoubtedly pertains to Railways only. - it fulfills all the conditions therein i.e. it is ‘Work Contract’ involving ‘Original work’ pertaining to ‘Railways’ - AAAR
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Classification of goods - Marine-pressure tight and Non-Pressure tight cables, specially made and designed for use in the warship - The marine pressure tight cables and non-pressure tight cables manufactured and supplied by the applicant to the Indian Navy are essential and integral parts of the submarine warship and hence the benefit of reduced rate of GST of 5% is available to the appellant - AAAR
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Classification of goods - rate of GST - Plastic Mechanical Liquid Dispensers - parts of general use - The goods are parts of general use as they can be fitted/screwed into bottles/containers of any make i.e. of plastic, glass, metal etc. Also, nowhere is it contended by the appellant, that their product (which are parts) can be used only in bottles of a particular make or type. - The product ‘Plastic mechanical liquid dispenser’ of the appellant would be rightly classifiable under Heading 3923.50 of the Customs Tariff Act, 1975(51 of 1975) and would be liable to GST at the rate of 18%. - AAAR
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Classification of goods - cotton grey fabrics - Irrespective of the fact as to whether the fabric of the appellant fulfills the criteria for classification under Heading 5903 or otherwise as per exclusion clauses (1) to (5) of Chapter Note 2(a) of Chapter 59, it would still be classified under Heading 5903 only, on account of the Explanatory notes to the HSN, which states that ‘textile fabrics which are spattered by spraying with visible particles of thermoplastic material and are capable of providing a bond to other fabrics or materials on the application of heat and pressure - AAAR
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Classification of goods - rate of GST - supply of Fly Ash Bricks - Fly Ash Blocks - since the ‘Fly Ash Bricks’ (containing 60% fly ash content) manufactured and supplied by the appellant does not find mention in any of the entries of any of the Schedules I, II, IV, V and VI of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017(as amended from time to time) - the GST rate on ‘Fly Ash Bricks” will be 18% (9% SGST + 9% CGST) - AAAR
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Classification of goods - rate of GST - Rice Bran (22+Oil) - The product of the appellant is classifiable under Chapter Heading 2302 and conforms to the description ‘Bran, sharps and other residues, whether or not in the form of pellets, derived from the sifting, milling or other working of cereals or of leguminous plants’ - Liable to GST @5% - AAAR
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Levy of GST - international transactions - goods are supplied from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India - with effect from 01.02.2019, Integrated Goods and Services Tax (IGST) is not payable on supply of goods directly from the vendor’s premises located outside India in the non-taxable territory to the customer’s premises located at another place outside India in the nontaxable territory, without such goods entering into India. - AAAR
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Valuation - inclusion of reimbursement of expenses - the appellant has charged the amount spent by them towards arrangement/providing of ATF for flying of Helicopter in respect of supply of rental service of helicopter - In terms of the valuation provisions under GST legislation, amount recovered as reimbursement by the appellant from the customer, for the fuel procured for use in the helicopter provided on rent to customer is required to be included in the value of services provided by the Appellant. - AAAR
Income Tax
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Disallowance u/s 10B - The term ‘manufacture’ has not been defined in Section 10B after the amendment was carried out in the year 2001. That has created an ambiguity if the argument by the learned Counsel for the assessee is considered where he sought to claim that to grant benefit to the assessee either the definition from the SEZ Act or the export import policy should be considered. The law is now well-settled that in case of ambiguity in an exemption provision the benefit has to go to the revenue. - HC
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Set off of the brought forward losses against the income from other sources - Ld. CIT (A) has rightly decided that, “although interest income has been shown as income from other sources it is still a part of the business income in nature as in all other assessment years and is available for set off of any losses from the previous year.” So, investing surplus funds in FDRs during the business activities is part of primary business of the assessee company to make easy availability of funds for core activities and as such, interest income has been rightly treated as business income by the ld. CIT (A). - AT
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Additions towards bogus purchases - Non genuine purchases of fabric made by the appellant - Opening of the bank account by the suppliers in the same bank in which assessee had bank account is not something which is unusual as it may be necessary for the smoothness of the banking and avoid the loss of time in collecting the cheques etc. We find that the burden to prove purchases was very well discharged by the assessee. - AT
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Revision u/s 263 - as per CIT assessment framed by the AO under section 143(3) read with section 147 of the Act as erroneous insofar prejudicial to the interest of Revenue - the learned principal CIT cannot held the order under section 147 r.w.s. 143(3) for non-enquiry of share capital which was not the part of the proceeding. If he wanted to do so then he has to revise the order under section 143(1) of the Act as the case may be. - AT
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Assessment u/s 153A - unexplained cash credit u/s 68 - addition based on statement - Such confessions have been retracted and then the addition could not withstand the scrutiny of the higher appellate authority, because no material was found supporting such addition. It is pertinent to observe that in a large number of authoritative pronouncements, it has been held that merely on the basis of declaration addition should not be made. The alleged declaration should be supported with unexplained expenditure or assets discernible in the seized material during the course of search. - AT
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Unexplained cash deposit in the Bank A/c - in the subsequent assessment year the A.O. himself has accepted that the S.B. A/c of the assessee is used for his business transactions and since the assessee has opted for presumptive taxation under section 44AF lower authorities are not justified in sustaining the addition as unexplained cash deposit in the Bank - AT
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Reopening of assessment u/s 147 - setting off of the interest expenses under Section 57 - The figures mentioned in the reason for reopening of assessment are also found in the audited accounts of petitioner. In the reasons for reopening, there is not even a whisper as to what was not disclosed. - this is not a case where the assessment is sought to be reopened - HC
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Rejection of Application under the DTVSV Act 2020 - whether no appeal is pending as on the date specified date i.e. 31.01.2020, whereas the appeal was filed with an application for condonation of delay - the rejection of the declaration filed by the petitioner under DTVSV Act, 2020 in Forms 1 and 2 on 05.03.2021. with the ‘Remark’ noted on 20.04.2021, by the 3rd respondent, on the basis of answer to Q.No.59, vide Circular No.21 dated 04.12.2020, cannot be sustained. - HC
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Return of TDS amount deducted u/s 194A on award passed under motor insurance act - This application is allowed and the Registry is directed to release the amount deposited by the non-applicant/Insurance Company, on account of deduction of tax on interest amount in favour applicants-claimants. - The non-applicant/Insurance Company is at liberty to seek withdrawal of the amount so deposited with the Income Tax Department and the Income Tax Department shall release the deducted amount as and when such requisition is made by the non-applicant/Insurance Company. - HC
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Validity of Search proceedings - Both the petitioners have admitted in their respective writ petitions that they in fact did not file ITRs for certain AYs. Even this information, if available with the Department would have been sufficient for them to form a reason to believe for the purpose of Section 132(1)(c). In other words, it is not mandatory that in the present case there should have been summons under Section 131 of the Act for the Department to proceed to initiate action under Section 132 of the Act. - No relief granted to petitioner - HC
Customs
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Re-export the Gold Dore Bars - review petition - The petitioner sought a clarification from the DGFT. We have reproduced the query raised by the petitioner specifically to indicate that, in raising the query, the petitioner was candid regarding the real factual position. The petitioner disclosed the fact that the import was made against a license which contained an actual user condition and that the goods still remained in Customs bonded area. The nature of the objections raised by Customs authorities were also disclosed to the DGFT. Despite this, the DGFT clearly clarified that export of gold not being prohibited, the petitioner was entitled to re-export of the Gold Dore Bars - No justifiable reason, for the Customs authorities to contend otherwise, commends itself. - HC
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Smuggling - Detention order - Illegal availment of duty drawback - Since, as the record discloses, the last act which the petitioner undertook, and which may amount to prejudicial activity, was on 11.12.2018, but the detention order was passed more than 02 years later on 15.01.2021, it is evident that the live-link or causal connection between the petitioner’s preventive detention, meant to forestall the petitioner from indulging in any prejudicial activity, can surely be said to have snapped - the detention order passed on 15.01.2021 and served upon the petitioner on 23.01.2021 cannot be said to be validly based upon alleged prejudicial activity - The petitioner is directed to be released from custody forthwith - HC
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Jurisdiction - power of Directorate of Revenue Intelligence to issue a SCN under Section 28(4) of the Act - the proceedings initiated under Section 28 of the Customs Act by any other officer other than a proper officer shall be vitiated - even though the learned Standing Counsel appearing for the respondent has raised the vehement contention that the ground want of jurisdiction now canvassed by the petitioner in view of Canon India judgment was not available to the petitioner either at the time of issuing Show Cause Notice or at the time of adjudication or passing order-in-original, even at the time of filing writ petition in 2018, that contention cannot have a legal backing as the law declared by the Supreme Court in Canon India case is only reiterating the law which is already available in statute under Section 28 of the Customs Act. - The respective impugned orders and the consequential impugned order, in all these writ petitions are quashed. - HC
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Validity of summon issued - for want of furnishing of certain documents, that has been quashed by this Court and accordingly, the respondent was directed to proceed further for furnishing the document - Only in pursuance of the said direction issued by this Court permitting the documents sought for by the petitioner and also permitting the petitioner to cross examine the witnesses as he sought for, now the respondent has fixed the hearing and by thus, the present summon dated 19.08.2021 has been issued. - This Court feels that the challenge now made by the petitioner against the impugned summons cannot be a successful challenge - HC
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Seeking refund of amount debited from the MEIS scrips issued to the petitioner in cash - What is the duty to be imposed on the imported goods first be calculated and accordingly, 2% of education cess and 1% of secondary and higher education cess shall be levied and imposed. Hence, when the importer pay the duty, he shall also pay the cess which become part and parcel of the duty of customs. - When such a circular was issued by the Customs Department and the same having been implemented in respect of various people like the petitioner, the benefit of the said circular cannot be denied to the petitioner on the alleged reason that, the education cess or the higher and secondary education cess being a different component cannot be treated as customs duty or additional customs duty - HC
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Denial of benefit of exemption under EPCG licience - The only allegation is that the appellant has not applied for and obtained a relaxation which is not the requirement either under para 2.58 of the FTP or under the Public Notice. Having surrendered that SHIS scrips to the JDGFT, Hyderabad, completely unused the appellant has completed his end of the responsibility. By cancelling the scrips, the JDGFT has done its job. Nothing else is required to avail the benefit of the Public Notice and nothing can be read into it. Once the benefit of the Public Notice is available, the allegation that condition no. 2(4) has been violated by the appellant by obtaining both EPCG and SHIS scrips cannot sustain. - AT
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Refund of Customs Duty - duty paid under protest - rejection on the ground that the transfer bonds in which the goods were transferred from Vizag Customs to EOU Bheemli have been closed which was duly intimated to the appellant but was not contested at the appropriate stage - The provision makes it clear that Procedure for submission of transfer bonds and the closure thereof is not possible in the absence of the executor of the bonds who requests removal of the imported goods from one warehouse to another. - This is not a fit case for refund - AT
Indian Laws
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Dishonor of Cheque - vicarious liability of Independent Directors / company secretary - The complaisant does not particularize the role of the petitioner in regard to facility agreement dated 28th March, 2010 executed by the Company with the complainant; nor the complaint discloses that the alleged offence was committed by the Company in connivance or was a result of the negligence of the petitioner - In absence of averments in the complaint, that petitioner is also “in charge” of the business of the company, the case could not fall under Section 141(1) of the Act. - HC
IBC
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Initiation of CIRP - The burden of prima facie proving occurrence of the default and that the application filed under Section 7 of the Code is within the period of limitation, is entirely on the financial creditor. While the decision to admit an application under Section 7 is typically made on the basis of material furnished by the financial creditor, the Adjudicating Authority is not barred from examining the material that is placed on record by the corporate debtor to determine that such application is not beyond the period of limitation. Undoubtedly, there is sufficient material in the present case to justify enlargement of the extension period in accordance with Section 18 of the Limitation Act and such material has also been considered by the Adjudicating Authority before admitting the application under Section 7 of the Code. - SC
Service Tax
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Place of provision of services - Rule 6 of the Place of Provision of Service Rules, 2012, provides and clarifies that in case of any cultural or sporting event and/or services related to such event, shall be the ‘place’ where the event is actually held - Admittedly the event was held outside India (Zimbabwe), and this service has not been received in India, rather it was meant for Bangladesh, for which territory, the telecasting rights were purchased and resold by the appellants. Only for the reason that the appellant provider or trader of telecasting right is located in India, it cannot be assumed or presumed by any stretch of imagination, that the service under dispute has been received in India. - AT
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Rejection of sales turnover - Non-filing of returns - There is no such assumption and presumption available to the Adjudicating Authority for rejection of sales turnover. Even a best judgment assumption has to be based on documents and information on record. - AT
Central Excise
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Recovery of erroneous refund / irregular Cenvat credit availed - Demand of duty with interest - allegation of misuse of Area based exemption - On examination of provision of section 11A of Central Excise Act, it clearly shows that the case at hand, is not one concerning conditions as given in section11A, but the issue concerns refunds made purportedly under the entitlements claimed by the respondent under the exemption notification, which, the Appellant/Revenue seeks to recover by taking recourse to section 11A which is not admissible. - HC
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CENVAT Credit - duty paying documents - Debit Note issued by the importer in respect of import of machines - CVD paid there on was passed on to the appellant by way of Debit note - The debit note is the document on the basis of which the Cenvat Credit is admissible. There is no dispute about receipt of goods - Credit is therefore allowed. - AT
Case Laws:
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GST
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2021 (10) TMI 153
Maintainability of Advance Ruling application - Classification of goods - applicable rate of SGST and CGST - PAPAD of different shapes and sizes - HELD THAT:- The appellant has obtained the Advance Ruling by submitting application of advance ruling with suppression of material facts or misrepresentation of facts, and the application was not eligible to be admitted in view of proviso to sub-section (2) of section 98 of the CGST Act, 2017. Therefore, in terms of Section 104 of CGST Act, 2017, and the GGST Act, 2017, the advance ruling pronounced by the Gujarat Authority of Advance Ruling is liable to be declared as void ab-initio.
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2021 (10) TMI 152
Classification of services - rate of GST - works contract by way of construction, erection, commissioning or installation of original works pertaining to railways - first high speed rail line i.e. bullet train in times to come and for this Mumbai-Ahmedabad High Speed Rail Corridor - whether entitled for charging of reduced rate of GST@12% instead of 18%? - HELD THAT:- M/s. NHSRCL is a Government Body wherein the Ministry of Railways holds equity shares of 95.72% and Government of Gujarat holds 4.28% of the remaining equity shares. As per Wikipedia, the National High Speed Rail Corporation Limited (NHSRCL) has been incorporated in 2016 with an object to finance, construct, maintain and manage the High Speed Rail Corridor in India. National High Speed Rail Corporation Limited (NHSRCL) has been formed under the Ministry of Railways, Government of India, for the development and implementation of the high speed rail projects in India. It is very much apparent that the objective/work of NHSRCL is related to railways. Further, as per the details of M/s. RITES ltd online, it is found that Rail India Technical and Economical Services limited (RITES ltd.)is a Public Sector Undertaking wherein ownership of the Government of India(72.02% in equity shares). As per Wikipedia, RITES Ltd, is an engineering consultancy company, specializing in the field of transport infrastructure. Established in 1974 by the Government of India, the company's initial charter was to provide consultancy services in rail transport management to operators in India and abroad. RITES has since diversified into planning and consulting services for other infrastructure, including airports, ports, highways and urban planning. On going through the work mentioned at Sr.No.1,2 and 3 (of Phase-I works), it appears that the same pertains to construction of the railway track, pavements alongside it as well as and high mass lighting on the pavement along the track. Similarly, Sr.No.1 and 2 (of Phase-II works) appears to pertain to construction of warehouse as well as construction of Balance Pavement area like area around warehouse and connecting road between pavement near the track and pavement around warehouse. Further, EIMWB mentioned at Sr.No.3 of Phase-II works above, stands for Electronic Inmotion weighment Bridge and pertains to Railways only. Similarly all the other works enlisted in para 18.1. above also appear to pertain to Railways only. The Work Contract allotted to the appellant by M/s.RITES ltd. undoubtedly pertains to Railways only. It can thus be concluded that the Work Contract allotted to the appellant by M/s. RITES ltd. is covered under Clause 3(v)(a) of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 as amended from time to time as it fulfills all the conditions therein i.e. it is Work Contract involving Original work pertaining to Railways . Thus, the Work Contract of the appellant is covered under Clause3(v)(a) of the Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 as amended from time to time - appeal allowed.
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2021 (10) TMI 151
Classification of goods - Marine-pressure tight and Non-Pressure tight cables, specially made and designed for use in the warship - whether the goods/parts used by the appellant are essential and integral parts of a submarine warship? - liable for GST @ 5% in terms of Sr. No. 252 of Notification No. 01/2017-CT (rate) dated 28.06.2017 or otherwise? - HELD THAT:- Marine-Pressure Non-Pressure Tight Cables are essential and integral part of the warship as such these cables are customized and specially designed for use in submarine warship only under the sea and do not have any commercial application. These cables are used to supply the power to the various parts and equipments of the submarine warship for their functioning in Submarine Warship and also used in weapon launcher of the submarine warship. The use and application of the Marine-Pressure Non-Pressure Tight Cables clearly suggest that these cables are very much essential and integral parts of the submarine warship as such these cables are used ONBOARD warship and without these cables all the essential equipment would be rendered nonoperational and submarine warship would be ineffective during war operation. The use of cables for electrical or mechanical and instrumental functioning of the submarine warship is very essential and without these cables the supply of power would not be possible and all the equipment and machinery of submarine warship become non-functioning or we can say submarine warship itself may become non-operational and ineffective. Hence, Marine Pressure Tight cable and non-pressure tight cable are integral and essential for the functioning of the submarine warship. The marine pressure tight cables and non-pressure tight cables manufactured and supplied by the applicant to the Indian Navy are essential and integral parts of the submarine warship and hence the benefit of reduced rate of GST of 5% is available to the appellant as per Sr. No. 252 of Notification No.01/2017-Integrated Tax(Rate) dated 28.06.2017.
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2021 (10) TMI 150
Classification of goods - rate of GST - Plastic Mechanical Liquid Dispensers - classified under HSN 3926 or under HSN 8424 and 9616 - HELD THAT:- The product Plastic mechanical liquid dispenser of the appellant is made of plastic and intended to be screwed/fitted on to the bottle/containers which are solely used for pumping/dispensing liquid or lotion from a bottle and serves for the depletion of the contents, viz. liquid, gel, cream etc. From the functions of the product, we find that they act as a cap, lid or closure of the bottle or container into which they are fitted, besides performing the function of pumping/dispensing liquid or lotion from a bottle and serving for the depletion of the contents contained therein i.e. liquid, gel, cream etc. Further, the appellant themselves have stated that the aforementioned product which they import from China are classified under the Tariff Heading 3923 only (caps and closures) - an imported item/product classified under Tariff Heading 3923 cannot have a distinct or different heading/classification when sold in the domestic market, especially when we are referring to the First Schedule to the Customs Tariff Act, 1975(51 of 1975) for arriving at the classification of the products in the GST regime. The goods are parts of general use as they can be fitted/screwed into bottles/containers of any make i.e. of plastic, glass, metal etc. Also, nowhere is it contended by the appellant, that their product (which are parts) can be used only in bottles of a particular make or type. Hence, it can be construed that these items/products of the appellant can be considered as parts of general use i.e. parts which can be used in any type/make of bottles or containers. It, therefore, becomes apparently clear that items/products made of plastic of the appellant, which are parts of general use , will not be covered under any heading of Chapter 84. Therefore, in view of clause(g) of Note 1 of Section XVI of the Customs Tariff Act, 1975, it can be concluded that the product Plastic mechanical liquid dispenser of the appellant would not be covered under Heading 8424 of the Customs Tariff Act, 1975(51 of 1975). Rate of GST - HELD THAT:- The product Plastic mechanical liquid dispenser of the appellant would be rightly classifiable under Heading 3923.50 of the Customs Tariff Act, 1975(51 of 1975) and would be liable to GST at the rate of 18%.
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2021 (10) TMI 149
Classification of goods - cotton grey fabrics having construction count of 20 s with read and peak 60x60/ Fusible Cotton interlining fabrics - classifiable under Chapter 52 or 59? - CBEC s Circular No.254/88/96-CX dated 18.10.1996 - HELD THAT:- Ahmedabad Textile Industry s Research Association (commonly known as ATIRA) is an autonomous non-profit association for textile research located in Ahmedabad and is the largest association for textile research allied industries in India which was established on 13 December 1947 and was recognized by the Council of Scientific and Industrial Research under the Ministry of Science and Technology, Government of India - Since the Chapter Note 2(a) of Chapter 59 stipulates that fabrics/products as detailed/described under Column(2) below, corresponding to Sr.Nos.(1) to (5) of the said note under Column(1) below, will not be covered under Heading 59.03/will be excluded from Heading 59.03, it is found prudent to compare the same to the test results mentioned above in order to find out whether the said product is covered under Heading 5903 or otherwise. All the five criteria/condition required for the product of the appellant for being classified under the Heading 5903, have been fulfilled. It is therefore found that based on the test results of the sample product/fabric(obtained by the appellant from ATIRA, Ahmedabad), the said product Fusible interlining fabric of cotton is undoubtedly classifiable under Heading 5903 of the Customs Tariff Act, 1975(51 of 1975) - chapter note of Chapter 52 as well as the explanatory notes to HSN with respect of the headings 5208, 5209 and 5212, we find that it does not cover laminated fabrics or fabrics coated with plastics. Hence, it can be concluded that Fusible Interlining fabrics of cotton will not be covered under Chapter 52 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). Irrespective of the fact as to whether the fabric of the appellant fulfills the criteria for classification under Heading 5903 or otherwise as per exclusion clauses (1) to (5) of Chapter Note 2(a) of Chapter 59, it would still be classified under Heading 5903 only, on account of the Explanatory notes to the HSN, which states that textile fabrics which are spattered by spraying with visible particles of thermoplastic material and are capable of providing a bond to other fabrics or materials on the application of heat and pressure are classifiable under heading 5903 read with the grounds mentioned in Circular No. 433/66/98-CX-6 dated 27/11/1998 - the product fusible interlining fabric of cotton of the appellant would undoubtedly be classifiable under Heading 5903 of the Customs Tariff Act, 1975 only.
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2021 (10) TMI 148
Classification of goods - rate of GST - supply of Fly Ash Bricks - Fly Ash Blocks - classifiable under Chapter heading 68159090 or not - taxed @ 5% and @ 12% respectively under the GST Act or not - Time limitation - HELD THAT:- The appellant was required to file the appeal in the present case, on or before 07.08.2020, but has filed the same on 31.08.2020 i.e. within the time limit provided in the aforementioned notification. In view of the above, we find that there is no delay on the part of the appellant in filing the said appeal which has been filed by them within the time limit prescribed in the Notification No.35/2020-Cenral Tax dated 03.04.2020(as amended). Classification of goods - Fly Ash Bricks - HELD THAT:- It been the intention of the GST council to classify Fly Ash Bricks and Fly Ash aggregates separately, Fly Ash Bricks would have been separately mentioned in Sr.No.225B above, in the same way as Fly Ash Blocks has been mentioned in the said entry. Moreover, it is also seen that the conditions envisaged in the above entry remains unchanged even after an intervening period of more than 2 years after the initial insertion of the aforementioned entry. It therefore appears that the Government intends to give benefit of the aforementioned entry only to those manufacturers who manufacture Fly Ash Bricks which contain 90% or more fly ash content - Rule 2(a) of the General Rules of Interpretation is not applicable for classification of Fly Ash Bricks in the present case. Fly Ash Bricks found mention in Sr.No.177 of Schedule-II of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017(on which GST leviability was 12%) but was omitted from Sr.No.177 with effect from 15.11.2017 vide Notification No.41/2017-Central Tax (Rate) dated 14.11.2017. Further, it is also seen that vide Notification No.41/2017-Central Tax (Rate) dated 14.11.2017 which amended Notification No.1/2017-Central Tax (Rate), Sr.No.225A has been inserted in Schedule-I of the said notification wherein Fly Ash Bricks with 90% or more fly ash content, finds mention. However, since the Fly Ash Bricks manufactured by the appellant are containing Fly Ash content of only 60%, the same will not be covered under the said Sr.No.225A. Since the Fly Ash Bricks (containing 60% fly ash content) manufactured and supplied by the appellant does not find mention in any of the entries of any of the Schedules I, II, IV, V and VI of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017(as amended from time to time), it is concluded that the same would be covered under Sr.No.453 of Schedule-III of Notification No:01/2017-Central Tax(Rate) with effect from 15.11.2017 - the GST rate on Fly Ash Bricks will be 18% with effect from 15.11.2017. Application rejected.
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2021 (10) TMI 147
Classification of goods - rate of GST - Rice Bran (22+Oil) - to be classified under Chapter heading 38259000 and attracts rate 9% CGST and 9% SGST under vide Sr.No.98 of Schedule III of Notification No. 1/2017- Central Tax (Rate) of CGST Act? - HELD THAT:- The product of the appellant is classifiable under Tariff Item 2302 40 00 of the CTA, 1975. Even otherwise, the product of the appellant cannot be classified under Chapter Heading 3825 of the CTA, 1975 which covers Residual products of the chemical or allied industries, not elsewhere specified or included, Municipal waste, sewage sludge, clinical waste, waste organic solvent, wastes of metal pickling liquors etc. Applicable rate of GST - HELD THAT:- Admittedly, the product of the appellant does not conform to any other description of the said entry at Sr. No. 102 of Notification No. 2/2017-Central Tax (Rate) viz. Aquatic feed, Poultry Feed etc. - It is settled principle of law that the exemption notification needs to be construed strictly and the burden to prove its entitlement is on the person (assessee/ appellant) claiming it. The product Rice Bran (102+ Oil) of the appellant is not covered by entry at Sr. No. 102 of Notification No. 2/2017-Central Tax (Rate), as amended. The product of the appellant cannot be termed as Rice Bran within the meaning of the said term as understood in the common or industry parlance. Merely because the appellant has given the name Rice Bran (22+ Oil) to its product, which otherwise is not Rice Bran , the said product cannot be held to be Rice Bran . Therefore, the product of the appellant is not covered by Sr. No. 103B of Schedule I of Notification No. 1/2017-Central Tax (Rate), as amended - the product of the appellant is classifiable under Chapter Heading 2302 and conforms to the description Bran, sharps and other residues, whether or not in the form of pellets, derived from the sifting, milling or other working of cereals or of leguminous plants - the said product is covered by entry at Sr. No. 103A of Schedule I of Notification No. 1/2017-Central Tax (Rate), as amended and is leviable to Goods and Services Tax @ 5% ad-valorem.
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2021 (10) TMI 146
Levy of GST - international transactions - supply of Hardware by the appellant in the manner commercially known as Merchant Trade Transaction - goods are supplied from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India - Place of supply of goods - N/N. 35/2020-Central Tax dated 03.04.2020, as amended vide Notification No. 55/2020-Central Tax dated 27.06.2020 - HELD THAT:- As per the charging section 5 of the IGST Act, 2017, integrated goods and services tax is levied on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption - as per this charging section, integrated goods and services tax is levied on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption. As per clause (a) of sub-section (1) of Section 10 of the IGST Act, 2017, where the supply involves movement of goods, whether by the supplier or the recipient or by any other person, the place of supply of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient . In the present case, the supply involves movement from the premises of the vendor located outside India to the buyer of the appellant located outside India. Therefore, the place of supply in this case is outside India inasmuch as the movement of goods terminates for delivery at the premises of the buyer located outside India - Section 7 of the CGST Act, 2017 defines the scope of supply. As per clause (a) of sub-section (1) of said section 7, the expression supply includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. As the transactions of the appellant, wherein the goods are supplied from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India, are covered under Paragraph 7 of Schedule III of the GST Acts, it is evident that the said transactions shall be treated neither as a supply of goods nor a supply of services with effect from 01.02.2019. As such, Goods and Services Tax is not leviable on such transactions with effect from 01.02.2019 - Integrated Goods and Services Tax was payable during the period from 01.07.2017 to 31.01.2019 on supply of goods directly from the vendor s premises located outside India in the non taxable territory to the customer s premises located at another place outside India in the non-taxable territory, without such goods entering into India. However, with effect from 01.02.2019, Integrated Goods and Services Tax is not payable on supply of goods directly from the vendor s premises located outside India in the non taxable territory to the customer s premises located at another place outside India in the nontaxable territory, without such goods entering into India. When a transaction is leviable to IGST / GST in terms of clear provisions of law, the same cannot be held as not liable to IGST / GST merely on the grounds that such transactions were not taxable under erstwhile Indirect Tax Laws or under the United Kingdom VAT legislation or that there is no mechanism to report place of supply of such transaction in GSTR-1 Return. The Integrated Goods and Services Tax was payable from 01.07.2017 to 31.01.2019 and is not payable with effect from 01.02.2019 on supply of goods directly from the vendor s premises located outside India in the non taxable territory to the customer s premises located at another place outside India in the non-taxable territory, without such goods entering into India.
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2021 (10) TMI 145
Classification of supply - HSN code - applicable rate of tax - Composite supply of works contract - supplies made by TS TRANSCO - supplies procure by TS TRANSCO and eligibility to obtain services at reduced rate of 12% as per entry 3(iv) of Notification 11/2017 CTR dated 28 June 2017 - input tax credit benefit on works contract services - restrictions imposed under sub-section (5) of section 17 of the CGST Act, 2017 - HELD THAT:- As seen from the estimate of contract, there is a significant involvement of goods in the composite supply of works contract. Therefore this is not a pure service as averred by the applicant and hence not eligible for exemption - it is evident from the entry 3 of N/N. 12/2017 CT (R) dated 28 June 2017 that only pure services which do not involve any works contract involving supply of goods or other composite supply involving supply of goods are exempted from tax under CGST/SGST. As seen from the above abstract of estimate of supply to GHMC, the applicant has executed works contract services for GHMC involving supply of goods. As the applicant has not made supply of pure services but has made supply of works contract services they are covered by exception to the exemption given under entry (3) of the above notification. It is evident that entry 3(vi) of the Notification is specific entry covering only certain construction services. This entry does not cover other works contract services under service head 9954 which include long-distance underground/overland/ submarine pipe lines, communication and electric power lines (cables); pumping stations and related works; transformer stations and related works i.e., General construction services. However there is a residual entry at 3(vii) of the above Notification covering all other construction services not mentioned in the preceding entries. The services supplied by the contractor to the applicant do not fall under entry 3 (vi) of Notification 11/2017 CTR dated.28.06.2017 as modified by Notification No.24/2017 dated.21.09.2017 and Notification no. 17/2018 dt:26.07.2018. Therefore this supply of works contract service is covered by Entry (vii) of Serial No. (3) of the said notification as inserted by way of substitution vide notification no. 24/2017 dt:21.09.2017. The same entry was later retained as Entry (xi) of Serial No. 3 to notification 11/2017 vide a substituted notification no. 3/2019 dt: 29.03.2019. Therefore this supply of works contract services to the applicant is taxable at the rate of 9% under both CGST SGST Acts respectively. Supply of general construction services - HELD THAT:- The supply of general construction services which enumerated at entry 3 (vii) of Notification 24/2017 dt.29.01.2017 which is retained as entry 12 vide Notification 3/2019 Central Tax dt.29.01.2019 and are taxable @9% under CGST/SGST Acts - the works contract service supplied by the applicant are in nature of General Construction service for longdistance underground/overland/ submarine pipe lines, communication and electric power lines (cables); pumping stations and related works; transformer stations and related works. These works are taxable @9% under CGST SGST Acts. The services are taxable as under: 1. Eligibility to exemption from tax on the supply of works contract services by the applicant to Greater Hyderabad Municipal Corporation (GHMC) - Taxable @18%. 2. Tax liability with respect to works contract services procured by the applicant from a 3rd party for supplying same services to GHMC - Taxable @18%. 3. Eligibility to exemption from tax on supply of works contract services by the applicant to I CAD department - Exempt to the extent of grants are received against supplies by applicant 4. Tax liability with respect to works contract services procured by the applicant from a 3rd party for supplying same services to I CAD department - Taxable @18%. 5. Tax liability for supply of works contract service by the applicant to south central railway - Taxable @18%. 6. Tax liability for procuring works contract services by the applicant from a 3rd party in order to supply the same to south central railway - Taxable @18%.
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2021 (10) TMI 142
Provisional attachments of Bank Accounts - seeking directions that the accounts may be allowed to be operated to the extent of essential expenditure to run the business and to clear outstanding dues - HELD THAT:- Admittedly, the petitioner has filed its objections to the attachment under Rule 159(5) of the Central Goods and Services Tax Rules, 2017 (for short CGST Rules, 2017 ). This Court in WATERMELON MANAGEMENT SERVICES PRIVATE LIMITED VERSUS THE COMMISSIONER, CENTRAL TAX, GST DELHI (EAST) ANR. [ 2020 (6) TMI 36 - DELHI HIGH COURT] has held that writs cannot be entertained when the petitioner has an alternative effective remedy before the competent authority. Since in the present case, objection under Rule 159(5) of the CGST Rules, 2017 has already been filed, this Court disposes of the present writ petition and application by directing the respondent to decide the objections filed by the petitioner by way of a reasoned order in accordance with law on or before 05th October, 2021 - Petition disposed off.
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2021 (10) TMI 141
Seeking grant of Regular Bail - fraudulently availing and passing on ineligible/ fake Input Tax Credit - non-existent firms - Sections 132(1)(b) (c) of the Central Goods and Services Tax Act 2017 - HELD THAT:- Considering the fact that petitioners have been in custody now for 70 days, complaint qua them have already been filed by the respondent and hence their custodial interrogation is not required and the evidence is documentary in nature, this Court deems it fit to release the petitioners on interim bail on their furnishing a personal bond in the sum of ₹1 lakh each with two sureties each of the like amount to the satisfaction of the Trial Court/ Duty Magistrate, further subject to the condition that petitioners will cooperate with the respondents and will join the investigation/ inquiry as and when required by the respondents and will not leave the country without the prior permission of this Court. List these petitions on 11th November, 2021.
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2021 (10) TMI 133
Seeking grant of Regular Bail - illegal availment of input tax credit - invoices issued by suppliers, without any actual movement of goods - non-existent transporters - Section 132(1) (b) and (c) of the Central Goods and Service Tax Act, 2017 - HELD THAT:- The petitioner has complied with the conditions as imposed in the detailed order dated 16.03.2021 vide which interim bail was granted to the petitioner and also the fact that the petitioner had been in custody from 07.12.2020 till 16.03.2021 and that the challan has already been filed before the Judicial Magistrate Ist Class and the proceedings under Section 74 of the CGST Act have also been initiated and the case is primarily based on documentary evidence, thus, no purpose would be served in sending the petitioner back into custody. The present petition is allowed and the order dated 16.03.2021 is made absolute - the petitioner would continue to be bound by the conditions which have been imposed.
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2021 (10) TMI 127
Maintainability of captioned writ petition - non-prosecution of the case - HELD THAT:- The position is no different today though the matter is listed under the cause list caption 'FOR DISMISSAL' pursuant to earlier proceedings dated 17.09.2021. In other words, today also Ms.G.Shankardevi, learned counsel representing Mr.P.T.Ramkumar, learned Standing Counsel for Southern Railway on behalf of Respondents 1 to 5 and Mr.V.Sundareswaran, learned counsel for 6th respondent are before this Virtual Court, but there is no representation for the writ petitioner. It is further to be noted that there was no representation in the first call. As a matter of abundant caution and with the intention of giving adequate opportunity , the matter was passed over and called again. There was no representation for writ petitioner in the second call also. The captioned writ petition is dismissed for default/non-prosecution.
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2021 (10) TMI 124
Jurisdiction - power of Additional/Joint Commissioner or a Commissioner to demand for service tax in excess of ₹ 50,00,000/- - applicability of CBEC circular bearing no. 1053/02/2017-CX, dated 10.03.2017 - no pre-show cause notice consultation was carried out - no hearing was given to the petitioner prior to passing of the impugned order - scope of remand order - refund of cess - Business Auxiliary Services - failure to pay service tax. HELD THAT:- The petitioner claims that the injury inflicted was further compounded by not according personal hearing to the petitioner. It is in this context that, various flaws, in the impugned order, have been pointed out by the petitioner. Issue notice to the respondent/revenue, via all permissible modes including e-mail - List the matter on 03.12.2021.
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2021 (10) TMI 118
Valuation - amount recovered as reimbursement (at actual) by the appellant from the customer, for the fuel procured on behalf of the customer is required to be included in the value of services provided by the appellant or not - pure agent services or not - Circular No. 47/21/2018-GST dated 8.6.2018 - HELD THAT:- In the instant case, the appellant has charged the amount spent by them towards arrangement/providing of ATF for flying of Helicopter in respect of supply of rental service of helicopter provided to the ONGC. The appellant has collected the said amount in the form of reimbursement from their customer / recipient of supply of service and the said reimbursement is in respect of the arrangement/providing of ATF made by them, at the time of / before the delivery of supply of services to their customer/recipient. Thus, in terms of Section 15(2)(c) of the GST Acts, 2017, the arrangement of ATF/providing of ATF in the helicopters/aircrafts is the activity done by the appellant at the time of OR before the supply of services to their customer AND the appellant is charging the amount spent in respect of the said ATF, from the customer in the form of reimbursement. Hence, the conditions of Section 15(2)(c) have been fulfilled and accordingly, the amount charged by the appellant (in respect of the arrangement/provision of ATF made by them for supply of Rental service of Helicopter ) from their customer in the form of reimbursement, is undoubtedly includible in the value of supply of services of Rental services of aircrafts in the instant case. In terms of Section 15(2)(c) of the GST Acts, 2017, the arranging of/provision of ATF in the helicopters/ aircrafts is the activity done by the appellant at the time of OR before the supply of services to their customer AND the appellant is charging the amount spent in respect of the said ATF, from their customer in the form of reimbursement. Hence, the conditions of Section 15(2)(c) of the GST Acts, 2017 have been fulfilled and accordingly, the amount charged by the appellant (in respect of the ATF fuel) from their customer in the form of reimbursement, is undoubtedly includable in the value of supply of services of Rental services of aircrafts in the instant case. The contention of the appellant that the responsibility of supply or arrangement of ATF is that of the customer only, is far from the truth and simply unacceptable. Moreover, whether the appellant has derived any benefit in the form of mark-up or otherwise from the reimbursement of fuel from the customer, is not the sole factor for determination of valuation of supply of rental service of helicopter under the provisions of the GST Acts, 2017 and the rules frame there under . Further, the appellant stating that it cannot be contended that fuel was an essential component of the services provided by the appellant, is wrong and completely out of context since without supply of ATF, the helicopters of the appellant would not fly and there would be no supply of Rental services of aircraft by the appellant in the instant case. Since none of the conditions envisaged in the provisions of Rule 33 of the GST Rules, 2017 for being a Pure Agent have been fulfilled/satisfied by the appellant, they cannot be said to be pure agent in this case and therefore the amount of reimbursement received by the appellant will undoubtedly be included in the value of supply of Rental Services of Aircraft provided by them. Although the appellant have stated that fuel reimbursements from customers are not liable to GST as they are not debited to the P L, are treated as receivables from customers and on recovery of such receivables, the amounts recovered are adjusted against the receivables and that books maintained are as per accounting standards, the fact remains that the value of supply needs to be determined in accordance with the statutory provisions of the GST Acts, 2017 and rules framed there under, which have been elaborately discussed and the valuation of supply is not dependent on the accounting treatment given to any expenditure or cost, hence their contention cannot be accepted. Thus, in terms of the valuation provisions under GST legislation, amount recovered as reimbursement by the appellant M/s. Global Vectra Helicorp Ltd. from the customer, for the fuel procured for use in the helicopter provided on rent to customer is required to be included in the value of services provided by the Appellant.
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Income Tax
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2021 (10) TMI 143
Disallowance u/s 10B - Denial of deduction as business of the assessee did not involve any manufacturing process - whether assessee will be entitled to exemption under Section 10B of the Income Tax Act for business of blending of tea being carried on by it by taking aid from provisions of other statutes and the policies? - whether either the definition from the SEZ Act or the export import policy should be considered? - HELD THAT:- The scheme of the Act in the various provisions as referred to about especially Sections 10A, 10AA, 10B and 10C which though provide for deductions to the industries engaged in manufacture or production of articles but operate in different fields. The term manufacture has not been defined in Section 10B after the amendment was carried out in the year 2001. That has created an ambiguity if the argument by the learned Counsel for the assessee is considered where he sought to claim that to grant benefit to the assessee either the definition from the SEZ Act or the export import policy should be considered. The law is now well-settled that in case of ambiguity in an exemption provision the benefit has to go to the revenue.- Decided against assessee.
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2021 (10) TMI 130
Order u/s 269UD by appropriate authority for purchase by Central Government of immovable property - Default in approval by the Charity Commissioner - HELD THAT:- As show cause notice, it is bereft of any materials or details. It does not contain any material to show as to why the appropriate authority felt that an order under Section 269 UD(1) was required to be made. Reply was fled on 22 April 1993 on behalf of the transferor trust and petitioner. In the impugned order the appropriate authority has relied upon a valuation report. Admittedly the same was not provided to petitioner. Moreover, the appropriate authority has given six sale instances but none of these details were provided to petitioner with the show cause notice or at any stage. The appropriate authority has accepted that the Charity Commissioner has accorded his sanction for sale of the said bungalow but the appropriate authority simply dismisses the same by saying that the order passed by the Charity Commissioner only has persuasive effect but is not binding. In the impugned order the appropriate authority says that even if the bungalow had remained unoccupied and required heavy repairs, in its opinion, this could affect the price only marginally, say to the extent of ₹ 100/- per sq.ft. which amount would be sufficient to renovate and beautify the row house. But there is nothing to show how they arrived at the figure of ₹ 100/- per sq.ft. No opportunity was given to petitioner to respond to said renovation cost. It is settled law that issuance of a show-cause notice is not an empty formality. The appropriate authority should give to the person likely to be affected by the order proposed to be made a notice of the action intended to be taken, inform him about the materials on the basis of which the appropriate authority proposes to take action for preemptive purchase and give a fair and reasonable opportunity to such person to represent his case and to correct or controvert the material sought to be relied upon against him Charity Commissioner, under the Bombay Public Trusts Act, is required to give his sanction bearing in mind interest, benefit and protection of the trust. Respondents have not fled any reply. Mr. Kotangale submitted that there was no requirement to give details of the sale instances referred to in paragraph 5 of the impugned order to petitioner because three of the instances are of bungalows in the same complex where the said bungalow is situated and therefore, petitioner should be deemed to be aware of the sale instances - We are not impressed by Shri Kotangale s submissions. First of all, that is not the case of the appropriate authority in the impugned order. Secondly, the appropriate authority is duty bound to give all materials on the basis of which it proposes to take action of pre-emptive purchase. It cannot absolve of its duty and responsibility to give all materials on the basis of which it proposes to take action. It cannot give a vague show cause notice and thereby deprive petitioner of a reasonable opportunity to effectively correct or controvert the material sought to be relied against him. The impugned order dated 28th April, 1993 is hereby quashed and set aside.The appropriate authority is directed to issue no objection certificate under sub-section (1) of Section 269UL of the Act to petitioner within four weeks of receiving a copy of this order
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2021 (10) TMI 121
Depreciation on the vehicles used by the assessee - @15% OR 30% - vehicles for which depreciation is claimed are stated as oil tankers transporting fuel from Indian Oil Corporation Ltd (IOCL) and Bharat Peroleum Corporation Ltd. (BPCL) to the retail outlets - HELD THAT:- Entitlement of depreciation at 30% of the motor vehicles/tankers used by the assessee for running the business is no more res integra and considered in favour of the assessee in the appeal filed by the assessee - See USHA JOHNSON PROPRIETRIX, M/S. GLOBAL ROADWAYS, (NOW KNOWN AS MARUTHAYATH TRANSPORTS) [ 2020 (11) TMI 1015 - KERALA HIGH COURT] . - Decided against revenue.
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2021 (10) TMI 115
Provisions of anticipated losses - certainty in recognizing expenses - assessment framed as per AS-7 - HELD THAT:- Hon ble Delhi High Court in case of Triveni Engineering Industries Ltd. [ 2010 (11) TMI 90 - DELHI HIGH COURT] decided the identical issue by holding that, no doubt, unless the expenditure is actually incurred or it is accrued in the relevant years, it would not be allowed as a deduction. However, at the same time, in the given scenario, where in relation to the project works undertaken by the assessee, completed contract method of accounting is followed which is consistent with the Accounting Standard and these Accounting Standards also lay down the norms indicating the particular point of time when the provisions for all known liabilities and losses has to be made, the making of such a provision by the assessee appears to be justified more so when the assessee has recognized gain as well as on such project during the year itself. In the instant case, assessee has shown revenue gain for AY 2011-12. When completed contract method of accounting is undisputedly applied to consistently by the assessee in a long term project, the actual profit/loss will come on record in the year of completion of contract when all the undisputed losses and gains would be adjusted. When percentage completion method, which is in accordance with AS-7, has been consistently applied by the assessee and has been accepted by the Department and the expenditures incurred by the assessee are admissible one, we find no ground to interfere into the findings returned by the ld. CIT (A). Set off of the brought forward losses against the income from other sources - CIT-A allowed claim - HELD THAT:- Perusal of the impugned order passed by the ld. CIT (A) goes to prove that this issue has been decided on the basis of facts brought on record by the parties to the appeals. When the core business of the assessee company is construction of power plant and purchasing the FDRs for availability of the easy funds for smooth functioning of the business, earning of interest on the FDRs on the funds invested from the business funds cannot be disallowed on the ground that earning interest on the FDRs is not part of the business of the assessee. Ld. CIT (A) has rightly decided that, although interest income has been shown as income from other sources it is still a part of the business income in nature as in all other assessment years and is available for set off of any losses from the previous year. So, investing surplus funds in FDRs during the business activities is part of primary business of the assessee company to make easy availability of funds for core activities and as such, interest income has been rightly treated as business income by the ld. CIT (A). Consequently, we find no ground to interfere into the findings returned by the ld. CIT (A) - Decided against revenue.
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2021 (10) TMI 114
Short Term Capital Loss on forfeiture of convertible share warrants - transfer u/s 2(47) of asset - extinguishment of the right of the assessee to obtain a share - HELD THAT:- As decided in PAVITRA COMMERCIALS LTD. VERSUS DCIT, CC 20, NEW DELHI. [ 2014 (12) TMI 1384 - ITAT DELHI] allowed the Short Term Capital Loss on the forfeiture of Convertible Share Warrants - thus Assessing Officer is hereby directed to delete the addition. Accordingly, the ground of the assessee s appeal is allowed.
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2021 (10) TMI 112
Non disclosure of income from sale of prospectus - Onus to prove - substantial relief was granted by ld. CIT(A) - HELD THAT:- On the touchstone of preponderance of human probabilities, it will be natural presumption that the assessee has sold these prospectus on the printed price to the students , who were interested in persuing the course and registering for studies, but the sale proceeds are not declared in the books of accounts and have escaped assessment. The onus is on the assessee to prove with cogent material/evidences that stock of prospectus held by it is duly accounted for by it and no income has escaped assessment viz. sold out of books of account. The assessee is not able to discharge its onus and the ld. CIT(A) has already given substantial relief. Thus on failure by assessee to discharge its primary onus, the assessee is not entitled for any further relief and the appellate order passed by ld. CIT(A) is upheld. The assessee fails in its appeal. Delay in deposit of TDS - Disallowance u/s 40(1)(ia) - expenditure incurred by the assessee on which admittedly income-tax was deducted at source under Chapter XVII-B by the assessee , which stood deposited late beyond the time prescribed u/s 200(1), but admittedly the same was deposited before the due date of filing of return of income u/s 139(1) - HELD THAT:- Recently, Hon ble Madras High Court in the case of CIT v. Western Agencies (Madras) Private Limited, [ 2021 (4) TMI 1029 - MADRAS HIGH COURT] has held by following the aforesaid decision of Hon ble Supreme Court in the case of Calcutta Export Company [ 2018 (5) TMI 356 - SUPREME COURT] , that amendment made by Finance Act, 2010 to provisions of Section 40(a)(ia) is curative in nature and shall apply retrospectively since when Section 40(a)(ia) was inserted viz. ay: 2005-06. Presently, we are concerned with ay:2005-06 , and Respectfully following aforesaid judgments, we hold that the assessee will be entitled for claiming deduction u/s 40(a)(ia) , in case income tax deducted at source under Chapter XVII-B during the year under consideration, was deposited by assessee to the credit of Central Government on or before the due date of filing of return of income u/s 139(1) of the 1961 Act. The assessee succeeds on this issue.
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2021 (10) TMI 111
Revision u/s 263 by CIT - Assessment u/s 153A - whether AO had rightly not made any addition in the assessment year under consideration [AY 2014-15] which is an unabated assessment year? - HELD THAT:- Revision u/s. 263 of the Act has to be made within the well defined limits subject to satisfaction of preconditions - when an assessment is completed before the search (unabated assessment) then addition/disallowance can be made only to the extent of undisclosed income which is found during the course of search with reference to valuable, article or things found or documents seized during the search which are not disclosed in the original assessment. In unabated assessment years, items of regular assessment cannot be added back in the proceedings u/s. 153A of the Act when no incriminating materials were found in respect of the fault/issue pointed out by the Ld. Pr. CIT. Except that of abated assessment years, a search assessment u/s. 153A of the Act should be evidence based of undisclosed income, therefore, we are of the view that assessment order passed by the AO u/s. 153A/143(3) dated 29.03.2016 is neither erroneous nor prejudicial to the interest of the revenue and therefore, Ld. Pr. CIT erred in exercising his revisional jurisdiction u/s. 263 and therefore, we are of the view that he invoked revisional jurisdiction without satisfying the essential pre-condition as stipulated in sec. 263 - Decided in favour of assessee.
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2021 (10) TMI 110
Revision u/s 263 - LTCG computation - in statement of LTCG, the assessee had not adopted the market value/SRO value as sale consideration as per section 50C - HELD THAT:- On going through the latest amendments made by the Finance Act, in section 50(C)(1), 3rd proviso, where the value adopted or assessed or assessable by the same valuation authority does not exceed 10% of the consideration received or accruing as a result of transfer of consideration so received or accruing as a result of the transfer shall for the purpose of section 48 deemed to be the full value of the consideration. As per the above proviso, it is clear that if there is variation of 10% of stamp duty value adopted by the SRO or the value shown by the assessee for computation of capital gains, in such a case, the value offered for tax by the assessee is to be adopted and section 50C does not apply to the case of the assessee. This amendment take effect as retrospective in nature. The assessee in AY 2012-13, has taken the value of ₹ 9,44,98,000/- whereas Pr. CIT adopted the value which is less than 10% as per the amended provision - we are of the view that the order passed by the AO is not erroneous and prejudicial to the interests of revenue, as held by the Pr. CIT. AO has taken a view on the issue, on which two views are possible, the view which is taken by the AO, if Pr. CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law, as per the ratio laid down by the Hon ble Supreme Court in the case of Malabar Industries ltd.[ 1991 (10) TMI 26 - KERALA HIGH COURT] . Every loss of revenue as a consequence of an order of AO cannot be treated as prejudicial to the interests of the revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law. Therefore, in the case under consideration, the view which has been taken by the AO is one of the courses permissible in law, which cannot be brushed aside by the Pr. CIT u/s 263 of the Act. In view of the above observations, we set aside the order of the Pr. CIT passed u/s 263 of the Act, and restore the order of the AO. Accordingly, the grounds raised by the assessee on this issue are allowed.
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2021 (10) TMI 109
Addition u/s 68 - Sham and bogus Loss booked in manipulated penny stocks - case of the assessee was selected for scrutiny assessment u/s 143(2) - CIT-A deleted the addition - HELD THAT:- A.O had absolutely on the basis of glaringly incorrect and misconceived facts made an addition u/s 68 - assessee had during the year under consideration not traded in the shares of the aforementioned companies. Rather, the scrips in question, viz. (i). M/s Shreenath Commercials Finance Ltd. (1,00,000 shares); and (ii). M/s Tuni Textiles Mills Ltd. (14,60,500 shares) were even held by the assessee in the succeeding year i.e A.Y. 2015-16. We are unable to comprehend that now when the assessee had not sold any of the aforementioned scrips during the year, then, how and on what basis the A.O had concluded that the assessee had booked a bogus loss on sale of shares, which thereafter had been set-off against its other income. As the loss suffered by the assessee company is on account of the valuation of inventory and not a trading loss or a capital loss, therefore, in our considered view the CIT(A) had rightly vacated the addition. As the valuation of the closing stock of the shares held by the assessee is as per the provisions of Sec. 145 of the Act and in conformity with the Accounting Standard 2 (AS-2), therefore, no infirmity qua the loss suffered by the assessee pursuant to the diminution in the value of the inventory therein arises. Backed by the aforesaid facts, we are of the considered view that as the A.O had framed the assessment on the basis of glaringly misconceived and incorrect facts - Decided against revenue.
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2021 (10) TMI 108
Revision u/s 263 by CIT - assessee is not eligible for deduction under section 54F of the Act where the construction of the residential house had already commenced prior to the sale of the original asset (four land parcel) and the conditions of section 54F does not stand satisfied - HELD THAT:- AO has carried out the specific enquiry with regard to eligibility of deduction claimed under section 54F of the Act. On a corollary, it can be argued that he was satisfied on the propriety of the claim in question. Secondly, the claim of the assessee under section 54F towards residential house property already under construction at the time of transfer of original asset but the construction completed after the transfer is found to be eligible in law by several judicial precedence quoted in the preceding paragraph - where the case of the assessee is vindicated by judicial endorsement, one would at least say that the issue raised by the PCIT is not free of any debate. Where the issue is debatable, and the A.O. has taken a view which is plausible in law, such view cannot be substituted by the view of the superior authority and the order passed cannot be branded as erroneous per se . Therefore, in the absence of any error in the assessment having regard to the allowability of section 54F, the enquiry directed by the PCIT are superfluous and without authority of law. Such action of the PCIT cannot be said to be within the realm of revisional jurisdiction under section 263 - Decided in favour of assessee.
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2021 (10) TMI 107
Characterization of interest income - income from other sources or business income - Principle of consistency - HELD THAT:- As per the principle of consistency the department in the absence of any change in the facts could not be permitted be take inconsistent stands. Our aforesaid view is fortified by the judgment of the Hon‟ble Supreme Court in the case of Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] - we are unable to persuade ourselves to subscribe to the view taken by the lower authorities that the interest income was liable to be brought to tax under the head Other sources‟. We, thus, set-aside the order of the CIT(A) and direct the A.O to assess the interest income under the head Profits and gains of business or profession . Disallowance of the Employee Benefit Expenses - in absence of the requisite details which would prove to the hilt that the expenses claimed by the assessee were incurred wholly and exclusively for the purpose of its business the A.O disallowed the same - HELD THAT:- CIT-A had declined the assessee's claim for deduction of the aforesaid expenses, for the reason, that the same pertained to salaries that were paid to certain employees who were engaged in financial and marketing activities, which as were him was not the nature of business of the assessee company. At this stage, we may herein observe that as the assessee was apart from the business of rendering consultancy services and trading in cotton liner, foam insole and gel insole was also carrying on the business of finance, therefore, we are unable to persuade ourselves to subscribe to the view taken by the CIT(A) that the aforesaid employee benefit expenses could not be related to its business activities. We, thus, in the backdrop of our aforesaid deliberations vacate the disallowance of the assessee‟s claim for deduction of employee benefit expenses - we herein set-aside the order of the CIT(A) and vacate the disallowance of the employee benefit expenses. Disallowance of legal and professional fees - HELD THAT:- As we have held that the interest income was rightly reflected by the assessee as its business income, therefore, its claim for deduction of the legal and professional fees incurred in respect of the said business activity was rightly claimed by it as a deduction. Accordingly, we set-aside the order of the CIT(A) and direct the A.O to allow the assessee‟s claim for deduction of legal and professional fees.
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2021 (10) TMI 106
Disallowance u/s 43B - entitlement of the assessee for claim of deduction of interest - Claim disallowed by the assessee u/s 43B in the earlier years - amount of interest that was waived under One Time Settlement - OTS - HELD THAT:- We concur with the view taken by the CIT(A) that if the said amount was already disallowed by the assessee u/s 43B in the earlier years and formed part of the amount of interest that was waived under OTS and credited in its Profit loss a/c for the year under consideration, then, the declining of the assessee s claim for deduction of the said amount in the computation of income would result to double taxation. In our considered view, once the aforesaid interest/any part of the same had been disallowed u/s 43B in the aforementioned preceding years, then, crediting of such interest/part thereof in a subsequent year in which the same had been waived under OTS would result to a double taxation of the said amount. As the assessee as per the terms and conditions of the OTS had during the year under consideration made a payment of interest to GIIC that was disallowed u/s 43B in the said earlier years, therefore, such sum so actually paid would be eligible as a deduction during the year under consideration u/s 43B. We concur with the view taken by the CIT(A) that if the said amount was disallowed u/s 43B in the earlier years and had been credited by the assessee company in its Profit and loss account for the year under consideration on account of waiver of interest income payable to GIIC, then, the claim of the assessee for deduction of such amount in its computation of income is in order. No infirmity in the view taken by the CIT(A) who had directed the A.O to carry out certain verifications, viz. (i). that the interest waived was credited in the profit loss a/c of the assessee company for the year under consideration; and (ii). that the interest waived had been included in the figure of Profit as per the profit loss a/c taken to the computation of income; and (iii). that such interest payable to GIIC was disallowed u/s 43B in the earlier years. Accordingly, in terms of our aforesaid observations finding no infirmity in the view taken by the CIT(A) we uphold his order in terms of our aforesaid observations.
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2021 (10) TMI 105
Characterisation of profit/surplus - Gain on sale of shares - STCG or business income - shares converted as the stock-in-trade - HELD THAT:- If the income/surplus arising from the sale of shares (forming part of a lot purchased by the assessee) had undisputedly been subjected to tax as STCG, then, by way of an implication it can safely be inferred that the said entire lot of shares was purchased by the assessee with an intention to hold the same as a capital asset. Accordingly, backed by the aforesaid fact the income/surplus arising on the sale of the balance shares (forming part of the aforesaid lot) shall have to be given a similar treatment. However, in case the assessee is found to have converted or treated such shares as the stock-in-trade of the business carried on by him, then, the income/surplus arising on the sale of such shares shall be assessed in the manner provided in the provisions of sub-section (2) of Sec. 45 of the Act. Accordingly, in terms of our aforesaid observations, we herein modify the view taken by the CIT(A) and direct the A.O to give effect to our aforesaid observations and re-determine the re-characterization of the income/surplus arising on the sale of shares under consideration. Effect of CBDT Circular No. 6/2016, dated 29.02.2016 - where an assessee irrespective of the period of holding opts to treat the listed shares and securities as stock-in-trade, then, the income arising from the transfer of such shares/securities would be treated as his business income. Also, the same further contemplate that in respect of shares and securities held by an assessee for a period of more than 12 months immediately preceding the date of its transfer, if the assessee desires to treat the income arising from the transfer thereof as capital gain, the same shall not be put to dispute by the A.O. In fact, the CBDT in its aforesaid circular had observed that in all other cases, the nature of transaction (i.e whether the same is in the nature of capital gain or business income) shall continue to be decided keeping in view the circulars issued by the CBDT., viz. Instruction No. 1827, dated August 31, 1989 and Circular No. 4 of 2007, dated June 15, 2007. We, thus, are of the considered view that the aforesaid Circular No. 6/2016, dated 29.02.2016 relied upon by the assessee would be of no avail in the backdrop of the facts involved in his case before us.Appeal filed by the assessee is partly allowed for statistical purposes
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2021 (10) TMI 104
Addition u/s 36(1)(va) - late deposit of employees share of PF ESI which were deposited after the due date but before the due date of filing of return of income - scope of amendment - HELD THAT:- It is not in dispute that the assessee deposited the contribution of PF ESI belated in terms of section 36(1)(va) of the Act, however, the said deposits were made prior to filing of return of income u/s 139(1). Thus as relying on HARENDRA NATH BISWAS [ 2021 (7) TMI 942 - ITAT KOLKATA] , SALZGITTER HYDRAULICS PRIVATE LIMITED [ 2021 (6) TMI 1059 - ITAT HYDERABAD] and MOHANGARH ENGINEERS AND CONSTRUCTION COMPANY [ 2021 (8) TMI 563 - ITAT JODHPUR] additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s 139(1) of the Act, in all the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee.
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2021 (10) TMI 103
Addition u/s 68 - Bogus LTCG - Denial of long-term capital gain u/s 10 (38) - HELD THAT:- When the assessee has produced all the information/documents to prove the genuineness of the transaction of the earning of the long-term capital gain which is exempt u/s 10 (38) and the learned assessing officer do not make any enquiry on such documents but merely relied on the report of the SEBI and other material and makes the addition, it cannot be sustained. However, in this case we find that assessee could not produce the contract notes of entering into sale of the above shares on online trading platform of the stock exchange where the time and date stamp and the evidence of payment of security transaction tax is shown Assessee could not produce the contract notes having the date and time stamp and evidence of payment of securities transaction tax, which proves that assessee has sold his shares online on stock exchange trading platform. These documents are of the paramount importance to determine the claim of the assessee. In view of this we set-aside the whole issue back to the file of the learned assessing officer to examine the claim of the assessee of earning the long-term capital gain u/s 10 (38) of the income tax act as claimed by the assessee. We also grant full liberty to the assessee to raise all the pleadings raised before us or any further pleadings before the learned assessing officer. AO is also directed to consider all the arguments of the assessee and peruse the evidence produced by the assessee. The assessing officer may also conduct due enquiries after the assessee submits the necessary evidence and decide the issue in accordance with the law. Appeal of the assessee is allowed for statistical purposes
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2021 (10) TMI 101
Exemption u/s 11 - charitable activity u/s 2(15) - Whether activity of the assessee falls under the clause education and not the last limb of advancement of general public utility ? - claim of accumulation under section 11(2) - HELD THAT:- While dealing with the identical issues the Coordinate Bench has been pleased to observe as follows for A.Y. 2014-15:[ 2019 (6) TMI 1637 - ITAT AHMEDABAD] - We find the order impugned passed by the Ld. CIT(A) granting relief in regard to the claim made by the assessee under Section 11(2) and Section 11(1)(a) of the Act is just and proper, without any ambiguity so as to warrant interference. Hence, the Revenue s appeal found to be devoid of any merit, hence, dismissed.
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2021 (10) TMI 100
Deduction u/s. 80P(2)(a)(iii) - contention of AR that assessee earned commission from marketing agricultural produce which is eligible business and entitled for deduction u/s. 80P(2)(a)(iii) - HELD THAT:- As in this case, the assessee has not maintained separate books for each activity carried out by it. The assessee purchased and sold arecanut from members and non-members and also earned income from members and derived commission income from trading activity also - contention of the ld. AR is that the CIT(Appeals) arbitrarily adopted the figures for determining deduction u/s. 80P(2)(a)(iii) of the Act. As per assessee an opportunity may be given to present the correct figures so as to determine proper deduction u/s. 80P(2)(a)(iii) of the Act thus in the interest of justice it is appropriate to remit this issue to the AO only for the purpose of quantification of deduction u/s. 80P(2)(a)(iii) of the Act, after going through the books of account of the assessee - Appeals by the assessee are partly allowed for statistical purposes.
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2021 (10) TMI 99
Revision u/s 263 - main grievance of the Assessee in this appeal is that no incriminating material or documents were unearthed and seized during the course of survey operation u/sec.132 and even otherwise, the assessment in this case was not pending as on the date of initiation of search and had already attained finality - HELD THAT:- Hon'ble Bombay High Court in the case of CIT Vs. Murli Agro Products Ltd. [ 2010 (10) TMI 1052 - BOMBAY HIGH COURT] has held that the AO while passing independent assessment u/sec. read with section 143(3) could not have disturbed the assessment/ reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under section 153A establish that the reliefs granted under the finalised assessment/ reassessment were contrary to the facts unearthed during the course of 153A proceedings. The CIT could not have invoked the jurisdiction u/sec. 263 of the Act on the ground that the assessment order passed by the AO u/sec. 153A r.w.s. 143(3) was erroneous and prejudicial to the interest of revenue. From the conclusion of the Hon'ble Bombay High Court in the said case it is clear that if no incriminating material found during the course of search operation u/sec. 132 of the Act and the assessment /reassessment has attained finality, then the same cannot be disturbed u/sec. 263 of the Act by the ld. Pr.CIT. In the instant case the Pr.CIT could not have invoked the revisional jurisdiction u/sec. 263 of the Act to revise the subjected unabated assessments which have attained finality by accepting the income of the Assessee as NIL and yielded no addition, therefore we are inclined to quash the impugned order. - Decided in favour of assessee.
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2021 (10) TMI 98
Revision u/s 263 - AO has accepted the book profit declared by the assessee u/s 115JB of the Act without considering the addition u/s 14A - HELD THAT:- Pr CIT has taken the view that the amount disallowed u/s 14A of the Act while computing total income under normal provisions of the Act should be adopted for making addition to Net profit under clause (f) to Explanation 1 to sec. 115JB - view so expressed by Ld Pr. CIT was against the decision rendered by Special bench of Tribunal in the case of Vireet Investments (P) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI ] wherein it was held that the cfor the purpose of computing income under normal provisions of the Act cannot be imported for the purpose of addition to be made under clause (f) to Explanation 1 to sec.115JB for computing book profit, i.e., the amount to be added under above said clause has to be computed from the Profit and Loss account independently. A.R raised the contentions on applicability of provisions of sec.14A, yet we are of the view that the issue agitated here relates to the computation of book profit u/s 115JB of the Act and further the AO did not examine applicability of clause (f) to Explanation 1 to sec. 115JB while framing the assessment order. The same renders the assessment order erroneous and prejudicial to the interests of the revenue. PCIT has expressed the view, which is contrary to the decision rendered by the special bench in the case of Vireet Investments P Ltd (supra). Accordingly, we modify the order passed by Ld Pr. CIT and direct the AO to examine applicability of clause (f) to Explanation 1 to sec.115JB of the Act independently without having regard to the provisions of sec.14A of the Act. After affording adequate opportunity of being heard and untrammeled by the view expressed by Ld PCIT, the AO may take appropriate decision in accordance with law. Appeal filed by the assessee is partly allowed.
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2021 (10) TMI 93
Losses from Forex Derivatives - CIT deleted the addition - DR argued as losses claimed by the assessee are MTM losses and unrealized, contingent in nature, therefore, requested to set aside the order of the Ld.CIT(A) and allow the appeal of the revenue - HELD THAT:- The company had to pay difference to the banks between the expected rate of dollar at the time of booking the contract and actual value of dollar at the time of cancellation of contract and the resultant loss was debited to the account of the assessee, thus the losses were crystalised and not contingent in nature. There is no dispute that the bank has debited the loss and the assessee has incurred the forex loss on forward contracts. Entering into forward contract in foreign exchange is permitted by RBI and the losses were incurred during the course of business of the assessee. The assessee is not in the trade of foreign exchange and is engaged in the business of export of agri products and the loss was incurred in the course of business. Therefore, the facts of the assessee s case are identical to the case of Sri Ramalingeswara Rice Oil Mill of this Tribunal, relied upon by the Ld.CIT(A). This Tribunal in the case of Sri Ramalingeswara Rice Oil Mill [ 2016 (10) TMI 924 - ITAT VISAKHAPATNAM] held that the losses are crystalised and the foreign exchange loss incurred by the assessee is business loss. Waiver of loan by way of One Time Settlement (OTS) - deemed income - Remission or cessation of liability under section 41(1) - HELD THAT:- In the instant case, the assessee did not get any such benefit or the cessation of liability in respect of expenditure or trading liability incurred in the earlier years. The sum of ₹ 26.03 crores was not a profit and loss item, for which the assessee claimed any deduction or loss of expenditure. Therefore, there is no case for making the addition u/s 41(1) of the Act. This Tribunal while dealing the issue in the case of Vasavi Polymers on similar facts held that the AO is not permitted to tax the principal amount as income. As per SRI VASAVI POLYMERS P. LTD. [ 2020 (6) TMI 401 - ITAT VISAKHAPATNAM] there is no dispute that the benefit by the assessee was in respect of Principal amount but not the expenditure debited to the Profit and loss account and the facts are identical to the case supra. The department did not bring any other case to controvert the case cited above. Therefore CIT(A) erred in confirming the addition - Decided in favour of assessee.
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2021 (10) TMI 92
Income accrued in India - taxable event - amount received from the Indian entity on transfer of copyrighted articles as Royalty - as argued receipt is in the nature of reimbursement and hence not taxable - HELD THAT:- As assessee acquired only a limited right of user in respect of specific software products from PTC Inc. and two other vendors, which are in the nature of copyrighted articles. As such, there cannot possibly be a situation of it passing on the copyright in them to its group entities. It hardly needs to be accentuated that no one can transfer a better right in a product than he himself has. Since the assessee itself obtained only a limited access to the software products de hors the right to copy the same, the sequitur is that it could not have transferred anything more than that to its entities globally including India. No question of treating the amount received from the Indian entity on transfer of copyrighted articles as Royalty in the hands of the assessee within the meaning of Article 12(3) of the DTAA. Respectfully following the ratio decidendi in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] we hold that the authorities below were not justified in including the amount in question in the total income of the assessee as Royalty as relying on SAMSUNG ELECTRONICS CO. LTD. [ 2009 (9) TMI 526 - KARNATAKA HIGH COURT] which is no more a good law after the advent of the Engineering Analysis (SC)(supra). Resultantly, the receipt is held to be not taxable notwithstanding the rejection of the contention of Reimbursement. If the receipt from the Indian entity is not Royalty, can it be charged to tax as regular business income? - Absent any permanent establishment of an assessee in India, the receipt cannot be included in the total income on that score. The assessee made sale of finished goods in India including the first transaction of ₹ 7.21 crore and odd as taken note by the AO on page 7 of the draft order. DRP excluded it from the total income after receiving remand report from the AO accepting that the assessee did not have any permanent establishment in India. The same raison d'etre applies here also and hence the amount of ₹ 86,55,225 cannot be charged as Business profits as well under the DTAA. In the final analysis, the receipt is not chargeable to tax. Taxability of Reimbursement of Travelling, Freight and other charges - assessee contended before the DRP that it was a mere case of reimbursement of Travelling and related expenses incurred on behalf of its Indian entity without any mark up and hence the same did not constitute its income - HELD THAT:- The amount pertaining to only three employees has been recovered as such from the Indian entity. Again, there is another invoice of GO Riteway Transportation at page 1963 of the paper book with value of 8,898.04 USDs. Employees of the Indian entity have been named at two places in such an invoice. The exact amount as charged by GO Riteway Transportation group from the assessee has been recovered from the Indian entity. This invoice is also for transportation. Similar is the position regarding other invoices which are in relation to Lodging and Boarding of Indian employees recovered from the Indian entity without any profit element. In view of the above discussion, it is clear that one-to-one link is overtly established between the amount paid by the assessee to third party vendors and that recovered from the Indian entity, which is evidently without any mark up. As it is only reimbursement of cost not containing any profit element, there can be no question of including such receipts in the total income of the assessee. This issue is determined in favour of the assessee. Reimbursement of Internet charges from the Indian entity - AO included such amount in the total income as per the draft order - assessee assailed the same before the DRP, which rejected the assessee's contention by observing that no evidence was furnished - HELD THA:- The assessee has placed a tabulation of sample invoices of Internet charges allocated by it to the Indian entity on page 44 of the written submissions. A vendor called Verizon raised invoices on the assessee, sample of which have been placed at page 2008 to 2022 of the paper book. These invoices distinctly point out 'Location/Service Index', namely, the user. Indian address with the exact amount of charge has been mentioned, which has been recovered - it is not a case of cost sharing of total costs between all the entities on some allocation key but charging the exact amount paid for the Indian entity. This indicates that the assessee paid the amount in question to Verizon for internet access and then recovered it from the Indian entity as such without any mark up. As it is also a case of reimbursement, there cannot be any question of including it in the total income of the assessee. We, therefore, order to exclude Reimbursement of Internet charges from the Indian entity from the total income of the assessee on this score. The assessee succeeds. Rate of tax at which the income declared by the assessee has been charged - HELD THAT:- The purpose of an assessment is to determine the correct amount of income and tax payable thereon. If the Act provides for soft-peddling, then that cannot be whisked away by the Officers. As it is a matter of exercising the option and the assessee did it in a particular way which was more beneficial to it albeit during the course of the assessment proceedings itself, the claim ought not to have been denied. Be that as it may, even though the judgment in Goetze (supra) provides that the AO has no power to entertain claim made otherwise than by way of a revised return, it unequivocally provides: 'that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Tribunal under s. 254 of the IT Act, 1961'. Thus it is evident, that there is no such constraint on the power of the Tribunal and it can grant rightful relief on a point for which no claim was made in the return of income. We, therefore, hold that no fault can be found with the assessee exercising the option as per section 90(2) of the Act to be governed by the reduced rate of tax of 10% plus surcharge etc. in terms of section 115A of the Act. It is, therefore, directed that tax be charged on the declared income of the assessee from Royalty and FTS at 10% under the Act.
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2021 (10) TMI 91
Computation of Capital gain - whether interest on loan taken for purchase of vacant site goes to increase the cost of acquisition u/s.48 - HELD THAT:- The assessee has not placed on record his return of income and computation statement - in a position to determine whether the interest paid on ICICI Bank loan was claimed as deduction u/s. 24 - matter needs to be decided by the A.O. afresh. Accordingly, this issue is restored to the files of the A.O. A.O. is directed to examine the interest which was claimed as deduction u/s. 24 of the I.T. Act. In the event, the assessee establishes that there is no claim of deduction u/s. 24 of the I.T. Act in respect of interest paid A.O. shall consider the claim that interest paid whether it goes to increase the cost of asset in light of the dictum laid down in the case of Addl. CIT v. K.S. Gupta [ 1976 (8) TMI 9 - ANDHRA PRADESH HIGH COURT] and shall take a decision in accordance with law. Ground relating to computation of capital gains in respect of interest paid on loan, whether it goes to increase the cost of acquisition of land, is allowed for statistical purposes. Addition as unexplained money u/s. 69A - HELD THAT:- Many of the credits appearing in assessee's bank account is on account of bank transfers. The assessee's submission that the FD deposits in the name of his deceased mother, which were in the joint account with the assessee, were automatically transferred to the assessee's bank account cannot be totally ruled out. The assessee being an NRI and not being present in India during assessment proceedings, is sufficient cause for not producing the necessary material/evidence before the A.O. In the interest of justice and equity, the additional evidence, which is furnished, goes to the root of the issue and for substantial cause, admit the same. Since the additional evidence is taken on record, the matter is restored to the files of A.O. A.O. is directed to consider the evidences placed with regard to the source of credits in the bank account to the extent which has been disbelieved by the A.O. The A.O. is directed to afford a reasonable opportunity of hearing to the assessee and take a decision in accordance with law. It is ordered accordingly.
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2021 (10) TMI 90
Addition u/s 68 - unexplained cash credit - loans received from creditors - HELD THAT:- Addition was made by the AO of the loans received by the assessee from six creditors. When the matter was carried before the CIT(A), Assessee furnished the copy of the ledger accounts, their bank accounts, copies of income tax returns and other evidences to prove the genuineness of the loan CIT(A) after considering all the evidences furnished by the assessee had deleted the addition by noting that the AO did not make the necessary enquires and that the AO rejected the explanation of the assessee on the basis of surmises. Before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue. In view of the aforesaid facts, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed.
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2021 (10) TMI 87
Levy fee u/s 234E - amendment to section 200A of the Act w.e.f 01.06.2015 - whether late filing fee u/s 234E of the Act has rightly been charged in the intimation issued u/s 200A/206CB of the Act while processing the TDS returns/statements as the enabling clause (c) having been inserted in the section w.e.f. 01.06.2015 - HELD THAT:- As decided in SUDARSHAN GOYAL VERSUS DCIT- (TDS) , GHAZIABAD. [ 2018 (5) TMI 1626 - ITAT AGRA] substitution made by clause (c) to (f) u/s 200A(1) can be read as having prospective effect and not having retrospective effect - thus the demand u/s 200A for computation and intimation for the payment of fee u/s 234E could not be made - the levy of the fee is cancelled. Also see SRI. FATHERAJ SINGHVI AND OTHERS VERSUS UNION OF INDIA AND OTHERS [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] - Decided in favor of assessee.
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2021 (10) TMI 86
Correct head of income - Capital gain OR business income - conversion of capital asset into stock in trade - HELD THAT:- It is settled law that there can be no estoppel against law. Moreover, statement of Mr. Sudhir Dhingra reproduced in the assessment order also refers to section 45(2) and therefore, how can the taxability of income be brought into force in this year merely on the basis of statement of the main promoter when section 45(2) itself provides for the taxability in the year of sale of stocks. Moreover, Mr. Sudhir Dhingra stated in his statement to offer income in previous year relevant to AY 2015-16 as can be seen from para (v) of CIT(A) s order page 121 and not in the year under appeal. In our considered opinion, obtaining completion certificate of the project from the Appropriate Authority as on 8.5.2013 does not ipso facto give rise to any business income. As read/seen considered the objections raised by the first appellate authority which in our considered opinion are more or less on the same lines as adopted by the assessing officer. We do not concur with such observations and findings recorded by the first appellate authority and we thus hold that the addition as long term capital gain and made in the assessment order and confirmed by the first appellate authority do not stand to the test of law and are not justified on the facts and circumstances of the case and hence we delete the above said both the additions and allow the grounds of appeal of the assessee. Bogus of job work - HELD THAT:- Contention of CIT(A) that evidence filed by the assessee selfserving documents and circumstantial evidence leads to the conclusion of A.O. that Sh. Mohinder Kumar Garg was an old employee of the assessee company cannot take the case of revenue anywhere. It would be enough for us to say that voluminous documentary evidences filed by the assessee to which we have made elaborate reference above are clearly establishing the genuineness of the job work expenses. In the face of direct documentary evidences, how can the so called circumstantial evidences be relied. Documentary evidences filed by the assessee before the lower authorities which have been referred by CIT(A) in his appeal order to which reference has also been made in the written submissions filed by the assessee and to which out attention was drawn clearly establish that job work expense claimed by the assessee to have been paid to M/s Sai Exports are quite genuine and established. In the result, the grounds of appeal in the appeal of the assessee are allowed. Non genuine purchases of fabric made by the appellant - HELD THAT:- We do not want to burden our order by repeating the whole hosts of documentary evidences filed in this case which establish that the purchases made by the assessee from the above said two suppliers are genuine purchases. We have gone through the observations made by CIT (A) in his appeal order and we do not agree with them. Opening of the bank account by the suppliers in the same bank in which assessee had bank account is not something which is unusual as it may be necessary for the smoothness of the banking and avoid the loss of time in collecting the cheques etc. We find that the burden to prove purchases was very well discharged by the assessee. There is no incriminating material found as a result of search in respect of purchases fabric made by the appellant from M/s Super Connection India P. Ltd. other companies and whatever has been mentioned in the form of statements cannot be regarded as incriminating material. Even the survey proceeding referred in the assessment order does not indicate any incriminating material. Disallowance u/s 14A - assessee company has shown dividend income on mutual fund / shares and balance was deleted by CIT(A) - HELD THAT:- It is seen that there is exempt income only to the extent of ₹ 49,301/- and for this reason also, disallowance under section 14A could not have exceeded this amount in view of the decision of Joint Investment Ltd.[ 2015 (3) TMI 155 - DELHI HIGH COURT] and hence we uphold the order of CIT(A) to this extent.
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2021 (10) TMI 82
Addition on account of interest in the HSBC Geneva bank account - AO has computed the interest by taking the last known credit balance in the bank account as on May, 2006 - HELD THAT:- As after the May, 2006 there was no material available with the Assessing Officer to show whether any credit balance was available in the said bank account in the subsequent year and particularly for the year under consideration. The Assessing Officer has not disputed the fact that the there is no bank statement available or any other information to show the status of existence or foreclosure of the bank account as on 31.03.2014. Therefore, the Assessing Officer has made addition on presumptive interest income of the assessee. DR has not disputed the facts as recorded by the Ld. CIT(A) that the Assessing Officer has made the addition without any material to show any interest income of the assessee from the alleged HSBC Geneva bank account - As relying on own case [ 2016 (4) TMI 668 - ITAT DELHI] AO had not brought on record any evidence to link the money brought into India or kept in foreign accounts by the assessee have a link with any Indian defence contract payment. The income has not accrued or arisen in India. - Decided against revenue. Unexplained deposits in the ICICI Bank London - HELD THAT:- Assessing Officer was not sure about the year in which these deposits were made in those bank accounts. Finally, the Assessing Officer has held that in the absence of any required information amount appearing in the Column No.9 of the table showing the difference of the amount already added to the income of the assessee in the preceding Assessment Years to be added as income for the year under consideration. Assessing Officer has also recorded the fact that the status of the assessee as NRI during those years is not finally settled as pending before the Hon ble Supreme Court. Now the said dispute of NRI status is finally settled and the order of the Hon ble jurisdictional High Court has been upheld by the Hon ble Supreme Court as pointed out by the Ld. AR which was not disputed by the Ld. DR. As relying on own case [ 2016 (4) TMI 668 - ITAT DELHI] issue decided in favour of assessee.
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2021 (10) TMI 79
Revision u/s 263 - as per CIT assessment framed by the AO under section 143(3) read with section 147 of the Act as erroneous insofar prejudicial to the interest of Revenue - Addition u/s 68 - whether the learned Principle CIT can extend the area of examination under section 263 by revising the assessment order framed under section 147 r.w.s. 143(3)? - HELD THAT:- As finding of the learned principal CIT was not correct to some extent. It is for the reason that the company namely M/s. Rachna Finelease Pvt. Ltd. and M/s. Capaxo Logistics Pvt. Ltd. (Arham Properties Pvt. Ltd.) have filed income tax return in response to the notice issued under section 148 of the Act and accordingly assessment was completed under section 147 read with section 143(3) of the Act. The respective assessment orders of M/s. Capaxo Logistics Pvt. Ltd. and M/s. Racna Finless Pvt. Ltd. are placed where huge additions made in the hands of these companies on account of unexplained credit under section 68 of the Act. However, subsequently the learned CIT(A) was pleased to delete the addition made by the AO in their hands.Therefore, the finding of the learned CIT(A) is not correct upto this extent. Once the source of fund in the hand of above companies were held as explained by ld. CIT(A) then amount received by the assessee from these companies cannot be held as unexplained under section 68 of the Act in the proceedings carried out under section 263. All the document it is established that identity, genuineness of transaction and credit worthiness/sources of fund has been established. Further the learned principal CIT have not pointed out any deficiency in these documentary evidences neither any contrary evidences brought by the learned DR before us. Thus the finding of the learned CIT that the creditworthiness of the parties were not proven was not based on the cogent reasons. Thus the finding of the learned PCIT appears to be arbitrary and non-speaking. To our understanding the answer stands negative for the reason that proceeding under section 147 is limited to the extent of reason recorded. Though the provision section 147(1) authorizes AO to make addition with regard to any other issue if it comes to his/her notice during the proceeding. Here it is not the case. Hence the learned principal CIT cannot held the order under section 147 r.w.s. 143(3) for non-enquiry of share capital which was not the part of the proceeding. If he wanted to do so then he has to revise the order under section 143(1) of the Act as the case may be. See M/S. LARK CHEMICALS LTD. [ 2013 (9) TMI 959 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2021 (10) TMI 78
Disallowance of electricity and water expenses - CIT(A) following the decision of the Tribunal in the case of the assessee in earlier year sustained 50% of the disallowance and allowed relief for the balance amount - Whether expenses incurred wholly and exclusively for the purpose of profession? - HELD THAT:- CIT(A) has followed binding precedent in the case of the assessee itself and, therefore, we do not find any error in the order of the CIT(A) on the issue in dispute - we find that assessee has failed to justify that entire electricity expenses of the residence were related to the profession work. In the facts and circumstances of the case, we uphold the finding of the Learned CIT(A) on the issue in dispute. The ground No. (i) of the appeal of the assessee is accordingly dismissed. Disallowance out of foreign travelling expenses - lack of vouchers for these expenses - HELD THAT:- First, the assessee failed to submit legible copies of bills/vouchers for amount of expenses disallowed by the AO. Secondly, according to her, period of stay of 21 days in foreign country was not justified for the purpose of profession as the IBA Annual Conference and Exhibition was only from 30th September to 5th October, 2012 (only for 6 days). The Learned Counsel of the assessee could not justify before us also the period of 21 days in foreign country for the purpose of professional work. In our opinion, the finding of the Learned CIT(A) on the issue in dispute is well reasoned and we do not find any error in the same. Accordingly, we uphold the same and dismiss the ground no. (ii) of the appeal of the assessee. TDS u/s 195 - Disallowance u/s 40(a)(ia) - non-deduction of the tax at source on payment made to International Bar Association (IBA) - HELD THAT:- Neither the Assessing Officer, nor the Ld. CIT(A) has specified which kind of PE exist in the case of non-resident entity or how the business connection of non-resident is established. Even if, we assume that lower authorities have thought of fixed place PE, then the authorities are required to establish that place of Indian Bar Association was under 'control' and at the 'disposal' of International Tax Bar Association and 'core activity' of International Tax Bar Association has been carried out from said place. No such finding of fact has been recorded by the lower authorities - no evidence of any agency PE or service PE has been brought on record by the lower authorities. CIT(A) has also confirmed the disallowance in terms of Section 37(1) of the Act on the ground that expenses were not incurred wholly and exclusively for the purpose of the profession of the assessee. The assessee has also not submitted any credible evidence before us to demonstrate that those expenses were incurred wholly and exclusively for the purpose of profession - restore this issue back to the file of the Assessing Officer for deciding afresh.
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2021 (10) TMI 77
Assessment u/s 153A - Whether incriminating documents found during the course of search u/s 132? - unexplained cash credit u/s 68 - addition based on statement - bogus long term capital gain in the statement made under section 132(4) - HELD THAT:- Assessee made reference to CBDT Circular Bearing no.286/2003 dated 103.2003 which has been further explained in the subsequent circulars. The Board has emphasised that no disclosure be taken from the assessee and endeavour be made for collection of the material because according to the Board the Department used to take voluntary disclosure under section 132(4) of the Act and stopped further investigation. This type of declaration later on retracted by the assessee nor honoured in the return filed by them, and the department failed to corroborate such disclosure. Thus, according to him, there is no disparity of such event on this point. No doubt, the disclosure or admission made under section 132(4) of the Act during the course of search proceedings is an admissible evidence but not conclusive one. It is true that admission being declaration against an interest are good evidence, but they are not conclusive, and a party is always at liberty to withdraw the admission by demonstrating that they are either mistaken or untrue. In law, the retracted confession even may form the legal basis of addition, if the AO is satisfied that it was true and was voluntarily made. But the basing the addition on a retracted declaration solely would not be safe. It is not a strict rule of law, but only rule of prudence. As a general rule, it is unsafe to rely upon a retracted confession without corroborative evidence. Due to this grey situation, CBDT has issued Circular No.286/2/2003 prohibiting the departmental officials from taking confession in the search. The CBDT is of the view that often the officials used to obtain confessions from the assessee and stop further recovery of the material. Such confessions have been retracted and then the addition could not withstand the scrutiny of the higher appellate authority, because no material was found supporting such addition. It is pertinent to observe that in a large number of authoritative pronouncements, it has been held that merely on the basis of declaration addition should not be made. The alleged declaration should be supported with unexplained expenditure or assets discernible in the seized material during the course of search. After going through well reasoned order in the light of material brought to our notice, we are of the view that issue in dispute in all these appeals is squarely covered by order of the Co-ordinate Bench in the case of Shri Brij Bhusan Singal and others [ 2019 (1) TMI 698 - ITAT DELHI] , and hold that the long term capital gain declared by the assessee and claimed as exempt under section 10(38) are to be treated as genuine and they are not to be assessed as unexplained cash credit under section 68 of the Act. - Decided in favour of assessee.
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2021 (10) TMI 75
Unexplained cash credit u/s 68 - not providing the creditworthiness of the parties and the genuineness of the transactions - scope of pre-amended Sec. 68 - HELD THAT:- As the year in the case of the assessee before us is A.Y. 2010-11, therefore, the aforesaid proviso to Sec. 68 of the Act would not be applicable. To sum up, we concur with the view taken by the CIT(A) that not only the assessee had duly substantiated the identity and creditworthiness of the investor companies, as well as proved the genuineness of the transactions in question i.e receipt of share capital and share premium from the aforementioned three shareholder companies, however, independent of that, even otherwise as the aforementioned amounts were received by the assessee company from the abovementioned shareholder companies whose complete details were furnished by the assessee with the A.O, therefore, the same as per the pre-amended Sec. 68 of the Act could not have been assessed as an unexplained cash credit in the hands of the assessee. No infirmity in the view taken by the CIT(A) that the amount received by the assessee company as share capital and share premium from the aforementioned three shareholder companies could not have been assessed as an unexplained cash credit u/s 68 - Decided in favour of assessee.
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2021 (10) TMI 74
Validity of Search proceedings - Requirement of issuance of summons before initiation of search - Whether warrant of authorization is qua the premises and not qua the assessee ? - whether requisite satisfaction of the authorized officer who authorized the search could not have been validly arrived at since there was no information available qua each of the Petitioners to justify the search? - Material seized during the search - Undisclosed income of an Assessee - HELD THAT:- Department s case does not pertain to Section 132(1) (a) or (b) but 132(1)(c). The Department s contention is that it is in possession of information which led it to form reason to believe that the Petitioners are in possession of any money, bullion, jewellery or other valuable articles or things and such money, bullion, jewellery represents either wholly or partly income or property which has not been disclosed . - Both the petitioners have admitted in their respective writ petitions that they in fact did not file ITRs for certain AYs. Even this information, if available with the Department would have been sufficient for them to form a reason to believe for the purpose of Section 132(1)(c). In other words, it is not mandatory that in the present case there should have been summons under Section 131 of the Act for the Department to proceed to initiate action under Section 132 of the Act. If here was such information available for the purposes of search, why did the Department have to undertake a survey of the factories of both Shiva and Shivom under Section 133A of the Act? - There is nothing in either in Section 132 or 133A of the Act that prohibits the Department from undertaking a survey of an entity exclusive to one location of its operations, whereas it may have credible information for search as regards the operations in another location. As rightly pointed out by the Department, search is qua a place and not necessarily qua the Assessee . Survey by its very nature could be of the entity and any place from where such entity may operate. It is perfectly possible that while conducting survey and search of the premises of an entity, for which an authorisation has been issued, the Department can come across material pertaining to some other person or entity. The provisions like Section 153C of the Act deal with such contingencies. However, that is not to say that a survey or a search cannot happen in two different premises simultaneously. Further, if search is qua the place, the Court sees no reason why if there are two entities in one premises, there cannot be a common search operation. The Court is not prepared to accept the plea of the Petitioners that in the present case the search and survey operations were entirely without jurisdiction. The Court would like to add that this conclusion is of a prima facie nature since despite the petitioners having insisted on a finding by this Court, the right of the Assessees to agitate this issue again in the further proceedings cannot be lost sight of. Consequently, the Court is not satisfied that any ground is made out by either of the Petitioners for grant of any of the reliefs as prayed for at this stage. Although the Court has expressed its prima facie view on the legal and factual issues raised, on the insistence of the Petitioners, it is clarified that after the assessment orders are received and if the Petitioners are aggrieved thereby, it would be open to them to urge all the grounds raised in the present petitions, apart from any further grounds they may have, before the Appellate Authority in accordance with law.
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2021 (10) TMI 73
Return of TDS amount deducted u/s 194A on award passed under motor insurance act - seeking release of amount deducted by the non-applicant/Insurance Company on account of 20% TDS from the interest earned on the awarded amount - HELD THAT:- Deduction made by the non-applicant/Insurance company is not in due adherence to the clause ix (a) of Section 194-A of Income Tax Act, 1961, as same has to be applied on the awarded amount proportionately in favour of the claimants with spread of years from which the claim is made. In terms of the application of provision of law quoted above, the proportionate valuation of the entitlement of the interest amount to the awarded amount is ₹ 7000 per claimant, therefore, the same does not exceed ₹ 50,000/- which can be taxable by application of Clause ix (a) of Section 194-A of Income Tax, 1961. This application is allowed and the Registry is directed to release the amount deposited by the non-applicant/Insurance Company, on account of deduction of tax on interest amount in favour applicants-claimants. The amounts shall be released in favour of the applicants/claimants through their counsel on proper identification and verification. The non-applicant/Insurance Company is at liberty to seek withdrawal of the amount so deposited with the Income Tax Department and the Income Tax Department shall release the deducted amount as and when such requisition is made by the non-applicant/Insurance Company.
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2021 (10) TMI 72
Application under the DTVSV Act 2020 rejected - whether no appeal is pending as on the date specified date i.e. 31.01.2020, whereas the appeal was filed with an application for condonation of delay - HELD THAT:- As the respondents did not oppose the condonation of delay and also the prayer of the petitioner to withdraw the appeal to avail the benefit of the DTVSV Act 2020, it is not open for the respondents now to turn around and reject the declaration filed in Forms 1 2 with the Remark as as no appeal is pending as on the date specified date i.e. 31.01.2020, as per Section 2 of the DTVSV Act 2020, and the assessee is not an eligible declarant. Also the condonation is not filed before the date of issue of Circular No.21 of 2020 dated 04.12.2020. So, the applicant is not an eligible declarant. Hence, the application filed by the appellant is hereby rejected. Since, this Court had already taken the view that no significance can be attached to the date of 04.12.2020 specified in Circular No.21 of 2020 while providing answer to Question No.59; that the same would have to be considered as applicable even in relation to further extension of time granted for filing declaration up to 31.03.2021 and cannot be restricted, the declaration filed by the petitioner under DTVSV Act, 2020 on 05.03.2021 would have to be considered as validly filed, and that the petitioner is eligible to avail the benefit under the DTVSV Act, 2020. This Court, in Boddu Ramesh's case ( 2021 (6) TMI 1054 - TELANGANA HIGH COURT ), taking note of the speech of the presenter of the Bill before the Parliament and the Statement of Objects and reasons appended to the DTVSV Act, 2020, held that the DTVSV Act, 2020, is a beneficial piece of legislation, and interpretation of the same should be in such a manner which would go to achieve the object for which the same was enacted. This Court, in M/s. Dongfang Electric Corporation Ltd. v. Designated Authority2, [ 2021 (9) TMI 92 - TELANGANA HIGH COURT ] held that the DTVSV Act, 2020 being a beneficial piece of legislation, resort should be made to liberal interpretation rather than literal interpretation, which would render the entire scheme inoperable . It is to be held that the rejection of the declaration filed by the petitioner under DTVSV Act, 2020 in Forms 1 and 2 on 05.03.2021. with the Remark noted on 20.04.2021, by the 3rd respondent, on the basis of answer to Q.No.59, vide Circular No.21 dated 04.12.2020, cannot be sustained. Writ Petition is allowed and the impugned order of the 3rd respondent,with the Remark as noted therein, is hereby set aside; the 3rd respondent is hereby directed to accept the declaration Forms 1 and 2 filed by the petitioner on 05.03.2021; process the same in accordance with the DTVSV Act, 2020; issue Form 3; and accept the payment from the petitioner as declared in Form 1 filed, before the due date as notified.
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2021 (10) TMI 71
Reopening of assessment u/s 147 - setting off of the interest expenses under Section 57 - Assessment reopened after the expiry of a period of four years - review v/s reopening - mandation of recording satisfaction before concluding reason to believe - wrong claim of the deduction under Section 57 - HELD THAT:- petitioner had truly and fully disclosed all material facts necessary for the purpose of assessment. Not only material facts were disclosed by petitioner truly and fully but they were carefully scrutinized and figures of income as well as deduction were reworked carefully by the Assessing Officer. In the reasons for reopening, the Assessing Officer has infact relied upon the audited accounts to say that the claim of deduction under Section 57 of the Act was not correct, the figures mentioned in the reason for reopening of assessment are also found in the audited accounts of petitioner. In the reasons for reopening, there is not even a whisper as to what was not disclosed. In the order rejecting the objections, the Assessing Officer admits that all details were fully disclosed. In our view, this is not a case where the assessment is sought to be reopened It cannot be said in the present case that there was an omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. It cannot be stated that the condition precedent to the reopening of an assessment beyond a period of four years has been fulfilled. As observed in Parashuram Pottery Works Co. Ltd. [ 1976 (11) TMI 1 - SUPREME COURT] it would be in the interest of citizens of India or we should say, civilization that those who are entrusted with the task of calculating and realising the price that we pay for the civilization should familiarise themselves with the relevant provisions and become well versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. The petition is allowed.
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2021 (10) TMI 70
Benefit of Vivad Se Vishwas Scheme - assessee had already been issued with Form-3 on 10.02.2021 - HELD THAT:- Assessee has already availed the benefit under the Act, no useful purpose would be served in keeping the appeal pending. At the same time, the interest of the assessee in the event the order to be passed by the Department under the Act is not in favour of the assessee, is to be safeguarded. Accordingly, the Tax Case Appeal stands disposed of on the ground that the assessee has already been issued with Form-3 and the Department shall process the application at the earliest in accordance with the said Act and communicate the decision to the assessee at the earliest. As observed, the assessee is given liberty to restore the appeal in the event the ultimate decision to be taken on the declaration filed by the assessee u/s 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders.
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2021 (10) TMI 69
Disallowance u/s 14A r.w. Rule 8D - assessee had suo moto disallowance - HELD THAT:- If a claim though available in law is not made either inadvertently or on account of erroneous belief of complex legal position, such claim cannot be shut out for all times to come, merely because it is raised for the first time before the appellate authority without resorting to revising the return before the AO. It has further held that any ground, legal contention or even a claim would be permissible to be raised for the first time before the appellate authority or the Tribunal when the facts necessary to examine such ground, contention or claim are held on record. It has further held that income tax proceedings are not strictly adversarial in nature and the intention of the Revenue should be to tax the real income. Thus in the absence of any exempt income, no disallowance u/s 14A of the Act could not made, we are of the view that the assessee cannot be denied to withdraw the suo moto disallowance u/s 14A - Decided in favour of assessee.
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2021 (10) TMI 68
Validity of Reopening of assessment u/s 147 - notice to company as no longer in existence and was dissolved by the orders of the Registrar of the Companies - whether curable defect u/s 292B? - HELD THAT:- Assessee under the provisions of Section 560 of the Act had made an application on 09.07.2016 before the Registrar of Companies for getting its name struck off from the Register of Companies and its dissolution. The intimation of the receipt of application was issued in the Gazette for publication and its copy was also sent to the Chief Commissioner of Income-tax. Thereafter on 19.01.2017, the name of the assessee was struck from the register of Companies and it was dissolved from that date and the intimation about the same was also given to the Income Tax Officer. Despite the aforesaid, notice u/s 148 of the Act for the reassessment proceedings was issued by the AO on 29.03.2018 when the company was no longer in existence and was dissolved by the orders of the Registrar of the Companies. Thus on the date of issuance of notice u/s 148 of the Act, assessee was no longer in existence. As in the case of Spice Infotainment Ltd. [ 2011 (8) TMI 544 - DELHI HIGH COURT] has held that the assessment in the name of company which has been amalgamated with another company and stood dissolved to be null and void and the assessment framed in the name of a non-existent company to be a jurisdictional defect which could not be cured under Section 292B of the Act. - Decided in favour of assessee.
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2021 (10) TMI 67
Unexplained cash deposit in the Bank A/c - Estimation of income under the presumptive taxation u/s 44AF - HELD THAT:- A perusal of the letter addressed to the A.O. shows that assessee has categorically mentioned that he is engaged in the retail trading of tailoring materials since long and his total income had never become taxable, for which, he never filed his return of income. The assessee had also explained before the A.O. that he is having only one S.B. A/c maintained with ICICI Bank Limited and has no Current A/c for maintaining business transactions and all his sales and purchases have been routed through his S.B. A/c only. There is no material on record before the A.O. that apart from the aforementioned Bank A/c, the assessee is having any other Bank A/c. therefore, find merit in the arguments advanced by Assessee that when all business transactions i.e., purchases and sales etc., are routed through the only Bank A/c maintained with ICICI Bank Limited and since in the subsequent assessment year the A.O. himself has accepted that the S.B. A/c of the assessee is used for his business transactions and since the assessee has opted for presumptive taxation under section 44AF lower authorities are not justified in sustaining the addition as unexplained cash deposit in the Bank - Decided in favour of assessee.
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2021 (10) TMI 66
Penalty u/s 271(1)(c) - whether the expenses are capital or revenue in nature? - debatable issue - addition being 50% of the expenditure debited in the profit loss account under different heads and for making addition being the alleged difference between the income shown in 26AS and income shown in the profit loss account - whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income during assessment proceedings? - HELD THAT:- Mere disallowance of expenditure claimed as per books of account, penalty u/s 271(1)(c) of the Act cannot be levied unless any particulars in the return of income has been found to be false or incorrect. Making ad hoc disallowance by the AO to the extent of 50% of the expenditure claimed by the assessee on account of salary wages, communication expenses, marketing expenses, professional legal expenses and tour travel expenses by holding the same to be capital in nature itself shows that the AO himself was not satisfied as to in which of the case assessee furnished inaccurate particulars because everything decided by the AO as well as ld. CIT (A) on ad hoc basis on the basis of their guesswork. Even otherwise, we fail to comprehend as to what enduring benefit has been created in favour of the assessee by incurring expenses on salary wages, communication expenses, marketing expenses etc. because these are expenses which are necessary to carry out day-to-day business. Moreover, it is a debatable issue if the expenditures are capital or revenue in nature as has been held by Hon ble Punjab Haryana High Court in case of CIT vs. Gurdaspur Cooperative Sugar Mills Ltd[ 2013 (3) TMI 175 - PUNJAB AND HARYANA HIGH COURT] . Also as perused the documents brought on record by the assessee hich go to shows that how much revenue was booked by the assessee and how much was the reimbursement of the expenses leading to no difference in the income shown in the 26AS and profit loss account. Ld. DR for the Revenue has failed to point out any difference in the income shown in Form 26AS and profit loss account as explained by the assessee. So, on this score also, the Revenue has failed to prove if inaccurate particulars have been furnished by the assessee. AO has failed to make out the case of furnishing of inaccurate particulars of income by the assessee so as to levy the penalty. Consequently, question framed is decided in favour of the assessee and against the Revenue.
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2021 (10) TMI 65
Allowable business expenditure v/s personal use out of expenditure - Disallowance towards alleged personal use out of expenditure on festival and gifts - HELD THAT:- We find merit in the contentions of the Ld. Counsel for the assessee that the addition has been made purely on adhoc basis. The Assessing Officer has not pointed out any specific item related to the personal uses. Therefore, the addition made by the Assessing Officer and sustained by Ld.CIT(A) is not justified hence, deleted. TDS u/s 195 - Disallowance of legal and professional expenses by invoking section 40(a)(i) - Scope of amendment - HELD THAT:- We do not see any justification to sustain the addition as made by the Assessing Officer. Ld.CIT(A) has categorically stated that the retrospective amendment has been clarified that even if non-resident has no business communication to India and not rendered any services in India then also the payment received deem to accrue or arise in India. As decided in MIRA EXIM LTD. [ 2018 (1) TMI 739 - DELHI HIGH COURT] as amounts paid were not Fee for Technical Services (FTS) under Explanation 7 to section 9(2),the deduction under section 40(a)(ia) was not warranted - Decided in favour of assessee. Disallowance of interest paid on account of notional interest on interest free advances given to the related party against the purchase of guest house property - HELD THAT:- The issue is identical to the issue involved in the earlier year. The matter travelled to Hon ble High Court. Hon ble High Court has confirmed the deletion made by the Tribunal [ 2018 (1) TMI 739 - DELHI HIGH COURT ] disallowance under section 36(1)(iii) is concerned, the addition was made purely on the basis that the funds were borrowed by a Director and that interest needed to be charged. This was wholly erroneous premise because the amounts were given to the Director for purely business purpose of the entity, i.e. to acquire guest house. The proposal did not materialize and eventually the money was returned. It is not Revenue s case that the amounts were utilized by the Director for her own purpose - finding with respect to commercial expediency, in the circumstances, does not call for interference - Decided against revenue. Addition invoking the provision of section 40A(3) - assessee submitted that Ld.CIT(A) was not justified in directing the Assessing Officer to invoke the provisions of Rule 6DD of the Income Tax Rules, 1962 - grievance of the assessee that Ld.CIT(A) gave direction for enhancement without complying the provision of section 251(2) - HELD THAT:- We find that Ld.CIT(A) did not comply with the provision of section 251(2) of the Act. Therefore, the direction of Ld.CIT(A) is hereby, quashed being illegal.
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2021 (10) TMI 64
Depreciation on account intangible assets - CIT-A deleted the addition - HELD THAT:- As decided in own case [ 2019 (1) TMI 1399 - ITAT DELHI ] when in the valuation report, which is given by PDIL, a Government of India Undertaking, intangibles assets and their benefits have been specifically valued and the assessee had paid a sum in a slump sale agreement for approvals, licences, permits, registration to run the business over and above the total price of fertilizer plant the same are intangibles and deprecation thereon is allowable u/s 32(l)(ii) of the Act apart from the depreciation claimed by the assessee on tangible assets. - Decided against revenue. Loss on sale of investment in the form of fertilizers bonds - CIT-A deleted the addition - HELD THAT:- We find that the Ld.CIT(A) has recorded a finding on fact that the amount of the fertilizers bonds (subsidy) has been declared as a revenue receipt in the respective assessment years. This finding on facts is not rebutted by Revenue by placing any contrary material. Therefore, we do not see any reason to interfere in the finding of Ld.CIT(A).
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2021 (10) TMI 63
Reopening of assessment u/s 147 - notice issued beyond six years - Capital receipt on flat - HELD THAT:- The assessee has received flat of 1536 sq.ft. in lieu of old flat of 645 sq.ft. in addition to said hardship allowance. It has not been controverted that the said agreement was undertaken between the said two parties and assessee was also one of the beneficiary/flat owner in the said society - assessee has not pointed out any fact that the assessee has declared the said transaction before the department, therefore, the allegation levelled by the AO that the assessee has not declared fully and truly the income chargeable to tax for A.Y. 2010-2011 relevant to A.Y.2011-2012. At the time of initiation of proceedings, the assessee has to draw a prima facie inference and satisfaction that the income has escaped assessment but the AO has not debarred or stopped from granting relief to the assessee by dropping the reassessment proceedings if during the course of reassessment proceedings the assessee exclusively established and substantiate that there was no income chargeable to tax has escaped. Without commenting on merits of the case, we are of view that the initiation of reassessment proceedings and proceedings u/s.147 of the Act by pressing into service clause (b) of Explanation 2 to Section 147 of the Act and issuance of notice u/s.148 of the Act is valid and has been based on sound legal principle and provisions of the Act. Capital or revenue receipt - benefits received by the assessee from a bigger size of flat - HELD THAT:- The orders passed by the ITAT Mumbai Bench in case of Smt. Delilah Raj Mansukhani [ 2021 (3) TMI 252 - ITAT MUMBAI ], Jitendra Kumar Soneja [ 2016 (8) TMI 1087 - ITAT MUMBAI] and Kushal K Bangia [ 2012 (2) TMI 29 - ITAT MUMBAI ] it is amply clear that where the assessee being a flat owner in a housing society receives certain sum from developer as corpus fund towards hardship caused to flat owners on redevelopment, impugned amount has to be treated as capital receipt simplicitor which as per Section 2(24)(vi) of the Act is not taxable as income of the assessee Benefit received by the assessee in the form of bigger size of flat and amount received as hardship allowance from the developer is a capital receipt, which cannot be treated as revenue receipt for taxing as income. - Appeal of assessee partly allowed.
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Benami Property
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2021 (10) TMI 125
Suit maintainable under the provisions of Benami Transactions (Prohibition) Act, 1988 - Whether suit barred under Section 4(1) of the Benami Act, 1988?- HELD THAT:- The suit property was in possession of late Hariprasad Agrawal until his death, therefore, Savitri Devi was a benami holder of the property. There is no such pleading in the plaint that the suit property was purchased for the benefit and improvement of Joint Hindu family property. In fact, there is no mention of the Joint Hindu family property in the whole plaint. Neither there is any mention of Hindu undivided family nor the joint property of such undivided family. In this circumstance, the absence of such pleadings, which are the requirement under sub-section (3) of Section 4 of the Act, 1988, for the maintainability of the suit as an exception to the provision under Section 4(1) of the Act, 1988, is totally missing. The prayer under Order VII Rule 11 of the CPC for rejection of plaint has to be considered only on the basis of the plaint averments and nothing else. The plaint averments as disclosed herein-above clearly shows that nothing has been pleaded to show that the suit property was held by Savitri Devi as coparcener of a Hindu undivided family and the same was for the benefit of all the coparceners of the Joint Hindu family. This being the position on the basis of the facts and pleadings in the plaint, there is no material to draw conclusion that the suit filed by the respondents is covered under the exception as provided under Section 4 (3) of the Act, 1988. This being the conclusion, the suit filed by the respondents appears to be clearly barred under Section 4(1) of the Benami Act, 1988 and in such a case the plaint of the respondents is liable to be rejected under Order VII Rule 11(d) of the CPC. As held that the impugned order passed by the learned trial Court is erroneous and unsustainable, therefore, the same is set aside. The application of the petitioners under Order VII Rule 11 of the CPC is allowed.
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Customs
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2021 (10) TMI 139
Seeking to re-export the Gold Dore Bars, on their furnishing shipping bills - warehoused goods - Order XLVII Rule 1 of the Code of Civil Procedure, 1908 (CPC) - HELD THAT:- The review petition does not make out any case of either of an error apparent on the record of the impugned order which merely records the consent of learned Counsel for the respondent and disposes of the petition on that basis or of the order meriting a re-consideration owing to any new material which has come to the notice of the respondent, i.e. the petitioner in the present review petition. Nonetheless, given the fact that the matter involves public revenue, we have deigned to hear the review petitioner, invoking, for the said purpose, the any other sufficient reason clause in Order XLVII Rule 1 CPC - there are no ground, whatsoever, to review the order or to accede to the submissions advanced by the review petitioner - No Bill of Entry having been filed in respect of the Gold Dore Bars in the present case, and as they still remained within Customs bond, the factum of import of the bars is, as yet, incomplete. It cannot be said that the import of the Gold Dore Bars into India is completed at this point of time. They cannot, therefore, be said to be in the nature of imported goods, for the purposes of enforcing the actual user condition contained in Notification 50/2017-Cus. Compliance with the actual user condition - HELD THAT:- The question of compliance with the actual user condition would arise only if the goods were released for home consumption, as it was obviously impossible for the importer to comply with the actual user condition when the goods were still in Customs bond. Admittedly, the Bill of Entry, in respect of one remaining consignment, is yet to be filed. The consignment is yet, therefore, to be released for home consignment. There can be no question, therefore, of the importer having to comply with any actual user condition at this point of time. The right of the importer to re-export the imported goods, even after clearance and removal to its factory premises, for bona fide grounds, stands acknowledged by the Supreme Court. One such permissible consideration is the fact that the use and sale of the goods in India, has become financially unremunerative. Every businessman works, axiomatically, for profit and that, if the tax authorities impose unrealistic restrictions, unsupported by statutory prescription or proscription, in the way of legitimate trade, it would, in the ultimate eventuate, discourage international trade and commerce, and would, therefore, be detrimental to the national economic interest. The petitioner sought a clarification from the DGFT. We have reproduced the query raised by the petitioner specifically to indicate that, in raising the query, the petitioner was candid regarding the real factual position. The petitioner disclosed the fact that the import was made against a license which contained an actual user condition and that the goods still remained in Customs bonded area. The nature of the objections raised by Customs authorities were also disclosed to the DGFT. Despite this, the DGFT clearly clarified that export of gold not being prohibited, the petitioner was entitled to re-export of the Gold Dore Bars - No justifiable reason, for the Customs authorities to contend otherwise, commends itself. We do not feel that, in acceding to the request of the petitioner to re-export the Gold Dore Bars, the learned Standing Counsel, on 4th September, 2019 committed any error apparent from the record - review petition dismissed.
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2021 (10) TMI 136
Smuggling - Detention order - Illegal availment of duty drawback - reasonable basis provided by any statements or not - section 3(1) of the COFEPOSA Act - petitioner is alleged to have attempted to export goods on paper without actually exporting anything - prejudicial activity under the COFEPOSA Act - whether there was a live-link or a causal connection between the prejudicial activity, in which the petitioner is alleged to have indulged, and the passing of the detention order? - grounds on which the detention order is premised are stale or illusory or have no real nexus with the need for placing the petitioner under prevention detention, or not. HELD THAT:- A close and careful perusal of the time-chart discloses that the 'actual activity which the petitioner is alleged to have done was of having exported certain goods only on-paper vid shipping Bill No. 9551237 dated 11.12.2018, whereby, as the allegation goes, the vehicle carrying goods was found to have been a tractor (presumably, as opposed to a truck or other goods carrier) and no goods were in fact loaded for onward export, though duty drawback and benefit under the IGST Act are alleged to have been availed. The other dates contained in the time-chart from 11.12.2018 all the way upto the passing of the impugned detention order dated 15.01.2021, which order was served upon the petitioner on 23.01.2021, do not disclose any other prejudicial activity which the petitioner can be said to have undertaken after 11.12.2018. Since, as the record discloses, the last act which the petitioner undertook, and which may amount to prejudicial activity, was on 11.12.2018, but the detention order was passed more than 02 years later on 15.01.2021, it is evident that the live-link or causal connection between the petitioner s preventive detention, meant to forestall the petitioner from indulging in any prejudicial activity, can surely be said to have snapped - the detention order passed on 15.01.2021 and served upon the petitioner on 23.01.2021 cannot be said to be validly based upon alleged prejudicial activity undertaken by the petitioner on 11.12.2018. A gap of more than 02 years between the last alleged prejudicial activity undertaken by the petitioner cannot be the basis for a justifiable apprehension that the petitioner would indulge again in similar prejudicial activity, to prevent which he should be preventively detained. The petitioner is directed to be released from custody forthwith, unless his custody is required in any other matter - petition disposed off.
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2021 (10) TMI 135
Levy of Anti-dumping duty - imports of melamine from the Peoples of Republic of China - sunset review investigation conducted by the Joint Secretary-cum-Designated Authority - N/N. ADSSR/16/2020 dated 23.08.2021 - grievance of the petitioner is that in course of the investigation by the Designated Authority, the petitioners had submitted certain representations/questionnaires, in course of their entitlement for a hearing before the Designated Authority where sunset review investigation was being conducted - HELD THAT:- As the final determination has not yet been made by the Central Government, we request the Central Government to take note of that the import questionnaire response submitted by the petitioner at the stage of sunset review investigation was not taken into consideration by the Designated Authority by stating the reason that they were required to file user questionnaire response and not the import questionnaire response in the background of the aspect that it is an admitted position of the Designated Authority that the petitioner Century Ply is both an importer and a consumer and by taking note, give a due consideration as required under the law. If any other representation was also submitted by the petitioners before the Designated Authority at the stage of the investigation, the Central Government may also look into it, if otherwise acceptable in law. It is also stated that the petitioners had also submitted the representation before the Designated Authority at the stage when the sunset review investigation was carried out. Petition disposed off.
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2021 (10) TMI 129
Quantum of redemption fine - unauthorised import of restricted item - rough marble blocks imported without an import licence - HELD THAT:- COC (I) has not given any basis as to how he decided a redemption fine of ₹ 37 lakhs. It is settled law that the quantum of redemption of fine which could be imposed is always dependent on the determination of the market price of the goods confiscated . The Apex Court in the case of CC VERSUS MANSI IMPEX [2011 (8) TMI 470 - SUPREME COURT] says this is one of the pre-requisites prescribed in the statute itself . In the case at hand, the COC (I) has not even conducted a sample market survey for determining the market price of the goods, without doing that, it could not have been possible for the COC (I) to arrive at a legally justified and correct quantum of redemption fine to be imposed - Also, COC (I) has not even observed in his order that respondent was a repeat offender or that was the reason why he imposed the penalty of almost 80% on respondent. The Tribunal has correctly observed that there was no discussion in the order of the COC (I) as to how the quantum of fine has been arrived at and what would be the margin of profit in order to arrive at the quantum of fine. The Tribunal has at least given the basis as to why they have reduced redemption fine to 35% - Appeal is dismissed.
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2021 (10) TMI 126
Smuggling - foreign currencies - Contraband item - statutory revisions under Section 129DD of the Customs Act, 1962 - HELD THAT:- Third respondent is directed to dispose of the stay petition as expeditiously as his business would permit and in any event, within three weeks from today i.e., on or before 08.10.2021 on its own merits and in accordance with law. Though obvious, it is made clear that this Court has not expressed any opinion or view on the merits of the matter in this order. Captioned Writ Petition and Writ Miscellaneous Petitions are disposed of - Registry to ensure that necessary and consequential amendments in the case file (owing to suo-motu impleading of third respondent) are carried out before issue of order copy and uploading of this order in the website.
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2021 (10) TMI 122
Jurisdiction - power of Directorate of Revenue Intelligence to issue a SCN under Section 28(4) of the Act - recovery of duties allegedly not levied or paid when the goods have been cleared for import by a Deputy Commissioner of Customs who decided that the goods are exempted - HELD THAT:- It is a settled preposition of law that, normally in tax matters, as against the order-in-original the writ petition would not be entertained unless the appeal remedy is exhausted and the tax payer/assessee can approach the High Court only after exhausting the appeal remedy. However, there are exceptions to the general rule, where, under three circumstances writ petitions are entertained. In the first category, if the principle of natural justice is violated and in the second category if there is any statutory violation and in third category if for want of jurisdiction the order passed by the authorities concerned can be questioned in a writ petition. Here in the case in hand, since the said plea of want of jurisdiction was not raised as there was no such ground was available at the time of filing the writ petitions in the year 2018, however during the pendency of the writ petition law has developed and the Canon India judgment has come in March 2021. After judgment of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] atleast two decisions from this Court as well as the Karnataka High Court on the same point had been rendered, where, in the judgment of the Karnata High Court referred to above, this issue has been extensively discussed and by applying the ratio of Canon India judgment the learned Judge allowed the writ petition stating that the proceedings initiated under Section 28 of the Customs Act by any other officer other than a proper officer shall be vitiated, therefore, the entire proceedings was interfered with and set aside. Since admittedly the Show Cause Notice dated 17.03.2009 was issued by the Additional Director General of Directorate of Revenue Intelligence, Chennai which culminated in the impugned order-in-original dated 28.08.2014, the said proceedings would not stand in the legal scrutiny and therefore, it is liable to be interfered with - Petition disposed off.
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2021 (10) TMI 120
Validity of summon issued - Seeking to direct the respondent to defer the adjudication proceedings before the respondent - cross examination of the officials and the documents sought for - HELD THAT:- On perusal of relevant provisions of the Customs Act, ie., Section 135 under the heading 'evasion of duty or prohibition', it has been provided that, whoever commits any of the action that has been mentioned in Section 135(1)(a) to (e) shall be punishable with the imprisonment which may extend to seven years and with minimum punishment of not less than one year - This is the separate proceedings, which can be initiated by the Customs Department as it is a punitive action on the part of the Customs Department as has been provided under Section 135 of the Customs Act, whereas the adjudication proceedings is altogether a different issue, where ultimately penalty could be imposed against the erring person under Sections 114A and 114AA of the Customs Act. Insofar as the present adjudication process is concerned, it may ultimately end in imposing of penalty under Sections 114A and 114AA of the Customs Act and this proceedings had already been concluded on 30.06.2020 itself. However, for want of furnishing of certain documents, that has been quashed by this Court and accordingly, the respondent was directed to proceed further for furnishing the document - Only in pursuance of the said direction issued by this Court permitting the documents sought for by the petitioner and also permitting the petitioner to cross examine the witnesses as he sought for, now the respondent has fixed the hearing and by thus, the present summon dated 19.08.2021 has been issued. In the Criminal proceedings, which has already been launched against the petitioner, after full-fledged trial, the Criminal Court will decide as to the guilt of the petitioner whether he has to be punished or not. Therefore, at no stretch of imagination, it can be stated that merely because of adjudication process is being conducted, that will have a prejudice against the petitioner in the criminal proceedings launched against him - in view of the peculiar circumstances, where, the service law governing the personnel of the State and Central Authorities concerned, which are in different perspective, where mere preponderance of probability is enough to take a conclusion that whether code of conduct prescribed against service personnel has been violated or not and only in that context, the departmental proceedings would be concluded and the penalties would be imposed against such person. This Court feels that the challenge now made by the petitioner against the impugned summons dated 19.08.2021 directing the petitioner to appear for hearing on 27.08.2021 cannot be a successful challenge - Petition dismissed.
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2021 (10) TMI 119
Seeking refund of amount debited from the MEIS scrips issued to the petitioner in cash - Refund of education cess or the higher and secondary education cess - HELD THAT:- The petitioner had imported RBD Palmolein under 10 warehouse bills of entry and 52 bills of entry, for which, whatever the duty imposed against him had been paid, of course, by using the scrips issued under MEIS. This is an acceptable method for debiting the duty by using the credit scrips under MEIS. While paying such duty, using the scrips, the petitioner had paid the entire duty, which includes the education, secondary education or higher education cess to the total amount of ₹ 22,88,86,212/-, that was accepted and the clearance of the goods had also been given by the Customs. Subsequently, the Customs department has come forward to issue a show cause notice on the ground that, while paying the duty by using the scrips, the petitioner also paid the education cess to the tune of ₹ 66,66,582/-. That kind of payment for other heads other than the duty or additional duty of customs cannot be paid through MEIS scrips. Here in the case in hand, it is no doubt that, the exemption N/N. 24/2015 is dated 08.04.2015 ie., well after the Finance Act, 2004 and 2007. In the 2004 Finance Act, Section 91 deals with education cess and Section 93 made it clear that, the education cess levied under Section 91 in the case of goods specified in the First Schedule to the Central Excise Tariff Act, 1994, being goods manufactured or produced, shall be a duty of excise. Therefore, insofar as the Central Excise is concerned, the education cess imposed under Section 91 of the Finance Act, 2004 was to be treated as a duty of excise, in view of Section 93. What is the duty to be imposed on the imported goods first be calculated and accordingly, 2% of education cess and 1% of secondary and higher education cess shall be levied and imposed. Hence, when the importer pay the duty, he shall also pay the cess which become part and parcel of the duty of customs. That is the reason why the total amount of ₹ 22,88,86,212/- were paid by the petitioner as duty of customs as well as education cess through the scrips of MEIS. Having accepted the same, though subsequently, in view of the notifications, if the Customs Department come forward to take a stand that the mode of payment of the education cess even though being part of the customs duty, shall not be on the same line by using the scrip, such kind of payment can be insisted upon, provided only in future cases and not in the cases where it has already been paid and where the goods have been cleared. This was exactly been made in execution by Circular No.2/2020 dated 10.01.2020. The impugned order is hereby quashed. As a sequel, there shall be a direction to the respondent to give the benefit of Clause 11 of Circular No. 02/2020 dated 10.01.2020 to the petitioner - Petition allowed.
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2021 (10) TMI 102
Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - misdeclaration of an export consignment - concealment of Ephedrine concealed in polyethylenebag/s - HELD THAT:- The consignment of glass bangles were declared for export to Malaysia vide the shipping bill cited above. Examination conducted on receipt of intelligence by department revealed that 105 kg of Ephedrine, a narcotic substance was concealed in the consignment. Keeping apart the omissions and commissions of the exporter in the smuggling, we are concerned with the role of the CHA is to be examined in this case. On perusal of the records, it is found that the appellants have submitted copies of PAN card, GST Registration Certificate, GSTIN ID card etc. obtained from the exporter. It is clear that exporter themselves have given a categorical submission that consignment does not contain any contraband. Under such circumstances, there is a strong case that the appellant Customs Broker had no previous knowledge of the concealment; the role of the appellant-customs broker is to be examined in this background. Agreeably, the customs broker has collected all the necessary documents to satisfy himself about the bona fides of the exporter. The only mistake or negligence on the part of the appellant-customs broker appears to be permitting an ex-employee whose H-Card has expired to file documents on their behalf - this Tribunal and various High Courts have held that revocation of licence entails in loss of livelihood for not only the customs broker but also the families depend on them and recourse to revocation should be taken in extreme circumstances only and not in respect of violations for which there are other provisions to deal with them. The revocation of licence is an extremely harsh step. However, the act of the appellant in allowing an ex-employee and that too without a valid G-Card, is a clear violation of the Customs Brokers Regulations. The Customs Broker needs to be visited with suitable punishment - the revocation is set aside and the penalty imposed and forfeiture of security deposit is upheld. Appeal allowed in part.
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2021 (10) TMI 94
Denial of benefit of exemption under EPCG licience - N/N. 102/2009-Cus. dt. 11.09.2009 - duty credit scrips under SHIS scheme not issued - SHIS scrips which are not issued in a particular year for the reason that zero duty EPCG authorization has been issued in that year shall not be issued in future years also - HELD THAT:- Whenever a scheme is formulated by the Ministry of Commerce/DGFT, a corresponding exemption notification is issued under Section 25 of the Customs Act to grant exemption from duties of customs. Such exemptions can be full or partial, conditional or unconditional. If goods imported under a promotion scheme of DGFT are exempted, evidently, the importer will have to fulfil the conditions laid down in the scheme which are mirrored in the exemption notification issued under the Customs Act. Many of these conditions are post import conditions, for example, that the licencee shall export goods worth so and so. If the licencee defaults in fulfilling such conditions, duty has to be recovered from it. The only way duties can be recovered under the Customs Act is by issuing an SCN under section 28 which lays down a time limit of two years (prior to 2016, it was one year). The demand can be raised during an extended period of five years if the short payment is on account of (a) Collusion; (b) Wilful mis-statement; or (c) suppression of facts. No demand can be raised beyond five years under any conditions - no demand can be raised under section 28 even in case of default. The effect of Public Notice No.30/2015-2020 dt. 08.09.2016 is that the exporters who have incorrectly availed simultaneous benefit of zero percent EPCG and SHIS have been provided an option to surrender one of the benefits subject to some conditions. Correspondingly, CBEC issued Circular No.45/2016-Cus. dt. 23.09.2016 directing that pending issues related to simultaneous issuance or availing of zero duty EPCG and SHIS shall be decided in terms of the above public notice - It is undisputed that the appellant has not utilised the SHIS scrips and returned them to the JDGFT, Hyderabad who had issued them and that they were cancelled by the JDGFT. Therefore, there is no dispute that the appellant had surrendered the benefits under the SHIS scheme as envisaged under the Public Notice. There are nothing to indicate that an exporter/importer has to apply for relaxation to the Policy Relaxation Committee or that there is form or manner in which it has to be applied for. Therefore, the impugned order has gone beyond the scope of the Public Notice and read into it additional words and came to conclusion that the appellant had to apply to the Policy Relaxation Committee and obtain relaxation in order to avail the benefit of the Public Notice. Undisputedly, the appellant surrendered the scrips to the JDGFT, Hyderabad who had issued the scrips and he confirmed having cancelled them. If the appellant had to apply to the Policy Relaxation Committee, he would have told them so. How the application of the appellant surrendering the scrips was processed by the JDGFT Hyderabad and whether he submitted it to the DGFT Delhi and obtained clearance from the Policy Relaxation Committee or this was not considered necessary are matters pertaining to the internal working between JDGFT Hyderabad and DGFT Delhi. Nothing has been brought on record by the Revenue to show that the Policy Relaxation Committee has refused to grant relaxation. The only allegation is that the appellant has not applied for and obtained a relaxation which is not the requirement either under para 2.58 of the FTP or under the Public Notice. Having surrendered that SHIS scrips to the JDGFT, Hyderabad, completely unused the appellant has completed his end of the responsibility. By cancelling the scrips, the JDGFT has done its job. Nothing else is required to avail the benefit of the Public Notice and nothing can be read into it. Once the benefit of the Public Notice is available, the allegation that condition no. 2(4) has been violated by the appellant by obtaining both EPCG and SHIS scrips cannot sustain. The Public Notice prescribed a procedure to be followed in such cases and the appellant has followed so. No demand can therefore sustain and nor can the consequential orders confiscating the goods and imposing penalties. Appeal allowed.
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2021 (10) TMI 85
Refund of Customs Duty - duty paid under protest - rejection on the ground that the transfer bonds in which the goods were transferred from Vizag Customs to EOU Bheemli have been closed which was duly intimated to the appellant but was not contested at the appropriate stage - shortage in the quantity of chemical imported - principles of natural justice - HELD THAT:- The goods imported, since were highly volatile in nature were mentioned to be susceptible to evaporation during the course of transit from Visakhapatnam port to the factory which is situated at more than 50 KMs. But the simultaneous perusal of record reveals that this submission of appellant came for the first time, vide the letter of appellant dated 27.03.2015 whereas the first transfer bond got already closed on 19.01.2014 and the last transfer bond among 5 was closed on 11.02.2015. There is no explanation of the appellant about his silence for almost more than one and half year since the closure of first bond of transfer bond and for almost five months from the closure of last transfer bonds. Though the appellant has reflected grievance about violation of principles of natural justice as being not given the opportunity of hearing at the time of closure of transfer bonds but apparently and admittedly the bonds have been closed in terms of Section 67 of Customs Act, 1962. The provision makes it clear that Procedure for submission of transfer bonds and the closure thereof is not possible in the absence of the executor of the bonds who requests removal of the imported goods from one warehouse to another. Hence the allegations of the appellant are observed to be wrong - Apparently and admittedly present is not the case of provisional and the final assessment since the appellant accepted while executing the transfer bonds the noticed shortage but has failed to explain sufficient cause for the silence to contest the same for almost one and half year, the subsequent refund application is nothing but a after-thought. The noticed shortage is apparently more than 1%. This is not a fit case for refund - there are no infirmity in the order passed by Commissioner (Appeals) - appeal dismissed.
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Corporate Laws
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2021 (10) TMI 138
Equitable, appropriate, proper and efficient administration of justice - power of superintendence over Hon'ble National Company Law Tribunal - appeal under Section 421 of the Companies Act, 2013 - HELD THAT:- Without any observations on the aspect as to whether in view of the order dated 16.3.2020 of the NCLAT dismissing the appeal Company Appeal( AT) 75/2020, the prayers made in the present petition can be considered, it is essential to observe that vide order dated 13.1.2021 in the present proceedings, the petitioner represented through her legal representative had submitted that CA. No. 373/2008 in relation to which a prayer was made in the present petition, i.e., W.P.(C) No. 6798/2020 which CA. No. 373/2008 had been filed before the NCLT, was intrinsically linked to Crl.M.(Co.) 3/2008. In view of the proceedings dated 23.8.2021 and in view of proceedings in Crl.M.(Co.) 3/2008 of even date whereby it has been directed that the proceedings thereof in relation to Co. Appln. Nos. 577/2020, 602/2020 and 625/2020 , subject to orders of the Hon ble the Chief Justice, be placed before the Court of Hon ble Mr. Justice Jayant Nath, it is considered appropriate that the proceedings of the present W.P.(C) No. 6798/2020 also intrinsically connected to Crl.M.(Co.) No. 3/2008 subject to the orders of the Hon ble the Chief Justice be placed before Hon ble Mr. Justice Jayant Nath on 7.10.2021.
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2021 (10) TMI 137
Presence of the Director(petitioner Sonia Khosla) in the AGM - it is claimed that in the AGM which they had held on 30/09/06 showing the petitioner Sonia Khosla also to be present in that meeting, being the shareholder as well as the Director of the Company, while her passport shows that she had left India on 16/09/06 and come back on 03/10/06 - HELD THAT:- It is essential to observe that the petitioner through her legal representative vide the applications Co.Appln. Nos. 577/2020, 602/2020 and 625/2020 seeks the compliance of directions dated 16.8.2010 i.e. the submission of the affidavits of the parties, as directed thereby, verifying whether or not any AGM was actually held on the date 30.9.2006 and whether they attended the same and whether or not Ms. Sonia Khosla ( the original petitioner (since deceased)) was present in that meeting with the then petitioner Ms. Sonia Khosla having also been directed to produce her passport with VISA entries on the date fixed that was 26.8.2010. Co.Appln. No. 1089/2018, which was filed by the petitioner also sought the enforcement of the order dated 16.8.2010 of this Court and initiation of contempt proceedings against the accused. It is this express prayer which has been dismissed vide order dated 3.12.2018 of the Co-ordinate Bench of the Court as disposed of by Hon ble Mr.Justice Jayant Nath vide order dated 3.12.2018. The prayers that have been made by the applicant, i.e., the legal representative of the deceased petitioner, vide Co.Appln. Nos. 577/2020, 602/2020 and 625/2020 have necessarily to be placed before Hon ble Mr. Justice Jayant Nath in view of the order dated 3.12.2018 qua Co.Appln. No. 1089/2018 - Subject to orders of the Hon ble the Chief Justice, the proceedings of the Co.Appln. Nos. 577/2020, 602/2020 and 625/2020 and Crl.M.(Co.) No.3/2008 be placed before Hon ble Mr.Justice Jayant Nath on 7.10.2021.
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Insolvency & Bankruptcy
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2021 (10) TMI 144
Initiation of CIRP - burden to prove - time limitation - Corporate Debtor failed to make repayment of its dues - application under Section 7 filed by a power of attorney holder - HELD THAT:- The NCLAT was of the opinion that general authorisation given to an officer of the financial creditor by means of a power of attorney, would not disentitle such officer to act as the authorised representative of the financial creditor while filing an application under Section 7 of the Code, merely because the authorisation was granted through a power of attorney - the corporate debtor cannot take the plea that while the officer has power to sanction the loan, such officer has no power to recover the loan amount or to initiate corporate insolvency resolution process, in spite of default in repayment. In the present case, Mr. Praveen Kumar Gupta has been given general authorisation by the Bank with respect to all the business and affairs of the Bank, including commencement of legal proceedings before any court or tribunal with respect to any demand and filing of all necessary applications in this regard. Such authorisation, having been granted by way of a power of attorney pursuant to a resolution passed by the Bank s board of directors on 06.12.2008, does not impair Mr. Gupta s authority to file an application under Section 7 of the Code. It is therefore clear that the application has been filed by an authorised person on behalf of the Financial Creditor and the objection of the Appellants on the maintainability of the application on this ground is untenable. Time Limitation - HELD THAT:- In the instant case, there is no dispute that the date of default is 30.09.2014 and the application under Section 7 of the Code was filed on 25.04.2019. According to the Financial Creditor, Section 18 of the Limitation Act is applicable in view of the Corporate Debtor acknowledging its debt by way of letters, written in and after 2018, giving details of amount repaid, acknowledging the amount outstanding and requesting consideration of one-time settlement proposal. There is no dispute that the date of default in this case is 30.09.2014, as mentioned by the financial creditor in its application under Section 7. A copy of the debit balance confirmation letter dated 07.04.2016 was filed along with the application. As the application was filed only on 25.04.2019, which is beyond a period of three years even after taking into account the debit balance confirmation letter dated 07.04.2016, the application was barred by limitation. However, the Corporate Debtor had, in its reply before the Adjudicating Authority, placed on record a letter dated 17.11.2018, which detailed the amount repaid till 30.09.2018 and acknowledged the amount outstanding as on 30.09.2018. On the basis of this letter and the record showing that the Corporate Debtor had executed various documents amounting to acknowledgement of the debt even in the financial year 2019-20, the NCLT was of the opinion that the application was filed within the period of limitation. The burden of prima facie proving occurrence of the default and that the application filed under Section 7 of the Code is within the period of limitation, is entirely on the financial creditor. While the decision to admit an application under Section 7 is typically made on the basis of material furnished by the financial creditor, the Adjudicating Authority is not barred from examining the material that is placed on record by the corporate debtor to determine that such application is not beyond the period of limitation. Undoubtedly, there is sufficient material in the present case to justify enlargement of the extension period in accordance with Section 18 of the Limitation Act and such material has also been considered by the Adjudicating Authority before admitting the application under Section 7 of the Code. In the present case, if the documents constituting acknowledgement of the debt beyond April, 2016 had not been brought on record by the Corporate Debtor, the application would have been fit for dismissal on the ground of lack of any plea by the Financial Creditor before the Adjudicating Authority with respect to extension of the limitation period and application of Section 18 of the Limitation Act. Appeal dismissed.
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2021 (10) TMI 117
Approval of resolution Plan - Section 31 of the Insolvency and Bankruptcy Code, 2016 - It is claimed by the Operational Creditor DVC that when the electricity supply was disconnected it was not aware of the initiation of Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor - HELD THAT:- Once reconnection has been provided by the Appellant at the previously held contract demand of 10 MVA through a 33 KV power supply line, any change in the contract demand or an enhanced power supply voltage of 132 KV will not be covered under the provisions of the approved Resolution Plan. Insofar as the request of the successful resolution applicant regarding waiver of security deposit for 5 years for increase in the contract demand to 45 MVA and supply of power at an enhanced voltage of 132 KV is concerned, waiver of bank guarantee/cash as security deposit by DVC against regular power usage on basis of contract demand for at 132 KV for next five years from the date of approval of the Resolution Plan by the Adjudicating Authority is not given bya specific order by the Adjudicating Authority (NCLT). Similarly, providing power supply through 132 KV supply line is also not granted by a specific order of NCLT. Thus, these requests only remain as proposals which have not been accepted or approved by specific order of the Adjudicating Authority while approving the Resolution Plan - in the absence of any specific orders, the Appellant is not obliged to grant any waiver of payment of security deposit over the next five years for increase in contract demand or supply of electricity by a 132 KV supply line. The parties should take action regarding these or any subsequent dues including security deposit in accordance with the extant and relevant regulations of WBERC. The dues of electricity supplied by DVC to the Corporate Debtor during the CIRP period, if not paid, should be paid from out of CIRP costs and the Resolution Professional should ensure it - any security deposit or other charges for requested increase in contract demand and enhanced supply line for electricity will have to be paid to the discom DVC in accordance with the relevant and extant laws and regulations. The payment of dues for electricity supplied to the corporate debtor during the moratorium period, to keep the corporate debtor as a going concern, should be paid out of CIRP costs, and the payment should be ensured by the Resolution Professional. Appeal allowed.
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2021 (10) TMI 116
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Debt or not - Financial creditors or not - liability of respondent to repay the deposit along with interest under Sections 73 and 74 of the Companies Act, 2013, and interest was to be paid at the rate of 18% as per Rule 17 of the Companies (Acceptance of Deposits) Rules 2014 - HELD THAT:- It is clear from definition given in Section 3(11) that debt is a much bigger set of financial liabilities, whereas financial debt is only a subset of the overall set of debt. Moreover, Section 5(8) defines financial debt to mean a debt along with interest which is disbursed against the consideration for the time value of money, where money should necessarily be borrowed against the condition of time value of money. Under Section 5(7), financial creditor is a person to whom financial debt is owed or to whom such debt has been legally assigned or transferred to - The Appellant has nowhere been able to show any document that there was a financial contract to borrow by the Corporate Debtor by the Respondent Corporate Debtor, in which refund of principal amount alongwith interest was included explicitly. We are, therefore, not persuaded by the contention of the Appellant that there was a time value of money attached with the deposited which was established through a prior contract before the principal amount was deposited for purchasing of shares by the Appellant with the Respondent. Moreover, the amount deposited should be a credit to be used by the Respondent-Corporate Debtor for the growth of his enterprise. The Appellant has not given any document or argument to show that the amount deposited by him was to be used by the Respondent for establishing or running his business. The appeal, therefore, does not need consideration and is dismissed at the stage of admission.
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2021 (10) TMI 113
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its outstanding dues - Operational Creditors - pre-existing dispute or not - HELD THAT:- The Appellant is an Operational Creditor who had valid Restaurant, Bar, Bakery and Eating House licenses from the ground and first floor premises of a bungalow knows as Pioneer House, situated at 9, St. John Baptist Road, Bandra, Mumbai. The Appellant entered into a Business Conduction Agreement with the Respondent No. 1 (Corporate Debtor) on 29.04.2010 (at page 65 to 82 of the Appeal Paper Book) which was followed by two Supplemental Agreements dated 30.04.2010 - Business Conducting Agreement was initially envisaged to be operative for a period of 5 years. However, subsequently, it was extended for another 2 years, expiring on 30.09.2017 vide Clause 2 of the Supplemental Agreement -1 dated 30.04.2010 - It is also admitted fact that as per the terms of the Supplemental Agreement, extension also entailed a revision of the monthly Business Conducting Fee from the pre-existing 10% of the Gross Revenue (as per Schedule B to the BCA dated 29.04.2010 r/w Clause 12 thereof) to 11% thereof. It is also admitted fact that the Respondent No. 1 is supporting the case of the Appellant. It is also fact that the Appellant had not made party as Respondent Nos. 2 and 3 before this Tribunal when the Appeal was filed. Vide order dated 12.01.2021 passed by this Tribunal the Appellant made party as Respondent Nos. 2 and 3 and they opposed the submissions of the Appellant - there is pre-existing dispute between the parties and two cases also pending one is before the Hon ble Bombay High Court and other is before the Court of Small Causes Bandra. The Ld. Adjudicating Authority rightly come to the conclusion that total amount of 14,62,205/- (Municipal Taxes) which is claimed by the Appellant from period 2010 to 2017 and the Petition under Section 9 of the IBC was filed on 12.03.2018, so all claims prior to 12.03.2015 are time barred. There is no merit in the instant Appeal - the Appeal is hereby dismissed.
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2021 (10) TMI 84
Seeking issuance of directions to the suspended Board of Directors (Respondents) to co-operate the RP in smooth functioning of CIRP of the Corporate Debtor - Section 19(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Section 19 (1) of the Code cast a duty upon to the ex-management and other personnel of the CD to furnish information and all assistance to the RP in managing the affairs of the CD. In the absence of cooperation, powers have been conferred on Adjudicating Authority to direct such personnel or other person to comply with the instructions of the resolution professional and to cooperate with him in collection of information and management of the Corporate Debtor. The provisions of Section 19 suggests that directions must be issued to the defaulting personnel of the ex-management to comply with the directions of the RP and to cooperate with him. The provisions of Section 19 are mandatory in nature so as to facilitate the RP to complete the CIRP expeditiously and manage the affairs of the CD as a going concern. Therefore, there is no escape from the conclusion that non-applicant respondents are under legal and moral obligation to co-operate with RP for smooth functioning of the CIRP. Petition disposed off.
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2021 (10) TMI 83
Transfer of the Corporate Debtor funds to Respondent No. 1 - fraudulent purpose or not - seeking direction to Respondent No. 2 (Appellant No. 1 herein) and Respondent No. 3 (Respondent No. 2 herein) jointly and severally to contribute ₹ 65 lacs to the Corporate Debtor - HELD THAT:- The Corporate Debtor -'Perfect International Private Limited' and the Appellant No. 2 entered into two Agreements viz. Agreement dated 12.10.2015 and 16.08.2016 respectively - Corporate Debtor made the first tranche of payment on 19.12.2016 of ₹ 25,00,000/- including the advance of ₹ 5,00,000/- as a part payment of the initial contract of 2015 for facilitation of securing long term working capital loan for the Corporate Debtor. Corporate Debtor released the second tranche of payment of ₹ 30,00,000/- to the Appellant No. 2 which included ₹ 4,00,000/- as balance commission amount for arranging the long term working capital loan from SREI Equipment Finance Limited and ₹ 26,00,000/- as part of commission for getting business order from M/s. Regen Powertech Private Limited - Corporate Debtor released the third tranche of payment on 31.03.2018 amounting to ₹ 10,00,000/- as balance commission amount for getting business order from M/s. Regen Powertech Private Limited. There is no illegality committed by the Ld. Adjudicating Authority while passing the impugned order. The impugned order passed by the Ld. Adjudicating Authority (National Company Law Tribunal), Special Bench, Chennai is hereby affirmed - Appeal dismissed.
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2021 (10) TMI 81
Original allottee of shares - fraud played by the appellant or not - prime stand of the Appellant is that the balance sheet(s) does/do not make mention of the said shares or so called 'Sale Deed' with M/s. IC Capital Markets since in the year ending 31.03.2002 to 31.3.2018 - HELD THAT:- This Tribunal taking note of the attendant facts and circumstances of the instant case in a conspectus and holistic fashion and keeping in mind yet another fact that the Appellant has preferred the instant Appeal Comp.App.(AT) No. 61 of 2020, (which is a continuation of original proceedings) i.e. Appl. No. CP(App)963/KB/2018 on the file of NCLT, Kolkata Bench dated 05.12.2019, this Tribunal comes to a resultant conclusion that IA No. 260/2021 filed by the Appellant is to be allowed and accordingly the I.A. No. 260/2021 is allowed, to secure the ends of justice. The Intervenor/Appellant is arrayed as newly added party (i.e. as second Respondent) in the main Comp.App.(AT) No. 61 of 2020 and by virtue of his impleadment is permitted to file his Reply/Response as the case may be, to the main Company Appeal - The 'Office of the Registry' is directed to List the matter on 20.10.2021.
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2021 (10) TMI 80
Liquidation of the corporate debtor - Section 33 (1) of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case no approval of the CoC has been obtained with respect to filing of this application, rather it has been observed that neither the sole CoC member i.e. the Operational Creditor nor the RP of the Operational Creditor has come forward or appeared before the Adjudicating Authority to move forward with the CIR process of the Corporate Debtor. Further it has been observed that no progress has been made in the CIRP of the Corporate Debtor and neither the Operational Creditor nor the RP of the Operational Creditor is pressing for the CIRP. Even the alleged assignee of the debt of the Operational Creditor, M/s. Terrence Alloys Pvt. Ltd. has not come forward after the rejection of the application for assignment of debt. This bench thinks fit that no orders under Section 33(1) of the code can be passed because none of the criteria for passing the order under Section 33(1) are satisfied hence, this application stands Rejected - Application dismissed.
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Service Tax
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2021 (10) TMI 97
Levy of service tax - Commercial Exploitation of Rights of Sports Events - place of provision of services - service provided in taxable territory or not - HELD THAT:- A conjoint reading of section 66B of the Finance Act, 1994 alongwith Rule 6 of the Place of Provision of Services Rules, 2012, provides for charge of service tax at the specified rate on the value of any service, other than services specified in the negative list, provided or agreed to be provided in the taxable territory (India), by any person to another. Admittedly, no services have been provided in the taxable territory. Rule 6 of the Place of Provision of Service Rules, 2012, provides and clarifies that in case of any cultural or sporting event and/or services related to such event, shall be the place where the event is actually held - Admittedly the event was held outside India (Zimbabwe), and this service has not been received in India, rather it was meant for Bangladesh, for which territory, the telecasting rights were purchased and resold by the appellants. Only for the reason that the appellant provider or trader of telecasting right is located in India, it cannot be assumed or presumed by any stretch of imagination, that the service under dispute has been received in India. Appeal allowed - decided in favor of appellant.
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2021 (10) TMI 96
Quantum of penalty u/s 78 - suppression of taxable value - consulting engineer services provided to clients - rent-a-cab service - legal services - reverse charge mechanism - period 2011-12 to 2015-16 - extended period of limitation - HELD THAT:- The allegations of Revenue are frivolous, that it was only on enquiry it came to know about the affairs of the appellant, i.e. providing of taxable service in view of the admitted facts that appellant is a registered assessee under the Service Tax provision, and have been filing their returns and paying tax. It is not alleged by the Revenue that the appellant was not maintaining proper financial records, register and vouchers for their transaction. It is further found that Form No. 26AS is not a statutory document for determining the taxable turnover under the Service Tax provisions. Also it is found that form 26AS is maintained on cash/ receipt basis by the Income Tax Department for the purpose of tax deducted at source, etc. being the relevant data for Income Tax - the whole basis of show cause notice is incorrect and/or misconceived. Extended period of limitation - HELD THAT:- The appellant is entitled to exemption under the Notification No. 25/2012-ST under Sl. No. 13(a) of the said notification for providing consulting engineer services in the matter of road construction. When road construction is exempt, every activity is exempt relating to the road construction including consulting engineer services - This Tribunal in M/S LORD KRISHNA REAL INFRA PRIVATE LTD. VERSUS COMMISSIONER OF CUSTOMS, C.E. S.T., NOIDA [ 2019 (2) TMI 1563 - CESTAT ALLAHABAD] has held in other disputed cases, that even the barricade provided on the side of highway, maintaining greenery on the side or middle of highway, construction of any facility, refreshment centre for road users, is also part of the road construction and such activity is also exempt. Even the administrative building constructed by the concessionaire, for construction of the road or highway for administration and collection of toll etc. is part of road. Rent a cab service - Reverse charge mechanism - HELD THAT:- There is no specific allegation as required under Section 66A read with Notification no. 30/2012-ST. The extended period of limitation is not available to Revenue - appeal allowed - decided in favor of appellant.
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2021 (10) TMI 95
Rejection of sales turnover - Non-filing of returns - It appeared to Revenue that the appellant have submitted ST-3 returns only for the period April, 2015 to September, 2015 (filed on 08.04.2018) and the other three half yearly returns were not found on the electronic record, and it appeared such returns have not been filed - HELD THAT:- There is no such assumption and presumption available to the Adjudicating Authority for rejection of sales turnover. Even a best judgment assumption has to be based on documents and information on record. Further after going through the provisions of Section 40A(3A) and (4), it has been provided - where an allowance has been made in the assessment for any year in respect of any liability incurred by the assessee for any expenditure, and subsequently during any previous year the assessee makes payment in respect thereof, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, the payment so made shall be deemed to be the profits and gains of business or profession and accordingly chargeable to income tax as income of the subsequent year, if the payment or aggregate of payments made to a person in a day, exceeds twenty thousand rupees - such provisions of Section 40A(3A) of the Income Tax Act, have no relevance for the purpose of determination of liability under the provisions of service tax. Revenue cannot deny the giving of credit for the challan(s) deposited during investigation, or tax paid using cenvat credit. The respondent - Revenue is directed to reconcile the challan(s) with the assistance of the appellant and to give credit of each and every challan deposited by the appellant. Accordingly, this ground is also allowed in favour of the appellant. The substantial demand set aside, penalty under section 76 is set aside. Penalty under section 77(2) is reduced to ₹ 5,000/- per return or ₹ 15,000/- in total. Penalty under section 70 read with Rule 7C of Service Tax Rules is reduced to ₹ 5,000/-. Appeal allowed.
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Central Excise
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2021 (10) TMI 134
Attachment of properties - Area Based exemptions - validity and vires of N/N. 17/2008-CE dated 27.03.2008 and No.31/2008-CE dated 10.06.2008 - request for fixation of a special rate for the value addition on the manufactured goods for the financial year 2016-2017 and 2017-2018 - applications of the petitioner were not entertained and the department invoked the attachment of some properties of the petitioner. Whether under the N/N. 32/99-CE dated 18.07.1999 as amended and the N/N. 31/2008-CE dated 10.06.2008 the manufacturers are entitled to have an option not to avail the rates specified in the tables contained in the notifications and whether they have a legal right to request the authorities for fixation of a special rate as per the actual value additions to the manufactured goods? HELD THAT:- The dominant purpose of the two notifications i.e. amended notification No.32/99-CE dated 18.07.1999 and the notification No. 31/2008-CE dated 10.06.2008, is the bestowing of a legal right to the assessee to opt for the fixation of a special rate in respect of the value addition to a manufactured goods. The requirement that such applications are to be made not later than 30th day of September of the given financial year is a provision for streamlining the procedure for making such application and to avoid the situation where the process of making such applications would be a never ending matter. Without going into the aspect whether the requirement to submit such application within 30th September of the given financial year is a mandatory requirement or a directory requirement, what we take note of is that such a provision has been incorporated to streamline the process for submission of the application seeking for the fixation of a special rate to the value addition to manufactured goods. In the peculiar facts and circumstances of the present case, where the necessity for making of a request for fixation of the special rate for the value addition to the manufactured goods may not have occasioned earlier, we deem it appropriate that the Principal Commissioner of GST, Guwahati decides the application of the petitioner dated 28.09.2020 on its own merit as regards the claim for fixation of a special rate to the value addition to the manufactured goods of the given financial year. The Principal Commissioner, GST, Guwahati is directed to consider the application of the petitioner dated 28.09.2020 seeking for fixation of a special rate to the value addition to the manufactured goods of the given financial year and decide the same as per law - petition allowed.
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2021 (10) TMI 128
Recovery of erroneous refund / irregular Cenvat credit availed - Demand of duty with interest - allegation of misuse of Area based exemption - benefit of N/N. 32/99-CE, dated 8th July, 1999 - HELD THAT:- It is palpably evident, on the face of the record itself, that there is no substantial question of law involved in this appeal. A bare reading of section 11A of the Act (as amended), clearly shows that the stipulation under this provision, can be exercised only if certain conditions precedent are present, as spelt out in section 11A, itself. On examination of provision of section 11A of Central Excise Act, it clearly shows that the case at hand, is not one concerning conditions as given in section11A, but the issue concerns refunds made purportedly under the entitlements claimed by the respondent under the exemption notification, which, the Appellant/Revenue seeks to recover by taking recourse to section 11A which is not admissible. There are no infirmity in the impugned judgment and order and no substantial question of law is involved - appeal dismissed.
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2021 (10) TMI 89
CENVAT Credit - input services - Courier Service which is used for dispatching documents relating to business and manufacturing samples - place of removal - FOR basis - denial on the premise that any service used beyond the place of removal is not admissible input service - HELD THAT:- On careful reading of definition of Input Service, it is found that only those services which were used for removal of goods from the place of removal not admissible input service - In the present case, the courier service used for dispatch of documents, hence the reasoning of the Revenue is not relevant. Therefore, credit on courier service relates to dispatch of documents being the service relating of overall activity of a business, is clearly admissible. Courier Service for dispatch of manufacturing samples - HELD THAT:- Since the sale is on FOR basis Courier charges are included in the sale price on which excise duty was paid, the appellant is entitled for Cenvat credit as held by this Tribunal in the case of M/S SANGHI INDUSTRIES LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1488 - CESTAT AHMEDABAD] and M/S ULTRATECH CEMENT LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1487 - CESTAT AHMEDABAD] which was upheld by Hon ble Gujarat High Court in THE COMMISSIONER, CENRTAL GOODS AND SERVICE TAX VERSUS M/S. ULTRATECH CEMENT LTD. [ 2020 (3) TMI 1206 - GUJARAT HIGH COURT] . Accordingly, the appellant is entitled for Cenvat credit in respect of Courier Service used for dispatch of documents as well as for dispatch of excisable goods as samples. Appeal allowed - decided in favor of appellant.
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2021 (10) TMI 88
Levy of penalty u/r 26 of CER - levy for the reason that the appellant have not sent the goods for job work by following the procedure as per Notification No. 214/86-CE dated 25.03.1986 as the appellant sent the goods to MGM Metallisers Limited on simple challan - job worked goods - HELD THAT:- In the present case, the appellant is Director of a raw material supplier to job worker. The appellant s Company is not registered with Central Excise department - In this case, it cannot be expected from the appellant s Company to follow procedure as per notification 214/86-CE or other procedures under Central Excise Rules. Accordingly, the appellant have rightly supplied the raw material under the cover of simple challan. Irrespective of any offence committed by the job worker or otherwise, the appellant being not a party to that offence, cannot be penalized under Rule 26 of Central Excise Rules, 2002. Appeal allowed - decided in favor of appellant.
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2021 (10) TMI 76
CENVAT Credit - duty paying documents - Debit Note issued by the importer in respect of import of machines - CVD paid there on was passed on to the appellant by way of Debit note - denial by both the Lower Authorities interpreting the rule 9 of Cenvat Credit Rules, 2004 - HELD THAT:- As per rule 9 not only invoice or bill of entry but any other document is also the valid document for availing credit. The appellant has submitted the bill of entry of the importer M/s CMC Machinery whereby the CVD was paid and proportionate CVD has been passed on through debit note. Debit note contains all the details as required to be mentioned in Cenvatable documents. Moreover, the appellant also submitted a certificate from CMC which bears the IEC Code number of the importer. With this fact a debit note can be considered as valid documents for availing the Cenvat credit. The debit note is the document on the basis of which the Cenvat Credit is admissible. There is no dispute about receipt of goods - Credit is therefore allowed. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (10) TMI 132
Maintainability of petition - availability of alternative remedy of appeal - Validity of assessment order - proper personal hearing has not been given to the writ petitioner - principles of natural justice - HELD THAT:- The alternate remedy would certainly apply to the case on hand and the writ petitioner may very well avail alternate remedy under Section 51 of TNVAT Act, if the writ petitioner chooses to file a statutory appeal. In other words, grounds are not good enough to compel this Court to persuade itself to exercise writ jurisdiction on the teeth of alternate remedy in a fiscal law Statute. Learned Revenue counsel pointed out that personal hearing has been given to the writ petitioner and therefore, it cannot be gainsaid that the provision only requires reasonable opportunity to show cause. The captioned Writ Petition fails and the same is dismissed.
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2021 (10) TMI 123
Validity of assessment orders - assessment orders challenged on the ground that the revision of assessment stating that the appellant has not filed the option letter in terms of Section 6(2) of the TNVAT Act is not sustainable - whether there is a need for a registered dealer to file an option letter in a particular format and does the Act prescribed any such format? - HELD THAT:- Since the appellant had questioned the very jurisdiction of the authority to treat the returns filed by the appellant as returns other than exercising option under Section 6(1) of the TNVAT, it is one of the exceptions which has been carved out to enable the aggrieved person to approach this Court under Article 226 of the Constitution of India though an alternative remedy is provided for - the writ petition has been pending from the year 2018 onwards and the issue being a legal issue, namely, as to whether in the absence of a written form or procedure or exercising the option whether a return filed by payment of compounded rate of tax would deem to be an option exercised by the dealer to pay taxes at compounded rates is a legal question which cannot be decided by the Appellate Authority under the provisions of the TNVAT Act and this is all the more a reason that the appellant should be permitted to approach this Court. Therefore, the writ petitions were maintainable. The order passed in the writ petitions are set aside, consequently the orders of assessment passed by the respondent are set aside - the matter is remanded to the Assessing Officer to treat the returns filed by the assessee under Section 6(1) of the TNVAT Act and proceed to complete the assessment in accordance with law - Petition allowed by way of remand.
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2021 (10) TMI 62
Maintainability of petition - availability of alternative remedy of appeal - Seeking restraint on Respondent Authorities from taking any action or proceedings against the petitioner - levy of service tax on end-to-end ATM management service provided by the Petitioner to banks in the State of U.P. - seeking adjustment of Service Tax collected by Union of India, i.e. Respondent no. 4 - HELD THAT:- The petitioner has challenged the assessment order passed under the 'Act 2008' against which admittedly a statutory remedy of appeal is available to the petitioner. The petitioner itself had raised the issue of applicability of VAT by filing application under Section 59 of the 'Act 2008' and vide order dated 14.12.2015 the petitioner has been held liable for VAT. Admittedly the said order has been challenged before the learned Commercial Tax Tribunal Lucknow vide appeal no. 2 of 2021 as such considering the order passed under Section 59 of the 'Act 2008' and the assessment order now passed there cannot by any occasion for this Court to entertain the instant petition. When the facts of the present case are tested on the touchstone of the law laid down by the Hon'ble Apex Court in the case of THE ASSISTANT COMMISSIONER OF STATE TAX AND OTHERS VERSUS M/S COMMERCIAL STEEL LIMITED [ 2021 (9) TMI 480 - SUPREME COURT ] it clearly emerges that the petitioner has failed to make out a case so as to persuade us to entertain the present writ petition keeping in view the exceptional circumstance which has been carved out by the Hon'ble Apex Court for entertaining a petition under Article 226 of the Constitution of India despite availability of statutory remedy. Petition dismissed.
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Indian Laws
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2021 (10) TMI 140
Dishonor of Cheque - vicarious liability of a person who is responsible to the company for the conduct of business of the company - offences punishable under Section 138 read with Section 141 of the Negotiable Instruments Act - HELD THAT:- The averments are not to the effect that petitioner no.11 was in charge of, but to the effect that, he was looking after and responsible for the day-to-day affairs, conduct and management of accused no.1Company. Expression in charge and looking after the affairs, conduct of respondent company, are distinct. Section 141 uses the words was in-charge of, and was responsible to the company for the conduct of the business of the company . In absence of averments in the complaint, that petitioner no.1 is also in charge of the business of the company, the case could not fall under Section 141(1) of the Act. This takes to find out whether, petitioner no.11 being Officer of the Company could be made liable under subsection 2 of Section 141. When verified, the averments in the complaint, are vague and general in nature and do not particularize the role of the petitioner in regard to facility agreement dated 28th March, 2010 executed by the Company with the complainant; nor the complaint discloses that the alleged offence was committed by the Company in connivance or was a result of the negligence of the petitioner no.11. As a consequence, petitioner cannot be made liable under sub-section (2) of Section 141 of the Act. Petition allowed.
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2021 (10) TMI 131
Seeking return of seized amount - whether there is a serious error inasmuch as the learned Court failed to consider that the seized cash belong to Bharatiya Janata Party and the petitioner was authorized to collect the same? - HELD THAT:- Provision of Section 451 provides for that when any property is produced before any Criminal Court during any inquiry or trial, the Court may make such order as it thinks fir for the proper custody of such property pending the conclusion of the inquiry or trial - Thus, it is understood that to avoid such situation powers under Section 451 Cr.P.C should be exercised promptly and at the earliest as it is of no use to keep valuable articles and currency notes in police custody for years till the trial is overThe seized articles being the cash of ₹ 30 lacs be deposited to the account of the BJP, West Bengal Unit after detailed panchnama and by taking photographs of such articles and on proper security. Application disposed off.
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2021 (10) TMI 61
Seeking return of the seized cash - rejection on the ground that the seized cash belong to Bharatiya Janata Party and the petitioner was duly authorised for collection of the same and that needs to be returned - HELD THAT:- Let this report received on the E-mail of Mr. Dhiraj Trivedi, learned advocate for the Income Tax Department be kept on record. However, Income Tax Department will submit such report by way of an affidavit within a week. A copy of the affidavit with a report be served on the parties. Let the matter appear next Friday (13.08.2021).
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