TMI Tax Updates - e-Newsletter
October 6, 2021

Case Laws in this Newsletter:

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

Articles

1. LEVY OF GST ON JOB WORKS IN ALCOHOLIC BEVERAGES INDUSTRY

   By: Dr. Sanjiv Agarwal

News

1. Builder hardware products from India have considerable global demand, says MoS Commerce Mr Som Parkash

2. 41 Industrial Parks identified as "Leaders" in the Industrial Park Ratings System Report

3. First consignment of GI tagged sweet dish Mihidana from West Bengal exported to Bahrain

4. Finance Minister Smt. Nirmala Sitharaman celebrates 53rd Foundation Day of the ICSI

5. Seychelles’ Tax Inspectors Without Borders (TIWB) programme launched in partnership with India

6. Auction for Sale (re-Issue) of (i) ‘4.26% GS 2023’, (ii) ‘5.63% GS 2026’, (iii) ‘6.67% GS 2035’, and (iv) ‘6.67% GS 2050’

Notifications

Customs

1. 59/2021 - dated 4-10-2021 - ADD

Seeks to extend anti dumping duty on 'ceramic tableware and glassware' originating in or exported from Malaysia, to prevent the circumvention of anti dumping duty levied on subject goods originating in or exported from China PR vide Notification No. 4/2018-Customs(ADD) dated 21st February, 2018.

DGFT

2. 34/2015-2020 - dated 4-10-2021 - FTP

Amendment in Export Policy of Syringes and incorporation of Policy Condition

SEZ

3. S.O. 4069 (E) - dated 27-9-2021 - SEZ

Central Government de-notifies an area of 0.4167 hectare, thereby making the resultant area as 35.7633 hectare at Sitapura, Jaipur in the State of Rajasthan

4. S.O. 4068 (E) - dated 24-9-2021 - SEZ

Central Government de-notifies an area of 4.97 hectare, thereby making the resultant area as 1.72 hectare at Wagholi and Kharadi Villages, Pune in the State of Maharashtra

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS/DDHS_Div3/P/CIR/2021/640 - dated 5-10-2021

Amendments to manner and mechanism of providing exit option to dissenting unit holders pursuant to Regulation 22(6A) and Regulation 22(8) of SEBI (Real Estate Investment Trusts) Regulations, 2014 (“SEBI (REIT) Regulations”)

2. SEBI/HO/DDHS/CIR/2021/0000000637 - dated 5-10-2021

Revised Formats for filing Financial information

IBC

3. IBBI/LIQ/44/2021 - dated 30-9-2021

IBBI’s Electronic Platform for hosting Public Notices of Auctions of Liquidation Assets under the IBBI (Liquidation Process) Regulations, 2016.

Customs

4. Instruction No. 21/2021 - dated 5-10-2021

Submission of Intimation of Arrest Report & Incident Report

Highlights / Catch Notes

GST

• Court Allows Provisional Release of Confiscated Goods u/r 140(1) CGST 2017, Pending Final Appeal Outcome.

  Case-Laws - HC : Seeking provisional release of confiscated goods alongwith the conveyance - It is directed that if the petitioner fulfills the conditions as laid down under Rule 140(1) of the CGST Rules of 2017, the respondents shall release the goods provisionally subject to the final outcome of the appeal for further proceedings which may be available to the petitioner under the Act - HC
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• Court Denies Default Bail Petition: GST Officers Not Police, No Duty for Final Report Under Cr.P.C. Section 173.

  Case-Laws - HC : Grant of default bail - alleged violation of Central Goods and Service Tax Act, 2017 - The GST officers are not the police officers, therefore, they are not required to submit final report as envisaged in Section 173 of Cr.P.C. - It is quite clear that complaint has been filed within 60 days of their arrest which is within the time prescribed for filing of complaint to entitle or disentitle the accused persons for default bail - the writ petition (criminal) is dismissed. - HC
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• Aluminium Composite Panel Taxed at 18% Under HSN Code 7606: 9% CGST and 9% SGST Applicable.

  Case-Laws - AAR : Classification of goods - rate of tax - Aluminium Composite Panel / sheet - the Aluminium Composite Panel/Sheet is covered under HSN Code 7606. - The rate of tax on Aluminium Composite Panel/Sheet 18% (9% each under CGST and SGST). - AAR
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Income Tax

• Appellant's Liability Contested Under Black Money Act, 2015; Notice Deemed Premature Due to Prior Assessment.

  Case-Laws - AT : Black money - Liability of the appellant to be assessed under the provisions of BMIT Act 2015 - Definition of undisclosed asset in the back money act clearly provides that assets created out of income assessed in income tax already shall be excluded. Hence, when the revenue has already assessed these assets under income tax proceedings upto previous Assessment Year and for current assessment year time for filing the return has not expired, assessee’s plea that the issue of notice is premature is tenable and accordingly we accept the same. - AT
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• TDS Not Applicable on Bank Guarantee Commission Payments to RBI-Approved Banks; Classified as Bank Charges, Not Commission.

  Case-Laws - AT : TDS u/s 194H - Addition u/s 40(a)(ia)- assessee has paid Bank Guarantee Commission to Scheduled Banks approved by RBI - In the present case it is one of the banking services provided by the Scheduled Banks to the assessee as per the norms of the RBI. It cannot be said to be a "commission" as intended to u/s 194H of the but it is in the nature of Bank charges charged by the bank for provision of services to the assessee - AT
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• Section 56 Additions on Share Allotment Deemed Unsustainable Due to Specific Case Circumstances and Anti-Abuse Measures.

  Case-Laws - AT : Addition u/s 56 - allotment of shares through right issue @1 per share - difference between FMV and the consideration paid by the assessee - the fact that intent of introducing the provisions was anti-abusive measures still remain intact and there is no reason to depart from the understanding that the provisions were counter evasion mechanism to prevent laundering of unaccounted income. - on the given facts and circumstances, the impugned additions as made by Ld. AO in the assessment order are not sustainable in the eyes of law. - AT
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• Penalty u/s 271G Deemed Unjustifiable for Diamond Industry Due to Practical Difficulties in Providing Transaction Details.

  Case-Laws - AT : Penalty u/s. 271G - assessee did not provide any basis for comparing the transactions and it failed to provide any alternative method to benchmark the transactions which had prevented determination of ALP of these transactions - considering the practical difficulties in furnishing the segment wise details of AE segment and non-AE segment transactions in diamond industry, no penalty under Sec. 271G could justifiably be imposed for failure to furnish the said information - we confirm the impugned order deleting the penalty u/s 271G - AT
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• High Court Affirms ITAT: Business Expenses for Convenience and Profit Without New Assets Are Deductible.

  Case-Laws - HC : Nature of expenditure - Deduction on account of capital work-in-progress written off in computation of its income - The ITAT’s view that if an expenditure is incurred for doing the business in a more convenient and profitable manner and has not resulted in bringing any new asset into existence, then, such expenditure is allowable business expenditure, is correct - HC
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• High Court Upholds ITAT Decision: PCIT's Order u/s 263 Deemed Unsustainable, No Misapplication Found.

  Case-Laws - HC : Revision u/s 263 by CIT - PCIT has not disputed the nature of the investments being strategic investment made for the purpose and in course of the business of the assessee. The PCIT has only looked at the matter from a different legal view on the same set of facts. It was for these reasons, the ITAT had interfered and held that the order passed by PCIT under Section 263 of the Act was not sustainable and accordingly set aside that order. Tribunal has not committed any perversity or applied incorrect principles to the given facts - HC
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• Court Rules Test Lab and Consultancy Income Not Commercial, Qualifies for Exemption Under Income Tax Act Sections 11 and 2(15.

  Case-Laws - HC : Exemption u/s 11 - Charitable activity u/s 2(15) - receipts under the heads ‘Revenue from test laboratory ‘and ‘consultancy receipts ‘ - Commercial activity or not - The intent of such activities is not to earn profit for its shareholders/owners. Consequently, this Court is in agreement with the findings of the CIT (A) and ITAT that the assessee-association does not carry on any business, trade or commerce with the intent of earning profit. - HC
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Customs

• Court Denies Importer's Claim for Interest on Refund Due to Incomplete Documentation u/s 27-A of Customs Act, 1962.

  Case-Laws - HC : Interest on refund - The contention of the respondent-importer that even if the application was defective, the same at the most may amount irregularity and hence, the Department cannot escape the liability of paying interest in terms of Section 27-A of the Act, 1962 is too far stretched and we are unable to accede to such a contention. The respondent-importer cannot be permitted to take undue advantage of lapses on his part in not submitting complete document to enable the Revenue to finalize the assessment before ordering for refund of 1% EDD. - HC
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• Court Rules No Immediate Threat in Export Incentive Scheme Case; Petitioner Lacks Cause of Action.

  Case-Laws - HC : Jurisdiction - misuse of Export Incentive Scheme - power of Directorate of Revenue Intelligence to investigate - there being no real threat of infringement of any of its rights, the petitioner does not have the cause of action even for moving this Court at this stage. Without a ‘cause of action’, the ‘right of action’ is meaningless. This is not a fit case to even examine as to whether the show-cause notice is non est in the eyes of law. - HC
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• Petitioner Faces Bank Guarantee Invocation for Unmet Export Obligations Under Advance License Scheme; Interest Waiver Denied Per Clauses 4.28.

  Case-Laws - HC : Advance License scheme - Invocation of Bank Guarantee - failure to achieve export obligation - waiver of statutory interest - A combined reading of clauses 4.28 (i), (ii) & (iii) leads to the conclusion that the petitioner will have to pay interest also if it intends to regularise its default in terms of clause 4.28. From the facts as pleaded in the writ petition, it appears that the petitioner never applied for regularisation in terms of clause 4.28 of the Handbook of Procedures. - HC
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Indian Laws

• Court Rules Debt on Promissory Note Enforceable Despite Non-Disclosure in Tax Returns; Debt Relief Laws Take Precedence.

  Case-Laws - HC : Recovery of suit amount on the basis of promissory note - Money Suit - legally enforceable debt or not - If the suit transaction falls within the scope of a debt relief legislation, the lender cannot maintain an action outside its framework. But failure to disclose in the tax returns cannot render the amount irrecoverable. It cannot extinguish the right of the creditor. A civil remedy can be stifled only by a statutory provision and not by judicial innovation. - HC
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Service Tax

• Court Condoned 815-Day Appeal Delay Filed in Wrong Forum, Allowed Under Article 226 Extraordinary Powers.

  Case-Laws - HC : Condonation of delay of 815 days in filing appeal - initially the appeal was filed before wrong forum - In view of the said factual circumstances, this Court feel that in such peculiar circumstances, the appeal filed by the petitioner can be entertained by the Appellate Authority. This Court by exercising its extraordinary power under Article 226 of the Constitution of India, can very well condone the delay in filing the appeal before the Appellate Authority for the very peculiar reasons.- HC
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Central Excise

• Burden of Proof on Revenue: No Evidence of Clinker Manufacturing, No Duty Imposed Due to Limestone Shortage Presumptions.

  Case-Laws - AT : Clandestine removal - Clinker - It is not for the respondent to show that they have not actually manufactured any final product out of this limestone found short. It is for the Revenue to, if a show cause notice is to be issued, to prove that the clinker was actually manufactured. In the present case, we find no such evidence coming forth. Therefore, even if it is held that the appellant has not satisfactorily explained its shortage of limestone, no duty can be demanded on presumption of manufacture of clinker - AT
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Case Laws:

• GST

• 2021 (10) TMI 204
  Classification of goods - rate of tax - Aluminium Composite Panel / sheet - HSN Code 3920 or HSN Code 7606 or HSN Code 7610? - HELD THAT:- Chapter 39 of the GST Tariff pertains to Plastics and articles thereof. Chapter 3920 covers other plates, sheets, film, foil, tape strip, of plastics, non-cellular and not reinforced, laminated, supported or similarly combined with other materials. The applicant has clearly stated that the impugned product is Plastic sheet laminated with Aluminium Sheets - In view of Tariff Heading 3920 it is clear that the impugned products, being plastic sheets laminated with aluminium sheets, are not covered under Tariff Heading 3920. Heading 7610 of GST tariff - HELD THAT:- It is seen that Heading 7610 covers Aluminium structures and its parts; aluminium plates, rods, profiles, tubes and the like, prepared for use in structures - the submissions made by the applicant do not support the fact of the subject product being termed as Aluminium Structure and/or parts thereof. From the facts and submissions before us we find that the subject product is not covered by the Tariff Heading 7610. Heading 7606 of the GST tariff - HELD THAT:- Heading 7606 of the GST tariff covers ALUMINIUM PLATES, SHEETS AND STRIP, OF A THICKNESS EXCEEDING 0.2 mm - In the subject case, under the ACP Product Information has mentioned that the Top and Bottom Aluminium Foil thickness in the subject products ranges upto 0.5 mm. Thus it is seen that the subject product would essentially exceed the thickness of 0.2 mm - the subject product is covered under Heading 7606 of the GST Tariff and the rate of GST on the impugned product is 18%.

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• 2021 (10) TMI 203
  Grant of default bail - alleged violation of Central Goods and Service Tax Act, 2017 - charge-sheet filed within 60 days or not - offence committed under Sections 132(1)(b) and (c) of the Act of 2017 - cognizable offence or not - GST Officers are police officers or not - HELD THAT:- The object of the provisions of Section 167(2) of Cr.P.C. is that State authority should not take any malafide belated action against accused persons. Right of the accused is an integral part of personal liberty, as per the provisions and is an indefeasible link to safeguard under Article 21 of the Constitution of India - it is abundantly clear that default bail is indefensible right of the petitioner. The same cannot be violated by prosecution. On above legal provisions of law and facts projected by the petitioners, the case has to be examined by this Court whether the petitioners are entitled to get default bail as provided in Section 167(2) of the Cr.P.C. on count of non filing of final report within 60 days or not. The GST officers are not the police officers, therefore, they are not required to submit final report as envisaged in Section 173 of Cr.P.C. It is quite clear that complaint has been filed within 60 days of their arrest which is within the time prescribed for filing of complaint to entitle or disentitle the accused persons for default bail - the writ petition (criminal) is dismissed.

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• 2021 (10) TMI 199
  Confiscation of goods alongwith conveyance - Section 129 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Counsel submits that the petitioner filed the appeal in terms of directions passed by this Court before the appellate authority. Second appeal is provided under the Act before the Tribunal which has not been constituted as yet. Issue notice to the respondent(s), returnable on 08.11.2021 - Meanwhile, it is directed that if the petitioner fulfills the conditions laid down under Rule 140(1) of the CGST Rules of 2017, the respondents shall release the goods provisionally subject to the final outcome of the writ petition.

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• 2021 (10) TMI 188
  Seeking provisional release of confiscated goods alongwith the conveyance - provision of filing of an appeal against the order of confiscation - no opportunity was given for depositing the amount of demand of tax and penalty - Rule 140(1) of the CGST Rules - principles of natural justice - HELD THAT:- While the petitioner assailed the initial action of the respondents before this Court and challenged the orders dated 22.01.2021 and 25.01.2021, it appears that during the pendency of the writ petition, the respondents proceeded and passed an order of demand of Tax and penalty on 08.02.2021. In the said order, 14 days time was given to deposit the amount from the date of detention and as 14 days had lapsed on the next date i.e. 09.02.2021, notice of confiscation of goods was initiated and final confiscation of order has been passed on 09.03.2021. Admittedly, the goods were seized on 22.01.2021. Thus, on the date when the order of demand of tax and penalty was issued on 08.02.2021, 14 days time had already been lapsed. Virtually, the petitioner has not been given any chance to deposit the tax and penalty. Since this Court has observed that no opportunity was given for depositing the amount of demand of tax and penalty while issuing the order dated 08.02.2021, it would be in the fitness of the things and in the interest of justice that the petitioner be given a chance to avail the provisional release of goods and vehicle in terms of Rule 140(1). It is directed that if the petitioner fulfills the conditions as laid down under Rule 140(1) of the CGST Rules of 2017, the respondents shall release the goods provisionally subject to the final outcome of the appeal for further proceedings which may be available to the petitioner under the Act - Petition disposed off.

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• 2021 (10) TMI 180
  GST tax evasion - all the four Commissionrates from CGST are attempting to pass on the buck to SGST - HELD THAT:- From the replies filed today on behalf of CGST, a very sorry state of affairs is revealed. Evidently, as per the claim of CGST, SGST is not even aware of the correct address of the CGST offices. The court is in pain to observe that instead of initiating an appropriate action against the delinquent firms in the matter, wherein as per the claim of Delhi Police, a tax evasion of Rs. 940 crores is involved, the authorities are involved in the blame game. Unfortunately, none is present on behalf of SGST and even no reply has been filed on behalf of Chairperson, CBIC - Commissioner, SGST is directed to file an affidavit regarding the action initiated by SGST in the instant matter. At the request of Ld. SPP for CGST, put up on 05.10.2021 for filing reply on behalf of Chairperson, CBIC and Commissioner, SGST and for further proceedings in the instant matter.

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• Income Tax

• 2021 (10) TMI 179
  Exemption u/s 11 - Charitable activity u/s 2(15) - receipts under the heads Revenue from test laboratory and consultancy receipts - Commercial activity or not - whether activities of the assessee do not fall under any of the categories i.e. relief to poor, education, medical relief, preservation of environment and preservation of monuments or places or objects of artistic or historic interest - HELD THAT:- In any event the assessee-association is charitable in nature and the appellant itself has granted the assessee registration under Section 12A and also recognized under Section 10(23C)(vi) of the Act vide notification No.1348 dated 31st October, 2007. Though the Assessing Officer has held that the assessee-association has various source of income from commercial activities, yet this Court finds that Appellate Authorities i.e. Commissioner (Appeals) and ITAT have held that the assessee-association has not been earning any profit as the main object of the assessee-association is to improve the public transport system in the country and the road safety standards. Undoubtedly, the activities of laboratory testing and consultancy are bringing revenue to the assessee-association but the intent of such activities is not to earn profit for its shareholders/owners. Consequently, this Court is in agreement with the findings of the CIT (A) and ITAT that the assessee-association does not carry on any business, trade or commerce with the intent of earning profit. Supreme Court in State of Haryana Ors. vs. Khalsa Motor Limited Ors.[ 1990 (8) TMI 416 - SUPREME COURT] has held that the High Court was not justified in law in reversing, in second appeal, the concurrent finding of the fact recorded by both the Courts below. The Supreme Court in Hero Vinoth (Minor) vs. Seshammal,[ 2006 (5) TMI 478 - SUPREME COURT] has also held that in a case where from a given set of circumstances two inferences of fact are possible, the one drawn by the lower appellate court will not be interfered by the High Court in second appeal. Adopting any other approach is not permissible. It has also held that there is a difference between question of law and a substantial question of law - Revenue appeal dismissed.

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• 2021 (10) TMI 178
  Revision u/s 264 - excess Dividend Distribution Tax (DDT) paid, within a time bound period - Petitioner also seeks a declaration that Section 115-O be read in a manner that is not inconsistent with Article 10 and other provisions of the India- Mauritius DTAA - HELD THAT:- This Court finds that the respondents have dismissed the petitioner s revision petition without giving any reason on merits, except stating that the petition was premature, as according to the learned Commissioner, the Revenue still had time to file an appeal against the ITAT judgment in the case of Giesecke Devrient (India) [ 2020 (10) TMI 750 - ITAT DELHI] As apparent that the learned Commissioner has neither applied its mind to the controversy at hand nor passed a reasoned order. Accordingly, the impugned order dated 31st March, 2021 is set aside and the matter is remanded back to the respondent-PCIT, Delhi-7 for passing a reasoned order within six weeks after giving an opportunity of hearing to the petitioner. This Court clarifies that it has not expressed any opinion on merits of the controversy. All rights and contentions of the parties are left open.

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• 2021 (10) TMI 177
  Settlement Commission order - unaccounted excess stock - Directions for verification of the Computer Server - HELD THAT:- As the scope of the directions issued by the Commission for verification of the Computer Server, the Commissioner added two more paragraphs to his communication dated 11.07.2013, which were, in fact, the stand taken by the Revenue before the AO stating that the delivery challans did not contain the signature of the customers and in the absence of receipts issued by the assessee to different customers from whom they have claimed to have received the old Gold, the authenticity of the receipt of Gold from the customers is not fully verifiable. In fact, the last two paragraphs in the communication dated 11.07.2013 was precisely the stand taken by the Revenue before the Commission, which was taken note of, and the Commission, with a view to examine as to whether there has been full and true disclosure, had directed verification of the Computer Server. The findings rendered by the Commission is not a concession extended by the CIT(DR), it is in fact, accepting the verification report which was submitted. Therefore, the Department, on a wrong premise that the Settlement Commission has recorded as if a concession was given, had approached the Writ Court, which, in our view, was unnecessary, as the Commission has not recorded any concession, but taken up the matter, considered the case of the assessee as well as the Department, and settled the case based upon the increased offer made by the assessee. There is no procedural error committed by the Commission, warranting interference by the Writ Court. We make it clear that the quoted paragraph of the order of the Commission is not to be construed as a concession given by the CIT(DR), but a finding rendered by the Commission with regard to the verification of the data from the impounded Computer Server. Thus, when there is no procedural irregularity, we would not be justified in interfering with the order of the Settlement Commission, which has attained finality and given effect to. That apart, in a writ proceedings, we are not expected to re-appreciate the facts. As we are fully convinced that there is no procedural error committed by the Commission, the order of the Commission does not call for any interference. WP allowed.

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• 2021 (10) TMI 176
  Disallowance u/s 40a(ia) - non deduction of TDS on provisions made in respect of expenses pertaining to the year under consideration - CIT(A) concluded that the respondent s claim for provision of expenses was allowable as deduction since provision was pertaining to the liability crystallized during the year - As per ITAT when payments were made by respondent to third parties, TDS has been deducted has not been disputed by the revenue and it is nobody s case that any payment has been made subsequently without deduction of tax source and even excess amount of provisions has been written back and hence there is no loss to revenue, thus reused to interfere - HELD THAT:- CIT(A) was correct in deleting the disallowance made under Section 40a(ia) of the Act and the view of CIT (A) that respondent could not have deducted TDS on provisions made in respect of expenses pertaining to the year under consideration is correct. Moreover, it is not disputed that in subsequent years when actual payments were made TDS has been deducted. Tribunal has not committed any perversity or applied incorrect principles to the given facts - no substantial question of law. - Decided against revenue.

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• 2021 (10) TMI 175
  Revision u/s 263 by CIT - As per CIT AO had failed to examine the interest expenses related to the borrowing made for the investment purposes was a business expenditure allowable u/s 36(1) (iii) or was it an expenditure incurred for earning dividend income allowable under Section 57 (iii) of the Act which is determinant of the applicability of Section 14A - ITAT setting aside order passed by the Principle Commissioner of Income Tax u/s 263 - HELD THAT:- If there are two possible views and the Assessing Officer has chosen one of the possible views then there is no reason to exercise power of revision and revisional powers cannot be exercised for directing a full inquiry to find out if that view taken after an inquiry is erroneous. Moreover, the power of revision can only be exercised where no inquiry as required under the law is carried out and even in case of inadequate inquiry by the Assessing Officer, the order of the Assessing Officer could not be reviewed. AO has recorded from the details submitted by respondent and the explanation given by respondent that the assessee had regular business connection with the company in which investment has been made and also there was a business income to the assessee from the same. He notes that the Assessing Officer, therefore did not consider the calculation of disallowance under Section 14A the interest expense debited by the assessee because the same has been incurred for the purpose of business. PCIT though was unhappy with the view of the Assessing Officer, the PCIT himself does not say why it should have been considered for the calculation of disallowance under Section 14A. Even if one assumes that he has, after reading of the order expressed his views, but still the position is two views therefore were possible. Therefore, if one of the two possible views was taken by the Assessing Officer, the PCIT could not have exercised his powers under Section 263. PCIT has not disputed the nature of the investments being strategic investment made for the purpose and in course of the business of the assessee. The PCIT has only looked at the matter from a different legal view on the same set of facts. It was for these reasons, the ITAT had interfered and held that the order passed by PCIT under Section 263 of the Act was not sustainable and accordingly set aside that order. Tribunal has not committed any perversity or applied incorrect principles to the given facts - Decided against revenue.

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• 2021 (10) TMI 174
  Nature of expenditure - Deduction on account of capital work-in-progress written off in computation of its income - expenditure was incurred for creation of new projects and these projects were capital assets of its business which were to yield enduring benefit - AO held that by parking such expenditure under the head capital work-in-progress , respondent itself has admitted that those expenses were capital in nature and reduction in capital asset on account of abandoned project for incurring a capital loss cannot be set off or reduced from the income as revenue loss, thus denied claim of writing off capital work-in- progress - ITAT held that the expenses incurred were in connection with the existing business and admittedly were of routine nature like salary, professional fees, etc., and these expenses are otherwise clearly of revenue in nature, thus allowable as revenue expenses - HELD THAT:- A judgment of this Court in CIT-3 Vs. Idea Cellular Ltd. [ 2016 (10) TMI 181 - BOMBAY HIGH COURT ] where the Court held that where new cellular towers were constructed by cellular operator in addition to existing tower and no new business was set up, if project was abandoned, expenditure so far incurred would be allowed as business expenditure. When we brought this judgment to the notice of Mr. Suresh Kumar and observed that the facts in this case are also identical to the facts of the appeal at hand, Mr. Suresh Kumar as an officer of the Court, agreed. He also states that an SLP against this judgment is pending but there is no stay. ITAT s view that if an expenditure is incurred for doing the business in a more convenient and profitable manner and has not resulted in bringing any new asset into existence, then, such expenditure is allowable business expenditure, is correct. - Decided against revenue.

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• 2021 (10) TMI 172
  Best judgment assessment u/s 144 - Valid notice issued u/s 142(1)(i) or not - proof of communication of notices and the draft assessment order - HELD THAT:- Revenue has produced the original file and photocopies of the relevant documents in the form of a typed set of papers from which, we find that the notice dated 14.02.2018 issued under Section 142(1)(i) of the Act was sent by Registered Post with Acknowledgement and has been received by the assessee on 24.02.2018. The hearing notice dated 20.05.2019 was also sent by Registered Post with Acknowledgement and the appellant-assessee has received the same on 25.05.2019. By a communication dated 16.09.2019, the Assessing Officer communicated the draft assessment order under Section 144 of the Act and gave one final opportunity to the assessee to file his explanation, if any, by 27.09.2019. This was communicated by Registered Post with Acknowledgement and received by the assessee on 27.09.2019. Thus, the notices and the draft assessment order have been communicated to the appellant and the appellant, despite having received the same, has not cooperated with the assessment proceedings and therefore, we find that there is no error in the order passed by the learned Writ Court. Writ Appeal fails and is dismissed - we grant liberty to the appellant-assessee to file an appeal before the Commissioner of Income Tax (Appeals), within a period of 30 days from the date of receipt of a copy of this judgment.

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• 2021 (10) TMI 171
  Rectification of mistake u/s 154 - Disallowance of set off of unabsorbed depreciation - notice u/s 154 of the Act was served on the assessee by which it was proposed to disallow the unabsorbed depreciation - HELD THAT:- Section 154 of the Act, twin conditions are required to be satisfied namely that there has to be a mistake and such a mistake has to be apparent on record. It is settled in law that the detection of such a mistake does not require a search or thorough application of mind and there cannot be a mistake in respect of an issue which admits of two plausible opinion. In the instant case, the Tribunal has dealt with the contention of the revenue in paragraph 6 and has held that for the reasons assigned therein, in the case of PEERLESS GENERAL FINANCE INVESTMENT CO. LTD. Vs. CIT [ 2016 (5) TMI 109 - SC ORDER] does not apply to the case of the assessee and has recorded a finding that the miscellaneous petition filed by the revenue is liable to be dismissed as the revenue has failed to show any error apparent on the face of the record in the order dated 06.07.2017 passed by the Tribunal. The order dated 06.07.2017 is based on the decision of the High Court of Gujarat in M/s. GENERAL MOTORS INDIA [ 2012 (8) TMI 714 - GUJARAT HIGH COURT] . The aforesaid order does not suffer from any mistake apparent on the face of the record warranting invocation of power under Section 144.

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• 2021 (10) TMI 170
  Completion Contract Method or the percentage Completion Contract Method for computation of income - Whether the percentage contract completion method is applicable to a developer? - HELD THAT:- Whether the completion Contract Method or the percentage Completion Contract Method for computation of income has to be adopted requires fair adjudication on the basis of facts. Therefore, the orders dated 27.08.2013 and 23.09.2013 passed by the CIT (Appeals) and so far the order of the AO vide orders dated 29.11.2010 and 16.12.2011 so far as it pertains to issue No.1 are hereby quashed and the matter is remanded to the Tribunal for decision afresh in accordance with law. It is needless to state that it will be open for both the parties to raise all contention as made available in law.

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• 2021 (10) TMI 169
  Denying the exemption u/s 54F - whether the appellant has not acquired a property, and the transaction was mere paper transaction? - HELD THAT:- From perusal of Section 54F of the Act, it is evident that if the assessee within a period of one year before or two years after the date on which transfer took place, purchases, or has within a period of three years after that date constructs a residential house, the assessee is entitled to the benefit of Section 54F of the Act. Section 54F of the Act is a beneficial provision, which has been enacted with an object to promote investment on housing and to enable the assessee to save tax on capital gains. In the instant case, admittedly, the assessee within one year before the date of transfer i.e., on 24.02.2007 has purchased along with other co-owners a property and had sold the capital asset on 24.10.2007. From close scrutiny of the order passed by the tribunal, it is evident that the tribunal while deciding the appeal preferred by the revenue has adjudicated only grounds 2 and 3 and has not adjudicated the ground with regard to the claim of assessee under Section 54F of the Act in the light of law laid down by Delhi High Court in CIT VS. GITA DUGGAL [ 2013 (3) TMI 101 - DELHI HIGH COURT ] . The tribunal has failed to adjudicate the grounds raised by the assessee in her appeal. - Matter restored back to ITAT.

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• 2021 (10) TMI 168
  MAT Applicability u/s 115JB - HELD THAT:- Substantial question of law involved in this appeal has already been answered in favour of the assessee by this Court in the case of COMMISSIONER OF INCOME-TAX, BANGALORE Vs. ING VYSYA BANK LTD [ 2020 (1) TMI 1116 - KARNATAKA HIGH COURT ] in favour of the assessee and against the revenue.

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• 2021 (10) TMI 167
  Penalty u/s. 271G - assessee did not provide any basis for comparing the transactions and it failed to provide any alternative method to benchmark the transactions which had prevented determination of ALP of these transactions - HELD THAT:- The assessee has maintained primary books of account / documents in respect of its business activity. The international transactions carried out by the assessee with its AEs has also been well documented which is supported by benchmarking done by the assessee under TNMM method - the assessee has made substantial compliances before Ld. Transfer Pricing officer and furnished all possible information, data and documents. The only lapse is that the assessee failed to furnish the segmental profitability of the AE and non-AE transactions which would be explained by the fact that it was practically difficult to maintain these details considering the nature of assessee s business. It could also be seen that finally the transactions have been accepted to be at arm s length. If the Transfer Pricing Officer was not satisfied with the benchmarking of the assessee under TNMM, nothing prevented him from rejecting assessee benchmarking and proceed to determine the ALP independently by applying any one of the prescribed methods. The blame for failure on the part of the Transfer Pricing Officer to determine the arm s length price cannot be fastened with the assessee. Similar issue of penalty u/s 271G for diamond industry has been adjudicated in assessee s favor in various decisions of this Tribunal. The coordinate bench of Mumbai Tribunal in the case of D. Navinchandra Exports (P.) Ltd. [ 2017 (11) TMI 1307 - ITAT MUMBAI ] held that considering the practical difficulties in furnishing the segment wise details of AE segment and non-AE segment transactions in diamond industry, no penalty under Sec. 271G could justifiably be imposed for failure to furnish the said information - we confirm the impugned order deleting the penalty u/s 271G. - Decided in favour of assessee.

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• 2021 (10) TMI 166
  Addition u/s 56 - allotment of shares through right issue @1 per share - difference between FMV and the consideration paid u/s 56(2)(vii) - The assessee being resident individual is stated to be director and a major shareholder in the private limited company - HELD THAT:- It could be inferred that provisions of section 56(2)(vii) were introduced as an anti-abuse measure and to prevent laundering of unaccounted income under the garb of gifts, after abolition of the Gift Tax Act. Upon perusal of orders of lower authorities, we find that there are no such allegations and no case of tax evasion or tax abuse has been made out against the assessee. In fact, the transactions are ordinary transactions of issue of right shares to existing shareholders in proportion to their existing shareholding and therefore, no case of abuse or tax evasion could be made out against the assessee. This proposition is supported by the fact that in line with the intent of legislatures, CBDT issued another Circular No. 10/2018 on 31/12/2018 clarifying that keeping in view the legislative intent to apply anti-abuse measures, Section 56(2)(viia) of the Act shall not be applicable in case of receipt of shares as a result of fresh issuance of shares, including by way of issue of bonus shares, rights shares and preference shares. The said circular was withdrawn immediately vide another Circular No.02/2019 dated 04/01/2019 and new Circular No. 03/2019 dated 21/01/2019 was issued wherein it was mentioned that the view taken in Circular No.10/2018 (subsequently withdrawn by Circular No.02/2019) that section 56(2)(viia) of the Act would not apply to fresh issuance of shares, would not be a correct approach, as it could be subject to abuse and would be contrary to the express provisions and the legislative intent of section 56(2)(viia) or similar provisions contained in section 56(2) - the fact that intent of introducing the provisions was anti-abusive measures still remain intact and there is no reason to depart from the understanding that the provisions were counter evasion mechanism to prevent laundering of unaccounted income. Additions as made by AO in the assessment order are not sustainable in the eyes of law.

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• 2021 (10) TMI 165
  Ex-parte order of the ld. CIT(A) in confirming the rectification order passed under section 154 - HELD THAT:- Since there was no representation from assessee s side despite various opportunities afforded, the ld. CIT(A) dismissed the appeal of the assessee. On perusal of the appellate order, we do not find that the assessee has furnished detailed written submissions against the grounds raised in the appeal before the ld. CIT(A) so that the ld. CIT(A) could adjudicate the issues on merits. However, before us, the ld. Counsel for the assessee prayed for one more opportunity of being heard to the assessee for furnishing his explanation in support of his claim. In view of the above, we are of the opinion that to meet the ends of natural justice, one more opportunity may be given to the assessee to furnish details explanation in support of his claim - Assessee appeal allowed for statistical purposes.

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• 2021 (10) TMI 164
  Eligibility to deduction u/s.80P - Claimed denied on the ground that the society had nominal members and hence the principle of mutuality is not satisfied - HELD THAT:- As relying on Swabhimani Souharda Credit Co-operative Ltd. 2020 (1) TMI 831 - KARNATAKA HIGH COURT] we are of the view that the claim of the Assessee for deduction u/s.80P of the Act has to be examined afresh by the CIT(A). The CIT(A) did not go into the question regarding eligibility of Assessee to deduction u/s.80P on merits but dismissed on the prelimnary point that a co-operative registered under the souhardha sahakari Act, 1997 cannot be regarded as a co-operative society under the Act. The order of the CIT(A) is accordingly set aside with a direction to the CIT(A) will decide the issue on merits in accordance with law - Appeal by the assessee is treated as allowed for statistical purpose.

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• 2021 (10) TMI 163
  Deduction u/s 35D - Increase of towards increase of authorized share capital - HELD THAT:- Tribunal vide order [ 2020 (6) TMI 240 - ITAT AHMEDABAD] allowed claim of the assessee. The ground raised by the assessee in that appeal exactly the same as that of the year under consideration A perusal of the ground and finding of the Tribunal reproduced above, where one of us (AM) is author of that order, no inconsistency was pointed out by the ld.DR in that decision so that we can take a contrary view in the case on hand. Therefore, following the judicial precedent, we allow the claim of the assessee in this year as well, and ground no.1 of the assessee s appeal is allowed. Interest expenditure as capital expenditure - HELD THAT:- Tribunal passed in the assessee s own case for Asstt.Year 2014-15. We find that similar claim made by the assessee in the preceding year was allowed by the Tribunal vide order [ 2020 (6) TMI 240 - ITAT AHMEDABAD] which was not disputed by the ld.DR - therefore following the decision of the Tribunal, we allow claim of the assessee for capitalization of interest expenditure on the money borrowed from the bank for investment in post-acquisition of shares. - Decided in favour of assessee.

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• 2021 (10) TMI 162
  TDS u/s 194H - Addition u/s 40(a)(ia)- assessee has paid Bank Guarantee Commission to Scheduled Banks approved by RBI - HELD THAT:- As decided in M/S NALWA STEEL AND POWER LTD [ 2021 (6) TMI 66 - ITAT DELHI] considering the Notification No. 56/2012 dated 31.12.2012 so-called bank guarantee commission is not in the nature of commission paid to an agent but it is in the nature of bank charges for providing one of the banking service. The requirement of Section 194H of the Act, therefore, would not arise. In the present case it is one of the banking services provided by the Scheduled Banks to the assessee as per the norms of the RBI. It cannot be said to be a commission as intended to u/s 194H of the but it is in the nature of Bank charges charged by the bank for provision of services to the assessee. Now this issue has been decided in M/S. LARSEN TOUBRO LTD. [ 2018 (12) TMI 991 - BOMBAY HIGH COURT] as well as per Notification No. 56/2012 of the CBDT the said provisions will also applied to earlier period than the date of issue of notification. Appeal of the assessee allowed. Addition on account of accrued interest - real income theory - taxation of hypothetical income - assessee was following mercantile system of accounting and the arbitration award give a right to the assessee to charge simple interest @ 5% per annum on the amount of advance given to M/s Karsan till the date of payment - HELD THAT:- As decided in own case [ 2017 (5) TMI 485 - DELHI HIGH COURT] the notional interest awarded by the International Court of Arbitration, which has now attained finality is a hypothetical income which cannot be subjected to tax. Merely because the said amount has been awarded by way of an order, does not mean that the assessee has received such income. The assessee followed mercantile system of accounting where there cannot be a situation of hypothetical income being taxed - since no part of the principal amount could actually be recovered by the Assessee, there was no real income and the question of adding any notional accrued interest to its income on such amount does not arise. - Decided against revenue. Disallowance of demurrage and wharfage charges - Scope of provision of the Railway Act, 1989 and Explanation 1 to Section 37(1) - CIT-A deleted the addition - HELD THAT:- As decided in own case [ 2017 (5) TMI 485 - DELHI HIGH COURT] question already stands answered in favour of the Assessee and against the Revenue by the judgment of this Court in Mahalaxmi Sugar Mills Company [ 1984 (5) TMI 6 - DELHI HIGH COURT] and of the Allahabad High Court in Nanhoomal Jyoti Prasad v. Commissioner of Income Tax [ 1979 (8) TMI 38 - ALLAHABAD HIGH COURT] - Decided against revenue. Addition of write-off value of slow moving stores and spares - scope of provisions of section 145 - assessee is not allowed to adopt any Accounting Standard of its choice as and when it deemed to be beneficial to it - CIT-A deleted the addition - HELD THAT:- As decided in own case [ 2017 (2) TMI 1226 - DELHI HIGH COURT] there is nothing on the record to doubt the bonafides of the valuation. In the event of likelihood of the stocks realizing higher amount than the value shown, the same would be reflected in the subsequent year in the income or profit of the assessee, the Revenue s contention is without any merit - no reason to subscribe and uphold the AO s adverse observations that the change in method of valuation was without basis. In fact the observations of the CAG in this case led to the change and adoption of AS-2, which was not previously resorted to. Disallowance on account of excess depreciation claimed on UPS (Uninterrupted Power Supply) - UPS as an integral part of computer - HELD THAT:- As decided in own case [ 2011 (7) TMI 1202 - ITAT DELHI] we uphold the order of the learned CIT(A) in accepting the assessee s claim of depreciation @ 60% on UPS and LAN/WAN. Disallowance u/s 14A - HELD THAT:- As in the absence of any exempt income, disallowance under Section 14-A of the Act of any amount was not permissible. The decision in Cheminvest Limited[ 2015 (9) TMI 238 - DELHI HIGH COURT] was followed - as no exempt income was earned during the year, thus, disallowance u/s 14A of the Act will not be applicable. Additional depreciation claimed u/s 32(1)(iia) - HELD THAT:- The electricity has been held as good as per the decision of the Hon ble Apex Court in case of State of Andhra Pradesh vs. NTPC [ 2002 (4) TMI 694 - SUPREME COURT] - To deny the benefit of additional depreciation to a generating entity on the basis that electricity is not an article or thing is an artificially restrictive meaning of the provision. Thus, the benefit of additional depreciation under Section 32(1)(iia) has to be granted to the assessee and w.e.f 01.04.2013, the provision has been amended by the Finance Act, 2012 wherein the assessees engaged in the generation of power have expressly been included in the ambit. Thus, the CIT(A) rightly deleted the disallowance. Addition on account of repair and maintenance expenses - CIT-A deleted the addition - HELD THAT:- It is pertinent to note that disallowance made by the Assessing Officer is an ad-hoc disallowance. The submission of the Ld. AR that there is no estimate that the annual repair and maintenance should be in consonance with the percentage of sales, is accepted as the Assessing Officer has not given any particular reason on why the said expenses has to be disallowed on ad-hoc basis. The contention of the Ld. DR that Section 37 (1) was not properly followed is also not correct to say as the details of the expenses were before the Assessing Officer which was totally ignored by the Assessing Officer. Thus, the CIT(A) rightly deleted this disallowance. Expenditure actually incurred on the Corporate Social Responsibility - HELD THAT:- These expenditure was incurred in compliance of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014. This can be seen from the records itself produced during the assessment proceedings by the Assessee. Thus, these expenditure were incurred as the statutory obligation of the assessee. The case laws referred by the Ld. AR are applicable in the present case. In fact, the Explanation 2 to Section 37(1) will be applicable in the Assessment Year 2015-16 and not that of present Assessment Year i.e. 2014-15. Thus, Ground Nos. 2(i) and 2(ii) of the Assessee s appeal is allowed.

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• 2021 (10) TMI 161
  Suppressed sales - Addition on the basis statement of search - HELD THAT:- As assessee has admitted that there is suppression of expenditure due to business exigencies, which included unaccounted purchase of raw materials. Hence there is suppression of both purchases and sales. Accordingly, the Ld. CIT(A) has taken the view that, in the facts and circumstances of the case, the gross profit only should have been assessed instead of assessing entire suppressed sales - there is no error in the decision so reached by Ld. CIT(A). When there is suppression of both purchases and sales, then what could be assessed is the profit element embedded therein. Before us, both the parties could not show as to how the decision so reached by Ld. CIT(A) was not correct, in the facts and circumstances of the case. Hence, we are of the view that the CIT(A) was justified in directing the AO to restrict the addition to the gross profit amount in respect of suppressed sales. Accordingly, we confirm his order passed on this issue. Addition of sundry creditors balance for want of details - A.R. has submitted that the sundry creditors balance represents trade creditors and all the creditors have running account - HELD THAT:- The fact remains that the assessing officer has made the impugned addition only for the reason that the assessee has not furnished relevant details called for by him - in the interest of natural justice, we are of the view that the assessee should be provided with one more opportunity to furnish explanations and details on this issue. Accordingly, we set the order passed by Ld. CIT(A) on this issue in all the three years and under consideration and restore the same to the file of AO for examining the same afresh. After providing adequate opportunity of being heard, the AO may take appropriate decision in accordance with law. Disallowance of prior period expenses - AO made this disallowance for want of details and also for the reason that this expense did not relate to AY 2010-11 - CIT(A) confirmed the same on identical reasoning - HELD THAT:- Before us also, no detail was furnished. Accordingly, we confirm the order passed by Ld. CIT(A) on this issue.

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• 2021 (10) TMI 160
  Unexplained investment u/s 68 - Adoption of additional evidences - HELD THAT:- Loan creditors are having creditworthiness and are capable of advancing the loans to the assessee; however, the additional evidences require factual verification. Considering the fact that the additional evidences sought to be furnished before us will have a crucial bearing on deciding the disputed issue, we are inclined to admit them - since the departmental authorities did not have an opportunity to verify them, adhering to the rules of natural justice, the departmental authorities have to be given an opportunity to verify them. It is also a fact on record that certain additional evidences furnished before learned Commissioner (Appeals) were not accepted purely on technical ground - we are inclined to restore the issue to the file of learned Commissioner (Appeals) for not only considering the additional evidences filed before him but also before us, as well. We further direct learned Commissioner (Appeals) to conduct adequate enquiry based on the additional evidences, either by himself, or get it done through the assessing officer by way of remand proceedings. Based on such enquiry, learned Commissioner (Appeals) must decide the issue through a speaking order after due opportunity of being heard to the assessee. Grounds are allowed for statistical purpose.

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• 2021 (10) TMI 159
  Unexplained investment - transaction in joint bank account with his father - HELD THAT:- Assessee s father is in receipt of rental income and the same are deposited in the joint account of the assessee and his father with Vijaya Bank. The assessee s father is also had deposited the proceeds of sale of agricultural property in Vijay Bank. There has been bank transfer from Vijaya Bank to Citi Bank and the assessee has withdrawn a sum from Citi Bank on 09.03.2006. Therefore, it cannot be stated there was no sufficient money available with the assessee s father for making a gift of sum - Hence delete the addition made by the A.O. For savings and drawing from Citi Bank withdrawals are for meeting the specific expenditure such as credit card payments and cheque payments to specified entities. The cash withdrawals in the Citi Bank account is not much. The few cash withdrawals, in all probabilities, would have been only for the purpose of meeting the personal expenses of the assessee. thus we confirm the addition. Sales proceeds of HUF property sum cannot be given credit because agricultural property was sold in June 2004 and the same in all likelihood would not have been available for making a purchase of the site much subsequently, i.e., on 09.03.2006. In this context, it is important to mention that the A.O. has already given a credit out of the sale proceeds of agricultural land of HUF towards the purchase of the site (since the initial installment towards payment for the purchase of site was made by the assessee in August 2004). Therefore, confirm the addition made by the A.O. Unexplained credit - addition of credits in two bank accounts of the assessee - HELD THAT:- As credits are transactions which pertains to loan availed or receipts of interest either from FD or SB accounts. The remaining amount of Rs. 4,86,500, the assessee has explained by stating that Vijaya Bank account is a joint bank account of assessee and his father and this fact has been accepted by the A.O. in the remand report submitted. The Chief Manager, Vijaya Bank has confirmed that the impugned account is joint account of the assessee and his father (Refer page 25 of the paper book). Hence, the observation of the A.O. that Vijaya Bank account is in the single name of assessee, is erroneous. Assessee s father had made deposits of the rental income received by him in the Vijaya Bank account. The assessee has also deposited money from withdrawals from other bank accounts. Therefore, in the facts and circumstances of this case, the addition made by the A.O. on account of credits to the Vijaya Bank account amounting to Rs. 3,16,760 is uncalled for and I delete the same. Hence, the issue relating to unexplained credits in the bank account is partly allowed.

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• 2021 (10) TMI 158
  Black money - Liability of the appellant to be assessed under the provisions of BMIT Act 2015 - denial of liability in the jurisdiction of the Assessing Officer to issue notice under black money - scope of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (in short BMIT Act ) - HELD THAT:- As in light of the limited scope of an appeal under section 15(l)(b), the Grounds no. 1, 2 and 3 of assessee s appeal which are connected with disposal of objections by the AO in conformity with the rules of natural justice are found to be beyond the scope of an appeal filed under section 15(l)(b) of the BMIT Act and hence, cannot be adjudicated. Consequently, ground no. 1, 2, and 3 of the appeal raised by the assessee are found to be unconnected with determination of assessee s liability, beyond the scope of section 15(l)(b) of the Act and are dismissed. Liability of the assessee to be assessed under the BMIT Act, 2015 - HELD THAT:- The ownership of these assets cannot be thrust upon the assessee. Hence, the denial of liability by the assessee at the jurisdictional stage also succeeds on this count too. BM Act provides u/s. 4(2) an exclusion for the assets which have been created out of the income assessed in India - As the settlement commission had rejected the assessee s plea and these matters proceedings are already separately going on.Hence by no stretch of imagination can lead to a conclusion that incomes are not been assessed as the Revenue has not dropped its plea/withdrawn its plea, that these incomes are not exigible to income tax. Once it is so held, these assets cannot again be the subject matter of black money proceedings at this stage, as it will amount to double prejudice to the assessee which is not sustainable in law. Various materials which have been referred by learned CIT(A) in his order rejecting the jurisdictional challenge have not been confronted to the assessee at the time of learned CIT(A) s order dismissing the jurisdictional challenge. We note that this is a very germane point as the principle of natural justice in this regard have been ignored by learned CIT(A). It is evident that the catena of documents which learned CIT(A) has referred are in fact lifted by him from the final order of the Assessing Officer to support his order. These were never confronted to the assessee. In this view of the matter order of CIT(A) suffers from jurisdictional infirmity in as much as it is contrary to the rules of natural justice. Moreover we note that assessee has duly raised a ground before ld CIT-A that there is violation of natural justice inasmuch as assessee s request for a personal hearing in this regard has been rejected by the AO. CIT(A) rejected this by holding that there is no such scope in section 15(1)b.We do not see the basis of such reasoning by Ld CIT(A),when assessee has duly submitted that the documents relied upon have not been confronted to the assessee.Ld CIT(A) in this regard has noted that these documents were not in appeal folder before him and he has simply accepted the AOs report that these documents are referred in AOs final order and the documents have been confronted to the assessee.This is palpable violation of natural justice and ld CIT(A) has fatally erred in rejecting the claim without himself examining the records.This proposition is duly supoerted by Honbe Supreme court decision in the case of Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] Assessing Officer has referred to the names of certain bank accounts and Form-A obtained from banks for establishment of beneficial owners identity - As already been noted that in the aid of Swiss AML Act, the Swiss bankers Association has issued a Code of Conduct for Swiss Banks with regard to the exercise of due diligence (CDB Guidelines), wherein model Form A is prescribed for the declaration of identity of the beneficial owners. However, as clarified by the Swiss Federal Tax Administration, vide its letter dated 30.6.2015 it does not have application for matters of taxation. Hence, mention of assessee s name in this Form-A cannot be taken as any proof of assessee s ownership of this asset for tax purpose. These assets were already part of income tax proceedings up to preceding assessment year and that for present Assessment Year the assessee has still time to file income tax return. Hence, it is the claim of the assessee issue of notice is premature. This plea of the assessee has been rejected by the authorities below by holding that there is no such bar in the black money act. Definition of undisclosed asset in the back money act clearly provides that assets created out of income assessed in income tax already shall be excluded. Hence, when the revenue has already assessed these assets under income tax proceedings upto previous Assessment Year and for current assessment year time for filing the return has not expired, assessee s plea that the issue of notice is premature is tenable and accordingly we accept the same. The bar in the ACT is inbuilt inasmuch as it has been provided that assets out of income assessed to income tax shall be excluded from the purview of undisclosed asset in Black Money Act. Hence, it is abundantly clear that as per the scheme of the act, there cannot be a simultaneously proceedings on the same asset/income under Income Tax Act, 1961 as well as Black Money Act. The doctorine of double prejudice does come into play here. Above discussion amply prove that the assessee s challenge before the ld CITA to denial of liability in the jurisdiction of the Assessing Officer to issue notice under black money act deserves to succeed.

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• 2021 (10) TMI 156
  Deposit of TDS - Proof of deposit - HELD THAT:- As held petitioner had to submit TDS certificates for the amount deducted by it towards payment of tax deducted at source (TDS) under the Income Tax Act. If the said TDS amount has not been deposited, the petitioner has to pay the aforesaid amount to the respondents. Since, the petitioner has not shown any proof that he has paid the TDS amount, he would have to pay the said amount to the respondents. It is also an admitted position that the orders dated 22nd May, 2019 and 1st August, 2019 have never been challenged by the petitioner and therefore, the aforesaid amounts of TDS and penalty have become final. Submissions of the petitioner that the sum as been calculated only on the basis of the calculation filed by the respondents, the Court is of the view that the petitioner would have a right to submit his own calculations in respect of the amount due. However, the said calculations have to be drawn on the basis of the judgment of the Division Bench wherein it is clearly provided that a sum of Rs. 5,50,000/- per month is payable even for the period from 1st March, 2010 to 31 st October, 2010. If the difference between the amount of Rs. 5,50,000/- per month as directed by the Division Bench and Rs. 2,75,000/- per month as claimed by the petitioner is taken into account for the period of eight months, a sum of Rs. 22,00,000/- becomes payable by the petitioner to the respondents.

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• 2021 (10) TMI 155
  Validity of Settlement Commission order - in the absence of customer s signature in the delivery challan and in the absence of receipts issued by the second respondent for receipt of old gold from the customers, the authenticity of the claim was neither verifiable nor acceptable - As there is a delay of more than six months in filing the writ petition and further, the writ petition against an order of Settlement Commission is not maintainable - HELD THAT:- This Court is of the considered opinion that the delay of about six months in filing a writ petition by the petitioner / Department cannot be considered as enormous, so as to reject the writ petition at the threshold. The ground raised in the writ petition is that based on certain incorrect facts and details, immunity was granted in favour of the second respondent, which caused prejudice to the interest of the Revenue. Thus, the petitioner has chosen to file the present writ petition as such mistakes crept in cannot be rectified by filing a clarification petition. However, this Court cannot adjudicate the disputed facts in the present writ proceedings as the adjudication was made before the Settlement Commission in the presence of the parties. What is transpired and the manner in which the facts recorded and the errors identifiable is the findings, to be considered by the Settlement Commission itself. This Court is of an opinion that the case on hand is a fit case for remand and the grounds raised in the writ petition is to be considered by the Settlement Commission for the purpose of consideration and passing fresh orders.

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• 2021 (10) TMI 154
  Assessment u/s 153A - Search proceedings u/s 132 - HELD THAT:- Since in this case search has taken place u/s 132, preceding six year assessments preceding from the date of search i.e. 29.04.2015 are to be done u/s 153A and accordingly assessment for A.Y. 2013-14 was also made u/s 143(3) / 153A. Therefore, we do not find merit in this contention for Ld. Counsel for the assessee. However, whether there was incriminating material found in respect of each of additions / disallowances made in the assessment order as per the arguments raised by Ld. Counsel may be relevant and we would consider this argument while discussing and adjudicating the grounds of appeal involving various additions / disallowances. Loss claimed by the assessee did not relate / accrue for the year under consideration - whether such loss is the loss of the year under appeal or not? - HELD THAT:- The impugned loss which is the subject matter of the present appeal is integral to the main business of the assessee andhas been incurred in respect of the contracts entered into to safeguard the foreign exchange proceeds on export or foreign exchange payments in respect of the imports and other payables from exchange fluctuation loss and is thus not speculative loss but is normal business loss which is liable to be set off as per the provisions of the Income Tax Act. Since the agreement came to an end in Jan 2013 and March 2013 and agreed level could not be achieved and hence, as per the agreement the loss had crystallized on the expiry of the period of 5 years which fell in the year before us and hence the loss booked by the assessee is the loss of the year under appeal. Merely because the loss has got some connection with earlier year(s), it does not make the loss as the loss of those years. All that has to be seen the precise point of crystallization of the event leading to the loss which in our considered opinion fell in the year before us and hence the loss is the loss of the year under appeal. As CIT vs. West Chusick Coal Co. Ltd. [ 1980 (9) TMI 65 - CALCUTTA HIGH COURT] , Metal Box Co of India Ltd. vs. Their workmen [ 1968 (8) TMI 53 - SUPREME COURT] which lay down the guiding principles as to when a loss can be said to have been incurred. Thus, even on this score the loss which is the subject matter of appeal before us is the loss which is allowable in the previous year relevant to AY 2013-14. - Decided against revenue. Bogus expenses claimed to be incurred by the assessee company on account of job work done - 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 considered by us are clearly establishing the genuineness of the job work expenses incurred in relation to M/s Sai Exports - For 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) at page 60 of his appeal order to which reference has also been made in the written submissions filed by the assessee and to which our attention was drawn clearly establish mentioned by us above that job work expense claimed by the assessee to have been paid to M/s Sai Exports are quite genuine and established. Non genuine purchases of fabric - 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 - Decided in favour of assessee. Addition u/s 14A - Extent of exempt income - HELD THAT:- In any case, there is exempt income only to the extent of Rs. 85,656/-and for this reason also, disallowance under section 14A could not have exceeded this amount in view of the decision of Delhi High Court in the case of Joint Investment Ltd [ 2015 (3) TMI 155 - DELHI HIGH COURT] hence we uphold the order of CIT(A) to this extent. But, Since we have deleted the entire amount of disallowance made by AO, hence even the disallowance sustained by CIT(A) to the extent of Rs. 85,656/- is also not sustainable. In the result, ground no. 14 of the assessee s appeal is allowed.

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• Customs

• 2021 (10) TMI 202
  De-freezing of petitioner Bank Account - SCN issued without jurisdiction and in violation of the Circular dated 16th September 2014 - HELD THAT:- This Court directs the registry of Customs, Excise and Service Tax Appellate Tribunal to list the Petitioner s appeal before the appropriate Bench on or before 10th October, 2021. This Court clarifies that it has not commented upon the merit of the controversy. The rights and contentions of all the parties are left open. Petition disposed off.

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• 2021 (10) TMI 200
  Forbearance on respondent from auctioning the 178 watches seized from the respondent till the disposal of the appeal - foreign made watches of various brands - revaluation of confiscated watches - confiscation - redemption fine - penalty - in an appeal filed by the respondent, can an order adverse to the interest of the respondent be passed, when admittedly, such portion of the order was not questioned before the First Appellate Authority? - HELD THAT:- In the case on hand, the Original Authority directed redemption of the seized goods on payment of redemption fine and appropriate Customs Duty. The respondent was on appeal before the First Appellate Authority, questioning the correctness of the entire order, that is, on the revaluation of the goods, on imposition of redemption fine and payment of Customs Duty and penalty. The First Appellate Authority, therefore, would be required to test the correctness of the order passed by the Original Authority and if he does not agree with the order, he made set aside the order, but the respondent cannot be worse off in his own appeal filed before the First Appellate Authority - this question is required to be agitated before the Tribunal in the appeal which has been filed by the respondent. During the pendency of the appeal, it appears that the Department took steps to dispose of the seized watches, which permitted the petitioner to file the Writ Petition. During the pendency of the appeal before the CESTAT, it would not be appropriate for the Department to dispose the seized goods, especially when the Tribunal has directed the appeal to be heard during November, 2021, and furthermore, the Original Authority has directed redemption of the seized watches on payment of redemption fine and appropriate Customs Duty. Therefore, the appellant/Department has to necessarily await the decision of the Tribunal and abide by the direction that has been issued by the Tribunal. The effect of the Circular dated 10.03.2017 need not be gone into in the instant case, as the respondent has complied with the Pre-Deposit condition for preferring the appeal before the CESTAT and the appeal has been directed to be listed for final hearing before the Division Bench during November, 2021. Therefore, the steps taken by the appellant/Department for auctioning the goods have to necessarily be deferred and await the decision of the Tribunal in the appeal filed by the respondent. Appeal is dismissed with a direction to the appellant/Department not to initiate any coercive action against the respondent, as the respondent has complied with the Pre- Deposit condition in terms of 129(E) of the Act and the watches which have been seized shall continue to be retained as such and not put up for auction and the appellant/Department shall await the decision of the Tribunal and abide by the same.

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• 2021 (10) TMI 198
  Maintainability of petition - availability of alternate remedy available under the provisions of the Customs Act - requirement of fixation of date for opportunity of personal hearing - violation of principles of natural justice - CBEC in Circular No.1053/2/2017- CX dated 10.03.2017 - HELD THAT:- In terms of the Circular, the Adjudicating Authority has to proceed to fix a date and time for personal hearing and atleast three opportunities should be given with sufficient interval of time so that the noticee may avail opportunity of being heard and separate communication should be made to the noticee for each opportunity of personal hearing. Further, it has been directed that separate letter for each hearing/extension should be issued on sufficient interval and if sufficient cause is shown in any stage of the proceedings, the Adjudicating Authority can adjourn the hearing for the reasons to be recorded in writing and no adjournment should be granted more than three times to the noticee. The procedure adopted by the first respondent in issuing a show cause notice and fixing three dates for personal hearing which are pre-fixed dates would fall foul of the above Circular. The facts clearly show that adequate opportunity was not afforded to the appellant. It may be true that the show cause notice is of the year 2017, yet the Customs Department did not take any action till issuance of notice dated 01.03.2021. On receipt of the notice, the appellant sought for two weeks time to produce the Bank Realization Certificates and time was granted by the concerned Officer till 06.04.2021. Much before the said date, the Order-in-Original has been passed - there has been violation of principles of natural justice. That apart, the appellant has submitted the certificates in the form of negative statement on 07.04.2021. If those certificates are verified and the stand taken by the appellant is found to be correct, then the proceedings itself had to be dropped. The matter is remanded to the first respondent for fresh consideration - Petition allowed by way of remand.

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• 2021 (10) TMI 196
  Jurisdiction - power of Directorate of Revenue Intelligence to investigate as to whether there has been misuse of Export Incentive Scheme by the petitioner - HELD THAT:- There is no explanation in the writ petition as to what triggered it, in the first place, and what made the petitioner apprehend that adverse action is in the offing. That after issuance of the impugned show-cause notice the respondents have not acted in any manner to infringe the rights of the petitioner [it has been 7 (years) since], is an important circumstance that needs to be borne in mind. Also, there being no real threat of infringement of any of its rights, the petitioner does not have the cause of action even for moving this Court at this stage. Without a cause of action , the right of action is meaningless. This is not a fit case to even examine as to whether the show-cause notice is non est in the eyes of law. Noticing that a notice for hearing had been issued to such writ petitioner, the writ petition is disposed off. Since the final order on the proceedings was yet to be passed, the interest of justice would be sufficiently served if the petitioner were granted the liberty to file an application before the respondent no. 2 to urge before such respondent that in view of the ratio of the decision in Canon India [ 2021 (3) TMI 384 - SUPREME COURT ], the proceedings cannot be carried further; and upon such an application being made, the respondent no. 2 was directed to proceed in accordance with lay by passing either a preliminary order or a final order, as the case may be, in the proceedings. Petition disposed off.

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• 2021 (10) TMI 190
  Advance License scheme - Invocation of Bank Guarantee - failure to achieve export obligation - waiver of statutory interest - regularisation under clause 4.28 of the Handbook of Procedures - power of judicial review under Article 226 of the Constitution of India - HELD THAT:- The case of the petitioner, on admitted facts, will fall under clause 4.28 (iii). Clause 4.28 deals with the situation where the export obligation has been fulfilled in value terms but there is a shortfall in the terms of quantity and clause 4.28 (ii) deals with the situation where the export obligation is fulfilled in quantity but there is a shortfall in value. Both situations contemplated by clauses 4.28 (i) and 4.28 (ii) provide separate methods for calculation of the amount payable for regularisation. Clause 4.28 (iii) provides that where the export obligation is not fulfilled both in terms of quantity and value the amount payable will be as the amount calculated under clauses 4.28 (i) and 4.23 (ii). A combined reading of clauses 4.28 (i), (ii) (iii) leads to the conclusion that the petitioner will have to pay interest also if it intends to regularise its default in terms of clause 4.28. From the facts as pleaded in the writ petition, it appears that the petitioner never applied for regularisation in terms of clause 4.28 of the Handbook of Procedures. Whether the delay in disposal of Ext.P1, should result in an order relieving the petitioner of the liability to pay interest as demanded in Ext.P11. Interest under the Customs Act is statutory? - HELD THAT:- The petitioner admittedly paid the amount due on account of failure to meet the export obligation only on 27-08-2013. The advance licence was issued in 2004 and the export obligation period was 18 months from the date of issue. Even accounting for the 6 months extension granted by the original authority, the period of export obligation would have expired in 2006. The petitioner was able to import materials without payment of customs duty only in terms of the advance licence. The petitioner, on failure to meet the export obligation, was required to pay customs duty on the imported material. The export obligation period having ended in the year 2006 (even after the extension) the petitioner was bound to pay customs duty in the year 2006. The petitioner has paid the customs duty only in the year 2013. The petitioner could have opted to remit customs duty under protest - the petitioner cannot claim any exemption from the payment of interest. Petition dismissed.

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• 2021 (10) TMI 189
  Interest on refund - refund has been sanctioned within the prescribed period of three months from the receipt of all the requisite documents - failure in filing refund claim after finalization of assessment - delay in refund of EDD - Section 27-A of the Act, 1962 - HELD THAT:- The respondent-importer had not produced all required documents and this compelled the Department to issue a show-cause notice on 7.7.2017 notifying the importer that the claim of refund will be rejected for non-submission of the documents. Pursuant to the show-cause notice, the importer has furnished 11 duplicate copies of bills of entries and four original copies of capital TR6 challans. It was found that the importer has produced these documents duly certified by Chartered Accountant only on 11.10.2017. The Department has sanctioned refund only after due verification of documents. The Appellate Authority having verified the documents and also having given its due consideration to the reasons assigned by the Original Authority concurred and affirmed the reasons assigned by the Original Authority. The Appellate Authority was also of the view that the refund is sanctioned well within the time of three months from the date of receipt of last document from the importer and therefore, question of awarding interest will not arise - the Tribunal has not at all a recorded finding indicating that the order passed by the original authority as well as the Appellate Authority suffers from perversity. The Tribunal has not even discussed the facts of the present case on hand. What emerges from the order passed by the Tribunal is that it has proceeded to order for payment of interest on the ground that the application is not decided within a period of three months. The contention of the respondent-importer that even if the application was defective, the same at the most may amount irregularity and hence, the Department cannot escape the liability of paying interest in terms of Section 27-A of the Act, 1962 is too far stretched and we are unable to accede to such a contention. The respondent-importer cannot be permitted to take undue advantage of lapses on his part in not submitting complete document to enable the Revenue to finalize the assessment before ordering for refund of 1% EDD. The present appeal are answered in affirmative i.e., in favour of the revenue and against the assessee.

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• Insolvency & Bankruptcy

• 2021 (10) TMI 183
  Maintainability of application - initiation of CIRP - alleged default on the part of the CD to make repayment of dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- Corporate Debtor in reply to the application has admitted that OC had rendered office management service and has not raised any dispute to the outstanding dues to OC. Further, CD has admitted that it had suffered huge losses and hence was unable to make arrangements for the payment of the demand. The applicant has placed sufficient evidence in support of its claim. Thus, the OC has clearly established the existence of debt and default on the part of the CD. The petition is within the limitation period. The present application is admitted initiating CIRP on the CD, with immediate effect - application admitted - moratorium declared.

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• 2021 (10) TMI 181
  Prayer for amendment in the application numbering IA-1317/2019 filed by the Applicant - HELD THAT:- Since the notice has not been issued in the IA-1317/2019, before issuance of the notice to the respondents, the applicant is entitled to make amendment in its application and respondent gains right to oppose only when he appears and files the reply. So considering these facts, there are no option but to allow the prayer of the Applicant. Accordingly, the present application is allowed. The Applicant is directed to incorporate the amendment proposed in this IA and file the amended application i.e., IA-1317/2019.

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• PMLA

• 2021 (10) TMI 201
  Legality of arrest - validity in terms of A. 22 (2) of Constitution of India r/w s. 57 CrPC - application moved by the petitioner herein to declare the arrest of the petitioner as illegal was dismissed without any reason - what is the time of arrest of petitioner is 8:30 PM of 03.08.2021 or 7:55 PM of 03.08.2021? - HELD THAT:- Admittedly, the search started on 03.08.2021 in the premises of the petitioner at 8:30 AM and it continued till afternoon uptil 3 o clock and thereafter the petitioner was taken to office of respondent for recording of his statement. It was recorded till 7.55 PM when he was arrested. He was then produced on 04.08.2021 at about 4 PM before the learned Court. The question is whether he was produced before Court within 24 hours of his arrest. Deepak Mahajan [ 1994 (1) TMI 87 - SUPREME COURT ], Roshan Biwi [ 1983 (11) TMI 290 - MADRAS HIGH COURT ] and Harbhajan Singh [ 1968 (12) TMI 101 - HIGH COURT OF BOMBAY ] all in unison clarify the custody and arrest are not synonymous. In every arrest there is always a custody but in every custody there may not be arrest. Even otherwise, if one look at the scheme of PMLA it shows arrest needs to be made only under Section 19(1) of the Act after completion of process under Section 17(1) and 18(1) and the accused is to be produced before the concerned court within 24 hours of his arrest under Section 19(1). The arrest is only under Section 19(1) of the Act after the formalities under Section 17(1) and Section 18(1) are complete viz. the search and seizure is made and the officer has in his possession the material to proceed further. Once the person is arrested under Section 19(1) he needs to be produced before the Special Court within twenty four hours per Section 19(3) of the Act. Section 19(3) rather clarifies it is only after the arrest is made under Section 19(1), the person needs to be produced within twenty four hours before the Court. Admittedly, in this petition there is no challenge to this scheme of the Act hence the petitioner cannot allege his arrest made by following the above procedure is illegal. Admittedly per facts, the officers on the basis of information per Section 17(1) had entered the building at 8.30 AM; conducted search per Section 18(1) till 3 PM and recorded statements till 7.55 PM and then arrested him per Section 19(1) of the Act. The petitioner was thus produced within 24 hours before the court from the time of his arrest under Section 19(1) of the Act, per Section 19(3) of the Act. Petition dismissed.

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• Service Tax

• 2021 (10) TMI 193
  Condonation of delay of 815 days in filing appeal - initially the appeal was filed before wrong forum, after knowing the facts, the appeal was filed before right forum after such huge delay - Short payment/non-payment of service tax - business auxiliary services - security service under reverse charge mechanism - renting immovable property service - repair, reconditioning, restoration and other similar service - freight charges paid under reverse charge mechanism - reversal of proportionate cenvat credit u/r 6(3) of Cenvat Credit Rules, 2004 - HELD THAT:- Admittedly, the order in original was passed on 30.08.2018, of course, after giving due opportunity to the petitioner, which the petitioner cannot deny. On receipt of the order in original on 04.09.2018, prerequisite deposit of 7.5% of demanded tax was paid by the petitioner on 20.09.2018, that is, within 15 days, based on which, it is claimed by the petitioner that, the appeal papers have been prepared and sent, instead of Appellate Authority, it was sent to the Original Authority, that is, the Assessing Authority. If at all the petitioner had no intention to prefer an appeal within the time prescribed, in this regard, he would not have come forward to make pre-requisite deposit of 7.5% of demanded tax and this has been admittedly done by the petitioner. No doubt, in view of the statutory limitation prescribed, the Appellate Authority can not condone such a huge delay and therefore the reason stated by the Appellate Authority, in this regard, to that extent can be accepted. Further, it is to be taken note of that, the petitioner had paid the pre-requisite deposit of 7.5% of demanded tax, in this context, though he made an attempt to file an appeal, but he had chosen the wrong Forum by mistake or by mis-conception of the Forum, due to various reasons at the end of the assessee side. In view of the said factual circumstances, this Court feel that in such peculiar circumstances, the appeal filed by the petitioner can be entertained by the Appellate Authority. This Court by exercising its extraordinary power under Article 226 of the Constitution of India, can very well condone the delay in filing the appeal before the Appellate Authority for the very peculiar reasons. There shall be a direction to the second respondent/Appellate Authority, to entertain the appeal filed by the petitioner as against the order-in-original, made by the first respondent, and accordingly decide the said appeal on merits and in accordance with law - Petition disposed off.

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• 2021 (10) TMI 187
  Rectification of mistake - non-intimation to the Department in order to pay Service Tax on Works Contract Services under the composition scheme - benefit of paying reduced tax under the composition scheme was not extended to the appellant - HELD THAT:- It is made clear that the Learned Counsel for the appellant has put forward argument only as to the rejection of the claim of the appellant for payment of Service Tax under the composition scheme. It is argued by him that the appellant ought to have been allowed to discharge Service Tax under the composition scheme for Works Contract and that the non-intimation to the Department prior to payment of Service Tax has to be considered as a procedural infraction. The non-intimation of availing the composition scheme is only a condonable lapse and that appellant has to be allowed to pay Service Tax under the composition scheme for Works Contract Services. The appellant is liable to pay Service Tax on such taxable value, however, at the reduced rate under the composition scheme - Appeal allowed in part.

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• 2021 (10) TMI 186
  CENVAT Credit - capital goods - input services - fabrication, erection, installation of towers and shelters - extended period of limitation - penalty - HELD THAT:- The issue relating to the admissibility of credit of inputs/capital goods and services used in the fabrication, erection and installation of towers and shelters has been long in dispute. Bombay High Court in the case of M/S. BHARTI AIRTEL LTD. (EARLIER KNOWN AS BHARTI TELE-VENTURES LTD.) VERSUS THE COMMISSIONER OF CENTRAL EXCISE [ 2014 (9) TMI 38 - BOMBAY HIGH COURT] , VODAFONE INDIA LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, MUMBAI II [ 2015 (9) TMI 583 - BOMBAY HIGH COURT] held that to produce telecommunication service, cenvat credit on towers, prefabricated shelters and their accessories cannot be availed as the towers are fixed to the earth and became immovable property and ipso facto, non-marketable and non-excisable. Delhi High Court in the case of VODAFONE MOBILE SERVICES LIMITED, INDUS TOWERS LIMITED, TOWER VISION INDIA PRIVATE LIMITED, BHARTI INFRATEL LIMITED, VERSUS COMMISSIONER OF SERVICE TAX, DELHI [ 2018 (11) TMI 713 - DELHI HIGH COURT] ., VODAFONE MOBILE SERVICES LIMITED, INDUS TOWERS LIMITED, TOWER VISION INDIA PRIVATE LIMITED, BHARTI INFRATEL LIMITED, VERSUS COMMISSIONER OF SERVICE TAX, DELHI [ 2018 (11) TMI 713 - DELHI HIGH COURT] , Delhi High Court have taken a contrary view after examining and distinguishing the judgment of Bombay High Court - the credit, of inputs / capital goods and services utilized in fabrication, erection, installation of towers and shelters by the appellants, is admissible to them. Credit of various services availed by the providers of telecom service - HELD THAT:- The credit taken and availed by the appellants on all the impugned services except the service relating to dismantling of towers (in respect of show cause notice dated 13.10.2011) is admissible to them - the appellants have not submitted any suitable reason to consider that the said service is required and the same is in the furtherance of their business - credit availed on service relating to dismantling of towers is not admissible to them. Validity of SCN - HELD THAT:- It is not understood as to how the learned Commissioner has come to the conclusion on the credit availed by the appellants in respect of each of the services. Understandably, the onus of identifying the service and the credit irregularly availed, if any, by the appellants is squarely on the department. So, it is very difficult to uphold show cause notices and orders issued without clarity of either allegation or confirmation. Time limitation - HELD THAT:- In addition to the fact that the appellants are regular assessees who have been filing ST-3 Returns, the appellants have been issued show cause notices dated 22.09.2009 and 08.10.2010. This being the case, it is not possible to invoke extended period by alleging suppression of fact with an intent to evade payment of duty in respect of show cause notices dated 14.10.2010 and 13.10.2011 - it is not possible for this Bench to hold that the department is free to invoke extended period in the subsequent show cause notices - the credit is admissible to the appellants and as such the appeal survives on merits and any findings on limitation etc. would be redundant. The impugned order is set aside, except to the extent of confirmation of credit availed on services relating to dismantling of towers for the normal period - appeal allowed in part.

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• 2021 (10) TMI 182
  Non-imposition of penalty - Section 76 of the Finance Act, 1994 - valuation with respect to service tax payable on the service of renting of immovable property service - HELD THAT:- Since the matter appears to have attained finality by virtue of common understanding between the Revenue and the assessee as reflected in the order-in-original dated 27 January 2016 for the subsequent period, we find that this matter needs to be decided accordingly. The impugned order is set aside and matter is remanded to the Original Authority with a direction to decide the matter afresh as per the order-in-original dated 27 January 2016 - appeals are disposed of by way of remand.

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• Central Excise

• 2021 (10) TMI 185
  CENVAT Credit - inputs/input services which is used in the manufacture of exempted goods of provision of exempted services - clearance of goods to SEZ developers by claiming exemption from payment of Central Excise duty - availing Cenvat credit on the inputs used in the manufacture of such goods - exemption to supplies made to SEZ developers - effect of notification dated 31.12.2008 - demand of interest and penalty - HELD THAT:- In this case, the appellant has not supplied the goods to SEZ units but has supplied them to SEZ developers. The case of the Revenue is, therefore, that the appellant is not entitled to the exemption from provisions of Rule 6(1), (2), (3) and(4) available under Rule 6(6)(i) of CCR. Since the appellant had not maintained separate accounts of inputs and input services, it is required to pay an amount equal to 10% of the value of the goods supplied to the SEZ developers. The show cause notice was issued in 2009 covering the period 28.12.2006 to 31.12.2008. In 2008, Rule 6(6)(i) was amended vide Notification No. 50/2008-CE(NT) dated 31.12.2008 to read as cleared to unit in a Special Economic Zone or to developer of a Special Economic Zone for their authorised operations . Whether the notification dated 31.12.2008 giving exemption to supplies made to SEZ developers from Rule 6(1),(2),(3) (4) will have retrospective application? - HELD THAT:- The inclusion of SEZ developers under Rule 6(6)(i) is clarificatory and applies to the period prior to 30.12.2008 also. This judgment was subsequently followed by the High Court again in the case of COMMISSIONER OF CENTRAL EXCISE BANGALORE-III, VERSUS M/S. LOTUS POWER GEARS (P) LTD. [ 2016 (6) TMI 998 - KARNATAKA HIGH COURT] - the appellant was not required to follow Rule 6(1), (2), (3) and (4) in respect of the supplies it made to the SEZ developers and hence it was not required to maintain separate accounts or pay an amount equal to 10% of the value of such supplies. Demand of interest and penalty - HELD THAT:- As the demand in the impugned order cannot be sustained, neither can the demand of interest or the imposition of penalty be sustained. Appeal allowed - decided in favor of appellant.

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• 2021 (10) TMI 184
  Clandestine removal - Clinker - shortage of Limestone (raw material) - shortage not explained to the Internal Physical Verification Agency or to the A.G. Audit - HELD THAT:- Duty of excise is leviable if and only if the taxable event has taken place. In terms of Section 3 of Central Excise Act there shall be levied and collected in such manner as may be prescribed, a duty of excise to be called Central Value Added Tax (CENVAT) on all excisable goods (excluding goods produced or manufactured in SEZ) which are produced and manufactured in India as, and at the rates set-forth in the first Schedule to the Central Excise Tariff Act, 1985 . There is no provision in the Central Excise Act to charge central excise duty on the basis of presumption of manufacture or production. If there is no production or manufacture no duty can be charged even if one procures raw material which is not accounted for. Of course, if it is a cenvatable input, Cenvat credit can be taken only if the raw material or input is used in or in relation to manufacture and not otherwise. Limestone is not even a cenvatable product. In this case, the show cause notice is issued by the Department alleging production/ manufacture of clinker from the limestone found short. There is no evidence that the clinker has been manufactured. Although limestone is the main ingredient for manufacture of clinker other ingredients, power, etc. are also required. There is nothing on record to show that there was corresponding proportionate shortage in the stock of other raw materials or that excess electricity has been consumed to correspond to the shortage of raw material - Having found to shortage, the respondent itself paid central excise duty on the clinker found short. On the question of shortage of limestone they conducted an enquiry and thereafter provided the explanation to the Revenue. The argument of the Revenue is that this explanation is not satisfactory and this shortage has not been reflected in their records or in the returns which they filed with the mines. It is observed that if these were indeed recorded in their books of accounts and reflected in their returns then there will be no shortage. The shortage was discovered when they conducted physical verification of the stock which did not match the accounts. Had the shortages been reflected in the accounts and in their returns then there would not be any shortage at all. Shortage of limestone - HELD THAT:- The respondent gave an explanation. We find no reason to disbelieve the respondent. If they had used the limestone for construction somewhere and not properly accounted for such usage in their books of accounts stock taking will show a shortage. It is not for the respondent to show that they have not actually manufactured any final product out of this limestone found short. It is for the Revenue to, if a show cause notice is to be issued, to prove that the clinker was actually manufactured. In the present case, we find no such evidence coming forth. Therefore, even if it is held that the appellant has not satisfactorily explained its shortage of limestone, no duty can be demanded on presumption of manufacture of clinker - the learned Commissioner has in the impugned order, after considering all facts, correctly dropped the show cause notice and the impugned order needs to be sustained. Appeal dismissed.

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• CST, VAT & Sales Tax

• 2021 (10) TMI 194
  Validity of assessment orders under the Kerala Tax on Luxuries Act, 1976 - seeking extension of period of limitation - HELD THAT:- The writ petition can be disposed of, directing the Appellate Tribunal-2nd respondent herein to consider and pass appropriate orders on Exts.P4, P4(a) and P4(b) delay petitions as well as Exts.P5, P5(a) and P5(b) stay petitions, as expeditiously as possible, at any rate, within a period of three months from the date of receipt of a copy of this judgment. Petition disposed off.

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• 2021 (10) TMI 191
  Levy of Entertainment tax - western classical music concert by the legendary Mr. Yanni proposed to be conducted on 14.04.2014 and 15.04.2014 - HELD THAT:- Once the live music concert falling under the definition of amusement under Section 3(2-A) and an entertainment tax on such amusement is to be levied under Section 4(F) of the Act, the clarificatory order impugned would reveal that the definition provided under the Act as well as the entertainment defined are considered by the First Respondent and accordingly, it was clarified that the legendary Thiru Yanni Live Concert conducted on 14.04.2014 and 15.04.2014 at Nehru Indoor Stadium would fall within the meaning of amusement and an entertainment tax shall be levied and paid to the State Government at the rate of ten percent on each payment for admission to the live concert on the said dates. There is no ambiguity in respect of the provisions of the Tamil Nadu Entertainment Tax Act 1939, the Petitioner is liable to pay the entertainment tax and the impugned clarificatory order is also in consonance with the provisions of the Act and there is no infirmity as such. Thus the Respondents are directed to proceed with the case of the Petitioner by following procedure as contemplated under the Act. Petition dismissed.

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• Indian Laws

• 2021 (10) TMI 197
  Dishonor of Cheque - power of attorney had personal knowledge in respect of the transaction or not - vicarious liability can be created by the complainants or not - HELD THAT:- In a case, where the Director or an officer of the company who has signed the cheque on behalf of the company, there would not be any need to make any specific averments that they were in charge of and responsible to the company for the conduct of the business of the company nor would necessary to make any specific allegation about consent, connivance or negligence. The very fact that the dishonoured cheque was signed by him on behalf of the company would give rise to the responsibility under Sub-Section (2) of Section 141 of the NI Act. The learned Trial Court Judge, has specifically dealt with the averments made by the complainant and the documents referred and has categorized the role of each of the accused before ordering issuance of the summons against accused nos.1, 3, 4, 6 and 7 of the complaint. Role of the petitioner nos.1 and 2 as accused nos.3 and 4 has been specified in the complaint and the learned Judge has taken cognizance of the fact and as rightly issued the summons against those accused- learned advocate for the petitioners has raised the issue about issuance of process against the accused persons under Section 202 of the Criminal Procedure Code beyond the territorial limits of the Court. Those are issues not required to be dealt with under Section 482 of the Criminal Procedure Code. This Court does not find any reason to interfere in the matter. In the result, present application is dismissed.

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• 2021 (10) TMI 195
  Seeking grant of Bail - Dishonor of Cheque - compromise entered into between the parties - HELD THAT:- Considering the facts and circumstances of this case and the nature of the offence involved in the present case and also the fact that the petitioner and opposite party no.2 have settled their dispute outside the Court and have filed joint compromise petition, the present criminal revision application is disposed of in terms of the compromise entered into between the parties in order to meet the ends of justice and secure peace between the parties. The Judgment of conviction and the order of sentence passed by the learned Judicial Magistrate, 1st Class, Hazaribag against the petitioner for offence under Section 138 of Negotiable Instruments Act and the Judgment dated 28.06.2019 passed by learned Additional Session Judge- XIV, Hazaribag affirming the conviction and sentence of the petitioner are set aside - the amount deposited by the petitioner amounting to Rs. 1,00,000/- before the learned court below is directed to be released in favour of the opposite party no.2 upon due identification. Application allowed.

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• 2021 (10) TMI 192
  Recovery of suit amount on the basis of promissory note - Money Suit - legally enforceable debt or not - suit was dismissed after holding that presumption under Section 118 of the Negotiable Instruments Act, 1881 could not be invoked - transaction did not conform to the mandate set out in Section 269SS of the Income Tax Act, 1961 - HELD THAT:- Section 118 of the Negotiable Instruments Act, 1881 states that the presumptions set out therein shall be made . This is equivalent to saying shall presume . It was held in PR. METRANI VERSUS COMMISSIONER OF INCOME-TAX [ 2006 (11) TMI 136 - SUPREME COURT ] that a presumption in the form of shall presume leaves no option with the Court not to make the presumption. The Court is bound to take the fact as proved until evidence is given to disprove it. Therefore, the first appellate court had no option but to apply Section 118 of the Negotiable Instruments Act, 1881. In case after case, it has been held that merely because the transaction in question has not been shown in the income tax returns, it would not be rendered void. If the lender has advanced a certain amount which ought to have been reflected in the tax returns but he failed to disclose the same in his returns, that would not exonerate the borrower from the liability to repay. The default committed by the lender may attract penal action from the department. But his right to recover the amount from the borrower cannot be extinguished - the law of limitation can render a claim otherwise valid unenforceable. The government of the day can bring in legislation offering succour to debtors. If the suit transaction falls within the scope of a debt relief legislation, the lender cannot maintain an action outside its framework. But failure to disclose in the tax returns cannot render the amount irrecoverable. It cannot extinguish the right of the creditor. A civil remedy can be stifled only by a statutory provision and not by judicial innovation. In the case on hand, the first appellate court contrary to the statutory mandate failed to presume a certain fact in favour of the plaintiff and that led to the dismissal of the suit. It also misconstrued the evidence on record - the substantial questions of law is answered in favour of the appellant - second appeal allowed.

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• 2021 (10) TMI 157
  Seeking further time for payment of the first installment - petitioner states that he has instructions to withdraw the present application - HELD THAT:- The Court is surprised with this kind of instruction being given by the petitioner to its advocate. It creates a doubt whether petitioner intends to honour its commitments in terms of order dated 1st September, 2021. Be that as it may, the counsel for the respondent would have remedies in law, in case the payments in terms of the order dated 1st September, 2021 are not made. Both the applications are dismissed with costs of Rs. 10,000 each.

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