TMI Tax Updates - e-Newsletter
October 8, 2021

Case Laws in this Newsletter:

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

Articles

1. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

News

1. Government of India releases ₹ 40,000 crore to States/ UTs with Legislature in-lieu of GST compensation shortfall

2. Shri Piyush Goyal calls for focus on Skill Development in all Govt schemes

3. Exchange Rate Notification No.80/2021 - Customs (N.T.)

4. Pandemic has remodelled G20 priorities, unique opportunity to inject an inclusive and equitable agenda at the G20, says Shri Piyush Goyal

Notifications

Customs

1. 80/2021 - dated 7-10-2021 - Cus (NT)

Prescribing Rate of exchange of foreign currency equivalent to Indian rupees

DGFT

2. 35/2015-2020 - dated 7-10-2021 - FTP

Relaxation in Export Policy of Red Sanders Wood

GST - States

3. 12/2021– State Tax (Rate) - dated 30-9-2021 - Bihar SGST

Seeks to exempt BGST on specified medicines used in COVID-19, up to 31st December, 2021

4. 11/2021– State Tax (Rate) - dated 30-9-2021 - Bihar SGST

Seeks to amend Notification No. 39/2017-State Tax (Rate), dated the 18th October, 2017

5. 10/2021– State Tax (Rate) - dated 30-9-2021 - Bihar SGST

Seeks to amend Notification No. 04/2017-State Tax (Rate), dated the 29th June, 2017

6. 09/2021– State Tax (Rate) - dated 30-9-2021 - Bihar SGST

Seeks to amend Notification No. 02/2017-State Tax (Rate), dated the 29th June, 2017

7. 08/2021– State Tax (Rate) - dated 30-9-2021 - Bihar SGST

Seeks to amend Notification No. 01/2017-State Tax (Rate), dated the 29th June, 2017

8. 07/2021– State Tax (Rate) - dated 30-9-2021 - Bihar SGST

Seeks to amend Notification No. 12/2017-State Tax (Rate), dated the 29th June, 2017

9. 06 /2021– State Tax (Rate) - dated 30-9-2021 - Bihar SGST

Seeks to amend Notification No. 11/2017-State Tax (Rate), dated the 29th June, 2017

10. F.12(1)FD/Tax/2021-69 - dated 1-10-2021 - Rajasthan SGST

Seeks to amend Notification No. F.12(1)FD/Tax/2021-289 dated the 26th March, 2021

11. F.12(1)FD/Tax/2021-67 - dated 1-10-2021 - Rajasthan SGST

Rajasthan Goods and Services Tax (Seventh Amendment) Rules, 2021

12. F.12(1)FD/Tax/2021-66 - dated 1-10-2021 - Rajasthan SGST

Seeks to notify section 4 and 5 of The Rajasthan Goods and Services Tax (Amendment) Act, 2021 w.e.f. 01.08.2021

13. F.12(1)FD/Tax/2021-65 - dated 1-10-2021 - Rajasthan SGST

Seeks to appoint 01.06.2021 as the day from which the provisions of section 6 of The Rajasthan Goods and Services Tax (Amendment) Act, 2021, relating to amendment of section 50 of the RGST Act, 2017 shall come into force

Circulars / Instructions / Orders

FEMA

1. Press Note No. 4 (2021 Series) - dated 6-10-2021

Review of Foreign Direct Investment (FDI) Policy on Telecom Sector

Highlights / Catch Notes

GST

• GST Applies to Total Supply Value, Including Management Fees; No Exemption for Employer EPF and ESI Contributions.

  Case-Laws - AAR : Levy of GST - GST to be paid on Management Fee/Administrative charges only or otherwise complete billing amount - employer portion of EPF & ESl amount of the bill are exempted for paying GST or not - GST is payable on total value of supply - employer portion of EPF & ESl amount of the bill are not exempted for paying GST. - AAR
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• GST Update: Ongoing Construction Projects Pre-April 2019 Impacted by New Definition of Affordable Residential Apartments.

  Case-Laws - AAR : Rate of GST - old rates of GST or new rates - ongoing projects construction of which had started before 01.04.2019 - definition of ‘affordable residential apartment’ has been changed w.e.f. 01.04.2019 - Where a promoter exercises option in Annexure-IV to pay tax at the rate as specified for item (ie) or (if) against serial number 3 of the Notification No. 3/2019 – Central Tax (Rate) dated 29.03.2019, there is no scope to pay tax at a reduced rate of 1% or 5% (effective rate), as the case may. - AAR
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• Retailers Can Claim ITC for Promotional Goods Supplied at Nominal Rates; Not Considered Gifts u/s 17(5)(h.

  Case-Laws - AAR : Admissibility of input tax credit (ITC) - items intended to be supplied by the applicant at a nominal rate under promotional scheme - the applicant intends to provide the said goods to the retailers at a certain consideration, though at a very nominal price and that too upon fulfilment of the criteria as specified in the scheme circular. Hence, it cannot be said that the said goods are being given as ‘gift’ and therefore restriction of availment of input tax credit under clause (h) of Sub-section (5) of section 17 shall not be applicable in respect of the said goods. - AAR
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• Pipeline Gas Supply and Facility Management Services Classified as Composite Supply Under GST Regulations.

  Case-Laws - AAR : Classification of supply - supply of cooking gas through pipeline from the gas banks installed at the project premises - the applicant is providing facility and property management services to each and every apartment owner of the project. This service includes maintenance and repair services related to supply of cooking gas through pipeline and is also applicable to the apartment owner who is not availing the pipeline gas supply. - in spite of issuance of separate invoices as ‘GAS CHARGES BILL” for consumption of gas, supply of gas through pipeline is found to be naturally bundled with facility and property management services and are supplied in conjunction with each other. The instant supply, therefore, shall be treated as ‘composite supply’ - AAR
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• Vocational Course Services Exempt from GST: AAR Rules Printing Services for Exams by Educational Boards Qualify for Exemption.

  Case-Laws - AAR : Classification of supply of services - different vocational education courses - educational institutions or not - Online and offline printing of Pre-Examination items such as Registration Certificate, Examination Enrollment Forms, Admit Cards, Award List for marks entry and other Pre examination related services to Educational Boards, Council and Universities - Benefit of exemption from GST is available - AAR
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Income Tax

• Reassessment Invalid: Lack of Statutory Notice u/s 143(2) Voids Proceedings, Assessment Quashed for Legal Non-compliance.

  Case-Laws - AT : Validity of reassessment proceedings for non-issuance of statutory notice u/s 143(2) - Since notice u/s 143(2) of the Act was not issued to the assessee, before commencing reassessment proceedings the error being fatal and uncorrectable renders the reassessment proceedings void ab initio and thus liable to be quashed. Hence the assessment so framed without issuance of notice u/s 143(2) of the Act is hereby quashed being contrary to law - AT
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• Assessment Reopening Invalid: AO Failed Minimal Investigation on Rs. 23.40 Crore Unsecured Loans u/s 147, CIT(A) Quashes Notice.

  Case-Laws - AT : Validity of reopening of assessment u/s 147 - AO has not even made minimum exercise for ascertaining the unsecured loans accepted during the year, under consideration before reopening of the assessment. Without even ascertaining the unsecured loans accepted during the year in the reasons recorded, the AO viewed that the entire sum of ₹ 23.40 crores outstanding as per the balance sheet was suspicious and escaped from the assessment chargeable to tax. Thus, the above facts clearly show that the AO reopened the assessment only with a suspicion without having sufficient reasons to form the belief for escapement of income - CIT(A) has rightly quashed the notice - AT
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• Additions on Alleged On-Money Deleted; Sale Consideration Matched Sale Agreement and Books of Accounts. No Further Investigation.

  Case-Laws - AT : Addition on account of alleged on-money - Applicability of section 50C - The assessee has duly discharged the onus of proving that the sale consideration as actually received by the assessee was reflected in the sale agreement as well as in the books of accounts. It is also evident that no further investigations have been carried out by lower authorities to rebut the documents of the assessee and bring on record any contrary evidence to prove transfer of excess sale consideration to the assessee, in any manner. - Additions deleted - AT
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• Taxpayer Penalized u/s 271(1)(c) Despite Voluntary Disclosure; CIT(A) Upholds Penalty Unjustly.

  Case-Laws - AT : Penalty levied u/s. 271(1)(c) - Suo-moto declaration of undisclosed assets located outside India under section 59 of the Black Money (Undisclosed Foreign Income and Asset and Imposition of Tax Act, 2015) - assessee paid the tax @ 30% along with equal amount by way of penalty. - Assessing Officer did not apply his mind. The ld. CIT(A) has unreasonably sustained the impugned penalty levied u/s. 271(1)(c) of the Act. - AT
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• Court Upholds Transfer Pricing Officer's Decision on Interest Rates in $7M Loan Agreement as Genuine Despite Appeal.

  Case-Laws - AT : TP Adjustment - Addition of interest expenses - These clauses in the loan agreement are nothing but eye-wash as the appellant company is the holding company of the borrower and have sanctioned loan for unsecured junior debt loan upto US$ 7 million. - considering the fact that the assessee itself has charged interest @ 8% in the case of UUL and 6.138% in the case of UBV, we do not find any error or infirmity in the transfer pricing approach of the TPO upheld by the DRP. - AT
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• Section 153A Assessments Limited to New Search Material; Additions Without New Evidence Not Allowed.

  Case-Laws - AT : Assessment u/s 153A - Assessment for AY 2006-07 was already completed prior to the date of search and having not abated, the scope of proceedings u/s.153A of the Act had to be confined only to material found in the course of search. Since no material on the basis of which the impugned addition has been made was found in the course of search, the additions made by the AO in the order of assessment could not have been subject matter of proceedings u/s.153A - AT
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• High Court Examines ITAT's Authority to Stay Orders u/s 263 of Income Tax Act Without Active Tax Demand.

  Case-Laws - HC : Stay of the order passed u/s 263 though there is no active demand of tax - Power of ITAT power to grant stay - Future demand - CIT issued directions to the AO - Whether the Revision order is qua a demand - whether the writ petitioner should have moved ITAT for stay? - As it involves a larger debate and in the light of the limited prayer that is sought for, I deem it appropriate to leave this question open - It is open to the writ petitioner to move ITAT for expeditious disposal of appeal before ITAT - Order stayed for 12 weeks - HC
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• Filing Revised Returns u/s 153A Indicates Acceptance, Bars Challenging Notices in Ongoing Income Tax Assessment.

  Case-Laws - HC : Assessment u/s 153A - Need for recording satisfaction - It may be relevant to note that in response to the aforesaid notices, the petitioner has already filed revised returns and the matter is pending assessment. Once the petitioner has already filed revised returns, he has accepted or acquiesced to the notices and, as such, is estopped from challenging the same. - HC
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Customs

• Court Reviews Petition to Release 63 Metric Tons of Waste Paper for Mutilation by Paper Manufacturer.

  Case-Laws - HC : Seeking release of imported consignment - 63 Metric Tons of Waste Paper-Old Book' - In the considered opinion of this Court, in view of the peculiar facts and circumstances, where two important aspects has to be taken note of, one is that the petitioner itself is a paper manufacturing industry and it has been doing this kind of importing of waste paper in book form for several years from various countries, and secondly, the petitioner had volunteered to mutilate the same on 03.07.2021, that is, well before the goods reached the port - there shall be a direction to the respondents to consider the claim/request of the petitioner as per his request dated 03.07.2021, permitting the petitioner to denature or mutilate the goods in question, which has been imported. - HC
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• Customs Broker License Case: Additional Rs. 50,000 Penalty Under Customs Broker Regulation Deemed Excessive, To Be Set Aside.

  Case-Laws - AT : Customs Broker License - levy of penalty - the violation, in the background of this case does not attract such harsh punishment of revocation of license or forfeiture of security deposit. The punishment by way of penalty would meet the ends of justice. The appellant has suffered and paid the penalty of ₹ 25,000/- imposed under sec. 158(2)(ii) of Customs Act, 1962 in the earlier proceedings. It is submitted by the learned counsel that such penalty has attained finality as the appellant did not prefer any appeal.. On such score, a further penalty of ₹ 50,000/- imposed under the Customs Broker Regulation is unwarranted. The same requires to be set aside - AT
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Service Tax

• Co-venturer contributions in joint ventures aren't taxable services; no contractor-contractee or principal-agent relationship exists.

  Case-Laws - AT : Levy of service tax - contribution to Joint Venture / Partnership arrangements - it is clearly impermissible to hold that the contribution made by a co-venturer (partner) in the course or furtherance of the joint-venture is a service rendered to the joint venture for a consideration. It is not in dispute that in a partnership or a joint venture, whatever a partner does for the furtherance of the business, he does so also for advancing his own interest, as he has a stake in the venture. All the resources contributed by the partners enter into a common pool required for running of the enterprise. There is no contractor-contractee or principal-agent relationship between the co-venturer and the joint-venture, which is a pre-requisite for a service to be liable to tax - AT
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Central Excise

• CENVAT Credit Stands for Inputs in By-products; Demands u/r 6 Inapplicable for Silica Sand, Ball Clay.

  Case-Laws - AT : Reversal of CENVAT Credit - exempted product/by-product - Any input/input services contained in any by-product/waste/refuse, Cenvat Credit cannot be varied or denied. With this logic demand under Rule 6 in respect of by-product is not applicable - Once it is established that the product in question are by-product then it is settled in respect of by-product demand under Rule 6 will not sustain. Accordingly, in the present case also, Silica Sand and Ball Clay being a by-product, no demand under Rule 6 shall sustain. - AT
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VAT

• Department Must Disclose Unknown Documents to Petitioner for Fair Tax Proceedings Under Natural Justice Principles.

  Case-Laws - HC : Violation of principles of natural justice - the case of the department appears to be that office value is nothing but the value of the goods indicated in the transport permit granted from time to time. If that be so, surely the petitioner cannot claim surprise about the contents of such permits granted by the department. However, if the department wishes to rely upon any other documents or material which is not within the knowledge or possession of the petitioner, the principles of natural justice require that the same must be provided to the petitioner before it can be used against it. - HC
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• Court Clarifies NBFC's Role as "Dealer" u/s 2(15) of TNVAT Act in Repossessed Vehicle Sales.

  Case-Laws - HC : Scope of "dealer" as per section 2(15) of the TNVAT Act, 2006 - NBFC - sale of repossessed vehicle on behalf of the defaulter by the Petitioner/Appellant - liability of taxes under VAT Act on the sale of the Hypothecated Motor Vehicles - There are many such clauses in the agreement, which clearly elucidate that theory as propounded by the assessee that the sale is effected by them as an agent of the borrower has to necessarily fall. - HC
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Case Laws:

• GST

• 2021 (10) TMI 328
  Levy of GST - GST to be paid on Management Fee/Administrative charges only or otherwise complete billing amount - employer portion of EPF ESl amount of the bill are exempted for paying GST or not - HELD THAT:- While sub-section (2) of section 15 clearly specifies the elements that will form a part of value of supply, sub-section (3) of section 15 excludes the elements that are not to be included in the value of supply - these provisions of the Act leave no room to deduct any amount like management fee, employer portion of EPF and ESI for the purpose of determination of value of supply under section 15 of the GST Act meaning thereby in the instant case, tax is leviable under section 9 of the Act ibid on the entire billing amount. GST is payable on total value of supply - employer portion of EPF ESl amount of the bill are not exempted for paying GST.

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• 2021 (10) TMI 327
  Rate of GST - old rates of GST or new rates - ongoing projects construction of which had started before 01.04.2019 - definition of affordable residential apartment has been changed w.e.f. 01.04.2019 vide Notification No.03/2019-Central Tax (Rate) dated 29.03.2019 - Whether this new definition is applicable in respect of flats (having carpet area of 60 sqm and value up to Rs. 45 lacs) of ongoing projects and collect tax @ 8% on all advances received after 01.04.2019 where: (i) 1st booking money received after 01.04.2019; and (ii) 1st booking money received before 01.04.2019. HELD THAT:- In the instant case, the applicant has exercised option to pay tax at old rates. Hence, the effective tax rate of 1% or 5%, as the case may be, as introduced vide Notification No.03/2019Central Tax (Rate) dated 29.03.2019 is found not to be applicable in respect of the said 06(six) projects, as discussed. The rate notification is amply clear to specify that liability to pay tax at old GST rate which was leviable prior to 01.04.2019 upon filing of option in Annexure-IV and levy of tax at new rate introduced w.e.f. 01.04.2019 is mutually exclusive. There is no scope to pay tax at both the rates on or after 01.04.2019. The definition of affordable residential apartment is not applicable in respect of the 06(six) projects involved in the instant case for the following reasons: (i) Affordable residential apartment shall mean a residential apartment in a project which commences on or after 1st April, 2019. But here all the projects are found to have been commenced before 1st April, 2019; (ii) Affordable residential apartment shall mean a residential apartment in an ongoing project in respect of which the promoter has not exercised option to pay tax at the rates as specified for item (ie) or (if) i.e., old GST rates. But in the instant case, the promoter has exercised option to pay central tax and state tax at the rate which was leviable prior to 01.04.2019. Where a promoter exercises option in Annexure-IV to pay tax at the rate as specified for item (ie) or (if) against serial number 3 of the Notification No. 3/2019 Central Tax (Rate) dated 29.03.2019, there is no scope to pay tax at a reduced rate of 1% or 5% (effective rate), as the case may.

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• 2021 (10) TMI 326
  Classification of supply - mixed supply or not - Supply of goods such as gold coins, refrigerator, mixer grinder, cooler, split air conditioner, etc. at nominal price to retailers against purchase of specified units of hosiery goods pursuant to a promotional scheme - individual supplies taxable at the rates applicable to each of such goods as per section 9 of the CGST Act or mixed supply taxable at the highest GST rate? - hosiery goods and good being sold at nominal price are sold under separate invoices with separate prices - input tax paid on the items being sold at nominal prices. Determination of nature of supply - HELD THAT:- The supply of hosiery goods followed by the supply of goods under promotional scheme shall not take place for a single price. As the supply of the aforesaid two items shall be made for different prices, it doesn t satisfy the condition of being made for a single price and the supplies, therefore, cannot be regarded as mixed supply. Whether the supply involved in the instant case can be termed as composite supply? - HELD THAT:- The supply shall not fall under the category of composite supply since supply of hosiery goods and goods under promotional scheme cannot be considered as naturally bundled and supplied in conjunction with each other in the ordinary course of business - the supply of hosiery goods and goods under promotional scheme are separate supply and tax on the supply shall be levied at the rate of each such item as notified by the Government. Admissibility of input tax credit on the items intended to be supplied by the applicant at a nominal rate under promotional scheme - HELD THAT:- In the instant case, the applicant intends to provide the said goods to the retailers at a certain consideration, though at a very nominal price and that too upon fulfilment of the criteria as specified in the scheme circular. Hence, it cannot be said that the said goods are being given as gift and therefore restriction of availment of input tax credit under clause (h) of Sub-section (5) of section 17 shall not be applicable in respect of the said goods.

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• 2021 (10) TMI 325
  Classification of supply - supply of goods or supply of services - composite supply or not - supply of cooking gas through pipeline from the gas banks installed at the project premises - HELD THAT:- It is a matter of fact that all the gas banks are installed at the common area of the project. Further, the Agreement to sub-Lease clearly specifies that all central and appurtenant installations for service such as electricity, telephone, television, gas shall be included in common parts portions of the project. It is also a matter of fact that the applicant has been entrusted by the developer for providing all sorts of facility and property management services in respect of the said residential complex and to provide such services, the applicant obtains services from two service providers namely (i) Cooliers International (India) Property Services Private Limited and (ii) Futuristic Utility Services. The applicant, provides the said services to the owners of the all apartment/flat/unit owners and issues invoices towards Common Area Maintenance (CAM, for short) Charges charging tax @ 18% leviable under the GST Act. This CAM charges inter alia includes services in respect of maintenance of gas bank, repair and maintenance of gas pipeline and other services related to supply of gas through LPG Reticulated System. Whether supply of cooking gas can be treated as a separate supply being supply of goods or it can be considered as a composite supply comprising supply of goods and supply of services both? - HELD THAT:- According to the Agreement to sub-Lease , each and every apartment owner, irrespective of the fact whether she/he will avail the pipeline gas supply or not, is required to pay a fixed amount against Piped Gas Bank connection . Further, if an apartment owner doesn t want to avail the pipeline supply of gas, still he shall have to bear the expenses incurred towards maintenance of gas bank, repair and maintenance of pipeline through which LPG will be supplied since such expenses are included under CAM charges - It is, therefore, not clear whether an apartment owner has to enter into a separate agreement/contract with the applicant for procuring pipeline gas supply. The applicant has not furnished any documents before us regarding terms and conditions towards supply of gas through pipeline and whether the applicant has to follow any guidelines issued by the appropriate authority for supply of gas through pipeline. In the instant case, the applicant is providing facility and property management services to each and every apartment owner of the project. This service includes maintenance and repair services related to supply of cooking gas through pipeline and is also applicable to the apartment owner who is not availing the pipeline gas supply. So, when an apartment owner intends to get supply of cooking gas through pipeline, she/he will be provided the same along with the services for which she/he has already been paying to the applicant. So, supply of cooking gas through pipeline is inextricably linked with facility and property management services as provided by the applicant. It therefore follows that in spite of issuance of separate invoices as GAS CHARGES BILL for consumption of gas, supply of gas through pipeline is found to be naturally bundled with facility and property management services and are supplied in conjunction with each other. The instant supply, therefore, shall be treated as composite supply as defined under clause (30) of section 2 of the GST Act where the principal supply is facility and management services.

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• 2021 (10) TMI 324
  Classification of supply of services - educational institutions or not - Online and offline printing of Pre-Examination items such as Registration Certificate, Examination Enrollment Forms, Admit Cards, Award List for marks entry and other Pre examination related services to Educational Boards, Council and Universities - Designing, Developing and managing Web based applications and related services for conducting online Examination of Educational Boards, Council and Universities - Post examination services of Scanning and Processing of Examination Results, generation and printing of Mark Sheets (Online and offline), Printing of Pass certificates and other related Examination activities for Educational Boards, Council and Universities - whether the councils namely The West Bengal Council of Rabindra Open Schooling and West Bengal State Council of Technical and Vocational Education and Skill Development can also be termed as educational institution? HELD THAT:- West Bengal State Council of Technical Vocational Education and Skill Development, a statutory body, offers courses under various sections like Engineering and Technology, Agriculture, Business and Commerce etc. and also conducts examinations for admission to different vocational education courses and therefore the function of the council is similar to other education boards. Whether the activities undertaken by the applicant against work orders issued to him shall be treated as services relating to conduct of examination or not? - HELD THAT:- The process of conducting examination includes pre-examination works, the examination itself and post-examination works. It has already been stated that the applicant has undertaken activities like pre and post examination data processing job relating to B.A./B.Sc. Examination, data processing job for online submission of PPR/FSI Forms relating to B.A./B.Sc. Examinees, upgradation of existing software towards development of pre post examination system through automation of existing registration process of UG B PG Courses etc. The said activities, as we opine, can be treated as services relating to conduct of examination. The supply of services details of which are submitted by the applicant in course of hearing shall get covered under entry serial number 66 of the Notification No. 12/2017 - Central Tax (Rate), dated 28th June, 2017 as amended and shall therefore be exempted from payment of tax under the GST Act.

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• 2021 (10) TMI 321
  Cancellation of GST registration certificate - failure to file monthly returns for six months - Section 29 of TN-GST Act - HELD THAT:- The impugned order being order for cancellation of GST Registration is set aside solely on the ground that SCN which preceded the same has not been issued in the prescribed template i.e., REG- 17 under Rule 22(1) of TN-GST Rules, as it does not mention the date and time of personal hearing. Though obvious, as the impugned order for cancellation of registration is set aside solely on the aforementioned ground, it is made clear that no view on merits of the matter is expressed in this order. Petition disposed off.

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• 2021 (10) TMI 312
  Revocation of cancellation of GST registration - non-consideration of the relevant material documents/records in support of the case of the petitioner - petitioner was not carrying his business from the premises in question from officially registered premises and they were carrying business in question from home - prevailing covid-19 situation - HELD THAT:- The respondents concerned are directed to consider afresh and dispose of the petitioner s application for revocation of cancellation of its registration of the petitioner under GST Act in accordance with law and by passing a reasoned and speaking order after giving opportunity of hearing to the petitioner or its authorized representative within four weeks from the date of communication of this order and also to consider the documents to be placed by the petitioner in support of its contention at the time of hearing. This Court has not gone into the merit of the petitioner s application for revocation of cancellation in question - Application disposed off.

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• Income Tax

• 2021 (10) TMI 308
  Grant of recognition u/s 80G(5)(vi) denied - reason given by CIT(E) is that in absence of any charitable activities, the genuineness of the charitable activity could not be examined - HELD THAT:- The assessee trust was granted registration u/s 12AA of the I.T.Act vide order of CIT(E) dated 16.12.2019. Department has not doubted the charitable nature of objects of the assessee for which it is established. The grant of approval / recognition u/s 80G of the I.T.Act, acts as catalyst and results in donations which in turn results in charitable activities - grant of recognition u/s 80G of the I.T.Act may be condition precedent for achieving the objects for which the trust is established. On identical factual situation, in the case of M/s.Chiranthana v. CIT(E) [ 2020 (1) TMI 1332 - ITAT BANGALORE ] had held that rejection of assessee s application for the sole reason that no activities has been started by the assessee is not correct and not mandated as per the provisions of the Act. The Co-ordinate Bench of the Tribunal after holding that the reasons stated by the CIT(E) cannot be a ground to deny the benefit of recognition u/s 80G(5)(vi) of the I.T.Act, restored the matter to the CIT(E) for de novo consideration. Thus in the present we restore the case to the files of CIT(E). The CIT(E) is directed to consider the assessee s application for recognition u/s 80G(5)(vi) of the I.T.Act afresh. The CIT(E) shall afford a reasonable opportunity of hearing to the assessee and shall take a decision in accordance with law. Assessee ground raised is allowed for statistical purposes.

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• 2021 (10) TMI 297
  Exemption u/s.11 - Charitable activity u/s 2(15) - allegation of Violation of trust objects - As per AO trust objects are charitable in nature, it cannot be held that its activities are carried out in accordance with is objects and are genuine, even though it has violated Prohibition of Capitation Fee Act (Government of Maharashtra) 1987 by accepting donation from its own students in the name of building fund, which is not only illegal but also violative of the trust s object of providing education and aid to the poor and deserving students - CIT-A allowed the deduction - HELD THAT:- DR could not convert the observations of the CIT(A) with new cogent evidence or information. Further the Ld.DR has fairly accepted the Honble Tribunal decision of set aside of the order of the Pr. CIT(Exemptions) and restoring registration u/s 12A of the Act in [ 2019 (7) TMI 1868 - ITAT MUMBAI ] When the assessment was framed by issue of notice u/s 148 of the Act, this order of the Hon ble Tribunal was not available with the A.O and therefore A.O has denied the exemption considering the cancellation of registration by the Pr. CIT(Exemptions). Accordingly we find that the assessee trust was restored with the registration u/s 12A of the Act by the Hon ble Tribunal and the decision was duly considered by the CIT(A) and directed the A.O to grant exemption u/s 11 of the Act. We are of the opinion that the CIT(A) has passed a reasoned and logical order considering the facts, circumstances, provisions of law and the decision of the Hon ble Tribunal. - Decided against revenue.

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• 2021 (10) TMI 292
  Assessment u/s 153A - Need for recording satisfaction - HELD THAT:- Investment of the petitioner in the relevant year to the extent of Rs. 80.00 lakhs, may be that for some reason, the agreement could not be performed and the petitioner may have to resort to lodging of an FIR against the vendor named therein, but the aforesaid documents sufficiently reveal that the petitioner intended to acquire an asset worth Rs. 80.00 lakhs in the relevant year and the said asset has escaped assessment. The said assessment/satisfaction of the Assessing Authority may not be correct or justified, nonetheless, he was possessed of the documents to form an opinion that the income worth over Rs. 50.00 lakhs or above has escaped assessment - not only he was possessed of the relevant documents but has also recorded his satisfaction regarding escapement of assessment to the tune of over Rs. 50.00 lakhs. Accordingly, it is not a case where ex facie it can be said that the notice is without jurisdiction. It may be relevant to note that in response to the aforesaid notices, the petitioner has already filed revised returns and the matter is pending assessment. Once the petitioner has already filed revised returns, he has accepted or acquiesced to the notices and, as such, is estopped from challenging the same.

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• 2021 (10) TMI 291
  Demand u/s 201(1) and 201(1A) - jurisdictional conditions precedent for invoking Section 201 - As submitted that the remittances made by the petitioner to BT Plc are not chargeable to tax and therefore, the jurisdictional conditions for initiation of proceedings under Section 201 of the Act are not fulfilled - HELD THAT:- It is not denied by the learned counsel for the petitioner that on similar issues, demands have been raised against the petitioner for the Assessment Years 2012-13 and 2013-14 which have been challenged by the petitioner before the CIT(A). The impugned Order has been passed by the respondent no.1 in purported compliance with the order dated [ 2021 (3) TMI 911 - DELHI HIGH COURT] of this Court, holding that the jurisdictional conditions precedent for invoking Section 201 of the Act are satisfied. As the petitioner has already availed of its remedies of appeal in relation to two AYs, we do not deem it proper to entertain the present petitions challenging the said finding of the respondent no. 1, at this stage. It will be open to the petitioner to challenge the final order passed by the respondent no.1 fastening any liability on the petitioner under Sections 201(1) and 201(1A) of the Act, including on the grounds that have been taken in the present petitions, by way of an appeal in accordance with the Act. Present petitions are dismissed granting leave to the petitioner to avail of its alternate efficacious remedy, if so advised.

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• 2021 (10) TMI 287
  Stay of the order passed u/s 263 though there is no active demand of tax - Power of ITAT power to grant stay - Future demand - CIT issued directions to the AO - Whether the Revision order is qua a demand - whether the writ petitioner should have moved ITAT for stay? - HELD THAT:- A careful perusal of Section 253(7) makes it clear that power of ITAT to grant stay is qua a demand. In the instant case, there is no disputation or disagreement that there is no demand. Therefore, if 253(7) is invoked the question as to whether ITAT can stay the Revisional order becomes a matter of debate. In the instant case, I deem it appropriate to leave this debate open. There is a specific provision namely sub-section (7) of Section 253 read with proviso to Sub-Section 2A of Section 254, the scenario or the obtaining legal position is completely different. This Court is also informed that this proposition/principle i.e., proposition that absent demand an appellant cannot move a stay petition under Section 253(7) before ITAT is not blessed with authorities. As it involves a larger debate and in the light of the limited prayer that is sought for, I deem it appropriate to leave this question open and dispose of captioned writ petition and WMP therein by making the following order: a) Revisional order being order dated 01.08.2019 made by third respondent will be kept in abeyance or in other words all further proceedings pursuant to this Revisional order will remain stayed for a period of twelve (12) weeks from today i.e., upto 15.12.2021; b) It is open to the writ petitioner to move ITAT for expeditious disposal of appeal before ITAT filed being Appeal No. IT- 2820/CHNY-2019 filed on 03.10.2019; c) Though obvious, it is made clear that this Court has not expressed any view or opinion on the merits of the matter as the ITAT is in seizin of the matter and it is, at the moment, the domain of the Tribunal. d) This Court has left open the question of incidental and ancillary powers of Tribunal to grant stay in the light of specific provisions namely Section 253(7) and 254(2A) proviso of IT Act.

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• 2021 (10) TMI 286
  Assessment of income of Satellite Rights for a movie - Substantial question of law of fact - accounts filed by the vendor of the Satellite Rights, the Revenue assessed the assessee on a sum of Rs. 12,00,000/- - whether Tribunal erred assessing the appellant based on the statement of accounts of the appellant s vendor Shri.Manickkam Narayanan alone, ignoring the books of accounts of the appellant? - HELD THAT:- Admittedly, the issue pertains to the transaction between the assessee and an individual in the matter of purchase and sale of Satellite Rights for a movie. The factual position has been clearly brought out by the Assessing Officer, which was re-examined for its correctness by the CIT(A), who found the same to be a reasoned order. The Tribunal, being the last authority to examine the factual position, examined the same and found that there is no error in the decision. On going through the material papers placed before us, we find that the entire issue is factual and the two authorities and the Tribunal have concurrently held against the appellant-assessee. Thus, we find, there is no question of law, much less substantial question of law arising for consideration in this appeal.

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• 2021 (10) TMI 285
  Validity of faceless assessment u/s 144B - no opportunity to show cause qua variation has not been given to the writ petitioner - HELD THAT:- From opportunity to show cause qua variation being ingrained in the very provision (albeit read with Section 143(3) of IT Act) under which impugned assessment order has been made, it is clear as daylight that in the case on hand there is a breach of the aforementioned provisions Therefore, the Impugned order is set aside solely on the ground that opportunity to show cause qua variation has not been given to the writ petitioner though SCN has been issued. The writ petitioner shall send its objections/ explanation as expeditiously as possible and in any event within a fortnight from today i.e., by 20.09.2021.

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• 2021 (10) TMI 284
  Correct head of Income - Income from house property or business income - income earned from complex commercial activity of letting out of the building along with other amenities in the industrial park - HELD THAT:- Substantial questions of law Nos.1 and 2 raised herein, are squarely covered by the decision of the coordinate Bench of this Court in the case of M/s. RAO COMPUTERS CONSULTANTS PRIVATE LTD. [ 2021 (6) TMI 152 - KARNATAKA HIGH COURT] wherein the coordinate Bench placing reliance on the Judgment of this Court in the case of CIT vs.VELANKANI INFORMATION SYSTEMS PVT LTD [ 2013 (8) TMI 113 - KARNATAKA HIGH COURT] has answered the substantial questions of law framed in the appeal in favour of the assessee. Allowable business expenditure - Disallowing the expenditure towards insurance, brokerage and depreciation incurred wholly and exclusively for the purposes of the business of complex commercial letting out services - HELD THAT:- As no finding by the assessing authority inasmuch as disallowing the expenditure referred to therein. In view of the finding given by this Court relating to the substantial question of law Nos. 1 and 2 as aforesaid, the assessing authority is directed to re-examine the issue inasmuch as expenditure/deductions towards insurance, brokerage and depreciation incurred for the purposes of the business of complex commercial letting out services, in an expedite manner.

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• 2021 (10) TMI 283
  Assessment u/s 153A - Whether incriminating material found during the course of search? - HELD THAT:- Hon ble Delhi High Court in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] has held that completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Assessment for AY 2006-07 was already completed prior to the date of search and having not abated, the scope of proceedings u/s.153A of the Act had to be confined only to material found in the course of search. Since no material on the basis of which the impugned addition has been made was found in the course of search, the additions made by the AO in the order of assessment could not have been subject matter of proceedings u/s.153A. - Decided in favour of assessee.

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• 2021 (10) TMI 282
  Disallowance u/s 14A r.w.s. 8D - AR submitted that the Revenue should have computed disallowance under Rule 8D by considering the average of only those investment on which the exempt income was received by the assessee company instead of total investments - HELD THAT:- It is pertinent to note that the assessee has received the exempt income being dividend income and exempt long term capital gain. This fact was not disputed by the Revenue Authorities. Therefore, the applicability of Rule 8D should have been restricted to that extent only. Hence, we direct the Assessing Officer to restrict the disallowance on the amount as per Section 14A read with Rule 8D. The appeal of the assessee is partly allowed.

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• 2021 (10) TMI 281
  Reopening of assessment u/s 147 - non issue of notice u/s 143(2) - HELD THAT:- As in the remand report the Assessing Officer has not commented upon the query related to issuance of notice u/s 143(2). There was nothing on the record to show that 143(2) notice was issued to the assessee. Thus, at threshold itself the assessment proceedings becomes bad in law as held in the case of Pr. CIT Vs. Silver Line [ 2015 (11) TMI 809 - DELHI HIGH COURT] upholding the decision of the Tribunal that the reassessment order cannot be passed without complying with the mandatory requirement of notice being issued by the AO to the assessee u/s 143(2) of the Act and, therefore, the reassessment order was legally unsustainable. CIT(A) has rightly quashed re-assessment order passed u/s. 147 and allowed the appeal of the assessee. There is no need to interfere with the findings of the CIT(A). Hence, appeal of the Revenue is dismissed.

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• 2021 (10) TMI 280
  Rectification of mistake u/s 254 - Deduction u/s 80P(2)(d) computation - inclusion of net interest income earned from co-operative societies - assessee contended that the Tribunal has directed the AO to compute net interest income from the cooperative societies, and thereafter grant deduction under section 80P(2)(d) - HELD THAT:- Tribunal has committed an error which is apparent one by directing the AO to compute only net interest income for the purpose of section 80P(2)(d) of the Act. The gross income is to be considered for deduction under section 80P(2)(d) of the Act. In view of the above decision of SURAT VANKAR SAHAKARI SANGH LTD. [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] we expunge the words net interest used by us in the finding extracted (supra) and in its place expression gross interest income is to be read in the order of the Tribunal. In other words, the ld.AO would grant deduction under section 80P(2)(d) of the Act of whole interest income i.e. gross interest income. MA allowed.

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• 2021 (10) TMI 279
  Disallowance u/s 14A r.w.r. 8D - HELD THAT:- The investment in the shares has been pleaded by the assessee at Rs. 32,000/- in this year. Though it is not verifiable from the findings of any of the authorities below, but, considering the pleadings of the assessee that it has no taxable income, we allow this ground of appeal and delete the disallowance. This because in Assessment Year 2014-15, the assessee has exempt income whereas the AO has worked out the disallowance i.e. more than the exempt income. This aspect gives us guidance that the Assessing Officer has not considered the figure; he simply proceeded with the formula of Rule 8D i.e. 0.5% of the total investment. He disallowed taking a lead from there. We, therefore, find force in the ground of appeal raised by the assessee and the statement of facts made therein. Therefore, the Ground No.2 3 of the appeal are allowed. Disallowance of travelling expenses - Expenditures were incurred in Assessment year 2012-13 - as crystallized in that year. Therefore, according to the Revenue Authorities, it should have been claimed in the earlier year - assessee has pleaded that since there is a same rate of taxes; therefore, this expenditure should be allowed in this year also - HELD THAT:- No force in this contention of the assessee; because if that be so, then it will be at the sweet will of the assessee to declare the quantum of income in any assessment year. The assessee may show higher income in a particular year and lower income in another year. It has to be adhered to the accounting principles as contemplated u/s 145. Addition u/s 14A r.w.r. 8D - HELD THAT:- The expenditure is to be disallowed relatable to earning of exempt income. So, it cannot be assumed that Rs. 2,21,640/- could be incurred for earning tax-free income of Rs. 1,81,315/-. This is an erroneous approach at the end of the Assessing Officer more particularly in view of the judgment in the case of CIT vs. Corrtech Energy Pvt Ltd, [ 2014 (3) TMI 856 - GUJARAT HIGH COURT ] - The assessee has disallowed itself on administrative expenses. To our mind, that is also on the lower side looking to the average of investments considered by the Assessing Officer Disallowance of employees contribution of provident fund - assessee has contended that though this amount was paid after due date provided in the PF Act, but it was paid prior to the due date of filing of the return - HELD THAT:- Explanation did not meet the approval of Hon ble High Court of Gujarat as reported in the case of CIT Vs. GSRTC [ 2014 (1) TMI 502 - GUJARAT HIGH COURT ] - First Appellate Authority has followed this decision and, to our mind, learned First Appellate Authority has not committed any error in upholding the disallowance. Accordingly, this ground of appeal of the assessee is rejected.

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• 2021 (10) TMI 278
  Remission / Cessation of Trading Liability u/s 41(1) - HELD THAT:- No case of remission of cessation of trading liability could be made out by revenue against the assessee. The assessee had filed confirmation of the sundry creditors and the amounts were shown as payable in the books of accounts. There was no write-back of the amounts either by the assessee or by the sundry creditors. This is further fortified by the fact that certain payments / adjustments have been done in subsequent financial year and the balance amount has been offered to tax when the liability has actually ceased. Therefore, the facts of the case do not convince us to confirm the impugned addition u/s 41(1). By deleting the same, we allow this ground of appeal. Addition on account of alleged on-money - Applicability of 50C - Assessee has been sold at much higher prices than the stamp duty value of each of the flat - HELD THAT:- Assessee has been sold at much higher prices than the stamp duty value of each of the flat and therefore, the provisions of Sec.50C were not applicable to the facts of the case. The assessee has sold the flats evenly throughout the year in price range of 4428 per square feet to 6958 square feet. The factors leading to variation in the sale price were duly explained by the assessee before Ld. AO which could not be disputed and no fact based findings could be rendered to controvert the same. In fact, the affidavits of 4 buyers confirming the sale price have been filed by the assessee. The assessee has duly discharged the onus of proving that the sale consideration as actually received by the assessee was reflected in the sale agreement as well as in the books of accounts. It is also evident that no further investigations have been carried out by lower authorities to rebut the documents of the assessee and bring on record any contrary evidence to prove transfer of excess sale consideration to the assessee, in any manner. Thus the conclusion that that all the flats would have been sold at highest prices is nothing more than an assumption of Ld. AO. Hence, we are inclined to delete the same. This ground stand allowed.

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• 2021 (10) TMI 277
  Addition on account of unexplained investment in Gold Silver articles u/s 69B - Jewellery surrendered by assessee - HELD THAT:- AO himself has accepted the fact not all jewellery so surrendered is unexplained and has taken into consideration the retraction in form of affidavit filed by the assessee and supported by evidence in form of bills and cheque payment and other documentation and has thus accepted a part of the jewellery as explained and has only brought to tax a part of the jewellery which as per the AO still remained unexplained, there is no basis for accepting the contention advanced by the ld PCIT/DR at this stage that it is a case of surrender of jewellery and in absence of retraction, the addition so confirmed by the ld CIT(A) be upheld. Therefore, the contention so advanced by the ld PCIT/DR cannot be accepted. In any case, the Revenue is not in appeal against the order so passed by the ld CIT(A) and we therefore restrict ourselves to the findings of the ld CIT(A) which are under challenge by the assessee. Jewellery received in form of gift from Sh. Ajay Maheshwari there is an apparent mistake in form of considering the wrong figure which has occurred in the findings of the ld CIT(A) in para 6.4 of the order when the same is read along with his specific findings at para 6.2 of his order and the figure of Rs. 44,36,092/- should have actually been taken instead of Rs. 54,76,382/. We accordingly agree with the contention of the ld AR that where the explanation of the assessee has been duly accepted by the ld. CIT(A) addition to the extent should be deleted in totality instead of restricting it to 75% and the whole of the jewellery so received as gift from Shri Ajay Maheshwari be treated as explained jewellery. Where the valuation report has been accepted by the ld CIT(A) which not just contains the total value rather it contains the valuation in respect of individual items of gold and diamond jewellery, the details of gold and diamond jewellery were very much on record along with disclosure thereof in the tax return filed for A.Y 2005-06. Therefore, having accepted the valuation report and factum of possession of substantial jewellery and the fact that necessary details of individual jewellery items are available on record, the action of the ld CIT(A) in treating only 75% of jewellery as explained and remaining 25% as unexplained doesn t have a rational basis with the material available on record and as to how the ld CIT(A) has arrived at the figure of 75% has also not been spelt out in the order so passed by him and the said action of ld CIT(A) of restricting the explained jewellery to 75% and treating the remaining 25% as unexplained therefore cannot be upheld. The whole of jewellery so received by the assessee and his wife from Late Shri Ramswaroop Maheshwari are treated as explained and addition of 25% of jewellery so confirmed by the ld CIT(A) is hereby directed to be deleted.

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• 2021 (10) TMI 276
  TP Adjustment - Addition of interest expenses - interest received by assessee on loans extended to its associated enterprises ( AEs ) - TPO adopting credit rating of BB, which prompted him to adopt the LIBOR rate with add on of 400 basis points - HELD THAT:- UUL agreed to repay the loan as and when sufficient funds are available with it and if not repaid, then agreed that the outstanding loans, together with accumulated interest, to be converted into common stock or preferred stock of UUL at any point of time. These clauses in the loan agreement are nothing but eye-wash as the appellant company is the holding company of the borrower and have sanctioned loan for unsecured junior debt loan upto US$ 7 million. The above facts have to be considered alongwith the fact that UUL has its Registered Office in the State of the Delaware, USA and in its fourth year of operations, it employed four employees for managing its warehousing operations. Considering the facts of the case in hand in light of the two loan agreements mentioned elsewhere, and considering the fact that the assessee itself has charged interest @ 8% in the case of UUL and 6.138% in the case of UBV, we do not find any error or infirmity in the transfer pricing approach of the TPO upheld by the DRP. Ground No. 3 with all its sub-grounds is dismissed. Lower interest charged @ 6% instead of 16% from its wholly owned subsidiary company - HELD THAT:- As on receiving financial assistance from the assessee, revenue from sales of M/s UniLink Engineering Pvt Ltd increased from Rs. 94.73 lakhs from F.Y 2005 06 to Rs. 26.12 crores in F.Y 2008 09. We further find that own funds of the assessee as on 31.03.2007 were at Rs. 33.35 crores which jumped to Rs. 127.62crores as on 31.03 2009 and tp Rs. 139.17 crores as on 31.03.2009. Loan was given in earlier F.Y and the assessee had sufficient own funds to give the loan. It is equally true that no disallowance was made in the earlier Assessment Year though the DRP has observed that rest judicata is not applicable under Income Tax proceedings but, in our considered opinion, when the facts are same, and the law has not changed, then the rule of consistency ought to have been followed. Considering the facts of the case in totality, we do not find any merit in the addition made by the Assessing Officer. We, accordingly, direct the Assessing Officer to delete the same. Ground No. 4 is, accordingly, allowed. Disallowing 5% of expenses on adhoc / estimated basis out of claim of deduction under the head Ocean, Air Freight and Marine Insurance - HELD THAT:- As assessee was specifically asked to justify the increase in expenses incurred on Air/ocean freight and marine insurance. It is equally true that before the DRP the assessee explained the increase by filing documentary evidences showing that these expenses were incurred on CIF basis. Assessing Officer himself has admitted in his second remand report that the assessee was able to justify the increase of expenses under this head. We are of the considered view that unless there is a limitation put by law on the amount of expenditure, a lesser amount expended cannot be allowed merely because the assessing authority thinks that the assessee could have managed by paying lesser amount as a prudent business man. Hon ble Supreme Court in the case of Walchand Co. Pvt Ltd [ 1967 (3) TMI 2 - SUPREME COURT] has held that the test of prudence by substituting its own view in place of business man s is not acceptable. Considering the fact that disallowance made by the assessee was purely on adhoc basis and restricting the disallowance by the DRP is also on adhoc basis. We, therefore, do not find any merit in the impugned addition. The Assessing Officer is directed to delete the addition.

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• 2021 (10) TMI 275
  Addition of opening cash balance - AO treated the opening balance for the A.Y. 2012-13 as unexplained and added the same to the total income of the assessee - case of the assessee that it does not maintain the balance sheet or Profit and Loss Account but the cash statement has been placed on record - HELD THAT:- The transactions were routed through banking channel which has not seen to have been verified by the Revenue. Thus, upon considering the entire aspect of the matter we find it fit and proper to remit the issue to the file of the Ld. AO to verify the genuineness of the transaction i.e. the source of the opening balance of the assessment year in consideration and to pass orders in accordance with law upon granting an opportunity of being heard to the assessee and upon taking into consideration the evidence which the assessee may rely upon at the time hearing of the matter. This ground of appeal is, thus, allowed for statistical purpose. Disallowance of interest expense - assessee has not produced the balance sheet or the statement of accounts or evidence with regard to the activities carried out by him, the interest charged on loan given by the assessee, purpose of loan taken, business activities carried out - HELD THAT:- As case of the assessee is this that the assessee paid interest on borrowed amount and earned interest on the loan given but only the interest earned has been taken into consideration by the Revenue and the interest paid has not been deducted, since the verification on this aspect has not been done by the Revenue under this facts and circumstances of the case we find it fit and proper to remit the issue to the file of the Ld. AO to verify such details - Assessee s appeal disposed of by statistical purposes.

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• 2021 (10) TMI 274
  Penalty levied u/s. 271(1)(c) - Suo-moto declaration of undisclosed assets located outside India under section 59 of the Black Money (Undisclosed Foreign Income and Asset and Imposition of Tax Act, 2015) in Form No. 6 filed by the assessee - HELD THAT:- The above referred declaration was accepted by the Commissioner of Income Tax and same was not declared invalid by the Commissioner of Income Tax. The valid declaration is not again prone to penalty under the Income Tact Act. Neither the Assessing Officer nor the ld. CIT(A) has considered the material facts that assessee has availed the one time compliance as laid down in section 59 to 72 of the Act and paid the tax @ 30% along with equal amount by way of penalty. The Commissioner of Income Tax has not declared the declaration filed in Form No. 6 by the assessee as invalid - as noticed neither in assessment order nor in appellate order any discussion was made by authorities below about the declaration of undisclosed assets located outside India under section 59 of the Black Money (Undisclosed Foreign Income and Asset and Imposition of Tax Act, 2015) in Form No. 6 filed by the assessee on 29-09-2015. The Commissioner of Income Tax has acknowledged as per Form 7 dated 30-12-2015 that declaration accepted and assessee has made compliance with the payment of taxes including penalty under the scheme. Assessing Officer did not apply his mind. The ld. CIT(A) has unreasonably sustained the impugned penalty levied u/s. 271(1)(c) of the Act. Therefore, the decision of ld. CIT(A) is unjustified and impugned penalty is deleted.

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• 2021 (10) TMI 273
  Revision u/s 263 by CIT - Partial allowance of deduction as CSR expenses - Proof of AO s order to be erroneous or prejudicial to the interest of the revenue - HELD THAT:- The amendment was made to Section 37 by Finance Act (No. 2) 2014 which came into effect from 01/04/2015 wherein it is declared that for the purposes of sub-section (1) any expenditure incurred by an Assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the Assessee for the purposes of the business or profession, however this case pertains to AY 2010-11 when there was no such embargo. Even the Assessing Officer, raised the specific query qua issue in hand which was replied by the Assessee and the AO formed his opinion based on the material available on record, law applicable to the particular AY and judgments applicable to the facts of the case, hence the same cannot be reviewed. May be the AO done inadequate enquiry, that also cannot be attributable to assessment order as erroneous in so far as it is prejudicial to the interest of the revenue - presumption and assumption of the ld. Commissioner is contrary to the facts and hence not tenable in the eyes of law. Claim of 50% of depreciation on wind mill - It is undisputed fact that by raising specific query vide column No. 8 of notice dated 17/12/2012, the AO asked the Assessee that there is huge investments in fixed assets specially plant machinery. Despite this fact your turnover has decreased then what use has been put to new assets. The said query was replied by the Assessee vide column No. 8 of the its reply (Pg no. 47 of PB) wherein it was replied by the Assessee that during the year under consideration the Assessee company started its commercial production in Block Mill since December, 2009 and also set up another Wind Mill installed in the month of March. The said query and its reply goes to show that the AO has made the requisite enquiry, therefore the assumption of the Ld. CIT is wrong and contrary to the facts. From submission of the Assessee before the ld. Commissioner to the effect that in Schedule 20 of the Audited balance sheet under point No. 18, it is clearly mentioned that the installed capacity of wind mill has been increased from 1.2 MW to 2.7 MW during this year, and therefore goes to show that relevant materials have been produced not only before the AO but also before the ld. Commissioner, however, still the ld. Commissioner opined that claim of the Assessee requires verification. Even it is not the case here that no enquiry has been done by the AO qua issue in hand, therefore the conclusion drawn by the ld. Commissioner on the issue under consideration is unsustainable. Additional depreciation of power generation - As clarified by the Co-ordinate Benches of the Tribunal the electricity has been considered as goods and amendment brought out in section 32(1)(iia) by the Finance Act, 2012 to include the business of generation and distribution of power to the benefit of additional depreciation is only clarificatory, hence deserves additional depreciation. Even the AO while allowing the additional depreciation on power generation used his own wisdom and followed the dictum of the Hon ble Courts, therefore his action cannot be faulted. On the aforesaid analyzations it is clear that the assumption of the ld. Commissioner to the effect that allowing additional depreciation on power generation as rendered the assessment order as erroneous insofar as it is prejudicial to the interest of the revenue, is wrong and contrary to the facts and judgments on the issue. Before coming to the conclusion that the order of the AO is erroneous and prejudicial to the interest of the revenue, the Ld. Commissioner ought to have conducted some minimal enquiry, which in the instant case qua the issue under consideration also, the ld. Commissioner failed to do - Decided in favour of assessee.

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• 2021 (10) TMI 272
  Attribution of income - Addition on account of training charges, defect liabilities and design and engineering services - HELD THAT:- AO cannot attribute any amount on account of training services specifically when the same have not been imported in the year under consideration - we find merit in the submission of the ld. Counsel that the consideration of these services has already been included in the amount received for foreign supervisor activity and since the revenue from the aforesaid activities have already been offered to tax, no further attribution can be made by the AO. In this view of the matter, we hold that the addition made by the AO on account of training services is not justified. Accordingly, the same is directed to be deleted. Liquidated damages and defect liability - As damages have to be paid by the assessee in case of delay i.e., a contingent event, therefore, the said liquidated damages under no circumstances can be concluded to be a part of consideration. We, therefore, find merit in the argument of the ld. Counsel that the conclusion of the AO that the same form part of the revenue earned from offshore supply is incorrect and against the settled principle of law. Further, this being the initial year of contract for the project, no such occasion had arisen and, therefore, in absence of any material with the AO, he was not justified in making the addition. We find, the Kolkata Bench of the Tribunal in the case of Outotec GmbH [ 2015 (6) TMI 609 - ITAT KOLKATA] has held that clauses like liquidated damages, performance guarantee and defect liability are part of normal commercial arrangements generally agreed in common trade parlance and cannot form the basis for attributing revenue earned from offshore supply of equipment to India. We hold that no portion of revenue earned from the sale of equipment can be taxed in India by virtue of commercial clauses like performance guarantee, defect liability and liquidated damages. We, therefore, set aside the order of the AO and direct him to delete the addition. Grounds of appeal No. 4 and 5 are accordingly allowed. Revenue received for design and engineering services - AO held that design and engineering are chargeable to tax u/s. 9(1)(vii) of the Act as well as Article 13 of the India-Korea DTAA - submission of assessee that the consideration for design and engineering is not taxable in India since such designs and drawings are treated as inseparable part of offshore supplies - ITAT set aside the issue to AO - HELD THAT:- Tribunal has given the finding which are specific and unequivocal regarding the taxability of design and engineering services. Since the issue is settled at the level of ITAT and which was not set aside to the file of the AO for any enquiry or verification, we do not find any infirmity in the order of the AO holding that design and engineering services are chargeable to tax u/s. 9(1)(vii) of the Act as well as Article 13 of the India-Korea DTAA. The ld. Counsel for the assessee has also not brought anything before us to take a contrary view than the view taken by the AO on this issue. Accordingly, the ground raised by the assessee on this issue as per ground of appeal No. 6 is dismissed.

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• 2021 (10) TMI 271
  Capital gain determination - Addition invoking the provisions of section 50C - date of transfer of capital asset - as per assessee capital asset in question was sold by the assessee vide agreement dated 3.6.2013 and not by Sale Deed dated 23.11.2015 and the value mentioned in sale agreement dated 3.6.2013 to be adopted - DR submitted that the sale agreement produced before the lower authorities cannot be relied upon wherein the assessee received Rs. 51,000 by way of cash out of sale consideration of Rs. 48 lakhs - HELD THAT:- In the present case, the assessee wants take advantage of first proviso to section 50C of the Act that transfer took place vide sale agreement dated 3.6.2013 and not on 23.11.2015. The date mentioned in the sale agreement to be considered and corresponding valuation on that date to be valued. In our opinion, the assessee adopted colourable device to avoid tax by producing the sale agreement dated 3.6.2013 which is executed on Rs. 2/- non-judicial stamp paper and payment of Rs. 51,000 was made by cash. Being so, we cannot give any credence to this agreement, though it was in writing. The plea of the assessee that transfer having taken place earlier to execution and registration of sale deed cannot be appreciated - the assessee has actually has executed the transfer of impugned property only through Sale Deed dated 23.11.2015, as such the AO rightly applied the valuation as applicable on this date. We do not find any infirmity in the order of the lower authorities and the same is confirmed.- Decided against assessee. Addition u/s. 68 - assessee has shown cash deposit into bank account for the demonetization period from 9.1.2016 to 30.12.2016 - Assessee submitted assessee availed the following loans and deposited into the bank account and withdrawn the same for redeposit into bank account - HELD THAT:- As submitted cash book filed before us to show that it was duly reflected in the cash book and redeposited in the bank account. In our opinion, these are additional evidence to be examined at the end of the AO. Therefore, we set aside the orders of lower authorities and remit the issue to the AO for re-examination and fresh decision in accordance with law. - Decided in favour of assessee for statistical purposes.

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• 2021 (10) TMI 270
  Rejection of application u/s 12AA - Non filing of return - as argued none of the papers was considered by the CIT exemption while rejecting the application for the assessee for registration - Denial of natural justice - HELD THAT:- As perusal of the order passed by the CIT exemption, clearly shows that the order was passed by the lower authorities without considering documents shown to us in the paper book filed by AR and further the CIT exemption has not considered the binding precedent of various HC available on record, wherein High Court had held that the filing of return of income is not necessary for considering the application was registration. it was held that only the account of the assessee are required to examine, and from the accounts it was to ascertain whether the activities of the assessee were genuine and charitable in nature or not since the Commissioner exemption has not done the needful. We set aside the order passed by the Commissioner and remand the matter to CIT (E). The CIT(E) is directed to pass fresh speaking order, in terms of direction given hereinabove, after following the principle of natural justice and affording the opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purposes

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• 2021 (10) TMI 269
  Validity of reopening of assessment u/s 147 - tangible material to prove the income escapement of income found or not? - Exercise for ascertaining the unsecured loans accepted during the year - Assessee submitted before the ld. CIT(A) that the notice u/sec. 148 was issued in the case of the Assessee on suspicion and there was no material to believe that the income had escaped from assessment - outstanding unsecured loans in the balance sheet and the AO suspected the entire outstanding of unsecured loans on the basis of admission given by the assessee for earlier years i.e. 2009-10 to 2015-16 - HELD THAT:- In the wording for reopening the assessment the AO used the words that unsecured loans appears to be suspicious and disproportionate to the turnover/gross receipts of the Assessee. Assessee reported the turnover of Rs. 290 crores and excess of income over expenditure was Rs. 5.30 cores. How the AO landed in a conclusion that 23.40 crores unsecured loans were suspicious and disproportionate to the turnover was not mentioned. As in reasons, the AO held that outstanding unsecured loans of Rs. 23.40 crores was believed to be escapement of income chargeable to income tax, whereas in the assessment order the AO found that unsecured loans accepted during the year was only Rs. 9,14,37,645/-. Thus, the AO has not even made minimum exercise for ascertaining the unsecured loans accepted during the year, under consideration before reopening of the assessment. AO has not even made minimum exercise for ascertaining the unsecured loans accepted during the year, under consideration before reopening of the assessment. Without even ascertaining the unsecured loans accepted during the year in the reasons recorded, the AO viewed that the entire sum of Rs. 23.40 crores outstanding as per the balance sheet was suspicious and escaped from the assessment chargeable to tax. Thus, the above facts clearly show that the AO reopened the assessment only with a suspicion without having sufficient reasons to form the belief for escapement of income - CIT(A) has rightly quashed the notice Unsecured loans outstanding in year under consideration need not be suspected merely because the assessee had admitted the same as income in the earlier years . For Income tax purpose each year is independent and the issue has to be decided on facts independently. From the above, it is very clear that the AO reopened assessment merely on suspicion - Decided in favour of assessee.

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• 2021 (10) TMI 268
  Disallowance being deduction claimed u/s. 80P - Whether assessee is carrying on banking business and is a cooperative bank not entitled to deduction u/s. 80P(2)(a)(2)? - HELD THAT:- As the foundation facts are required to be ascertained by the lower authorities like definition of members, nominal members and non members, whether the assessee was caring on banking activities for the members only or for non members and whether the assessee was having the approval from Reserve Bank of India for doing banking activities. We remand back appeal to the file of Ld. CIT(A) for denovo passing of the appellate order with the following directions CIT(A) shall decide the appeal on the basis of the findings recorded by the Hon ble Supreme Court more particularly in the matter of Mavilayi Service Cooperative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] While deciding the issue on the basis of the above said judgment, the Ld. CIT(A) shall examine the rules of assessee-society as well as the Act under which the society was formed. For the purpose of ascertaining the scope of the activities of the assessee, the CIT(A) shall examine whether its activities were restricted to members or non members or both. Whether the assessee was having any license for carrying out the banking activities for the members and non members. Based on the above said factual findings the CIT(A) shall decide the matter after finding opportunity of hearing to the assessee as well as to the AO and passed a reasoned and speaking order. Needless to say the assessee had liberty to file any other document which it deem necessary for due disposal of the appeal and may rely upon any of the Judgment referred before us. - Appeal of the assessee is allowed for statistical purposes.

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• 2021 (10) TMI 267
  Interest u/s 201 as payable by the Assessee on delayed payment of TDS - Order u/s 153 issued by the CPC (TDS) charging interest on late payment of the TDS u/s 201(1A) - HELD THAT:- Assessee deposited cheque on 30.04.2012 which has been cleared and the amount has been debited on 30.04.2012 itself from the account of the assessee whereas the challan generated by the bank reflected date of deposit as on 01.05.2012 which spinned off the charging of interest by the CPC. Assessee has produced certificate from the Indian Overseas Bank, Secunderabad Branch confirming that the assessee has deposited the amounts through Internet Banking facility (IBF) of the bank on 30.04.2012 and amounts have been debited on the same date. A technical error on the part of the bank to reflect the amount on 01.05.2012 instead of 30.04.2012 for which we hold that the assessee cannot be held to be responsible. We are also guided by the circular of CBDT No. 1197 with regard to the Section 211, advance tax where in in case of bank holiday, the amounts were allowed to be paid on the next day of the due date without interest. In the instant case, the matter pertaining to Section 201, the assessee has rightly deposited the TDS amount on 30.04.2012. Hence, we hold that the assessee is not liable to pay any interest u/s 201(1A). Appeal of the assessee is allowed.

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• 2021 (10) TMI 266
  Legality of Search proceedings - Unexplained jewellery found from the locker - addition on account of jewellery - board circular VDIS disclosure - HELD THAT:- Legal challenges are concerned, first of all jewellery was found from the locker which is co-owned by assessee and her husband during search operations on Kesarwani Zarda Bhandar, Sahson , Allahabad, and jewellery weighing 1725.040 gms was owned up by the assessee. It is an admitted fact that the assessee has not declared this jewellery in her income-tax returns , filed prior to date of search. Further, the assessee has admittedly not filed any wealth tax return prior to the date of search - jewellery found from the locker, under these circumstances, itself is , prima-facie, incriminating material and there is no bar on revenue to use incriminating material found for framing assessment and bringing to tax total income including undisclosed income - assessee has not made any arguments before us challenging the legality of the search or assessment framed by Revenue - search took place on 27.08.2009 and the ay under consideration is ay: 2010-11 viz. the assessment year relevant to the previous year in which search took place. The assessment for year under consideration was framed u/s 143(3), and the year under consideration is the year when the search took place , and the mandate under the instant case is to assess the total income. Thus, we decide this issue against the assessee. Unexplained jewellery - Circular refers to the jewellery which should not be seized during search operations and not with the assessments to be framed. One of the relevant factor for identifying the Stridhan of a women is her and her family (both parents and in-law) social and financial status/background, which cannot be ignored keeping in view the prevalent practices as per Hindu customs. It is also observed that no elaborate reasons have been given by authorities below rejecting the aforesaid contentions raised by the assessee. The matter need to be restored back to the file of the AO for fresh determination and the AO is directed to pass reasoned and speaking orders. We set aside the appellate order passed by ld. CIT(A) and restore the matter back to the file of the AO for fresh determination on merits in accordance with law.We clarify that the jewellery was found from the locker owned by the assessee, and the onus/burden is on the assessee to explain satisfactorily the jewellery found from the locker. We clarify that we have not commented on the merits of the issue. Needless to say that proper and adequate opportunity of being heard shall be provided by the AO to the assessee in set aside remand proceedings. The evidences/explanations filed by assessee in her defense shall be admitted by the AO and shall be adjudicated by AO on merits in accordance with law. The appeal of the assessee is allowed for statistical purposes.

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• 2021 (10) TMI 265
  Disallowing the deduction claimed u/s 10A - AO during the assessment proceedings found that the assessee is not engaged in the activity of export of the website assessee is not eligible for deduction u/s 10A - CIT-A deleted the addition - HELD THAT:- No material has been placed on record by the Revenue to demonstrate that the decisions of Tribunal as discussed above while dismissing the appeal of Revenue has been set aside / stayed or overruled by the Higher Judicial Authorities. Before us, Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support.

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• 2021 (10) TMI 264
  Addition for security deposit forfeited - not offering income to tax - assessee submitted forfeited security deposit is a capital receipts and not liable to be taxed - HELD THAT:- From perusal of the above finding of Ld. CIT(A) and judicial precedents referred therein we find that the liability under consideration was not on account of any deduction claimed by the assessee against income/gross revenue. It was a write off of capital receipts being security deposit taken from a company for the purpose of giving security for taking a property on lease on its behalf. The company namely M/s Waveset INC from which the security deposits was received, went into liquidation and the said amount was not liable to be refunded. In our view this security deposit is a capital receipt not chargeable to tax. Thus, no interference is called for in the finding of Ld. CIT(A). Ground no.1 raised by the revenue is dismissed. Non-deduction of tax at source on payments made on behalf of EION Telecom charged to profit and loss account for which reimbursement was received and credited to income - CIT-A deleted the addition - HELD THAT:- We find that the M/s. EION Telecom P. Ltd. has deducted the income tax at source as applicable on all the expenses farming part of the alleged disallowance. The details/summary of TDS deducted and deposited by EION Telecom Pvt. Ltd. during the relevant period stands submitted before the Ld. AO. M/s EION Telecom Pvt. Ltd. was assessed u/s 143(3) of the Act for A.Y. 2013-14 and same was not found to have made any default in making compliance to the TDS provisions. Also in assessee s own case for A.Y. 2012-13 and 2013-14 under the similar set of facts no disallowance have been made in the assessment framed u/s 143(3) of the Act. We, therefore, under the given facts and circumstances of the case and factual matrix find no infirmity in the finding of Ld. CIT(A) deleting disallowance u/s 40a(ia) - Decided against revenue.

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• 2021 (10) TMI 263
  Undisclosed income of the assessee - Addition u/s 68 - HELD THAT:- No further enquiry was made by the Ld. AO and he merely interpreted that the amount received by assessee is her undisclosed income routed through Shri Manoj Kumar Jain. Fail to find any merit in this finding because before us bank account of the assessee is not placed nor the ld. AO had made any enquiry to examine that whether the alleged sum was credited in the bank account of the assessee, which is a primary condition to make addition u/s 68. Secondly, cash was deposited in the account of Mukesh Kumar Jain, so substantive addition ought to have been made in his hand if sufficient explanation was not offered and if needed protective addition could have been made in the hands of assessee. Thirdly, Mr. Manoj Kumar Jain said to have received some amount credited in the bank account from sale of land, thereafter no efforts seems to have been made by the revenue authorities as appearing from records, to check the correctness of this statement. As per actual matrix of the case and loose ends of the enquiry conducted by the revenue authorities, assessee deserve to succeed as there is no direct material found by the revenue authorities against her to make the addition for undisclosed income - Decided in favour of assessee.

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• 2021 (10) TMI 262
  Validity of reassessment proceedings for non-issuance of statutory notice u/s 143(2) - HELD THAT:- Additional ground issue raised by the assessee is that reassessment proceedings are liable to be quashed, on the specific ground of non-issuance of statutory notice u/s 143(2) of the Act. It is an admitted fact before us that for the instant year under appeal for the purpose of reassessment Ld. AO only issued notice u/s 148 of the Act but failed to issue statutory notice u/s 143(2) of the Act. Whether the issue of notice u/s 143(2) of the Act is mandatory for carrying out reassessment proceedings, we find that Hon ble Apex Court in a recent judgment in the case of CIT vs. Laxman Das Khandelwal [ 2019 (8) TMI 660 - SUPREME COURT] adjudicating similar issue laying down the ratio that the issuance of notice u/s 143(2) of the Act being a prerequisite and in the absence of such notices the entire proceeding would be invalid. Since notice u/s 143(2) of the Act was not issued to the assessee, before commencing reassessment proceedings the error being fatal and uncorrectable renders the reassessment proceedings void ab initio and thus liable to be quashed. Hence the assessment so framed without issuance of notice u/s 143(2) of the Act is hereby quashed being contrary to law - Decided in favour of assessee.

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• 2021 (10) TMI 261
  Estimation of income - Bogus purchases - HELD THAT:- Simply because the parties were not produced the entire purchases cannot be added as held by the Bombay High Court in the case of CIT v. Nikunj Eximp [ 2013 (1) TMI 88 - BOMBAY HIGH COURT] . However, at the same time keeping in view the nature of business of the assessee and the fact that the assessee is making some local purchases without any transportation bills, lorry receipts etc, the possibility of making purchases in gray market on cash cannot be ruled out. Thus following the decision of the Hon ble Gujarat High Court in the case of CIT v. Simit P. Seth[ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] I direct the Assessing Officer to restrict the disallowance/addition to 12.5% of the bogus purchases. - Decided partly in favour of assessee.

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• 2021 (10) TMI 260
  Addition u/s. 14A while computing the book profit u/s. 115JB - HELD THAT:- During the course of assessment, the Assessing Officer has added the disallowance made u/s. 14A to the book profit computed u/s. 115JB of the act. The ld. CIT(A) has restricted the addition to the extent of Rs. 35,440/- as disallowance computed by the assessee company. With the assistance of ld. representatives, we have gone through the decision of VIREET INVESTMENT (P.) LTD. [ 2017 (6) TMI 1124 - ITAT DELHI] wherein it is held that expenditure incurred to earn exempt income not to be added for computing book profit u/s. 115JB of the Act. Therefore, following the decision of the Co-ordinate Bench as above we consider that decision of ld. CIT(A) in sustaining the part of the addition is not justified, therefore the impugned addition is deleted and appeal of the assessee is allowed on this issue. Disallowance u/s. 14A - Expenses incurred on earning exempt income - HELD THAT:- As in Adani Agro (P) Ltd. [ 2018 (2) TMI 1215 - GUJARAT HIGH COURT] wherein it is held that there was no question of disallowing administrative expenses u/s. 14A r.w.r. 8D in excess of the total administrative expenditure incurred by the assessee. In the light of the above, we restrict the disallowance u/s. 14A to the extent of Rs. 35,440/- as the amount computed by the assessee pertaining to the interest attributable to the exempt income and the disallowance out of administrative expenditure up to such expenditure i.e. Rs. 39,386/-. Accordingly, we restrict the total disallowance. Appeal of the assessee is partly allowed.

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• 2021 (10) TMI 259
  Condonation of delay - delay of 122 days - HELD THAT:- As delay of 122 days in filing of the assessee s appeal before the Tribunal has occurred due to the files being misplaced and ill health of the assessee s counsel. Hence I am of the view that though there is some negligence on the part of the assessee it deserves some leniency. Therefore, in the interest of Justice we hereby condone the delay of 122 days in filing both the appeals and proceed to adjudicate the matter on merits. Estimation of turnover - scrutiny assessment - income of the assessee on the sale of built-up space - HELD THAT:- As revealed that the assessee has not maintained his books of accounts. It was also revealed that the assessee had sold built up space for Rs. 1,21,46,655/-. Since the assessee could not furnish sufficient details to determine the profit arising out of the sale of the built-up space of Rs. 1,21,46,655/- the Ld. AO estimated the income on the sale @15% on the turnover which works out to Rs. 18,22,000/- and brought the same to tax. Even before the Ld. CIT (A) the assessee could not furnish the particulars of his income with respect to the sale of built-up space. Therefore, the Ld. CIT (A) magnanimously relied on the provisions of section 44AD of the Act and sustained the addition at 8% of the Turnover. Neither the assessee nor its representative could furnish any evidence as well for having maintained the books of accounts and relevant documents. Therefore, in this situation find it not necessary to interfere with the order of the Ld. CIT (A) who has already granted generous relief to the assessee. - Decided against assessee.

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• 2021 (10) TMI 258
  Estimation of income - Bogus purchases - CIT(A) restricting the addition on account of profit element at the rate of 2.42% of the alleged bogus purchases from tainted parties - DR argued that the learned CIT(A) ought to have estimated the profit at the rate of 12.5% of the value of purchases which has been consistently made by this Tribunal in various other cases - HELD THAT:- Assessee is engaged in iron and steel industry and moreover, assessee is only a trader in Iron and Steel. Assessee has disclosed gross profit of 2.42% in its books which has been accepted by the Revenue. It is not in dispute that sales made out of the purchases of Rs. 1,75,16,051/- from seven parties has not been doubted by the Revenue. For the purpose of determining the profit element embedded in the value of such purchases, taking into consideration the industry in which the assessee is dealing with, we deem it fit appropriate to estimate the profit at 5% of the value of such purchases as income of the assessee, which in our considered opinion, would meet the ends of justice. Appeal of the Revenue is partly allowed.

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• 2021 (10) TMI 257
  Application for registration of trust u/s 12AA rejected - mismatch in the name mentioned in Form 10A vis- -vis name mentioned in the trust deed - HELD THAT:- CIT(Exemption), Bhopal was not justified in rejecting the claim for a mere mistake in the spelling of the name of the trust. He ought to have provided an opportunity to the assessee trust to rectify this error. No other observation has been made by Ld. CIT(Exemption), Bhopal pointing out any error in the details filed by the assessee in order to reject the claim of the assessee deserving to be registered u/s 12AA. We set aside the issue of grant of registration u/s 12AA of the Act to Ld. CIT(Exemption), Bhopal and direct him for examining it afresh after giving reasonable opportunity of being heard - Appeal of assessee allowed for statistical purposes.

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• Customs

• 2021 (10) TMI 323
  Seeking provisional release of imported goods - pendency of the review petition - HELD THAT:- This writ petition is disposed of by directing the Principal Commissioner of Customs (Port) to consider afresh representation of the petitioner dated 13th April, 2021 for provisional release of goods in question in accordance with law and by passing a reasoned and speaking order and considering for imposition of softer condition for provisional release in view of the fact that petitioner s money amounting to more than Rs. 98 lacks has already been deposited with them and further that the respondents themselves are not able to pass the final order of adjudication in spite of the judgment of the Hon ble Supreme Court held in their favour in the case of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] on the ground of pendency of the review petition and for which petitioner should not have been penalized. Petition disposed off.

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• 2021 (10) TMI 311
  Seeking release of imported consignment - 63 Metric Tons of Waste Paper-Old Book - mutilation of goods, which are waste papers in the book form - Section 24 of the Customs Act - HELD THAT:- Merely because the goods in question is in the form of books, may be a new book or old book, it cannot be stated that, it is only a book for different purpose to sell in the market and not to be used as a wastepaper for making the pulp in paper industry. In normal parlance, if a paper in the book form is not going to be utilised for any reading or reference purpose, and it is going to be utilised for waste paper purpose, eventhough if it is in a new book form or a brand new book form, that can only be treated as a wastepaper - Merely because, in the declaration or bill of entry or bill of lading, it is stated as a wastepaper, it cannot be stated that it is a mis-declaration, unless and until the Customs Department found it as a different item not going to be utilised as a wastepaper by making their own inspection or investigation without having any such declaration prior to the same. If the importer really imported the goods in question as brand new books for the purpose of selling it in the Indian market definitely, the worth of the goods would be multifold than what has been declared, that is, around 13,00,000/- rupees worth for the wastepaper, so such kind of valued goods cannot be volunteered by the petitioner to be mutilate, as that will be more loss to the petitioner than to pay the redemption fine as well as the customs duty even if ultimately the Customs Department found that it is a misdeclared good, therefore, it is to be confiscated with redemption right. This Court feel that the subsequent action to conduct an inspection on 08.07.2021, and a further inspection by a special team on 23.07.2021 followed by the seizure under mahazer, are all may be a unwarranted exercise, even if the goods in question, are to be treated only as books, they could have very well allowed the books to be mutilated for which the petitioner had already expressed his willingness on 03.07.2021 itself - merely because a seizure has been taken place, it cannot be stated that the adjudication has to go in the present case, and therefore at this juncture only provisional release under Section 110(A) alone is possible. In the considered opinion of this Court, in view of the peculiar facts and circumstances, where two important aspects has to be taken note of, one is that the petitioner itself is a paper manufacturing industry and it has been doing this kind of importing of waste paper in book form for several years from various countries, and secondly, the petitioner had volunteered to mutilate the same on 03.07.2021, that is, well before the goods reached the port - there shall be a direction to the respondents to consider the claim/request of the petitioner as per his request dated 03.07.2021, permitting the petitioner to denature or mutilate the goods in question, which has been imported. Petition disposed off.

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• 2021 (10) TMI 305
  Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - misclassification and overvaluation of imported goods to claim higher drawback - appellant has allowed Shri Bhagwan Patil who does not possess proper qualification to deal with customs clearance activities and thus failed to comply with CBRL2, 2013 - HELD THAT:- The appellant as a Customs Broker is obliged to recruit persons who have proper qualification and only engage such persons to deal with clearance of goods. The appellant having allowed Shri Bhagawan Patil to use the password for filing documents on the ICEGATE has in our view, indeed violated Regulation 17(9) of CBLR, 2013. The question then is whether such infraction is so grave to impose a punishment of revocation of license and forfeiture of security. This has to be answered by considering the fact that the appellant has already been subject to trial / proceedings for the very same infraction before the Nhava Sheva Commissionerate - it had to be held that the violation, in the background of this case does not attract such harsh punishment of revocation of license or forfeiture of security deposit. The punishment by way of penalty would meet the ends of justice. The appellant has suffered and paid the penalty of Rs. 25,000/- imposed under sec. 158(2)(ii) of Customs Act, 1962 in the earlier proceedings. It is submitted by the learned counsel that such penalty has attained finality as the appellant did not prefer any appeal.. On such score, a further penalty of Rs. 50,000/- imposed under the Customs Broker Regulation is unwarranted. The same requires to be set aside - appeal allowed. As per P.V. Subba Rao, There is no provision for imposing any penalty under Section 158 itself. It only enables the Central Government to make Rules or the Board to make Regulations which may provide for imposition of penalty. The Adjudicating Authority has no power under this Section. Though such penalty was imposed by the adjudicating authority in the earlier proceedings and was also paid by the appellant, it is important to clarify this legal provision - Appeal allowed.

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• 2021 (10) TMI 303
  100% EOU Scheme - detention of certain imported and indigenous goods which were not included in the list of capital goods - appellant s case was referred to the National Company Law Tribunal, Chennai in terms of Section 31(1) of the Insolvency and Bankruptcy Code, 2016 for consideration and approval of a Resolution Plan - HELD THAT:- The order of the National Company Law Tribunal, Chennai in the matter of M/s. Subburaj Spinning Mills Pvt. Ltd. dated 12.03.2019 [ 2019 (5) TMI 480 - NATIONAL COMPANY LAW TRIBUNAL, SINGLE BENCH, CHENNAI] is placed, where the National Company Law Tribunal has held that the Resolution Plan is approved and thereafter concluded that the same shall become effective from the date of passing of the order. As per the order, from the plan approval date, all proceedings, claims, disputes and interests in connection with the Corporate Debtor (appellant herein) shall stand withdrawn, satisfied and discharged - miscellaneous application has been filed by the Authorized Signatory of the appellant for having the appeal disposed of by closing the demands, as abated. The appeal is dismissed as abated.

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• Corporate Laws

• 2021 (10) TMI 295
  Seeking restoration of name of the company in the register of companies - Section 252 of the Companies Act, 2013 - HELD THAT:- The appellant has submitted sufficient evidence that it has been in operation during the period preceding strike off, therefore, it could not be termed as a defunct company as per Section 252 of the Act. Thus, taking into consideration the provisions of Section 252(1) of the Companies Act, 2013, which vests this Tribunal with a discretion where the Company, whose name has been struck off, and such Company is able to demonstrate that it is just to do so, can restore the name of the Company, in the Register and in the interest of all stakeholders, including the Appellant itself, who seeks restoration of the name of the Company in the register maintained by Registrar of Companies, the company deserve to be restored. Appeal allowed.

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• Insolvency & Bankruptcy

• 2021 (10) TMI 301
  Inclusion of fresh claim in the Resolution Plan - the claims arising pre-CIRP - pre-existing liabilities of water charges as claim by the Respondent No. 1 in respect of water charges and service charges - claim towards differential premium and transfer charges - HELD THAT:- As per the settled law claims arising pre CIRP cannot be claimed by the creditor. In the recent Judgment of Ghanashyam Mishra and Sons Private Limited [ 2021 (4) TMI 613 - SUPREME COURT] the Hon ble Apex Court laid down the law by giving rest to many legal issues and clarifying the legal position, under the Doctrine of Clean Slate that all claims against the Corporate Debtor prior to CIRP and after the transfer of the assets of the Corporate Debtor to the successful Resolution Applicant to be dealt with in terms of the Resolution Plan and if not forming part of such Resolution Plan shall extinguished. In the light of the above judgement of Hon ble Supreme Court, the claim of water charges of Rs. 47,06,751/- being pre CIRP charges, the same is extinguished and stands cancelled. Hence the claim of Rs. 47,06,751/- is rejected - in view of the approval of Resolution Plan by way of order of the Tribunal on 14.10.2019 and change of constitution of taking over of the Corporate Debtor and 100% change in shareholding of the Corporate Debtor, the Applicant is required to pay the differential premium and transfer charges of Rs. 38,09,600/-. Application disposed off.

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• 2021 (10) TMI 299
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Debtor-Creditor relationship between the Corporate Debtor and the Operational Creditor - Whether the claim of Rs. 33.98 Crores is an Operational Debt legally recoverable from GIPL? - HELD THAT:- In the Application under Section 9 of the IBC for the amount i.e. Rs. 33.98 Crores in which, admittedly Rs. 10 Crores has been paid by the GIPL and the remaining amount is to be paid by AJVPL and in case they failed to pay the amount, the Operational Creditor (SPJV) can recover the amount from AJVPL and the guarantors i.e. MIAPL and MK. However, the SPJV cannot recover any amount under the agreement dated 14.12.2013 from the GIPL - for the purpose of this amount, there is no relationship between them as Operational Creditor (SPJV) and Corporate Debtor (GIPL). Whether the claim of Rs. 2.03 Crores is an Operational Debt legally recoverable from GIPL? - HELD THAT:- SPJV has not completed the work to the satisfaction of GIPL and therefore, they have withheld Rs. 2.03 Crores and subsequently, released Rs. 5 Lacs and no completion certificate was issued in favour of SPJV - there is a pre-existing dispute between the parties, therefore, Section 9 Application is not maintainable. Hon ble Supreme Court in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT] has held that the Adjudicating Authority is to see at the time of admitting or rejecting the Application whether there is plausible contention which requires further investigation and that the dispute is not patently feeble legal argument or an assertion of fact unsupported by evidence. Therefore, so long dispute exist in fact and it is not spurious hypothetical or imaginary, Adjudicating Authority has to reject the Application. Moreover, the existence of dispute must be pre-existing i.e. it must exit before the receipt of demand notice or invoice. In the present case, there is a pre-existing dispute, therefore, the Application under Section 9 of the IBC is liable to be dismissed. However, Ld. Adjudicating Authority has admitted the Application and initiated CIRP without considering the documents. Appeal allowed.

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• 2021 (10) TMI 298
  Condonation of delay of 56 days in filing application under section 9 of the Code - Section 5 of the Limitation Act, 1963 r/w. Section 238A of the Insolvency Bankruptcy Code, 2016 - Seeking permission to correct the date of default in Part-IV of Application under section 9 of the Insolvency Bankruptcy Code, 2016 - seeking amendment of original petition under Rule 11 of the National Company Law Tribunal Rules, 2016 - HELD THAT:- As per Rule 20(c)(i), (iii) (iv), views expressed by a party in the course of the mediation/conciliation proceedings or the proposals made or views expressed by the mediator/conciliator and admission made by a party in the course of mediation/conciliation proceeding shall not rely on or introduce the said information in other proceedings. When we consider the case in hand then we notice that although the settlement agreement was arrived in between the parties and the matter was referred to the concerned court under Rule 25 of the Mediation Rules but the applicant has failed to produce any document to show that the concerned court has passed any order as required under Rule 25 of the Mediation Rules. Therefore, in view of the Rule 25 of the Mediation Rules, unless an order has been passed by the concerned court, the settlement arrived in between the parties before the Mediator cannot be treated as a decree. And in view of Rule 20 of the Mediation Rules, views expressed by a party in the course of the mediation/conciliation proceedings or the proposals made or views expressed by the mediator/conciliator and admission made by a party in the course of mediation/conciliation proceeding shall not rely on or introduce the said information in other proceedings. Application dismissed.

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• Service Tax

• 2021 (10) TMI 314
  Realization of service tax / GST by the Opposite Parties - seeking grant of refund - pro-rata reduction in the amount as there was lability to pay less amount - HELD THAT:- It is seen that in similar circumstances GGS INFRASTRUCTURE PRIVATE LIMITED VERSUS COMMISSIONER OF CGST CENTRAL EXCISE [ 2020 (12) TMI 914 - BOMBAY HIGH COURT] has held that The amount of service tax dues having thus crystallized, the resolution plan says that the same would be settled at 5% of the principal dues adjudicated. The word used is adjudicated and not adjusted as sought to be read and applied by the respondent. Therefore, the amount that the petitioner would be required to pay is 5% of Rs. 7,02,20,725.00. A direction is issued to Opposite Party No.3 to calculate and refund to the Petitioner the excess service tax paid by it by acknowledging that the Petitioner is entitled to receive only 20.5% of the admitted claim amount which works out to Rs. 3,71,87,750/- - Petition allowed.

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• 2021 (10) TMI 310
  Levy of service tax alongwith penalty - transfer of development rights - suppression of factum of taxable service - intent to evade tax - HELD THAT:- Petitioners are the land developers and that they take up developmental activities on the lands belonging to others, is not in dispute; the development activities are accomplished in terms of Joint Development Agreements whereunder the structure built in the form of Flats are shared between the developers and the land owners in the agreed ratio. Circular dated 10.02.2012 makes it abundantly clear that the taxable event occurs at the time when the builder gives the possession or creates right in the property of the said Flats in favour of the land owner; these building blocks of the provision are conspicuously absent in the impugned notices which appear to stand as the non-sense on the stilts ; therefore, they are liable to be violated warranting remittance of the matter for fresh consideration. Matter is remitted for being treated afresh - petition allowed in part and part matter on remand.

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• 2021 (10) TMI 306
  Levy of service tax - contribution to Joint Venture / Partnership arrangements - reimbursement/cost charged to the Joint Account by the Appellant namely, salaries of employees working for the joint venture - cost of the employees and labour provided by the Appellant - entire cost recovered by the Appellant should be subjected to service tax recoverable from the Appellant with interest and penalty or not - whether the Appellant was rendering any services to the PMT-JV, of which it was a constituent member? - October 2013 to June 2017 - extended period of limitation - HELD THAT:- The issue has been dealt with earlier by Tribunal in the decision rendered in BG EXPLORATION PRODUCTION INDIA LTD VERSUS COMMISSIONER OF SERVICE TAX (AUDIT-I) MUMBAI [ 2020 (10) TMI 579 - CESTAT MUMBAI] in the case of the Appellant. This order arose out of the show cause notice dated 09.12.2015 and the order impugned in this appeal arises out of the show cause notice dated 16.04.2015. The charges levelled in the two show cause notice are identical - it was held in the case that It is found that it is parties to the production sharing contract who constitute a joint venture and that the Explanation below section 65B (44), intended to cover supply of services to a constituent of unincorporated associations or body of persons by the latter is not relevant to the present dispute. Further, the fulfilment of obligation to contribute to the capital of the joint venture is beyond the scope of taxation under Finance Act, 1994 as it does not amount to consideration. Under the Contract in question, the Central Government was to bring in its rights over the resources, while ONGC was to handle contracts and documentation, RIL was to manage financial and commercial requirements and the Appellant was vested with the responsibility of undertaking the technical operations. The man power deployed by the Appellant was in furtherance of its own interest as also that of the joint venture and not by way of any service to unincorporated joint venture. Also, the cost incurred by the Appellant for this purpose was its capital contribution to the joint venture and it cannot be said that consideration was received by the Appellant for arranging man power - The equity brought in by the co-venturer, in this case by making available man power, cannot be considered as a service rendered to the unincorporated joint venture. It is this capital contribution along with the capital contribution made by others which forms the hotchpotch of the unincorporated joint venture. There is no dispute that the joint venture in the present case has been constituted in terms of the Contract, which is a contractual arrangement between the Government of India, the Appellant, ONGC and RIL. The said joint venture was entered into for maximizing the extraction of crude petroleum/natural gas from the identified blocks and to share the profits from the venture - it is clearly impermissible to hold that the contribution made by a co-venturer (partner) in the course or furtherance of the joint-venture is a service rendered to the joint venture for a consideration. It is not in dispute that in a partnership or a joint venture, whatever a partner does for the furtherance of the business, he does so also for advancing his own interest, as he has a stake in the venture. All the resources contributed by the partners enter into a common pool required for running of the enterprise. There is no contractor-contractee or principal-agent relationship between the co-venturer and the joint-venture, which is a pre-requisite for a service to be liable to tax under the Finance Act. It can safely be concluded that the Government of India with the Appellant, RIL and ONGC had entered into a joint venture agreement, whereunder each co-venturer had its own set of obligations and the responsibility discharged by each of the co-venturers towards the venture was not by way of any service rendered to the joint venture, but in their own interest in furtherance of the common objective of the joint venture. Service tax liability, therefore, could not have been fastened upon the Appellant. Extended period of limitation - HELD THAT:- It is not necessary to examine the contention of the Appellant regarding the invocation of the extended period of limitation. Appeal allowed.

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• 2021 (10) TMI 304
  Non-payment/short payment of service tax - works contract services provided to Rajasthan Rajya Vidyut Prasaran Nigam Ltd., a State PSU - time limitation - exemption to commercial nature of building - applicability of circular no.12/2012-ST read with exemption notification no.25/2012-ST - HELD THAT:- No case of contumacious conduct or conscious breach of law is made out in the facts and circumstances. Revenue has raised the demand in the show cause notice, which has been found to be misconceived by the Commissioner (Appeals), as the appellant was entitled to exemption. Further, the services rendered to the Government Companies post 30.06.2012, being of non-commercial nature, was also exempt under Notification No.25/2012-ST - all the demand of tax and penalties are fit to be set aside. Amount paid as tax is Revenue deposit, and directed to be refunded with interest (from the date of deposit till date of refund @ 12% P.A) - All penalties are set aside - Appeal allowed.

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• 2021 (10) TMI 302
  Validity of SCN - demand of service tax on GTO/GTA services received by the appellant - reverse charge mechanism - Section 73 of FA - refund of service tax paid under protest which have been demanded vide the SCN pending adjudication - HELD THAT:- The issue of levy of service tax on GTO service, on the receiver of service under reverse charge mechanism was held ultra virus by the Hon ble Supreme Court in the case of L. H. Sugar [ 2005 (7) TMI 106 - SC ORDER ]. It was categorically held that person required to file return under Section 71A of the Act was not covered under Section 73, as it stood on the date of issuance of the show cause notice. It is admitted fact that the appellant have taken service tax registration and are filing the periodical returns regularly. The appellant have maintained proper books of accounts in the normal course of business. Hon ble Supreme Court in case of Laghu Udyog Bharati [ 1999 (7) TMI 1 - SUPREME COURT ], have held the provision of levy under reverse charge basis, as per Rule 2(1)(d) of the Service Tax Rules in the case of GTO service, as ultra virus the Finance Act, 1994. Accordingly, in these facts and circumstances and in view of the law pronounced by the Apex Court, it is held that the extended period of limitation cannot be invoked, as admittedly the show cause notice have been issued after the normal period of limitation. Further, whole proceedings and the show cause notice is ab initio void in view of the ruling of the Hon ble Supreme Court. The revenue is directed to grant refund of the amount of Rs. 43,89,613/- to the appellant (paid under protest) with interest @ 12% per annum for the period from 08.11.2003 till the date of payment, within a period of sixty days from the date of receipt/ service of the copy of the order - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (10) TMI 320
  Area Based exemption - substantial exemption - N/N. 1/2010 dated 06.02.2010 - HELD THAT:- It appears that the petitioner has availed the Budgetary Support Scheme, which is now sought to be recovered by way of a Demand Notice dated 28.11.2019. The reason behind issuing the Demand Notice is stated to be a misunderstanding by the official respondents that the petitioner-unit was entitled to avail the benefits for a period of 10 years commencing from 2009 which period would end in 2019. Notice - List again on 18.11.2021.

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• 2021 (10) TMI 317
  Maintainability of appeal - monetary amount involved in the appeal - CENVAT Credit - input services - transportation charges incurred by the manufacturer for clearance of final product from place of removal, up to 01.04.2008 - varying interpretation of the term nput service in various decisions - HELD THAT:- The learned Senior Standing Counsel for the appellant submitted a letter to the Registry stating that this appeal may be permitted to be withdrawn on the ground of Low Tax Effect, as per the monetary limits fixed by the National Litigation Policy. The letter circulated by the learned Senior Standing Counsel is placed on the record and this Civil Miscellaneous Appeal is dismissed as withdrawn. Consequently, the Substantial Questions of law are left open.

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• 2021 (10) TMI 307
  CENVAT Credit - exempted product/by-product - Silica Sand and Ball Clay - common input service is used for mining of Lignite as well as Silica Sand and Ball Clay (taxable as well as exempt goods) - applicability of Rule 6 of Cenvat Credit Rules, 2004 - HELD THAT:- The main contract is for mining of Lignite while doing the excavation to achieve Lignite, the over burden has to be removed and this over burden constitute Silica Sand and Ball Clay etc., thereafter the Lignite is excavated. With this it is clear that to excavate the Lignite unavoidably upper layer has to be removed and, in that process the said by-products are also removed. Therefore, from the nature of mining of Lignite as discussed above, it is clear that the Silica Sand and Ball Clay are generated unavoidably which is inevitable. Any input/input services contained in any by-product/waste/refuse, Cenvat Credit cannot be varied or denied. With this logic demand under Rule 6 in respect of by-product is not applicable - Once it is established that the product in question are by-product then it is settled in respect of by-product demand under Rule 6 will not sustain. Accordingly, in the present case also, Silica Sand and Ball Clay being a by-product, no demand under Rule 6 shall sustain. Appeal allowed - decided in favor of appellant.

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• 2021 (10) TMI 300
  Clandestine removal - shortage of raw material and excess of finished goods - entire case was made out on the basis of Income Tax investigation - no corroborative evidence produced - HELD THAT:- There is no dispute that show cause notices were issued and demand was confirmed only on the basis of investigation carried out by Income Tax department. On physical stock taking by the Central Excise department, no difference was found. Since the entire case was made out on the basis of Income Tax investigation and no independent evidence was brought on record by Central Excise department, the demand cannot be sustained. In a common investigation by the department, another case was made out against one of the units of the appellant, wherein this Tribunal considered the same set of facts and legal position relying on the judgments in the case of Ravi Foods Pvt. Limited vs. CCE, Hyderabad [ 2010 (12) TMI 290 - CESTAT, BANGALORE] where it was held that The adjudicating authority having not given any positive findings as regards the clandestine manufacturing and clearance of the goods, in itself would indicate that the said charges as alleged against the appellants were not proved. Appeal allowed - decided in favor of appellant.

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• 2021 (10) TMI 296
  CENVAT Credit - input services - employee compensation insurance service - period from May 2015 to April 2016 - denial of credit on the ground that the said service cannot be considered as an input service w.e.f. 01.04.2011 - HELD THAT:- The phrase input service defined under Rule 2 (l) ibid has specifically excludes the life/health insurance taken by the employer for the personal use or consumption of any employee. In this case, it is not the case of Revenue that the insurance service was meant primarily for personal use by the employees. Rather, the insurance policy in this case was taken by the appellant in respect of its employees as per the statutory mandates provided under the Employee s State Insurance Act, 1948 and the Workmen s Compensation Act, 1923. Larger Bench of this Tribunal in the case of DHARTI DREDGING AND INFRASTRUCTURE LTD VERSUS COMMISSIONER OF CENTRAL TAX, SECUNDERABAD GST [ 2021 (4) TMI 853 - CESTAT HYDERABAD] , by relying upon the judgment of Hon ble Madras High Court in the case of M/S. GANESAN BUILDERS LTD VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI-II [ 2017 (7) TMI 720 - CESTAT CHENNAI] has held that the intention of the insurance policy is to protect the employees who work at the site and not primarily for personal use or consumption of the employee and thus, the premium paid by the employer on such service should be considered as input service. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (10) TMI 322
  Violation of principles of natural justice - Rejection of petitioners application for rectification of the assessment order - adequate hearing before the Assessing Officer passed in order of assessment or not - HELD THAT:- The petitioner has gone on affidavit stating that no such notice was received by the petitioner after 23.11.2020. Even, otherwise, it is difficult to believe that a company which was duly represented by the legal representative virtually on all previous hearing dates would suddenly abandon the assessment proceedings and incur the risk of substantial ex-parte liability arising against it - in facts of the present case the assessee deserves an opportunity of making further arguments before the Assessing Officer. It is well known through series of judgments of the Supreme Court that where there is clear breach of principles of natural justice, availability of alternative remedy would not prevent the High Court from exercising this jurisdiction - the case of the department appears to be that office value is nothing but the value of the goods indicated in the transport permit granted from time to time. If that be so, surely the petitioner cannot claim surprise about the contents of such permits granted by the department. However, if the department wishes to rely upon any other documents or material which is not within the knowledge or possession of the petitioner, the principles of natural justice require that the same must be provided to the petitioner before it can be used against it. The order rejecting the petitioner s application for rectification does not survive. The assessment proceedings are revived and restored to file of the Assessing Officer - Application disposed off.

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• 2021 (10) TMI 319
  Waiver of arrears of tax - inter-State sales of Bengal Gram, Dalls and Pulses - non-production of C Declaration Forms, prescribed under the Central Sales Tax Act, 1956 - HELD THAT:- No doubt, the assessment orders in respect of the relevant Assessment Years have become final. However, in terms of G.O.Ms.No.347 Revenue (CT-II) Department, dated 17.03.2008, G.O.Ms.No.38 Revenue (CT-II) Department, dated 24.01.2013 and the Government Memo Nos.26197/CT-II(1)/2013 dated 10.05.2016 and 27.09.2016, the Government had extended the benefit of waiver of collection of tax to dealers in respect of inter-State sales in Dalls and Pulses above 2%/3% in the event of non-production of C Declaration Forms, however, subject to satisfying conditions laid down in Memos dated 10.05.2016 and 27.09.2016 - The petitioner appears to have submitted certain documents under the cover of letter dated 16.05.2016 with regard to waiver of tax relating to Assessment Years 2011-2012, 2012-2013, 2013-2014, 2014-2015. Although, it is averred in the counter that the petitioner did not submit relevant documents in terms of Government memos dated 10.05.2016 and 27.09.2016, no order rejecting plea of the petitioner for waiver is placed before this Court. The Writ Petition is disposed off giving opportunity to the petitioner to file a fresh representation seeking waiver of collection of taxes for the Assessment Years 2011-2012, 2012-2013, 2013-2014, 2014-2015, in terms of G.O.Ms.No.347 Revenue (CT-II) Department, dated 17.03.2008 G.O.Ms.No.38 Revenue (CT-II) Department, dated 24.01.2013 and the Government memos Nos.26197/CT-II(1)/2013 dated 10.05.2016 and 27.09.2016 along with relevant documents in support its case, within a fortnight from the date - petition disposed off.

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• 2021 (10) TMI 318
  Works contract - deemed assessment under Section 22(2) of TNVAT Act - dealer obtained what is known as S Certificate - non-filing of evidence for completion of work executed - request for revision under Section 22(6)(a) of TNVAT Act, but this was declined on the ground that the order was not made under Section 22(4) - HELD THAT:- This Court reminds itself of the most recent judgment of Hon ble Supreme Court din THE ASSISTANT COMMISSIONER OF STATE TAX AND OTHERS VERSUS M/S COMMERCIAL STEEL LIMITED [ 2021 (9) TMI 480 - SUPREME COURT ] rendered by a Hon ble three member Bench and penned by Hon ble Dr Dhananjaya Y Chandrachud. Dealing with alternate remedy in fiscal statute, Hon ble Supreme Court neatly and nicely culled out the exceptions to the alternate remedy rule qua fiscal statute matters and held that only in cases where exceptions are attracted it would be justified to exercise writ jurisdiction. Impugned order is assailed on points predicated on mixed blend of facts and law which at best qualify as grounds of appeal and fail to pass muster qua being persuasive enough for exercise of writ jurisdiction on the teeth of alternate remedy in fiscal law Statutes. To be noted, the points raised in having assailing impugned order (notwithstanding very many averments in writ affidavit) have been captured and set out - it is deemed appropriate to not to dilate further on this, more so as the exceptions as culled out by Hon ble Supreme Court have been reiterated and are reproduced supra. Therefore, this is a fit case to relegate the writ petitioner to the alternate remedy of statutory appeal under Section 51 of TNVAT Act. Petition dismisssed.

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• 2021 (10) TMI 316
  Maintainability of petition - availability of alternative remedy of appeal - Validity of assessment order - HELD THAT:- Considering the fact that a Coordinate Bench vide in FIS PAYMENT SOLNS. SERVICES INDIA PVT LTD THRU. AUTH. SIGNATOR VERSUS STATE OF U.P. THRU. ADDL. CHIEF SECY. TAX REGISTRATION ORS [ 2021 (10) TMI 62 - ALLAHABAD HIGH COURT] , has dismissed the petitioner s petition bearing No. 20781 (MB) of 2021 against a similar order in similar circumstances relegating the petitioner to the remedy of appeal against the assessment order, we are of the opinion that the petitioner should prefer an appeal against the impugned order of assessment, but at the same time, the Tribunal should decide the Appeal No.02 of 2021, wherein it is said that the delay in filing the same has been condoned, within six weeks from the date a certified copy of this order is submitted before it. Parties are directed to cooperate in the matter. If an appeal is filed by the petitioner against the assessment order, the Appellate Authority is directed not to pass final order in appellate proceedings for a period of two months, so that the decision of the Tribunal is available for appropriate decision of the appeal - it is further provided that after a decision in the Appeal no. 2 of 2021 pending before the Tribunal, if the decision goes against the petitioner, it shall be open to the petitioner to approach this Court under Article 226 of the Constitution of India subject however to the discretion of this Court to entertain such writ petition or not to do so. Petition disposed off.

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• 2021 (10) TMI 315
  Maintainability of petition - availability of alternative remedy - Scope/subject matter of assessment - power to change the character of the transaction and while deciding the appeal - Section 9(2) of the Central Sales Tax Act, 1956 read with Section 22(2) of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- The issue involved in this appeal is squarely covered by the judgment in M/S. SAINT GOBAIN GLASS INDIA LTD. (NOW KNOWN AS SAINT GOBAIN INDIA PRIVATE LTD.) VERSUS THE APPELLATE JOINT COMMISSIONER (CT) , CHENNAI, THE DEPUTY COMMISSIONER (CT) -IV, LARGE TAXPAYERS UNIT [ 2021 (9) TMI 1181 - MADRAS HIGH COURT] . The legal issue which was decided in the said appeal was whether, the First Appellate Authority has power to change the character of the transaction and while deciding the appeal in terms of Section 52 of the TNVAT Act, he has power to confirm, reduce, enhance or annul the assessment or the penalty or both; set aside the assessment and direct the Assessing Officer to make a fresh assessment or pass such other orders as he may think fit; or in the case of any other order, confirm, cancel, or vary such order. Taking note of the said provisions, it was held that the Appellate Authority cannot travel beyond the subject matter of assessment. Petition allowed.

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• 2021 (10) TMI 313
  Scope of dealer as per section 2(15) of the TNVAT Act, 2006 - NBFC - sale of repossessed vehicle on behalf of the defaulter by the Petitioner/Appellant - liability of taxes under VAT Act on the sale of the Hypothecated Motor Vehicles - Petitioner/Appellant is a dealer even though the contractual agreements specifically states the Petitioner/Appellant is not the owner of the Vehicle or not? - Resale of Plant and Machinery, Furniture and Fittings and Fixed Asset by the Petitioner/Appellant which is used for the purpose of own business would fall within the meaning of sale and subject to VAT or not - confirmation of additions made to sale of Plant Machinery, Fixture, Furniture, air conditioner and gold/gold jewellery as part of business activity of the assessee? HELD THAT:- It is not in dispute that the identical questions of law were considered by the Division Bench of this Court, in which one of us (TSSJ) was a party, in the case of M/S. CHOLAMANDALAM INVESTMENT FINANCE COMPANY LTD. VERSUS THE STATE OF TAMIL NADU (REPRESENTED BY THE ASSISTANT COMMISSIONER (CT) , CHENNAI [ 2019 (9) TMI 1597 - MADRAS HIGH COURT] , wherein, the identical contentions were raised by the said petitioner, who was also a non-banking finance company - It was held in the case that The question, which was framed for consideration by the Division Bench was whether the bank, which holds the hypothecation of vehicles in their favour would be a dealer within the definition under Section 2(15) of the TNVAT Act, merely because, the bank seized and repossessed the hypothecated vehicle and brings it to sale. The Tax Case Revisions are dismissed.

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• 2021 (10) TMI 294
  Validity of assessment order - computation of surcharge - calculation was done before setting off of the entry tax against the OST payable - HELD THAT:- After the decision of the Supreme Court in COMMISSIONER OF COMMERCIAL TAXES OTHERS VERSUS M/S BAJAJ AUTO LTD. ANOTHER [ 2016 (11) TMI 31 - SUPREME COURT] , whereby it was held that surcharge is payable on the amount of the tax due under the OST Act before adjustment of the tax paid under the Entry Tax Act, the impugned order dated 20th February, 2017 was passed re-computing the surcharge payable in terms of the said judgment. It was re-computed as Rs. 17,00,448/- and together with interest Rs. 18,63,971/-. The total amount payable was determined for the year 2002-03 as Rs. 35,64,419/-. A demand of that date under Section 13(6) of the OST Act was also raised. In identical circumstances, this Court has in M/S. NEELAM MOTORS VERSUS DEPUTY COMMISSIONER OF SALES TAX, CT GST CIRCLE, BALASORE AND ANOTHER [ 2021 (9) TMI 205 - ORISSA HIGH COURT] quashed similar orders of re-computation of surcharge and the corresponding demand particularly when the orders pertaining to an Assessee were not challenged by the Department before the Supreme Court. In the said order this Court has held that the order in M/S. BAJAJ AUTO LTD. VERSUS THE DEPUTY COMMISSIONER OF SALES TAX, SAMBALPUR-II CIRCLE AND ANOTHER [ 2021 (3) TMI 1265 - ORISSA HIGH COURT] is inapplicable as the factual position there was different. Demand set aside - petition disposed off.

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• Indian Laws

• 2021 (10) TMI 309
  Dishonor of Cheque - search, seizure and production of income tax returns with books of accounts - application rejected on the ground that as per the complainant, they have not filed income tax returns, therefore there was no reason to believe that such document was in possession of the witness to invoke Section 91 of Cr.P.C. - HELD THAT:- Having regard to the huge amounts involved in the transaction and production of the income tax returns for only one year, proper opportunity should have been given to the accused to substantiate his defence and depriving of such right amounts to depriving him of fair trial. So far as the allegations of delay, no doubt the matter is pending since 2014. But the documents produced by the petitioner go to show that delay had occurred on account of the acts of both the parties. The accused to substantiate his defence had sought production of income tax returns and the audited balance sheets annexed to the income tax returns and not seeking prosecution of the complainant for violation of the provisions of the Income Tax Act. Therefore rejection of the application on such ground was not justifiable. Application under Section 311 of Cr.P.C to be recalled to show that the income tax returns for the years 2010-2011 produced by him was not genuine - HELD THAT:- The power to summon under Section 311 of Cr.P.C can be exercised at any stage of any enquiry or trial, or other proceedings also. Even in Mandvi Cooperative Bank Ltd. s case referred to supra the Hon ble Supreme Court held that there shall not be any compromise with the fair trial. The said judgment cannot be pressed into service to say that there is total bar to summon or recall the witnesses after the defence evidence is over. Therefore the trial Court shall consider the application under Section 311 of Cr.P.C. after response of the income tax authorities consequent to the summons issued to them under Section 91 of Cr.P.C. - However in the application under Section 91 of Cr.P.C. the only relevant documents are income tax returns and the annexures to the income tax returns and not the documents as sought in the application. The impugned orders of the trial Court dated 06.10.2018 and 20.11.2018 are hereby set aside. The application of the accused under Section 91 of Cr.P.C. read with Section 311 of Cr.P.C. is hereby partly allowed. The trial Court shall issue summons to the Principal Commissioner of Income Tax, Bengaluru for production of income tax returns of the complainant along with the annexures enclosed with the said returns for the years 2009-2010 to 2013-2014 - Petition allowed in part.

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• 2021 (10) TMI 293
  Dishonor of Cheque - unregistered Partnership - maintainability of complaint under Section 138 read with 141 of the Negotiable Instruments Act, 1881 - HELD THAT:- In the case in hand, the learned Magistrate while issuing the process, has personally verified the complaint; perused the documents filed alongwith it and after taking into consideration the statement of Complainant on oath and upon hearing, learned Advocate for the Complainant at length held that there were sufficient grounds for proceeding against the accused. It shows that the learned Magistrate has not only verified the complaint and heard the Complainants Advocates, but also perused the documents filed alongwith the complaint for obtaining satisfaction as to sufficiency of ground for proceeding under Section 202. Though the accused Nos. 1, 2 and 3 were residing at a place beyond the territorial jurisdiction of the learned Magistrate, and although he did not postpone the issuance of process, order issue process shows that learned Magistrate has obtained requisite satisfaction, from the documents available on record as to sufficiency of the grounds for proceeding under Section 202 against the accused. In view of this matter the impugned order in Criminal Revision Application No. 79/2019 is quashed and set aside. The issue process order passed by the learned Magistrate on 16th January, 2019 is upheld - Impugned order is quashed and set aside - Application allowed.

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• 2021 (10) TMI 290
  Validity of suit/case against the state president of a political party - though the petition has been filed for the offence u/s. 500 IPC, but curiously the summons have been issued by the court below directing the petitioner to appear in relation to an offence u/s. 138 of the Negotiable Instruments Act - non-application off mind - right of freedom of speech - Defamation - HELD THAT:- The fundamental right to freedom of speech gets ascendance over individual s perception of his own reputation and that the constitutional right cannot be curtailed by taking recourse to criminal jurisprudence - from the definition of Defamation it is evident that the words spoken or intended to be read or by signs or by visible representation, makes or publishes any imputation should be the basis on which the act of defamation could be held to be perpetrated. However, in the case on hand, though averment is made by the respondent in the private complaint filed u/s. 199 r/w 200 Cr.P.C., however, no material to substantiate the said act has been filed along with the said complaint, though it is the categorical averment of the respondent in the complaint that the words were spoken by the petitioner when the petitioner was addressing the print and electronic media. The complaint is a mere collection acts of the said to have been done by the political party and its President, but for the few lines of innuendos against the petitioner. The complaint is nothing but an attempt on the part of the respondent to gain political publicity at the cost of judicial time - in the present case, sub-section (6) of Section 199 IPC is the fulcrum of the case on which basis the private complaint has been lodged by the respondent, which has been taken cognizance of by the learned Magistrate. It is implicitly clear that the respondent has taken it on his own to file the private complaint on the basis of some statements alleged to have been made by the petitioner against some other person/entity with which he has no grievance as there is no case of defamation as against him and the ingredients prescribed under sub-section (6) to Section 199 Cr.P.C. in no way stands fulfilled. Therefore, the private complaint alleging defamation has no legs to stand and the cognizance taken on the said complaint deserves to be quashed. Though the complaint has been filed u/s. 199 r/w 200 Cr.P.C., for an offence u/s. 500 IPC, yet the court below, on taking cognizance of the case, has issued summons u/s. 138 of the Negotiable Instruments Act. This clearly shows that the trial court has not adverted to the material placed before it while taking cognizance of the case and the said act of the trial court, in issuing a notice u/s. 138 of the Negotiable Instruments Act for an offence alleged to have been committed u/s. 500 IPC, exhibits clear non-application of mind on the part of the court below - Petition allowed.

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• 2021 (10) TMI 289
  Dishonor of Cheque - acquittal of the accused - rebuttal of presumption - legally enforceable debt or not - whether the first accused is the wife of the second accused is liable under Section 138 of the Negotiable Instruments Act? - HELD THAT:- Once the drawer admits the signature of the cheque, it is presumed that the drawer had given the cheque for discharging a legally enforceable debt or liability. The drawer is given an option to rebut the statutory presumption by adducing positive evidence in the form of proof. The respondent was admitted a signatory in the covering letter (Ex. P1) issued along with her postdated cheque (Ex. P2). The signature and execution of the cheque by the respondent herein is not disputed and clear in view of the legal notice (Ex. P3) issued by the respondent herein just prior to the due date of the cheque - The trial Court has rightly come to the conclusion that the private complainant is entitled for presumption under Section 138 of the Negotiable Instruments Act and the respondent having failed to rebut the presumption has laid the conviction. On perusal of Ex. P1 has categorically stated that their pre-existing legally enforceable debt against the accused for the said amount of Rs. 2,30,400/- Ex. P2 was issued and hence in the absence of any suggestive case being probabilized by the respondent, the lower Appellate Court has wrongly construed and allowed the appeal and committed in error in setting aside the well considered judgment of the trial Court and hence, all the findings rendered by the lower Appellate Court are hereby stands vacated and that of the trial Court is restored. This Court holds that the conviction laid by the trial Court is restored. The order passed by the lower Appellate Court dated 10.11.2014 is set aside - Appeal allowed.

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• 2021 (10) TMI 288
  Dishonor of Cheque - acquittal of the accused - rebuttal of presumption - legally enforceable debt or not - failure to prove the cheque - HELD THAT:- There is no evidence as to when the vehicle was exactly seized, what was the condition of the vehicle and to whom it was sold, whether it was sold by auction or by any mutual agreement is not at all forthcoming. Hence, it appears that the complainant has managed the things amongst themselves and disposed of the vehicle. Complainant in the complaint nowhere asserted regarding seizure of the vehicle though PW. 1 claims that he has intimated the sale to accused No. 1 orally. The said contention cannot be accepted as the company is dealing with the matter and it is not accepted that company deals orally - it appears that the complainant has managed the things amongst themselves and disposed of the vehicle. Complainant in the complaint nowhere asserted regarding seizure of the vehicle though PW. 1 claims that he has intimated the sale to accused No. 1 orally. The said contention cannot be accepted as the company is dealing with the matter and it is not accepted that company deals orally. It is evident that the cheque dated 19.12.2013 is obtained by the complainant at the time of execution of the agreement Ex. P6 itself and it is a post dated cheque - The evidence on record disclose Ex. P1 when compared with Ex. P6, establish that it is the post dated cheque issued at the time of execution of Ex. P1. Even that apart, account statement itself discloses that no proper account is maintained and PW. 1 does not know anything about this. There is no evidence as to when exactly the vehicle was seized and admittedly no notice was issued to the complainant and after seizure, the hypothecation agreement came to an end and again the complainant wanted to proceed against the accused. However, when the vehicle was sold is also not forthcoming. Hence, it is evident that the documents produced by the complainant are not at all maintained in proper way and they have failed to establish legally enforceable debt to the tune of Rs. 3,60,000/- as referred in Ex. P1. Merely admission of signature of Ex. P1 does not assist the prosecution in proving the guilt of the accused. Though the presumption is in favour of the complainant, the evidence and cross examination of PW. 1 and the documents itself disclose that the presumption stands rebutted. No material evidence is placed by he prosecution in this regard. The learned magistrate has considered all these aspects in proper perspective and arrived at a just decision. Hence, the judgment of the trial Court does not call for any interference and it is sustainable under law. The Court places its appreciation on the record of the assistance rendered by the amicus curiae - Appeal dismissed.

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