TMI Tax Updates - e-Newsletter
November 1, 2021

Case Laws in this Newsletter:

Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. Reassessment in case of cash deposits -unnecessary litigation by ignoring ground realities causing harassment of small assesses and people having dealing with them.

   By: DEVKUMAR KOTHARI

2. Pre=deposit under section 107 of the CGST Act, 2017

   By: Sandeep Garg

3. BLOCKAGE OF ELECTRONIC CREDIT LEDGER CANNOT BE CONTINUED BEYOND ONE YEAR

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Sebi warns Vedanta over related-party transactions

2. On the eve of the G 20 Summit, India's Leadership on global concerns and its views on a wide array of issues receive strong support - Shri Piyush Goyal

Notifications

Customs

1. 88/2021 - dated 29-10-2021 - Cus (NT)

Amendment in Notification No. 82/2021-CUSTOMS (N.T.), dated 21st October, 2021

2. 87/2021 - dated 29-10-2021 - Cus (NT)

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

GST - States

3. S. R. O. No. 752/2021 - dated 16-10-2021 - Kerala SGST

Kerala Goods and Services Tax (Fifth Amendment) Rules, 2021

4. 1239-F.T. - dated 21-10-2021 - West Bengal SGST

Seeks to exempt WBGST partially or in full on specified medicines used in COVID-19, up to 31st December, 2021.

5. 1233-F.T. - dated 21-10-2021 - West Bengal SGST

Seeks to amend notification No. 1135-F.T. dated 28.06.2017 regarding rates of taxable services of job work services, manufacturing services etc.

6. 1232-F.T. - dated 21-10-2021 - West Bengal SGST

Seeks to amend Notification No. 440-F.T. dated 31.03.2021 regarding exemption of persons from Aadhaar authentication

7. 1231-F.T. - dated 21-10-2021 - West Bengal SGST

West Bengal Goods and Services Tax (Eighth Amendment) Rules, 2021

Income Tax

8. 127/2021 - dated 29-10-2021 - IT

U/s 10(46) of IT Act 1961 - Central Government notifies ‘Gujarat State Aids Control Society’ in respect of the specified income arising to that Society.

9. 126/2021 - dated 29-10-2021 - IT

U/s 10(46) of IT Act 1961 - Central Government notifies ‘Madhya Pradesh Pollution Control Board’ in respect of the specified income arising to that Board.

10. 125/2021 - dated 29-10-2021 - IT

U/s 10(46) of IT Act 1961 - Central Government notifies ‘Chandigarh Pollution Control Committee’ in respect of the specified income arising to that Committee.

Circulars / Instructions / Orders

DGFT

1. 32/2015-2020 - dated 29-10-2021

Amendment in Para 2.76 of Handbook of Procedures (HBP) of the Foreign Trade Policy (FTP) 2015-20 regarding export of SCOMET items from DTA to SEZ/EOU and outside the country

Customs

2. Instruction No. 22/2021 - dated 27-10-2021

Import of crushed and de-oiled GM soya cake - Relaxation in applicability of provision in Para 6 (b) of-General Notes Regarding Import Policy Schedule -I (Imports) of the ITC(HS) 2017, Schedule I(Import Policy)

Highlights / Catch Notes

Income Tax

• Court Overturns AAR; Trust Income Not Taxable in India per Income Tax Act & India-UAE DTAA.

  Case-Laws - HC : Recognition of TRUST - As can be seen from the definitions, the Trust created in terms of the deed of settlement is consistent with the requirements of both, the Indian Trusts Act as well as Trust (Jersey) Law, 1984 as to what constitutes a trust. - The AAR ruling has to be quashed. The income that accrues to the trust would not be chargeable to tax in India either by virtue of application of Section 61 read with Section 63 or on an application of Section 161 of the Act conjointly with the provisions of Article 24 of the India-UAE DTAA. - HC
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• Reassessment u/s 147 Can't Rely on Internal Audit Opinions, Courts Rule Against Audit-Based Reassessment Notices.

  Case-Laws - HC : Reopening of assessment u/s 147 - It is settled law that the opinion of the Internal Audit party of the Income Tax Department cannot be recorded as information within the meaning of section 147(b) of the Act for the purpose of opening the assessment. The courts have also held that notice of reassessment cannot be issued based on information received from audit objection - HC
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• Tribunal Overturns Prior Orders: No Legal Questions on Reimbursed Security and HVAC Charges in Profit and Loss Account.

  Case-Laws - HC : Addition of security charge reimbursed - Assessee failure to credit HV AC charges to P&L A/c - Having considered the breakup figures available in the P&L report and the clarification offered by the assessee, the Tribunal has rightly allowed the appeal setting aside the orders passed by the authorities. It is well settled law that these factual aspects having been considered by the Tribunal and on the finding of the Tribunal with respect to this factual aspects, no questions of law would arise. - HC
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• Assessee Granted 60% Depreciation Rate for Windows Software as per Rule 5, Income Tax Rules, 1962.

  Case-Laws - AT : Disallowance of excess depreciation on computer software - assessee had purchased software being operating system for Windows and claimed depreciation as per Rule 5 of IT Rules, 1962 @ 60% as applicable to computer and computer software. - AO directed to allow depreciation @ 60% as claimed by the assessee. - AT
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• Taxpayer's Prior Year Rental Expenses Allowed Despite Initial Disallowance; Genuine Expenditure Confirmed by Appeals.

  Case-Laws - AT : Disallowance of rental expenses - expenses relating to earlier year were not admissible - CIT(A) has incorrectly stated in his finding that assessee has only claimed the interest component and not claimed the rental expenses of earlier year - There is no doubt about the genuineness of the expenditure. - Claim allowed - AT
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• Taxpayer Eligible for Interest on Final Refund by ITSC u/s 244A: 'Any Amount Due' Includes Tax and Interest.

  Case-Laws - AT : Entitlement to interest u/s 244A - We find from perusal of provisions of section 244A of the Act that the said section does not draw any distinction between ‘tax’ and ‘interest’. It only uses the expression ‘any amount due’. Hence the final refund determined by the ITSC would fall within the ambit of the expression ‘any amount due’ in section 244A of the Act , thereby making the assessee eligible to receive interest u/s 244A of the Act thereon. - AT
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• Court Overturns CIT(A) Decision, Upholds Addition u/s 68 for Bogus LTCG Due to Unproven Transactions.

  Case-Laws - AT : Bogus LTCG - Addition u/s 68 - Statement of the assessee recorded during investigation leads to the irresistible conclusion that the assessee has not discharged his onus to prove that the entire transaction was genuine because it is incomprehensible that a person, assessee in this case, who is constantly in touch with the person since 25.06.2012 when he has purchased the scrips by making payment through undisclosed cash, then got the scrips dematerialized on 30.12.2013 only after legalizing the amount through IDS, 2016, thereafter he got the same amount returned and paid him the amount through cheque on 31.12.2013, but strangely stated that, “I do not particularly know the parties from whom or to whom he bought and sold the shares”. - CIT (A) has erred in deleting the disallowance made by the AO - AT
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• Penalty of 30% on Undisclosed Income Upheld After Assessee's Admission u/s 132(4) of Income Tax Act.

  Case-Laws - AT : Penalty proceedings u/s.271AAB - In this case, the assessee has admitted undisclosed income in the statement recorded u/s.132(4) of the Act and substantiates the manner in which undisclosed income was derived. Therefore, we are of the considered view that reasons given by the Assessing Officer to levy penalty of 30% of undisclosed income is in accordance with law - AT
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• Tax Authority Directed to Allow Long-Term Capital Loss Carry Forward; Denial u/s 94(7) Deemed Unjustified.

  Case-Laws - AT : Denial of carry forward of long term capital loss - When the he taxed the difference in amount under short term capital gain and also disallowed short term capital loss u/s. 94(7) of the Act, definitely, in our opinion, the AO should have allowed carry forward of differential amount under long term capital loss and for denying the same, in our opinion, is not justified. Therefore, we direct the AO to allow carry forward the difference of amount. - AT
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• Court Rules No Income Addition for Non-Deduction of TDS on Reimbursed Testing Charges u/s 40(a)(ia.

  Case-Laws - AT : TDS u/s 194C - Disallowance u/s 40(a)(ia) being the amount of expenses claimed under the head testing charges on the reason that the assessee has not deducted tax on such payment - The testing charges was made by the Government and the assessee has only reimbursed the expenses through the mode of deduction made by the Government out of running bills of contract - No additions could be made - AT
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• Income Adjustment Based on Incorrect Yield Comparison Challenged; Billets Misclassified by Assessing Officer.

  Case-Laws - AT : Addition on account of lower yield of production compared to industrial average - estimation of income based on average yield across the business @ 89% - the yield percentage as referred by the AO in the assessment year with which comparison has been made does not relate to SMS division as the billets have been mentioned in the table as raw material whereas billets are finished products of SMS division. It appears that AO has proceeded on misconception of facts. Thus, on this point too, the action of the AO is not justifiable. - AT
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• Ex-parte order u/s 144A: Odisha Cricket Association must submit documents to AO, including bank statements and funding details.

  Case-Laws - AT : Assessment u/s 144A - Ex-parte order - due to some unavoidable circumstances, voluminous documents and paper book were not filed before the AO - AO is also directed to call all relevant documents/evidences including copy of bank statement, copies of cheques/drafts, from the recipient of Odisha Cricket Association through which amounts were received by the Association and collect the entire correspondence and details of the persons/entity/company, who gave the impugned amount to the Orisha Cricket Association. The assessee is also directed to fully cooperate with the AO in the proceedings and did not take any unnecessary adjournment and also produce all the documentary evidences before him to substantiate its case. - AT
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Customs

• DRI's Authority to Issue Show Cause Notices u/s 28 of Customs Act Invalidated; Legal Authority Questioned.

  Case-Laws - HC : Jurisdiction - power of DRI to issue SCN u/s 28 of Customs Act - DRI are Proper Officers or not - availability of alternate remedy of appeal - In the present case, the entire proceedings are initiated by the respondent No. 2 - Joint Director, DRI, Mumbai, by issuing the show cause notice are invalid, without any authority of law and liable to be set aside and ensuing demands are also liable to be set aside. - HC
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• High Court to Consider One-Time Exception for Teak Wood Import Without Phytosanitary Certificate Under Clause 14.

  Case-Laws - HC : Seeking Relaxation for clearance of subject consignment on payment of necessary four times penalty charges for dispensing with the Phytosanitary Certificate - import of teak wood from the originating country called, Panama - Under Clause 14, it has been made clear that the powers for relaxation has been delegated to the Officer in-charge of the Plant Quarantine Station for relaxing the conditions of the said Order, 2003 as a one-time exception in favour of a single party and not for repeated violation by that party. - Matter needs to be verified, if no relief was granted earlier, one time relief to be gratned - HC
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• Excess Duty Payment Error Resolved After Initial Delay; Amendment Approved Following Apex Court Precedent.

  Case-Laws - AT : Seeking amendment in the bills of entry - excess duty payment by mistake - Had the Department considered the appellant’s request for amendment of its Bill of Entry then, perhaps, the alleged delay, etc. would not have arisen at all. The appellant had correctly and in line with the dictum of the Hon’ble Apex Court in the case of ITC Ltd. (Supra) requested for amendment and it was at the instance of the Department that a refund application was also filed. - Amendment allowed - AT
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Service Tax

• Excess Service Tax Refund Claim Hinges on Time Limitation; Appellant Challenges Unlawful Retention of Overpayment by Department.

  Case-Laws - AT : Refund of excess service tax paid - time limitation - In the present case, the refund arises out of excess payment. The excess payment can be ascertained only when the appellant files the ST-3 returns. When such facts are put into consideration, in strict sense, it cannot be said that there is a delay in filing the refund claim. It is an excess payment made by the appellant. Needless to say that the department cannot retain any amount which is not collected / paid under authority of law. - AT
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• Appellant Wins Tax Dispute: Car Parking Space Use Not Classified as 'Construction Services' Under Extended Limitation Period.

  Case-Laws - AT : Extended period of limitation - Classification of services - Right to use of car parking space or not - the Appellant has made out a case on limitation ground as the said service was introduced w.e.f. 01/07/2010 and there was no clarity as to the taxability of such amounts as received by the Appellant. Hence the Appellant was under a bona fide belief that since it was giving Right to use of car parking space, no tax is payable under the category ‘Construction Services’ - in the instant case of the Appellant, since the entire demand has been raised by invoking extended period of limitation, the same is set aside. - AT
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Case Laws:

• Income Tax

• 2021 (10) TMI 1271
  Rectification application u/s 254 - whether the order passed on an application under Section 254(2) of the Act is an order in appeal which is amenable to further appeal under Section 260-A? - HELD THAT:- As decided in M/S LACHMAN DASS BHATIA HINGWALA (P.) LTD [ 2010 (12) TMI 105 - DELHI HIGH COURT] no appeal lies under Section 260-A of the Act against an order rejecting the application filed under Section 254(2) of the Act. Therefore, in the absence of any statutory remedy against it, the writ petition is the only remedy, if any, available. Accordingly, the petitioner has rightly invoked the writ jurisdiction of the court so as to challenge the order dated 24th April 2009 passed by the tribunal. Denied benefit u/s 80IB on failure to produce evidence regarding consumption of electricity - The petitioner has not produced the requisite bills or payment vouchers to establish that electricity was consumed for the purposes of production and that payment thereof was duly made to the department. The mere obtaining a sanction for electricity connection was rightly not deemed to be a proof of the consumption of electricity. The submission that the petitioner has provided a certificate of electricity department to establish certain payment which was not considered by the authorities and, as such, the decision of the tribunal stands vitiated is completely misconceived and cannot be accepted. The petitioner in moving the rectification application has raised the above point and argued that a certificate from electricity department showing payment of Rs. 68,906/- for electricity consumption for the year 2004-2005 relevant to the assessment year 2005-2006 was produced, but a perusal of the said certificate itself as enclosed by the petitioner himself would reveal that the same was issued by the Department on 26th August 2009 much after the assessment order, the appellate order by the CIT (Appeals) and the order by the tribunal have been passed. Thus, a certificate issued subsequent to the culmination of the above proceedings could not have been produced before any of the authorities and in fact was not available on record. It could not have been filed even along-with the rectification application which was decided on 24th April 2009 as the certificate was issued on 26th August 2009. Petition dismissed.

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• 2021 (10) TMI 1270
  Recognition of TRUST - Taxability of the income accruing on the investments made or proposed to be made in the Indian portfolio companies by the Trust -taxability of income arising by virtue of revocable transfer of assets - Scope of AAR rulling - whether the capital contribution made / proposed to be made / transferred by ADIA to Green Maiden A 2013 Trust be treated as a revocable transfer for the purpose of Section 63 of the Act ? - Whether the entire income which may arise from the investments made by the Trust in Indian Companies (Portfolio companies) be chargeable to income-tax in the hands of ADIA as per Section 61 of the Act or be chargeable to income-tax in the hands of any other person as defined under the Act ? - as submitted trustee is entitled to receive income on behalf of the sole beneficiary, it should be considered as representative assessee of the sole beneficiary - reasoning given by AAR that the trust is registered in jersey, there is no treaty between India and Jersey and Section 61 and 63 of the Act would apply only to those trust which fall under the Indian Trust Act 1882 HELD THAT:- Nothing in Section 61 requires involvement of a trust in revocable transfer. Section 61 is plain and simple in as much as, it provides for income arising to any person by virtue of a revocable transfer of assets shall be chargeable to income tax as the income of the transferor and shall be included in his total income. Further Section 61 is not dependent on Section 63 of the Act. A transfer can be revocable transfer on its own merits without reference to Section 63 of the Act. Clause (a) of Section 63 of the Act merely extends the provisions of Section 61 of the Act to cases which might not otherwise be covered by Section 61 by extending the meaning of word revocable. The case of AAR that if the transaction does not qualify as a trust, the provisions of Section 63 and/or Section 61 are not applicable, is erroneous. In any event, under Section 63 there is no requirement that a trust covered by it must necessarily be an Indian trust falling under the Indian Trust Act. Such restriction which is not there in the Act cannot be imported into Sections 61 and 63 of the Act. As noted earlier, where such restriction is provided for the Act says so as noted in section 10(23FB) of the Act where it specifically provides that venture capital fund means a fund operating under the trust deed registered under the provisions of Registration Act, 1908. As can be seen from the definitions, the Trust created in terms of the deed of settlement is consistent with the requirements of both, the Indian Trusts Act as well as Trust (Jersey) Law, 1984 as to what constitutes a trust. Settlor cannot be a sole beneficiary - First of all the Act does not make any such provision. Secondly, there is no provision under the Indian Trust Act also which debars the settlor from being beneficiary. In the case of Bhavna Nalinkant Nanavati [ 2002 (1) TMI 48 - GUJARAT HIGH COURT] the settlor of the trust was also the sole beneficiary in the Deed of Settlement.In the present instance, the settlor is not the trustee but is the sole beneficiary which is clearly permissible. AAR s view that Sections 60 to 64 are designed to overtake and circumvent the counter design by a taxpayer to reduce its tax liability by parting its property in such a way that the income should no longer be received by him but at the same time he retains certain powers over property/income - In the case at hand, if ADIA had invested the amount directly, the income derived from such investment would exempted under Article 24 of India-UAE DTAA. ADIA has not created the trust to avoid tax and that is not AAR s case either. AAR says if ADIA had directly invested they would not have been liable to pay tax. AAR failed to understand why would someone not invest directly if the returns on such investment would be exempt from tax. AAR fails to appreciate that ADIA routed its investment on certain instruments through the trust only for commercial expediency. According to AAR the assessee s representative could not satisfactorily answer the query as to why ADIA routed its investments in non-convertible debenture funds through Jersey route for investment in Indian market and ADIA itself being an FII registered with SEBI could have directly invested in Indian Portfolios and taken advantage of Article 24 of India-UAE treaty. But the fact is ADIA has explained in detail in its letter dated 13th November 2018 and letter dated 25th September 2019 to AAR, why it routed its investment in non convertible debentures through Jersey route for Indian market. As regards the ground that Section 160(1)(i) or 160(1)(iv) of the Act, provides that trustee can be representative assessee but in this case trustee being a resident of Jersey cannot be an agent of ADIA, in our view that is not sustainable as the Act does not provide anywhere that only trustee who is resident of India can be an agent under Section 160 of the Act. Act presupposes that a Foreign Trust is a trust for the purposes of the Act. In Vikramsinghjit of Gondal [ 2014 (5) TMI 286 - SUPREME COURT] , the Apex Court has applied the provisions of Section 164 and 166 of the Act to tax the beneficiary of a trust settled in U.K. Even if, the trust is based out of Jersey and the trust is settled in Jersey, ADIA being the settlor and sole beneficiary of the trust and resident of UAE as per Article 24 of the India-UAE DTAA, the income which arises to it by virtue of investment in Indian Portfolio companies will be governed by the beneficial provisions of the India-UAE DTAA. As exemption under Article 24 of India-UAE DTAA would be attracted. Even if for a moment we say that for any reason the provisions of Section 61 are not applicable, then also the trustee can only be assessed in a representative capacity and, accordingly the provisions of Section 160(i)(iv) will be applicable. Therefore, even if the income is taxed in the hands of the trustee in terms of Section 161(1), it will be taxed in the like manner and to the same extent as the beneficiary. Once again, ADIA is the sole beneficiary of the trust, the income assessed in the hands of the trustee will take colour of that of ADIA s income and thereby, the benefit of India-UAE DTAA must be granted. So long as the settlor has a right to reassume power over the assets settled, the same would amount to revocable transfer. In the facts of the case at hand, ADIA could reassume the power and hence the contribution to the trust was a revocable transfer thereby making the income arising to the trust taxable in the hands of ADIA which was exempt under Article 24 of India-UAE DTAA. The tax liability of a trust has to be determined by applying the provisions of the Act alongwith the provisions of India-UAE DTAA and not apply the law as applicable in Jersey. The ruling dated 18th March 2020 has to be quashed. The income that accrues to the trust would not be chargeable to tax in India either by virtue of application of Section 61 read with Section 63 or on an application of Section 161 of the Act conjointly with the provisions of Article 24 of the India-UAE DTAA. Since we have quashed the Ruling dated 18th March 2020 of the AAR, the steps taken in furtherance of the Ruling order passed therein are also quashed and set aside.

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• 2021 (10) TMI 1269
  Revision u/s 263 - Dis-allowance of additional depreciation u/s 32(1)(iia) - Claim of assessee was rejected in the year under consideration by order under Section 263 of the Act, since no new plant and machinery was put to use in that Assessment Year - ITAT allowed the appeal relying upon the judgment of Rittal India (P) Ltd. [ 2016 (1) TMI 81 - KARNATAKA HIGH COURT] HELD THAT:- The judgment of Rittal India [ 2016 (1) TMI 81 - KARNATAKA HIGH COURT] has been considered by this Court in an unreported order in M/s. Godrej Industries Ltd. [ 2018 (12) TMI 64 - BOMBAY HIGH COURT] - This Court in Godrej Industries Ltd. [ 2018 (12) TMI 64 - BOMBAY HIGH COURT] has also relied upon the judgment of T. P. Textiles Pvt. Limited [ 2017 (3) TMI 739 - MADRAS HIGH COURT] wherein Madras High Court has considered the additional proviso which was inserted to Section 32(1) (iia) of the Act and has also concurred with the view of the Madras High Court that said newly added third proviso to clause (ii) of subsection 1 of Section 32 of the Act being clarificatory in nature would apply to case covering past period also. In our view, ITAT has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raised any substantial question of law.

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• 2021 (10) TMI 1266
  Reopening of assessment u/s 147 - reopening of assessment has been decided only because of audit objections - HELD THAT:- Compulsory scrutiny of the record has revealed, there was a statement of income but reopening has been because of audit objection. We have also noted that Assessing Officer had taken a stand contrary to the view expressed in the audit objection and had even addressed a letter to the Director of Audit intimating that objections raised by audit authority were not acceptable. Nevertheless the Assessing Officer reopened and issued notice under Section 148 of the Act. It is settled law that the opinion of the Internal Audit party of the Income Tax Department cannot be recorded as information within the meaning of section 147(b) of the Act for the purpose of opening the assessment. The courts have also held that notice of reassessment cannot be issued based on information received from audit objection. No substantial question of law.

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• 2021 (10) TMI 1265
  TDS u/s 195 - Demand u/s 201(1) and u/s 201(1A) - DTAA between India and UAE - as argued all the replies given by petitioner to show cause notices issued have not been considered and dealt with in the impugned order - as stated show cause notice does not refer to this issue and petitioner has not been called upon to show cause why it should not be held that petitioner was dependent PE for PDR Solutions UAE etc. - HELD THAT:- Issuance of a show cause notice is the preliminary step which is required to be undertaken. The purpose of show cause notice is to enable a party to effectively deal with the case made out by respondents ( See Om Shri Jigar Association Vs Union of India [ 1994 (5) TMI 24 - GUJARAT HIGH COURT] In the circumstances, without making any observations on the merits of the case, we are quashing the impugned order dated 30th March 2021 and any consequential demand notice issued therein and remand the matter to respondent no.1 to pass fresh orders after hearing petitioner. If respondent no.1 feels need to add any further points in the show cause notice, respondent no.1 shall issue fresh show cause notice to petitioner and petitioner may respond to the said show cause notice. We keep open all rights and contentions of the parties including petitioner s right to raise the issue of limitation.

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• 2021 (10) TMI 1263
  Deduction u/s 80P - AO has come to a conclusion that the assessee cannot be treated as a Co-operative society meant only for its members and providing credit facilities to its members - Whether the appellant is a primary co-operative bank and that the appellant is not entitled for deduction u/s.80 P(2)(a)(i) ? - Tribunal held that even if the assessee is not found to be a Co-operative Bank, the factual aspects requires to be analysed and thereafter final decision has to be made - HELD THAT:- The Hon ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] considering the expression member as defined in Section 2(l) of the Kerala Co-operative Societies Act, 1969 and the said Act expressly permitting loans to non-members under Section 59(2) and (3), held that loans given to nominal members would qualify for the purpose of deduction under Section 80P(2)(a)(i) of the Act. In the wake of this judgment, the matter requires re-consideration by the Assessing Officer with reference to Section 2(f) and 60 of the Karnataka Co-operative Societies Act, 1959 read with Section 80P(2)(a)(i) of the Act. The order of the Tribunal impugned being adjudicated and this Court having formed an opinion that the matter requires re-consideration, the consequential order of assessment has to be set aside. Alternative remedy of statutory appeal is not a bar in the circumstances of the case. For the aforesaid reasons, without answering substantial questions of law, we set aside the orders impugned and restore the matter to the file of the Assessing Officer to re-consider the matter in the light of the observations made hereinabove.

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• 2021 (10) TMI 1262
  Addition of security charge reimbursed - Assessee failure to credit HV AC charges to P L A/c - tribunal has set aside the disallowances made by assessing authority - Substantial question of law - Denial of natural justice - whether tribunal is right in law in allowing relief to assessee on the basis of fresh materials brought on record before Tribunal ? - no opportunity was provided to the AO to examine the material evidence furnished before the Tribunal for the first time - HELD THAT:- Revenue challenge that no opportunity was provided to the Assessing Officer to examine the material evidence furnished before the Tribunal for the first time does not holds water for the reason that it was admitted by the CIT(A) as well, that the assessee has provided clarification in rectification proceedings under Section 154 of the Act before the Assessing Officer which came to be disposed of. If such material evidence was placed before the Assessing Officer even in the proceedings under Section 154 of the Act, regarding entries in P L A/c, the same being available, CIT(A) under hyper technicalities ought not to have confirmed the addition of HV AC charges on the premise that no documentary evidence was placed to substantiate the same. Tribunal is the last fact finding authority, irrespective of the material evidence examined by the authorities, the Tribunal is equally competent to examine the material evidence placed before it. Having considered the breakup figures available in the P L report and the clarification offered by the assessee, the Tribunal has rightly allowed the appeal setting aside the orders passed by the authorities. It is well settled law that these factual aspects having been considered by the Tribunal and on the finding of the Tribunal with respect to this factual aspects, no questions of law would arise. It is apt to refer the judgment of this Court in Soft Brands India (P) Ltd. [ 2018 (6) TMI 1327 - KARNATAKA HIGH COURT] wherein it has been held that the finding of the Tribunal being one of the fact which has not been shown to be perverse, that unless the perversity in the finding of the fact is established before the High Court, no Substantial Questions of law arises for consideration under Section 260(A)

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• 2021 (10) TMI 1261
  Deduction u/s 57(iii) - interest paid to the bank - establish the nexus for claiming the deduction under Section 57(iii) with the borrowed fund - HELD THAT:- It is discernable that the Tribunal has dismissed the appeal solely on the ground that the Annexure/Schedule mentioned in the agreements placed on record by the assessee were not made available to decide the issue of deduction under Section 57 (iii) of the Act. As such, we are of the considered opinion that providing one more opportunity to the assessee to furnish the details would not prejudice the rights of the Revenue. Given the circumstances, we set aside the order impugned and remand the matter to the Assessing Officer to provide an opportunity to the assessee to furnish the Annexure/Schedule mentioned in the agreements in support of her claim made, without answering the substantial questions of law raised. The impugned order passed by the Income Tax Appellate Tribunal, Bengaluru Bench C , Bengaluru, is set aside. The matter is remanded to the Assessing Officer for reconsideration keeping open all the rights and contentions of the parties.

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• 2021 (10) TMI 1260
  Delayed deposit of ESI/PF u/s 36(1)(va) - HELD THAT:- It is an undisputed fact that though there has been delay in deposit of PF/ESI dues but it is also an undisputed fact that money collected from employees, have been deposited with the appropriate authorities before filing of return of income. We find that Delhi Bench of Tribunal in the case of Dee Development Engineers Ltd. [ 2021 (4) TMI 393 - ITAT DELHI] after considering the decision of Bharat Hotels [ 2018 (9) TMI 798 - DELHI HIGH COURT] has decided the issue in favour of the assessee - no disallowance u/s 36(1)(va) of the Act is called for in the present case. Decided in favour of assessee.

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• 2021 (10) TMI 1259
  Deduction u/s. 80IC - Rejection of books of accounts - estimation of income - HELD THAT:- As pertaining to the discrepancies in the financials of the assessee and has also given the details depicted by way of various charts which reflects the profits of the assessee in the preceding years as well as the profits of other related concern of the same group which were operating in the same field and even in the same geographical area and has reasonably estimated the profit of the assessee company, which cannot be faulted as perverse. As already agreed with the decision of the Ld. CIT(A) rejecting the books of account, book results and invocation of the provision of section 145(3) of the Act while disposing of the assessee s appeal - we do not find any infirmity in the order of the CIT(A) in estimating the income of the assessee. We note that from AY 2007-08 the assessee is eligible unit for deduction u/s. 80IC of the Act and, as discussed the estimation is made on the basis of relevant material and has been found by us to be reasonable in the facts and circumstances of the case. Therefore we uphold the impugned action of the Ld. CIT(A) giving partial relief to the assessee and also in the process confirming partly the action of AO. - Decided against revenue.

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• 2021 (10) TMI 1258
  Disallowance of excess depreciation on computer software - assessee had purchased software being operating system for Windows and claimed depreciation as per Rule 5 of IT Rules, 1962 @ 60% as applicable to computer and computer software. The AO restricted depreciation claimed on computer software @ 25% as applicable to intangible assets being patent, license etc on the ground that payment made by the assessee for acquiring license for software is nothing but an intangible asset - HELD THAT:- Computer software (whether canned form or uncanned form) is goods and a tangible asset by itself. Further Rule 5 of IT Rules, 1962 governing the rate of depreciation for software, has prescribed 60% depreciation on computer and computer softwares. Since, the assessee has purchased software like Windows, MS Office and other operating system which is embaded in computer system and thus, the same is construed as an integrated part of computer system which is eligible for depreciation @ 60% as claimed by the assessee, but not 25% as applicable to intangible asset as considered by the Ld. AO. Therefore, we are of a considered view that the AO as well as CIT(A) were erred in restricting depreciation on software to 25% as against 60% as claimed by the assessee. Hence, we direct the AO to allow depreciation @ 60% as claimed by the assessee. TDS u/s 195 - disallowance of payment made to a non-resident for purchase of software u/s. 40(a)(i) - assessee has purchased copyrighted software from a service provider from USA and assessee has not deducted TDS u/s. 195 for the reason that software license purchased from non-resident supplier is not in the nature of Royalty as defined u/s. 9(1)(vi) - HELD THAT:- In the case of CIT vs M/s. Dassault Systems Simulia P Ltd., [ 2021 (4) TMI 180 - MADRAS HIGH COURT ] had considered an identical issue and held that whether assessee had purchased only a right to use copyright, i.e., software and not entire copyright itself, amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not payment of royalty for the use of copyright in the computer software, and same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 were not liable to deduct any TDS u/s. 195 of the Act, 1961. In this case, the assessee has purchased software from supplier in USA and said software is a copyrighted article - payment made by the assessee for purchase of software to non-resident supplier is outside the scope of the definition of Royalty as defined u/s. 9(1)(vii) and thus, the assessee does not required to deduct TDS u/s. 195 and consequently, payment made for purchase of software cannot be disallowed u/s. 40(a)(i) of the Act for non-deduction of tax at source. Hence, we direct the AO to delete the additions made towards disallowance of payments made to non-resident for purchase of software. Assessee appeal allowed.

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• 2021 (10) TMI 1257
  Disallowance of rental expenses - expenses relating to earlier year were not admissible - HELD THAT:- The assessee society was required to pay rent and delayed interest which was paid by the assessee on 29th August, 2009. On the basis of this payment the district collector, Surendranagar has passed an order on 8th Sep, 2008 renewing the lease of the petrol pump land for further period of 15 years. CIT(A) has incorrectly stated in his finding that assessee has only claimed the interest component and not claimed the rental expenses of earlier year, after perusal of the material on record, we find that amount as comprised of lease rent and interest pertaining to lease rent and interest for the period 2003 to 2008. On perusal of material on record, it is categorically demonstrated that impugned expenses were crystallized during the year under consideration. There is no doubt about the genuineness of the expenditure. Having considered the material on record, we do not find any justification for the disallowance of the claim of the assessee without considering the relevant material fact that the impugned liability was crystallized during the year under consideration. Appeal of the assessee is allowed.

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• 2021 (10) TMI 1256
  Addition u/s 36(1)(va) - delayed deposit of employees contribution of EPF and ESI but paid before the due date of filing of return - HELD THAT:- It is an undisputed fact that though there has been delay in deposit of PF/ESI dues but it is also an undisputed fact that money collected from employees, have been deposited with the appropriate authorities before filing of return of income. Following the decision rendered in the case of Dee Development Engineers Ltd. [ 2021 (4) TMI 393 - ITAT DELHI] and for similar reasons hold that no disallowance u/s 36(1)(va) of the Act is called for in the present case. I therefore direct the deletion of addition. Thus the ground of assessee is allowed.

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• 2021 (10) TMI 1255
  Overriding effect of Insolvency and Bankruptcy Code over income tax act - National Company Law Tribunal under section 31 of the Insolvency and Bankruptcy Code 2016 overriding effect over anything inconsistent contained in the Income Tax Act - Effect of the order delivered by the National Company Law Tribunal, Kolkata Bench on 12.02.2018 approving the resolution plan on the proceedings in the case of the assessee for AY 2010-11 - HELD THAT:- The order passed by the National Company Law Tribunal under section 31 of the Insolvency and Bankruptcy Code 2016 has overriding effect over anything inconsistent contained in the Income Tax Act and it shall be binding on all the respective entities including other stakeholders, which include Central Government, State Government and other Local Bodies. As per the said order delivered in the case of the assessee-company affirming the Resolution Plan, all dues under the provisions of the Income Tax Act including taxes, duty, penalties, interest, fines, cesses, unpaid tax deducted at source/tax collected at source, whether admitted or not, due or contingent, whether part of above claim of income tax authorities or not, whether part of tax due diligence finding or not, asserted or unasserted, crystallized or un-crystallized, known or known, secured or unsecured, disputed or undisputed, present or future, in relation to any period prior to the acquisition of control by the resolution applicant over the company pursuant to this plan shall extinguished by virtue of the order of the adjudicating authority and the company should not be liable to pay any amount against such demand. All assessments or other proceedings pending in case of the company, on the date of the order of the adjudicating authority relating to the period prior to that date, shall stand terminated and all consequential liabilities, if any, should be deleted and should be considered to be not payable by the company by virtue of the order of the adjudicating authority. Post the order of the adjudicating authority, no reassessment/revision or any other proceedings under the provisions of the Income Tax Act should be initiated on the company in relation to period prior to acquisition of control by the resolution applicant over the Company pursuant to this plan shall stand extinguished by virtue of order of the National Company Law Tribunal and the assessee-company should not be liable to pay against such demand. Since the present appeal involving AY 2010-11 relates to the period prior to the acquisition of control by the Resolution Applicant over the company pursuant to this plan, all dues under the provisions of the Income Tax Act 1961 including taxes, duty, penalties, interest fines, cesses, etc. shall stand extinguished by virtue of the order of the National Company Law Tribunal and all proceedings including the appellate proceedings pending on the date of the order of the National Company Law Tribunal including the present proceedings relating to the prior period to the date of order shall stand extinguished and all consequential liabilities, if any, should be deleted and should be considered to be not payable by the Company. In the light of the order of the National Company Law Tribunal (NCLT) dated 12.02.2018 passed in assessee s case, we deem it fit to restore the case for the assessment year under consideration before us to Assessing Officer for taking necessary action in accordance with law

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• 2021 (10) TMI 1254
  Entitlement to interest u/s 244A - nature of amount of refund - refunds admittedly due to it by an order of the Hon ble Income Tax Settlement Commission, but granted to it after a delay of 98 months - HELD THAT:- Hon ble Apex Court in case of K.Lakshmanya Co. [ 2017 (11) TMI 589 - SUPREME COURT] had held that assessee was entitled to interest u/s 244A of the Act on a refund due to it on account of waiver by the ITSC of interest u/s 234A, 234B and 234C. We hold that the refunds finally determined by the ITSC in the instant case had been wrongfully retained by the department for a considerable period of time and hence department is bound to compensate assessee with interest u/s 244A of the Act. We find from perusal of provisions of section 244A of the Act that the said section does not draw any distinction between tax and interest . It only uses the expression any amount due . Hence the final refund determined by the ITSC would fall within the ambit of the expression any amount due in section 244A of the Act , thereby making the assessee eligible to receive interest u/s 244A of the Act thereon. In view of the aforesaid observations and placing reliance on various judicial precedents relied upon hereinabove including the CBDT Instruction and CBDT Circular we direct the ld AO to grant interest on refund from 14.7.2009 onwards till the date of granting refund for all the Asst Years under consideration. Accordingly, the grounds raised by the assessee are allowed.

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• 2021 (10) TMI 1253
  Revision u/s 263 by CIT - As per CIT no adequate inquiry was conducted by the Assessing Officer with regard to the nature of land as agricultural land and the applicability of Section 50C of the Act was also ignored - Whether the subject matter of agricultural land sold was a capital asset? - HELD THAT:- AO has raised the taxability of sale transaction under capital gain. The assessee also replied the above query by way of reply at clause no. 4 of letter dated 10.09.2016 alongwith copy of sale deeds. As submitted by the assessee before the Assessing Officer that 5 acres land was transferred to seller parties as per court s order. The Assessing Officer after perusal of documents, did not find taxability of the transaction. Thus, the finding of the PCIT that no inquiries have been carried out in respect of sale transaction is factually incorrect. Assessee got registered 11 acres 9 gunthas agricultural land on 11.03.2013 along with 5 other persons jointly in their favour and on same date, 5 acres and 29 gunthas of land transferred back to the seller party. In this transaction, even the land is treated as Capital Asset, there will not be any capital gain, the stamp duty value of purchase and sale being same on the day of transaction. Invoking of Section 50C - Relevant provision has been made effective from 01.04.2003, whereas agreement for purchase of land was entered into in the year 1984 (01.10.84) as per Para B of the compromise dead (English translate copy). The compromise deed was entered into on 13.03.2013 and the land has been returned back to the seller, which has been registered by ways of sale deed. Hence, provisions of section 50C are not applicable over the facts of the case. The required conditions for invoking the Section 263 read with Explanation 2(a) of the Act are not satisfied - Decided in favour of assessee.

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• 2021 (10) TMI 1252
  Exemption u/s 11 - denial of registration u/s 12AA - Proof of charitable activities u/s 2(15) - main/ primary object of the trust/ institution - whether activities undertaken by the assessee do not fall within the definition of Section 2(15) of the Act? - HELD THAT:- It is evident that the objects of the assessee trust meant for benefit of pharma dealers would undoubtedly fall within the fourth limb of Section 2(15) of the Act i.e. the advancement of any other object of general public utility which has been held to be very wide in its connotation in several judicial pronouncements noted above. The assessee society in the instant case is stated to be engaged in promotion of trade and commerce related to pharma business, protecting the rights and interests of its members, making its members aware about their duties, conducting seminars and workshops and organizing awareness camps and educating them about health and safety, cleanliness and also creating awareness about the legal provisions and duties and obligations under Income Tax Act and other laws to help them becoming a law abiding citizens. In this background, we are of the opinion that endeavors of the assessee society tantamounts to advancement of public utility and hence making such objects charitable in nature and susceptible to s.2(15). The object beneficial to a section of the public is also an object of general public utility. Hence, the case of the assessee gets covered in the fourth limb of Section 2(15) of the Act i.e. the advancement of any other object of general public utility . This being so, the assessee would be entitled to the benefit meant for charitable trust as contemplated in the scheme of the Act. Other objection of the CIT(E) that assessee society has purchased the land and distributed the same to its members by way of 99 years of lease - merely leasing of developed plots to its members on the basis of their respective contributions does not make the assessee ineligible for registration as a charitable entity per se. No merit in the contention of the CIT(E) that land purchased by the society is not appearing in the balance sheet. As pointed out on behalf of the assessee, the land purchased by the assessee society has been duly disclosed in the Schedule A Land and Land Development of the balance sheet and thus disclosed in a particular manner. While the assessee is a mutual concern and operating on the principles of mutuality, this by itself would not place any embargo for registration under s.12AA of the Act and to avail associated benefits under s.11 s.12 of the Act having regard to CBDT Circular No. 11/2008 dated 19.12.2008 coupled with the decision of All India Rubber Industries Association vs. Addl.CIT Ors. [ 2018 (10) TMI 1172 - ITAT MUMBAI] The objects of the assessee society when read in the light of judicial precedents expounding the law in this regard, the conclusion is inescapable that the objects of the assessee is for charitable purpose within the meaning of Section 2(15) of the Act and the assessee is entitled in law for registration under s.12AA - Decided in favour of assessee.

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• 2021 (10) TMI 1251
  Bogus LTCG - Addition u/s 68 - unaccounted share transaction - not eligible for exemption u/s 10(38) - legalize the unaccounted money through dubious method into white money - CIT-A deleted the addition - HELD THAT:- As the entire transaction as to purchasing and selling of 40,000 shares of M/s. Kappac Pharma Limited by the assessee company is genuine one routed through banking channel as well as SEBI, in the light of the fundamental facts that no man of ordinary prudence would invest in a company which is consistently in loss as per its annual report, the entire transaction is ingenuine. Transaction undertaken by the assessee for purchasing 40,000 shares were dubious from the very outset as assessee has purchased the shares with undisclosed money of Rs. 4,52,000/- by way of cash payment which he subsequently declared unaccounted in IDS, 2016 scheme and got the same legalized from Principal CIT. Thereafter, assessee took back the cash of Rs. 4,52,000/- from the seller and paid him cheque of the aforesaid amount on 31.12.2013 after getting the scrips dematerialized. During investigation when statement of assessee was recorded as to how he had paid the amount of Rs. 4,52,000/- and as to what is the name of the seller of the shares of M/s. Kappac Pharma Limited, he has given evasive reply making the entire transaction doubtful. Questions put to assessee during investigation and answers given thereto during his recording of statement u/s 131 Statement of the assessee recorded during investigation leads to the irresistible conclusion that the assessee has not discharged his onus to prove that the entire transaction was genuine because it is incomprehensible that a person, assessee in this case, who is constantly in touch with the person since 25.06.2012 when he has purchased the scrips by making payment through undisclosed cash, then got the scrips dematerialized on 30.12.2013 only after legalizing amount of Rs. 4,52,000/- through IDS, 2016, thereafter he got the amount of Rs. 4,52,000/- returned and paid him the amount through cheque on 31.12.2013, but strangely stated that, I do not particularly know the parties from whom or to whom he bought and sold the shares . Evasive reply coupled with undisputed fact narrated in the preceding para shows that the entire transactions as to purchasing and selling the shares of M/s. Kappac Pharma Limited by the assessee was not a genuine share trading transaction but has been given colour of share trading. Because the entire case is crystal clear from the undisputed facts brought on record by the assessee himself. And moreover assessee has failed to discharge the onus that the entire transaction was genuine even by suppressing the correct facts during recording of his statement u/s 131 of the Act. Entire transactions have to be examined in the light of the surrounding circumstances in order to unearth the bogus transactions of purchase and sale of shares. So, the assessee has failed to dispel all the suspicion raised by the AO to establish that the transactions in question were neither real nor beyond human probabilities. The case laws relied upon by the ld.AR for the assessee is not applicable to the facts and circumstances of the case. CIT (A) has erred in deleting the disallowance made by the AO on account of exempt LTCG claimed by the assessee u/s 10(38) of the Act, hence question decided in favour of revenue.

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• 2021 (10) TMI 1250
  Penalty proceedings u/s.271AAB - During the course of search operation assessee in his sworn deposition recorded u/s.132(4) had offered undisclosed income - As argued admission of undisclosed income without any reference to incriminating material does not warrant levy of penalty - HELD THAT:- The facts borne out from records clearly indicate that the assessee has undisclosed income, which was offered to tax in the sworn statement recorded u/s.132(4) of the Act. The assessee had also filed revised return and declared undisclosed income offered to tax during course of search and paid taxes. As per provisions of section 271AAB, penalty is mandatory, where the assessee has admitted undisclosed income during the course of search in the statement recorded u/s.132(4) of the Act and specifies manner in which such income has been derived. In this case, the assessee has admitted undisclosed income in the statement recorded u/s.132(4) of the Act and substantiates the manner in which undisclosed income was derived. Therefore, we are of the considered view that reasons given by the Assessing Officer to levy penalty of 30% of undisclosed income is in accordance with law and thus, we are inclined uphold order of the learned CIT(A) and dismiss appeal filed by the assessee.

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• 2021 (10) TMI 1249
  Assessment u/s 153A - addition of income from house property - Whether AO is not supposed to make assessment on the basis of estimation or on the basis of appreciation of material other than the seized material in respect of completed/unabated assessments in respect of years prior to the searched year? - HELD THAT:- In view of the decision of SINHGAD TECHNICAL EDUCATION SOCIETY [ 2017 (8) TMI 1298 - SUPREME COURT] wherein it has been held that for framing assessment u/s 153C of the Act, there must be an incriminating material relevant to that assessment year. For AY 2009-10 2010-11 AND 2011-12 2012-13 the assessment framed u/s 153C of the Act in this case is without jurisdiction and therefore, the same is bad in law. Further, no incriminating material was found for the assessment years AY 2009-10 and AY 2010-11. Therefore, as per the decision of the Hon ble Supreme Court, the notices issued u/s 153C of the Act in these appeals as well as consequent assessments framed u/s 153C of the Act are not sustainable in the eyes of law and the same are accordingly quashed. Assessment Year 2013-14 - A diary containing the rental income for the whole year was found during the search and seizure operation. The rent from nine rooms was noted in the aforesaid diary - The income recorded, in our view, is the full income of the year from the aforesaid property. Moreover, it is not necessary that all the rooms of the building will be occupied on all days during the entire year. Therefore, as per the incriminating material, the rental income for the year from the property in question was at Rs.39,12,500/-. The assessee having one third share in the said property, the rental income from the said property would be Rs.13,04,166/- upon which the assessee would be entitled to deduction at the rate of 30% u/s 24(1) of the Act. However, the assessee, for the AY 2013-14, has already offered an income of Rs.28,07,259/- which is more than the income that can be arrived at from the incriminating documents. We find force in the contention of the Ld CIT(A). AR that the assessee had offered the income in lumpsum of Rs. 1,80,00000/- which was bifurcated on approximation basis and that the excess income offered in an year may be adjusted against the year in which less income is found to have been offered. The additions made by the AO in respect of the aforesaid assessment year are set aside and it is directed that the taxes paid over and above the income of Rs. 1304166/- would be adjusted against other years for which the less taxes have been found to be offered. Assessment Year 2014-15 - After granting deduction u/s 24(1) of the Act, at the rate of 30% , the total income of the assessee during the year comes out at Rs.55,68,161/- whereas the assessee has offered the income of the year under consideration at Rs.31,44,095/-. Therefore, the addition to the extent of Rs.24,22,066/- is sustained for the assessment year under consideration. However, the assessee will be entitled to the adjustment of the taxes paid for the assessment years AY 2009-10, AY 2010-11, AY 2011-12, AY 2012-13 and of excess taxes paid for AY 2013-14 against the taxes due for the AY 2014-15 in view of the assessment quashed for A.Y. 2009-10 to A.Y. 2012-13 and additions sustained for A.Y. 13-14 as ordered above. Assessment Year 2015-16 - As in this case, admittedly no notice u/s 153C of the Act was issued to the assessee for the assessment year under consideration. Even otherwise, the return of income for the assessment year under consideration was filed by the assessee on 07.02.2016 i.e. within the standard period of filing of the return of income and as per the proviso to Section 143(2) of the Act, no notice could have been issued after the expiry of six months from the end of the financial year in which the return of income is furnished which expires on 30.09.2016. As the assessment framed was time barred. Moreover, no incriminating material was found during the year under consideration. Therefore, even otherwise, the assessment framed u/s 153C of the Act would be without jurisdiction. Under these circumstances, the return of income has to be accepted for the year under consideration. The additions made by the AO for the year under consideration are ordered to be deleted. Since the facts of the cases as well as the ownership rights in the property are same in case of both the assessees, therefore, our findings arrived herein would mutatis mutandis apply for the respective appeals for different years of both the assessees

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• 2021 (10) TMI 1248
  Computation of deduction u/s 10AA - exclusion of telecommunicating expenses and internet usage charges from the export as well as total turnover while computing deduction - HELD THAT:- As relying on M/S. IGATE GLOBAL SOLUTIONS LTD. [ 2019 (8) TMI 1226 - ITAT BANGALORE] DR did not bring on record any contrary view or order against the order of this Tribunal. Therefore, we hold that any amount reduced from export turnover should also be reduced from the amount of total turnover in the computation of deduction u/s. 10AA of the Act. Thus, ground raised by the assessee is allowed. Exclusion of expenditure on account of technical services from the export as well as total turnover while computing deduction u/s. 10AA - HELD THAT:- As relying on own case [ 2019 (8) TMI 1325 - ITAT PUNE] hold that any amount of foreign exchange expenses reduced from export turnover should also be reduced from the amount of total turnover in the computation of deduction u/s. 10AA of the Act. Thus, ground raised by the assessee is allowed. Onsite/deputation of technical manpower (DTM) software services not eligible for deduction u/s. 10AA - HELD THAT:- We note that, in assessee s own case i.e. IGATE Global Solution Ltd. as it was then in A.Y. 2007-08,[ 2019 (8) TMI 1226 - ITAT BANGALORE] on transfer, Pune Benches of ITAT discussed the issue in great detail and turned down the contention of Revenue that the income from onsite/DTM was not derived from export of computer software and is not qualified for deduction u/s. 10A/10AA of the Act. Further, the Co-ordinate Bench held that Explanation 3 is a deeming provision, which specifically brings profits and gains derived from on site development of computer software and services for development of software outside India within the meaning of the profits and gains derived from the export of computer software outside India which means that not only the profits and gains derived by the eligible undertaking from export of computer software are eligible for deduction but also profits and gains derived from onsite development of computer software and services for development of software outside India. The words derived from contained in sub-section (1) of section 10A is not an exhaustive provision and it has been further elaborated in sub-section (4) to mean the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking. The Co-ordinate Bench opined when there exists a direct link between the eligible undertaking and some income, the same is profit of the business of undertaking, even if may not be derived from the export of computer software etc. The proposition as enunciated by the Co-ordinate Bench in assessee s own case i.e. iGATE Global Solution Ltd, as it was the then, in A.Y. 2007-08 has been followed by this Tribunal in assessee s own case in A.Y. 2010-11[ 2020 (3) TMI 338 - ITAT PUNE] therefore, we hold that the income from onsite/DTM rendered abroad is considered to be derived from the export of computer software, is eligible for deduction u/s. 10A/10AA of the Act. Nature of gain - foreign exchange gain falls on capital account or revenue account - HELD THAT:- AO opined that the foreign operations are part and parcel of the overall company s operations and cannot be regarded as separate or independent operations and accordingly an amount being amount credited in the year under consideration as held as taxable - CIT(A) directed the AO to ascertain the amount of foreign exchange gain on capital account and on the revenue account and to delete the addition on account of furnishing of gain on capital account. It is clear from the impugned order that the ld. CIT(A) sent the mater back to the file of AO for making addition only in respect of foreign exchange gain on revenue account. The claim of the assessee is on the same line as has been directed by the ld. CIT(A) to be done, accordingly, we, therefore, dismiss the ground taken by the assessee. Disallowance of depreciation on goodwill - HELD THAT:- As the assessee acquired entity IT T Ltd. and taken overall net worth of its assets, totaling to Rs. 10,57,24,413/- which clearly evidenced in the financials of assessee in the Agreement at Page No. 8 of the paper book. Likewise, the assessee also shown the total consideration as goodwill under acquisition in the Balance sheet, therefore, we find the order of CIT(A) is incorrect in holding that no evidences showing acquisition in the F.Y. 2003-04. In the facts and circumstances of the case as discussed above, we find force in the arguments of the ld. AR that the assessee is entitled to claim depreciation on goodwill. Depreciation on goodwill only on the written down value of the goodwill starting from F.Y. 2003-04 onwards. The assessee placed on record a chartof the assessment order by which the opening written down value of the F.Y. 2003-04 at Rs. 105,724,413/- and after depreciation allowing @ 25% the closing written down value at Rs. 79,293,310/-. In the same way the written down value has been computed in each of the succeeding year and for F.Y. 2009-10 arrived at Rs. 14,112,506/-. Thus, it is well constitutes the opening written down value of goodwill for the F.Y. 2010-11 relevant to A.Y. 2011-12 i.e. the year under consideration. We, therefore, direct the AO to grant depreciation @ 25% on written down value of the goodwill at Rs. 14,112,506/-. Thus, ground No. 5 raised by the assessee is allowed for statistical purpose. Denial of carry forward of long term capital loss - AO observed that the said amount is net of short term capital loss and said short term capital loss is disallowable u/s. 94(7) - HELD THAT:- If we accept the interpretation rendered by both the authorities below, definitely, it would frustrate the object contemplated u/s. 80 of the Act. Section 80 of the Act explains that no loss which has not been determined in pursuance of a return filed shall be carried forward in accordance with the provisions of sub-section (3) of section 139 of the Act. Admittedly, there was no return of loss u/s. 139(3) of the Act as the assessee declared positive income u/s. 139(1) of the Act. Even then, in our opinion that when the AO found variation in long term capital loss he should have allowed carry forward of such loss in the assessment proceedings itself, because, When the he taxed the difference in amount under short term capital gain and also disallowed short term capital loss u/s. 94(7) of the Act, definitely, in our opinion, the AO should have allowed carry forward of differential amount under long term capital loss and for denying the same, in our opinion, is not justified. Therefore, we direct the AO to allow carry forward the difference of amount. Addition of foreign tax credit - HELD THAT:- We note that the CIT(A) directed the AO to obtain documents as required under Rule 128(8) of the Income Tax Rules and to give benefit of foreign tax credit. It is seen that the several issues came up for consideration in assessee s own case for A.Y. 2009-10. Since, the facts and circumstances of the instant ground are similar to those of the earlier years as discussed in the aforesaid order for A.Y. 2009-10 in the said impugned order and remit the matter back to the file of AO for re-deciding this issue in conformity with the relevant discussion given by the Tribunal in the said order. Needless to say the assessee shall be offered reasonable opportunity of hearing. Thus, ground raised by the assessee is allowed for statistical purpose. Deduction paid towards Education Cess under Finance Act while computing the taxable income - HELD THAT- The Hon ble High Court of Bombay in the case of Sesa Goa Ltd. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] was pleased to hold that the Education Cess is an allowable expenditure as per the provision of the I.T. Act - we direct the AO to allow deduction in respect of Education Cess paid by the assessee. Accordingly, the additional ground raised by the assessee is allowed. Disallowance u/s. 14A r.w. Rule 8D - Mandation of recording satisfaction - HELD THAT:- the contention of the ld. AR is that there was no satisfaction recorded by the AO as confirmed by the CIT(A) regarding the disallowance made by the assessee on its own is incorrect and we find that the AO categorically held that the disallowance made by the assessee is not accepatable, thereby, the submission of ld. AR is rejected. We find in the present case the AO clearly recorded is non-satisfaction regarding the disallowance made by the assessee on its own relating to exempt income and proceeded to invoke the procedure contemplated under Rule 8D of the Rule. Therefore, the contention of ld. AR that the finding of this Tribunal in assessee s own case for A.Y. 2011-12 is applicable to the year under consideration is rejected, therefore, we hold the facts in A.Y. 2011-12 in consolidated order of this Tribunal [ 2019 (3) TMI 1135 - ITAT PUNE] are not identical to the fact of the year under consideration. In view of the same, we hold the order of CIT(A) in this regard in holding that the AO did not record any satisfaction relating to the disallowance made by the assessee on its own is not justified. Thus, the order of CIT(A) is set aside in this regard and the order of AO is restored. Accordingly, ground raised by the Revenue is allowed.

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• 2021 (10) TMI 1247
  TDS u/s 194C - Disallowance u/s 40(a)(ia) being the amount of expenses claimed under the head testing charges on the reason that the assessee has not deducted tax on such payment - CIT(A) in his finding held that the assessee has not awarded any contract to any party for testing charges, in fact, the testing charges were deducted by the Government while making payment to the assessee on running bills raised by the assessee upon the Governmen - HELD THAT:- As contract agreement with terms and conditions for project of SSS. Canal with Government department wherein as per Clause 76 stated that deduction to be made toward testing charges from the running account bill of the contractor. No infirmity in the decision of the Ld. CIT(A) holding that testing charges was made by the Government and the assessee has only reimbursed the expenses through the mode of deduction made by the Government out of running bills of contract. Therefore, we do not find any merit in the ground of appeal of the Revenue and the same stand dismissed. Addition u/s 40(b) - remuneration to partner on the ground that remuneration of partner was not allowable on the amount of interest received on Fixed Deposit/SSNL Bonds which was treated as income from other sources -CIT(A) has allowed the appeal of the assessee - HELD THAT:- The assessee has claimed that interest on Fixed Deposit, interest on SSNL Fixed Deposit and interest on SSNL Bonds was made out of surplus funds available with the assessee and the interest income was part of the business income. Therefore, the same was correctly included for calculating remuneration of the partners. As in the case of CIT vs. J.J. Industries [ 2013 (7) TMI 577 - GUJARAT HIGH COURT] wherein it is held that interest from Fixed Deposit on spare funds cannot be excluded from book profit for the purpose of determining allowable deduction of remuneration paid to partners. After taking in to consideration the decision of Hon ble Jurisdictional High Court we do not find any error in the decision of the Ld. CIT(A), therefore, this ground of appeal of the Revenue is also dismissed.

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• 2021 (10) TMI 1246
  Revision u/s 263 by CIT - Addition u/s 68 - amount received in a different Financial year - verification of loan transactions - HELD THAT:- Assessee has vociferously pleaded before PCIT in the first instance that the so called list of shell co. by SEBI implicating lender (a privately held group co.), statement of some third party witness alleging such a privately managed company to be a shell company and all other material coming to the notice of deptt., which is basis for allegation of order being erroneous, must be confronted and made available to Assessee. Such material were admittedly never confronted to the assessee despite specific request. Pertinent here to observe that while it is fairly settled that substantive power enshrined in the Act cannot be ordinarily held hostage to procedural requirements, nonetheless, it bears to recall that procedure delineated in section 263 is a substantive provision and the provision explicitly requires the revisional authority to meet the mandate of principles of natural justice., an abiding characteristic of any administrative or quasi-judicial function in any case. The revisional order so passed, in the instant case, alleging existence of some adverse material without enabling the assessee to respond thereto and without giving any effective opportunity despite express demand is thus palpably fragile and requires to be treated as illegal. In the absence of adherence to salutary principles, the purported new material is rendered extraneous and hence required to be ignored as non est and consequently, the revisional action is required to be tested dohors such alleged material. The whole case of the PCIT built on such unintelligible and non-descript premise is thus a damp squib. On this score too, the revisional action fails. Looking from any angle, the directions towards verification of loan transactions are unsustainable in law and deserve to be quashed. The directions no. 1-4 are thus set aside. Applicability of Section 56(2)(viib) in respect of shares issued - We are unable to see any error in the action of the AO towards his endorsement on issue of shares at premium. The premium charged is demonstrated to be strictly as per the immediately last available audited and approved balance-sheet at the time of issue of shares. The action of the Assessee is thus on a sound basis. We find prima facie merit in the plea advanced for justification of the requirement of Section 56(2)(viib) of the Act. No abnormality is discernable in the admission of claim of the Assessee by the AO. On facts, the balance-sheet for the FY 2013-14 was stated to be signed on 29.08.2014, i.e. after the issue of shares on 30.07.2014 and, therefore, the stance of the assessee to adopt the figures as per last audited accounts of FY 2012-13 is plausible - AO has weighed these facts and has come to a reasonable conclusion. Valuation dynamics is contingent upon of plethora of factors such as market interest, feasibility, perception etc. and cannot be determined with a mathematical precision. It is often said that valuation is an art rather than a science. A meager difference in premium qua a book net-worth as per past balance-sheet would not, in our view, necessarily invite the deeming fiction in the larger context of its stated objects. Such course is certainly not decipherable under the shelter of revisional proceedings where the order has been passed in exercise of quasi judicial powers and carries legal effect. Such a tiny difference in valuation determined by a highly subjective exercise can not be said to be either erroneous or even prejudicial to the interest of revenue in it true purport. It is not permissible to PCIT to substitute a view taken by the AO which has a plausible basis. Applicability of Section 56(2)(viib) by the Revisional Commissioner is thus set aside. Applicability of Section 43CA in respect of sale deed executed below stamp duty value - A chart was placed before the PCIT also showing actual sale consideration and circled rate/stamp duty value - assessee thus contends that it was conclusively demonstrated before the PCIT that there exists no infringement of Section 43CA. The PCIT has not applied his mind to the demonstrable facts but has merely directed the assessee to re-verify the point in question. The action of PCIT does not appear tenable. The PCIT must have weighed the submissions of the assessee to remove any doubt entertained by him as per show cause. The points at the stage of show cause are ephemeral and rebuttable. The PCIT has not given any finding on the submissions made. No hesitation to set aside such action. Section 263 is not meant to conduct roving inquiry howsoever wide the amplitude of the powers may be. When a glaring and demonstrable fact has been placed before the PCIT to address his concern, the minimum that is expected of him is to look at the relevant facts. He cannot direct the Assessing Officer to make further inquiry/adequate inquiry without himself looking into the facts and carrying out some minimum inquiry to demonstrate the error. The mundane and perfunctory remittance of the issue to the file of the Assessing Officer cannot be approved. The action of PCIT is thus set aside and that of AO is restored. Applicability of Section 40A(3) in respect of payment for purchase of land - We straight away find substantial merit in the plea of the assessee that Section 40A(3) has no application in the facts of the case where the payment was made merely by way of advance and consequently not claimed as expenditure/deduction. The PCIT has not controverted the claim of the assessee that no expenditure has been claimed under the provisions of law towards advances made. Apparently, the provisions of Section 40A(3) does not apply to such transactions of mere advance without being claimed as expenditure. The genuineness of stamp-paper for execution of documents for advance payment is not relevant where no prejudice is caused to the revenue having regard to the fact that no expenditure has been claimed at all. The proposed directions are grossly opposed to the scheme of the revisionary powers. We thus see no merit, whatsoever, in this direction either. The whole set of directions given by the revisional order thus are thus marred in law and traveled beyond the mandate. - Decided in favour of assessee.

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• 2021 (10) TMI 1245
  Addition on account of lower yield of production compared to industrial average - estimation of income based on average yield across the business @ 89% - HELD THAT:- Whole basis for addition on account of alleged suppression of production in SMS/Furnace division is merely relying upon the conclusion drawn by the predecessor AO in the search assessment of the assessee, which was found to be unsustainable both by the CIT(A) as well as the ITAT in earlier years. We simultaneously note of the fact that the yield percentage of 97% referred by the AO in the assessment year with which comparison has been made does not relate to SMS division as the billets have been mentioned in the table as raw material whereas billets are finished products of SMS division. It appears that AO has proceeded on misconception of facts. Thus, on this point too, the action of the AO is not justifiable. In the light of the view taken by the co-ordinate bench in the case of assessee [ 2019 (11) TMI 922 - ITAT RAIPUR] , the issue is no longer res integra. It is evident that issue is squarely covered by the decision of the co-ordinate bench in assessee s own case for AYs. 2009-10 to 2012-13 wherein also the appeal of the Revenue was dismissed after elaborate discussion on factual and legal matrix.Revenue s appeal towards alleged lower yield of production is dismissed. Addition u/s 14A r.w.r. 8D - CIT-A deleted the addition - HELD THAT:- As the assessee has not derived any exempt income per se. It is well settled that in the absence of any exempt income, no disallowance under s. 14A of the Act is permissible in view of the decision of the Hon ble Gujarat High Court in the case of CIT vs. Corrtech Energy P. Ltd. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] . Alo the assessee has demonstrated sufficient net worth from which a presumption would naturally arise that investment for the purposes of earning exempt income is out of such own interest free funds available at the disposal of the assessee. A reference in this regard has been made on behalf of the assessee to the several judicial precedents including CIT vs. HDFC Bank Ltd. . [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] and SUZLON ENERGY LTD. [ 2013 (7) TMI 697 - GUJARAT HIGH COURT] - Decided in favour of assessee.

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• 2021 (10) TMI 1244
  TP Adjustment - ALP determination at entity level - authorities have computed entity level margin while determining the impugned Arm s Length Price (ALP) adjustment pertaining to software development services resulting in addition - HELD THAT:- We note in this factual backdrop that instant issue of Chapter X computation to be restricted to the assessee s international transactions only is no more res integra in light of decision in CIT Vs. Firestone International (P) Ltd. [ 2015 (6) TMI 1123 - BOMBAY HIGH COURT] . We thus decline Revenue s vehement arguments supporting the learned lower authorities action computing the assessee s impugned ALP at entity level than only pertaining to its international transactions with the AEs involving an amount in issue. We accordingly find prima facie merit in the assessee s instant foregoing argument and restore the instant former issue back to Transfer Pricing Officer (TPO) for his afresh adjudication as per law within three effective opportunities of hearing. Interest on receivables at ALP adjustment computed as per the SBI short term deposit rate - We find from a perusal of the TPO s order dt. 29.10.2019 page 61 that he appears to have gone by earlier estimation only whilst determining a credit period of 30 days only. As in Technimont ICB Limited [ 2013 (1) TMI 948 - ITAT MUMBAI] that an AE itself does not form a comparable since the corresponding transactions would be rendered as controlled ones only. We thus delete the impugned ALP adjustment on receivables in principle and leave it open for the TPO to verify necessary facts as per law.

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• 2021 (10) TMI 1243
  Assessment u/s 144A - Ex-parte order - non providing proper opportunity - HELD THAT:- On perusal of assessment order, it is revealed that the assessee did not appear but filed some documents/explanation. However, the assessment was completed vide an ex-parte order dated 31.3.2015 passed u/s. 153A/144 of the I.T. Act, 1961, assessing the total income at Rs. 58,11,170/- as against the returned income of Rs. 2691/-, without providing sufficient opportunity to the assessee. Against the assessment order, the assessee appealed before the Ld. CIT(A) who during the appellate proceedings has considered the written submission of the assessee but the main contention that due to some unavoidable circumstances, voluminous documents and paper book were not filed before the AO, was not considered. Keeping in view of the facts and circumstances of the case as explained above, we are of the considered opinion that the orders passed by the Revenue Authorities are against the principle of natural justice and, therefore, the issues involved in the Appeal filed by the assessee deserve to be set aside to the file of the AO to decide the same afresh, under the law, after detailed enquiry/investigation/verification of the each and every evidence. The AO is directed to pass denovo assessment order after allowing proper opportunity to the assessee. AO is also directed to call all relevant documents/evidences including copy of bank statement, copies of cheques/drafts, from the recipient of Odisha Cricket Association through which amounts were received by the Association and collect the entire correspondence and details of the persons/entity/company, who gave the impugned amount to the Orisha Cricket Association. The assessee is also directed to fully cooperate with the AO in the proceedings and did not take any unnecessary adjournment and also produce all the documentary evidences before him to substantiate its case.

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• 2021 (10) TMI 1242
  Assessment u/s 153A - Absence of satisfaction as needed foregoing alleged section 153C - HELD THAT:- As in the 2nd proviso to sub-section (1) of section 153A that all assessments pending on the date of initiation of search shall abate. We hold in view of the foregoing statutory provisions that the AO s foregoing alleged section 153C satisfaction only incorporated the expression; whilst dealing with the alleged seized material, it only relates to than belongs to as on the date of search and therefore also, section 153C satisfaction are found not same is not sustainable qua the instant latter aspect as well. We wish to make it clear that we are dealing with a search wherein the corresponding statutory provisions have to be given stricter interpretation only in light only in light of Commissioner of Customs Vs. Dilip Kumar Co. [ 2018 (7) TMI 1826 - SUPREME COURT] - We accordingly affirm the CIT(A) s action under challenge holding the impugned 143(3) r.w.s. 153C assessment as lacking proper satisfaction. - Decided in favour of assessee.

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• 2021 (10) TMI 1241
  Validity of Reopening of assessment u/s 147 - Addition of commission income for providing accommodation entries through unsecured loans - HELD THAT:- Admittedly, the return of income filed by the assessee was not subjected to scrutiny and was simply processed under section 143(1) of the Act. Subsequently, the assessing officer received specific information from the Investigation Wing indicating that certain unsecured loans advanced by the assessee during the year are non genuine. Based on such opinion, the assessing officer reopened the assessment. Thus, it is very much clear since the return of income filed by the assessee was simply processed under section 143(1) of the Act, the assessing officer had no occasion to verify the genuineness of the loan transaction. When the assessing officer received specific information concerning the genuineness of the loan transaction, he had tangible material available before him to reopen the assessment. While recording the reasons for reopening the assessment, the assessing officer has to prima facie form a belief that the material on record indicate escapement of income. At the stage of reopening, the assessing officer is not required to record any conclusive finding regarding the escapement of income, as, that is a matter which can be ascertained in course of assessment proceedings. Thus, in the facts of the present case, the assessing officer had tangible material to form a belief that income has escaped assessment. That being the case, in our considered view, the assessing officer has validly initiated proceedings under section 147. Genuineness of unsecured loan - The source from which the assessee had received such funds has not been properly explained either before the departmental authorities or even before us. Therefore, this aspect needs to be factually verified as it raises doubt regarding the loan transaction. However, merely based on such doubt and suspicion, no addition can be made as the issue requires further enquiry and investigation. At this stage, it is necessary to observe, in assessee s own case in assessment year 2010-11, learned Commissioner (Appeals) has accepted similar loan transaction entered by the assessee with two parties, including, a common party as genuine and the addition of commission income has been deleted. Thus, these aspects will also have some bearing on the issue. Considering the fact that proper enquiry has not been made with regard to the source of funds available in assessee s bank account, we are inclined to restore the issue to the assessing officer for fresh adjudication after proper enquiry and only after due opportunity of being heard to the assessee. Ground 2 is allowed for statistical purposes.

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• 2021 (10) TMI 1240
  Assessment u/s 153A - Challenging addition contending that the year under appeal is non-abated assessment year and no incriminating material was referred while making addition - HELD THAT:- We find that the year under appeal is A.Y. 2006-07. Time limit of issuance of notice u/s 143(2) of the Act for selecting assessee s case for scrutiny expires on 30th September 2007. Search was conducted on 13.11.2007. Except registered sale deed no other incriminating material was found. Consideration mentioned in the registered sale deed is duly accounted for. Other evidences are gathered by the Ld. AO by issuing notice u/s 131 of the Act and statement of the sellers were recorded during the course of assessment proceedings. The year under appeal is a non-abated assessment year. Addition in such non-abated assessment years can be made only on the basis of incriminating material found during the course of search. Our this proposition is supported by the judgment of Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and in the case of Pr. CIT vs. Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] Unaccounted receipts - As purchase consideration paid by the assessee is not below the guideline rate applicable for calculating stamp duty. Both the sellers namely Mr. Arvind Kumar and Mr. Laxmi Narayan have signed the registered deed in the presence of the Sub-Registrar for registering the documents. Further, the assessee has not been provided any opportunity to cross examine alleged sellers nor the Ld. AO has initiated any proceedings against the sellers for making additions in their hands for unaccounted receipts. Under the given facts and circumstances of the case, are of the considered view that Ld. AO was not justified in making the addition - Decided in favour of assessee.

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• 2021 (10) TMI 1239
  Addition u/s 68 - Unexplained cash credit - HELD THAT:- Assessee has furnished the VAT audit report and Sales-tax return of M/s Khushal Trading Corporation, wherein, the transaction with the assessee has been reflected. It is also evident, the assessee has made payment for purchase to M/s Khushal Trading Corporation through banking channel - it can be said that not only the identity of M/s Khushal Trading Corporation is established but the assessee had purchased goods from the said party is also proved, as the concerned selling dealer has also furnished confirmation of account. Thus, in such circumstances, the amount cannot be treated as unexplained cash credit as the identity, genuineness and creditworthiness have been established. Bogus purchases - The purchases made from M/s Khushal Trading Corporation cannot be held as non genuine merely because ledger account copy of assessee for couple of years could not be furnished due to certain exigencies. In any case of the matter, once the selling dealer confirms the sales made to the assessee and when such sales have been reflected in its accounts and returns filed, both, before the Income-tax department as well as Sales-tax department and there is no adverse information from the Sales-tax department, the purchases made from M/s Khushal Trading Corporation cannot be doubted, merely on the basis of presumption and surmises, unless, the revenue brings evidence on record to factually establish that the purchases are non genuine or M/s Khushal Trading Corporation is a non genuine entity.

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• 2021 (10) TMI 1238
  Bogus LTCG - Unaccounted share transaction - exemption u/s 10(38) denied - addition primarily on the ground that M/s Alliance Intermediaries and Network Pvt. Ltd. through whom the assessee has carried out transaction of purchase and sale of shares belongs to Mukesh Chokshi group - HELD THAT:- Once, the assessee has discharged his onus to substantiate that the shares were purchased against payment and the shares were duly received/credited to the DMAT account; on sale, shares were debited from DMAT account of the assessee and the payment was credited to the bank account of the assessee and that the shares were transacted at floor of BSE, the transaction cannot be held to be non genuine merely on the basis of statement made by third part, more so, when no opportunity to cross examine the person making the statement is afforded to the assessee. Revenue has not been able to controvert above findings of the CIT(A). We find no reason to interfere with the well reasoned order of the CIT(A) in deleting the addition. Therefore, the appeal of the Revenue lacks merit - Decided in favour of assessee.

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• Customs

• 2021 (10) TMI 1268
  Provisional attachment of Bank Accounts - applicability of time limitation - formal order of attachment was not served on petitioner - Violation of principles of natural justice - HELD THAT:- The provisions contained in section 110(5) of the Act are clear. An order of provisional attachment ceases to be valid beyond 6 (six) months of such order being made provided, of course, its life has been extended in accordance with law at the end of six months to remain alive for a further period not exceeding 6 (six) months. The period of 1 (one) year has expired and, therefore, the order of provisional attachment, by operation of law, has ceased to be in operation. The Joint Commissioner of Customs, respondent no. 2, is directed to immediately communicate to the petitioner s banker that validity of the attachment order has ceased and that the petitioner is entitled to operate the relevant bank account, which was under attachment. Let such communication be made as early as possible but not later than 7 (seven) days from date - petition allowed.

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• 2021 (10) TMI 1267
  Jurisdiction - power of DRI to issue SCN u/s 28 of Customs Act - DRI are Proper Officers or not - availability of alternate remedy of appeal - HELD THAT:- The issue in the present case is squarely covered by the decision in the case of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] where it was held that The entire proceeding in the present case initiated by the Additional Director General of the DRI by issuing show cause notices in all the matters are invalid without any authority of law and liable to be set-aside. In the present case, the entire proceedings are initiated by the respondent No. 2 - Joint Director, DRI, Mumbai, by issuing the show cause notice are invalid, without any authority of law and liable to be set aside and ensuing demands are also liable to be set aside. Availability of alternate remedy to challenge the impugned order - HELD THAT:- The alternative remedy would not operate as a bar, as the proceedings initiated by the respondent No.2 are wholly without jurisdiction. The show-cause notice is totally non est in the eyes of law for absolute want of jurisdiction of the authority which issued it - Petition allowed.

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• 2021 (10) TMI 1264
  Seeking Relaxation for clearance of subject consignment on payment of necessary four times penalty charges for dispensing with the Phytosanitary Certificate - import of teak wood from the originating country called, Panama - whether the petitioner is entitled to get relaxation under Clause 14 of the said Order, 2003 from producing the phytosanitary certificate? - HELD THAT:- Assuming that the reason stated by the third respondent is correct, where the petitioner already availed the relaxation for production of phytosanitary certificate, even then, for second or subsequent relaxation, the power may not be vested with the third respondent, but vested with the Joint Secretary to Government of concerned Department, before whom, if the very request is made by any importer for giving relaxation for production of phytosanitary certificate second time or subsequent time, that can also be considered in the public interest and accordingly, that can also be considered by the Joint Secretary to the Government of the Department concerned. Under Clause 14, it has been made clear that the powers for relaxation has been delegated to the Officer in-charge of the Plant Quarantine Station for relaxing the conditions of the said Order, 2003 as a one-time exception in favour of a single party and not for repeated violation by that party. Therefore, it has been made clear that only one time relaxation is permissible in respect of one party at the hands of the Officer in-charge of the Plant Quarantine Station - Herein the case in hand, the third respondent is Officer concerned of the Plant Quarantine Station. Therefore, his power is to grant one time relaxation, not beyond that. Forwarding of the issue - HELD THAT:- In the case in hand, the forwarding of the issue has not been undertaken by the third respondent, therefore, in this aspect also, this Court feels that, the impugned order can be interfered with. The matter can be remitted back to the third respondent for consideration as to whether the petitioner has made any earlier request and availed any relaxation or not and if there is no such relaxation benefit or waiver of the production of phytosanitary certificate, the officer concerned, ie., the third respondent can very well consider for grant of such relaxation, within the meaning of Clause 14 of the said Order, 2003 - Petition allowed by way of remand.

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• 2021 (10) TMI 1237
  Smuggling - Gold - Absolute confiscation - option was not given to the appellant for redemption as per Section 125 of the Customs Act, 1962 - levy of penalty u/s 112(a) (b) of the Customs Act, 1962 - HELD THAT:- The Commissioner (Appeals) in the impugned order, has referred to a decision of Hon ble Kerala High Court in the case of COMMISSIONER OF CUSTOMS, KERALA VERSUS OM PRAKASH KHATRI, DHIRAJ KUMAR DEVASI, SURENDRA SINGH RAO AND PANNA GOLD IMPEX LTD [ 2019 (3) TMI 457 - KERALA HIGH COURT] which thereafter was upheld by the Hon ble Apex Court in OM PRAKASH KHATRI VERSUS COMMISSIONER [ 2019 (11) TMI 796 - SC ORDER] - it was held in the case that The appellant was unable to explain the source of the gold which was confiscated. In the circumstances, we find no merit in the civil appeals, which are accordingly dismissed. The above decision may not come in the way of a legitimate owner if the source of gold is established. The Order-in-Original does not record as to any such queries or any answer thereto from the appellant, and hence it is necessary in the first place to ascertain if the appellant can explain the sources before the adjudicating authority and if not, then the ratio of the Supreme Court judgment in OM PRAKASH KHATRI VERSUS COMMISSIONER [ 2019 (11) TMI 796 - SC ORDER] would apply. An attempt was made before this forum by the appellant by filing a copy of the tax invoice, to which learned DR objected to seriously, contending that firstly the same was not furnished before the lower authorities and secondly, the said document is clearly an afterthought, with no signature of the buyer. Case remitted back to the file of adjudicating authority who having failed in the first instance to offer redemption option, shall now offer the same to the appellant, and then it is for the appellant to clear the test prescribed by the Apex court - the matter is restored to the file of adjudicating authority who shall pass a fresh order - appeal allowed by way of remand.

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• 2021 (10) TMI 1236
  Seeking amendment in the bills of entry - excess duty payment by mistake - Section 154 of Customs Act - HELD THAT:- In the present case there is no dispute that excess duty was paid mistakenly on account of certain error and the said mistake was rectifiable under Section 154. Further, the appellant was not at fault at all but it was directed to file refund application at the first instance. Had the Department considered the appellant s request for amendment of its Bill of Entry then, perhaps, the alleged delay, etc. would not have arisen at all. The appellant had correctly and in line with the dictum of the Hon ble Apex Court in the case of ITC Ltd. (Supra) requested for amendment and it was at the instance of the Department that a refund application was also filed. The appellant s request for amendment/rectification being as per the Hon ble Apex Court s judgment in ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] , is therefore in order - Appeal allowed by way of remand.

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• Insolvency & Bankruptcy

• 2021 (10) TMI 1235
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Applicant i.e. the Operational Creditor as per Purchase Order supplied material and stand taken by the Corporate debtor that there was understanding that material should be supplied only 100% advanced payment, but the Corporate Debtor has never raised any dispute in respect of supplied of excess quantity material until the demand for payment raised by the Operational Creditor after a year - The Corporate Debtor contended that as per section 9(3)(b) of the I B Code, there is dispute among parties, but that contention is after thought as until demand for payment raised by the Operational Creditor, the Corporate debtor accepted material supplied and enjoyed the same. The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.

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• 2021 (10) TMI 1234
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - service of demand notice - HELD THAT:- There is a business relationship between Operational Creditor and Corporate Debtor, and medicines were supplied to the Corporate Debtor as per mutual understanding and on the basis of purchase order raised by Corporate Debtor from time to time. There exists no written agreement. Though it was claimed by the Corporate Debtor in his reply that there were delays in delivery, however, no evidence for such claim has been submitted by the Corporate Debtor. Further Corporate Debtor has not returned the medicines to Operational Creditor which were delivered to it - no evidence in support of claim of losses suffered by Corporate Debtor has been brought on record. Thus, it is frivolous or spurious defence which has been made to avoid initiation of CIRP. Hence, there is no merit in such claims made by the Corporate Debtor. It is also noticed that there is no pre existing dispute between Operational Creditor and Corporate Debtor, and no reply was sent by Corporate Debtor against the demand notice under section 8 of IBC, 2016 which was served on Corporate Debtor by hand delivery. It is clear that Corporate Debtor has defaulted in the payment of its debts. On the basis of the facts the application is otherwise defect free on record. However as far as amount of debt is concerned, the same would be determined by IP/IRP in the course of CIRP of the Corporate Debtor - Application admitted - moratorium declared.

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• 2021 (10) TMI 1233
  Jurisdiction - competence of suspended management of the CD to file Composite Resolution Plan - HELD THAT:- The CD is an MSME Unit and the Hon ble NCLAT has passed an order in this regard holding that there is no harm in giving an opportunity to the MSME in accordance with the provisions of the Code for keeping the promotion of entrepreneurship alive. Section 29 A of IBC provides for the eligibility of Resolution Applicant and Section 240 A explains how IBC code is applicable to MSMEs - One Resolution plan has been approved by the COC and placed before this bench and the Applicant has filed this Petition as a matter of abundant caution. There are no merits in the petition - petition dismissed.

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• Service Tax

• 2021 (10) TMI 1232
  Refund of unutilised Cenvat Credit - input or not - nexus of input with the output service - Education and Training Expenses - Subscription Fee - Subscription Fee paid to Export Promotion Council for EOU, SEZ, and M/s. Nasscom - Rejection of refund for mismatch of description in the Invoices issued by M/s. Beyond Square Solutions (P) Ltd. - rejection of refund for invoices do not indicate the Service Tax Registration No. of the service provider. Education and Training Expenses - denial on the ground of nexus - HELD THAT:- In the invoices, the services are described as Event Management Services. The invoice does not show that the services are provided for Education and Training Services or as Subscription Fee. As per invoice, the consideration is paid for Event Management Services - The Tribunal in the case of DBOI GLOBAL SERVICES PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [ 2016 (11) TMI 521 - CESTAT MUMBAI] has held that Event Management Services are eligible for credit. The said decision has been upheld by the Bombay High Court in THE COMMISSIONER OF SERVICE TAX VI, MUMBAI VERSUS M/S. DBOI GLOBAL SERVICES P. LTD. [ 2018 (12) TMI 171 - BOMBAY HIGH COURT] - the disallowance of credit/refund on these invoices issued by M/s. Host India Events Marketing is unjustified. The appellant is eligible for credit/refund. Refund claim - Subscription Fee paid to Export Promotion Council for EOU, SEZ, and M/s. Nasscom - HELD THAT:- The Tribunal in the case of M/s. Alliance Global Services IT India (P) Ltd., (supra) has analysed the very same issue and held that the credit is eligible. It also needs to be pointed out that in para 7.4 of the impugned order, the Commissioner (Appeals) has relied upon the decision in the case ofM/S. MARUTI SUZUKI LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III [ 2009 (8) TMI 14 - SUPREME COURT] to hold that the credit is not eligible - credit availed in respect of Subscription Fee paid on Export Promotion Council for EOU, SEZ and M/s. Nasscom are eligible for refund. Refund claim - Invoices issued by M/s. Beyond Square Solutions (P) Ltd. - Learned counsel has argued that though the nature of expenses is described in the invoices dated 15.05.2015 and 07.03.2015 by M/s. Beyond Square Solutions (P) Ltd., as Subscription Fee, these invoices are actually issued for providing software solutions and not expenses towards Subscription Fee - HELD THAT:- On perusal of two invoices, the description of services unambiguously shows that the amount is paid for monthly Subscription Fee. The amount in both these invoices are constant, which is Rs. 15,000/-. There are no reason to assume that these expenses were for Software Services rendered by M/s. BSSPL to appellants.. It has also to be mentioned that the amount paid being constant for every month, it can only be that the amount is paid towards subscription. The appellants have not produced any evidence to support their arguments that M/s. BSSPL assisted them for providing software solutions and the expenses are incurred for such services and not Subscription Fee. For this reason, the rejection of credit on the invoices by M/s.BSSPL is upheld. Refund claim - Invoices issued by two Consultancy Services, namely, M/s. Crave Infotech and Consultancy Services and M/s. Dayadimensi India (P) Ltd. - reason for rejection of refund in respect of these invoices is that the invoices do not indicate the Service Tax Registration No. of the service provider - HELD THAT:- It is an omission on the part of service provider, which is beyond the control of the appellants, who is the service recipient. In the case of MAFATLAL INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, AHMEDABAD [ 2020 (6) TMI 61 - CESTAT AHMEDABAD] , it was held that this issue is only a technical infraction and the error not being on the assessee s part, the benefit of credit/refund cannot be rejected - the credit/refund on these invoices is eligible. Appeal allowed in part.

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• 2021 (10) TMI 1231
  Refund of unutilized/accumulated CENVAT credit on input services - N/N. 27/2012 ibid - HELD THAT:- The Orders-in-Originals are speaking orders, inasmuch as the adjudicating authority has considered the conditions laid down under the governing Notification No. 27/2012 ibid and has also analysed the applicability of para 2(h) of said Notification ibid has also noted the change in law with the introduction of GST Act, 2017 whereby, the filing of ER-3 return was done away with. I find that the reasonings given by the adjudicating authority are quite logical and well-founded. It is also well settled that the introduction of a new law cannot be held to deprive the rights of a Taxpayer, especially when the tax payers money lies with the Revenue. In the impugned order, the Commissioner (Appeals) has only upheld the Department s contention that the refund sanctioned was not legal and proper, but has not whispered any reasons to arrive at such a conclusion. The Commissioner (Appeals) has only extracted the findings of the adjudicating authority to hold that the sanctioning order was not legal and proper, which is nothing but baseless, arbitrary hence, the same cannot be sustained in the eye of law. The appellant is entitled for the refunds - Appeal allowed - decided in favor of appellant.

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• 2021 (10) TMI 1230
  Refund of excess service tax paid - time limitation - refund claim rejected holding that the tax payment having been made vide challan dated 20.7.2017 and 1.6.2017, the refund claim filed on 29.11.2018 is beyond one year period as prescribed under section 11B of the Central Excise Act, 1944 - HELD THAT:- It is not disputed that the appellant has made excess payment of Rs. 3,05,175/-. Returns were belatedly filed only on 23.10.2018. However, tax was paid by cash in advance vide challans dated 20.7.2017 and 1.6.2017. The department has computed the period of one year from these dates of the challan to hold that the refund claim is barred by limitation. It has to be mentioned that the appellant has come to know about the excess payment only after the filing of the returns on 23.10.2018. The refund claim having been filed on 29.11.2018 when computed from the date of filing of the ST-3 returns, it cannot be said that there is a delay in filing the refund claim. Section 11B of Central Excise Act, 1944 does not talk about the relevant date for computing the period of limitation in the case of payment of service tax. In the present case, the refund arises out of excess payment. The excess payment can be ascertained only when the appellant files the ST-3 returns. When such facts are put into consideration, in strict sense, it cannot be said that there is a delay in filing the refund claim. It is an excess payment made by the appellant. Needless to say that the department cannot retain any amount which is not collected / paid under authority of law. The jurisdictional High Court in the case of M/S. 3E INFOTECH VERSUS CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL, COMMISSIONER OF CENTRAL EXCISE (APPEALS-I) [ 2018 (7) TMI 276 - MADRAS HIGH COURT] has categorically held that section 11B cannot be applied when the tax has been paid under mistake and when not required to be paid. The rejection of refund claim as time-barred in terms of section 11B of Central Excise Act, 1944 r/w section 83 of the Finance Act, 1994 cannot sustain - Appeal allowed - decided in favor of appellant.

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• 2021 (10) TMI 1229
  Classification of services - Right to use of car parking space or not - car parking charges collected by the appellant from its customers - levy of tax on Club Membership Services - Demand of Service Tax on amounts received after 01/07/2010 for Construction Services rendered upto 30/06/2010 - time limitation. Car parking charges collected by the appellant from its customers - Right to use of car parking space or not - time limitation - HELD THAT:- The general terms and conditions sheet as well as the sale deed mentions the said amounts against the Right to use car parking space and not as sale of car parking space. The department has not brought any contrary submission to challenge the above finding that the Appellant has provided right to use towards car parking space and not Construction Service towards the same Right to use - the Appellant has made out a case on limitation ground as the said service was introduced w.e.f. 01/07/2010 and there was no clarity as to the taxability of such amounts as received by the Appellant. Hence the Appellant was under a bona fide belief that since it was giving Right to use of car parking space, no tax is payable under the category Construction Services - in the instant case of the Appellant, since the entire demand has been raised by invoking extended period of limitation, the same is set aside. Club Membership Services - HELD THAT:- Since there was no club in existence during the period of dispute, there cannot be any demand raised on the said ground. The Architect s Certificate dated 16/08/2016 is testimony to the stated fact and there is no contrary evidence produced by the department to dispute the same - there are merit in the submission of the Appellant and accordingly the demand under the Membership of Club or Association Services also needs to be set aside. Demand of Service Tax on amounts received after 01/07/2010 for Construction Services rendered upto 30/06/2010 - HELD THAT:- The essential condition for determining the taxability is (i) whether payment made by the buyer to the builder on or after 01/07/2010 and (ii) whether payment made before or after issuance of completion certificate by the competent authority and since in the case of the Appellant the completion certificate was not issued when the amounts were received, the same is taxable under the Service Tax net - there is no ambiguity in the condition as the same only extends the tax net of the Construction Services to any amounts received prior to obtaining completion certificate - the demand on the Construction of Residential Complex Services as confirmed by the learned Adjudicating authority is set aside in entirety. Time Limitation - HELD THAT:- The department has failed to produce sufficient evidence to satisfy the ingredients for invocation of extended period of limitation and hence, the invocation of extended period of limitation to demand duty cannot be sustained in the case at hand. The entire demand cannot be confirmed both on merits and on limitation - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (10) TMI 1228
  CENVAT Credit - removal of goods after use - denial of credit on the ground that transaction value against stock transfer is not a sale - availed in terms of proviso to Rule (5A)(a) of CENVAT Credit Rules, 2004 - Revenue neutrality - HELD THAT:- A close reading of Rule 5 and sub-Rule 5A would clearly reveal that removal after being used is the requirement for availment of CENVAT credit and whether it is a sale transaction/not a sale transaction is not a criteria that would determine the eligibility of availment of such credit and therefore it would be erroneous to say that transaction value of the invoice would have no basis unless it is a sale transaction because CENVAT credit was taken at the time of purchase of capital goods that has already determined the transaction value and it is that value which is noted in the transfer challan. Revenue neutrality - HELD THAT:- The appellant had clearly mentioned in the documents evidencing transfer that the valuation was done as per the Circular No. 643/34/2002-CX dated 01/07/2002 and the same is held to be proper calculation by the Jurisdictional Range Offer of the supplier of capital goods, besides the facts that it is now a settled position of law that legality of such availment of credit cannot be questioned at the receiver s end let alone a revenue neutral situation. Appeal allowed - decided in favor of appellant.

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• Indian Laws

• 2021 (10) TMI 1227
  Dishonor of Cheque - existence of recoverable debt or not - NEFT transfer was made towards the outstanding cheque amount or not - HELD THAT:- The issue as to whether this Court can enter into disputed questions of facts, while exercising powers under Section 482 Cr.P.C., is no longer res integra. The Supreme Court in STATE FARM CORPN. OF INDIA LTD. VERSUS NIJJER AGRO FOODS LTD. AND ORS. [ 2005 (7) TMI 726 - SUPREME COURT] has taken the following view in respect of exercise of power under Section 482 Cr.P.C. by High Courts where it was held that Whether the said payment has been made or it is towards some of the amounts covered by the cheques are all the questions which can be decided only at the trial of the complaint cases under Section 138 of the Negotiable Instruments Act and could not have been made the basis of allowing the revision petition. Similar view has been taken in S. KRISHNAMOORTHY VERSUS CHELLAMMAL [ 2015 (3) TMI 1386 - SUPREME COURT] , where the Supreme Court held that when there are disputed questions of facts involved, the same would be a matter of trial and cannot be decided in the proceedings under Section 482 Cr.P.C. This Court is of the view that while exercising its power under Section 482 Cr.P.C., it would be expedient for the Court to not go into the disputed questions of fact, the same being a matter of trial - Petition dismissed.

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