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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter November 11, 2020 Case Laws in this Newsletter: GST Income Tax Corporate Laws Insolvency & Bankruptcy Law of Competition Service Tax Central Excise CST, VAT & Sales Tax Articles 1. CONSTITUTIONAL VALIDITY OF REGULATION 7A OF ‘INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (INSOLVENCY PROFESSIONALS) REGULATIONS, 2016 By: DR.MARIAPPAN GOVINDARAJAN Summary: Regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 mandates insolvency professionals to obtain annual authorization from their Insolvency Professional Agency (IPA) to undertake assignments. A petitioner challenged this regulation, claiming it violated constitutional rights and was an unreasonable exercise of power. The High Court examined the regulations and concluded they were within the Board's authority, did not constitute excessive delegation, and did not violate Articles 14, 19, and 21 of the Constitution. The petition was dismissed, but the court suggested revisiting the time limit for appeals. Notifications Customs 1. 35/2020 - dated 10-11-2020 - ADD Seeks to impose Anti-Dumping Duty on flax fabrics (having flax content of more than 50%) imported from China and Hong Kong for a period of 5 years Summary: The Government of India has imposed an anti-dumping duty on flax fabrics with more than 50% flax content imported from China and Hong Kong. This measure, effective for five years, follows a review indicating that these imports are priced below normal value, undercutting domestic market prices and causing potential harm to the Indian industry. The duty rates are set at $2.36 per meter for imports from China and $1.14 per meter for imports from Hong Kong. The duty is payable in Indian currency, with exchange rates determined by the Government of India as per the Customs Act. Circulars / Instructions / Orders Companies Law 1. 37/2020 - dated 9-11-2020 Extension of LLP Settlement Scheme, 2020. Summary: The Ministry of Corporate Affairs has extended the LLP Settlement Scheme, 2020, due to COVID-19 disruptions. The deadline for filing belated documents has been moved to November 30, 2020. This extension applies to defaulting LLPs, with all other conditions in previous circulars remaining unchanged. Additionally, statements of account and solvency for the financial year 2019-2020, signed beyond the six-month period but by November 30, 2020, will not be considered non-compliant. This decision has been approved by the competent authority. Highlights / Catch Notes GST Court Rules Unlawful Detention and Collection of Fees Violates Articles 14, 265, CGST Act, and CBIC Circular. Case-Laws - HC : Detention of goods alongwith vehicle - wrong destination is noticed - Any defect, if any, in the documentation accompanying the goods has to be looked at in terms of the Circular issued by the CBIC - The action of 1st respondent in collecting the sum of ₹ 4,30,778/- from petitioner on 30.01.2020 is declared as arbitrary and violative of Articles 14 and 265 of the Constitution of India, and also the provisions of CGST Act, 2017 and TGST Act, 2017, and also the Circular CBEC / 20 / 16 / 03 / 2017 – GST - HC Visit to Get Source Bio-mining of Dumped Garbage in Compost Yards Classified as Solid Waste Management, Eligible for Tax Exemption per AAR. Case-Laws - AAR : Classification of services - Solid waste management - Revamping of existing dumped Garbage in compost yards by Bio-mining process - the activity undertaken by the applicant is covered under SAC 9994 and more appropriately under the Group 99943. Benefit of exemption available - AAR Visit to Get Source Income Tax Reassessment Order Quashed: Section 148 Notice Sent to Wrong Address Violates Natural Justice Principles. Case-Laws - AT : Validity of reopening of assessment - notice under section 148 issued at wrong address - While passing impugned reassessment order, principle of natural justice and ‘audi alterm partem’ needs to be followed. - impugned notice issued u/s148 at the wrong address quashed and the consequential assessment order passed is set aside. - AT Visit to Get Source High Court Rules Prosecution for Non-Filing of Tax Returns Invalid After Petitioner Clears Outstanding Dues u/s 276C(2. Case-Laws - HC : Offences u/s 276 C(2) - non filing of ITR and failure to pay tax dues - It is admitted in the counter affidavit itself that the petitioner have since cleared the dues and as on date no tax dues are payable in respect of the aforesaid financial years. Inasmuch as the tax has been subsequently paid, I am of the view that continuance of the impugned prosecution would only amount to an abuse of legal process. - HC Visit to Get Source Section 143(2) Notice Error: Typo in Tax Return Date Curable u/s 292B, Doesn't Invalidate Notice. Case-Laws - AT : Notice u/s 143(2) with wrong date of filing of return - the error has occurred due to typographical mistake and hence it is curable as per provisions of section 292B of the Act. - AT Visit to Get Source Interest on Seized Funds: Section 132B Entitles Taxpayers to Interest, Not Applicable for Section 234B Advance Tax Calculations. Case-Laws - AT : Interest charged u/s 234B - Deposit of amount pursuant to search and seizure proceedings - Provisions of section 132B of the Act governs the manner of utilisation of funds seized by the Department. If the amount seized and kept in PD account is more than the liability payable by assessee, then the assessee is entitled to interest also as per the provisions of section 132B of the Act - this amount cannot be treated as equal and to advance tax for purpose of computing interest u/s 234B - AT Visit to Get Source Institution's Tax Exemption Upheld Despite Less Than 50% Government Grants u/s 10(23C)(iiiab) of Income Tax Act. Case-Laws - AT : Exemption u/s 10(23C)(iiiab) - As per AO grants received during the year were not received wholly from Government but from other sources also - institutions receiving substantial grant less than 50% of the total contribution by the Government - Exemption cannot be denied - AT Visit to Get Source Notice u/s 143(2) Invalid; Assessment Order Void Due to Lack of Jurisdiction by Issuing Officer. Revenue Appeal Dismissed. Case-Laws - AT : Validity of notice u/s 143(2) - the notice u/s 143(2) was not issued by an officer having jurisdiction on the assessee and who had passed the assessment order and therefore, we hold that in view of non issue of statutory notice u/s 143(2), the assessment order is bad in law and void ab in initio and hence all further proceedings including the order passed by the learned CIT(A) is bad in law and therefore, the appeal filed by Revenue against the order of learned CIT(A) does not stand and is dismissed. - AT Visit to Get Source Court Deletes Addition for Unaccounted Cotton Bales After Evidence Shows Proper Invoice and Sale Documentation. Case-Laws - AT : Addition on account of excess stock - discrepancies in stock records, unaccounted sales - we are satisfied with the documentary evidence that the alleged stock of cotton bales were part of book stock and they were issued out of stock on 24.1.2012 and were sold through the invoices issued on 25.1.2012. Physical stock was taken by the revenue authorities on the date of survey on 24.1.2002 - Addition deleted.- AT Visit to Get Source Assessee qualifies for Section 54F exemption despite not depositing in a capital gains account, meeting substantive conditions. Case-Laws - AT : Disallowance u/s 54F - Investment of Sale consideration for claiming exemption on LTCG - Advance was given for purchase of new residential property but the transaction was not materialized due to litigation - purchase of new residential property thereafter after getting refund of advance - failure to deposit into the capital gain account with the authorized banks - Since the assessee has fulfilled the substantive condition of Section 54F(1) of the Act by way of utilizing the sale consideration from sale of the capital asset (other than residential house) within two years of sale of original capital asset, assessee is eligible for deduction u/s 54F(1) - AT Visit to Get Source Chennai Open Tennis Tournament expenses disallowed as business deductions; deemed statutory duty expenses unrelated to business. Case-Laws - HC : Expenses incurred by contributing to Chennai Open Tennis Tournament - It is manifest that the amounts in question were paid by the assessee as a statutory agent to discharge a statutory duty unconnected with the business, though the occasion for the imposition arose because of the territorial nexus afforded by the accident of its doing business in India - Expenses not allowed - HC Visit to Get Source Central Excise CENVAT Credit Reversal: Rule 6(3A) Only Applies to Common Input Services, Excludes Exclusively Dutiable Goods Inputs (3A. Case-Laws - AT : Reversal of CENVAT Credit - for the purpose of formula under rule 6(3A) is only total CENVAT credit of common input service and cannot include CENVAT credit on input service exclusively used for the manufacture of dutiable goods - This position is also clear from the underlying object of the amendment made in rule 6(3A) of the Rules by Notification dated March 1, 2016, to consider only common input services and not total input service credit, for the purpose of computing the amount of reversal. - AT Visit to Get Source Auction Purchasers Not Liable for Previous Owner's Central Excise Arrears in Property Sales, Court Rules. Case-Laws - HC : Demand / Recovery of central excise arrears - Purchase of property in a public auction - In various judgements, the categorical declaration is that the auction purchaser is not liable to pay any arrears, or duty or statutory dues for the default of the previous establishment. The right of the auction purchaser is absolute and independent of all the liabilities of the erstwhile establishment or owner - HC Visit to Get Source VAT Kerala High Court: Tax Assessments with Expired Limitation by March 31, 2019, Cannot Be Reopened in 2020. Case-Laws - HC : Reopening of assessment - Assessment for escaped turnover - time limitation - amended by Kerala Finance Act, 2017 - It is declared that the assessment in respect of which the period of limitation for re-opening under Section 25 of the KVAT Act was to expire by 31.03.2019 cannot be re-opened on 18.01.2020 - HC Visit to Get Source Case Laws: GST 2020 (11) TMI 325 Classification of services - Solid waste management - Revamping of existing dumped Garbage in compost yards by Bio-mining process - exemption under Sl. No. 3 of notifications No. 12/2017 dt: 28.07.2017 as amended -liability to deduct TDS - Erode city Municipal Corporation - section 51 of CGST Act of TNGST Act, 2017 - HELD THAT:- The activities undertaken by the applicant such as consolidation of waste, temporary storage of hazardous non-hazardous waste; treating and disposing the waste by processing in a facility that meets legal standards, are all covered under the group 99943. The ultimate goal of the activity is reclamation of land clear of the dump and the activity undertaken by the applicant is removal of the waste following the norms set under SWM Rules 2016. Therefore, the activity undertaken by the applicant is covered under SAC 9994 and more appropriately under the Group 99943. Whether the services provided by the applicant are exempted under Sl. No. 3 of notifications No. 12/2017 dt: 28.06.2017 as amended? - HELD THAT:- In the case at hand, the activity undertaken by the applicant is disposal of solid waste dumped in the specified yards and the same is Pure Service classifiable under SAC 9994, thus the first criterion is satisfied - The Erode City Municipal Corporation was formed as per the Erode City Municipal Corporation Act 2008 by the Government of Tamil Nadu. The service recipient i.e., Erode City Municipal Corporation, Erode, Tamil Nadu is a local authority. As per Section 2 clause (69) sub-clause (b) of the CGST Act, 2017 Municipality as defined in clause (e) of article 243P the Constitution is a local authority, hence the services are provided to Local Authority and the criterion related to recipient is satisfied. Whether the activity is a function entrusted to a municipality under Article 243W of the Constitution. Sl.No.6 of The Twelfth Schedule to the Constitution under Article 243 W? - HELD THAT:- On a cogent reading of Sl.No. 6 of the Twelfth Schedule to the Constitution and Rule 15 of the Solid Waste Management Rules 2016, it is evident that it is the duty of the local authority to investigate, analyse the existing dumpsites for their potential bio-mining and bio-remediation and wherever feasible has to take actions to bio-mine or bio-remediate the sites under Solid Waste Management . In the case at hand the function of bio-mining and bio-remediation of the dump yard is entrusted to the applicant and therefore the final criterion is also satisfied - the exemption at Sl.No. 3 of the Notification 12/2017 dated 28.06.2017 as amended is applicable to the said services provided by the applicant to Erode City Municipal Corporation. Whether the Erode City Municipal Corporation is liable to deduct TDS as per the provisions of Section 51 GST Act 2017 for the services received by them from the applicant? - HELD THAT:- The applicant supplies the service but the question raised is not on the applicability of the Notification to the applicant but the applicability of the Notification to the recipient of the services of the applicant, who is a distinct person for whom this ruling is not applicable as per Section 103 of the Act - there are no merit in the claim of the applicant in as much as the ruling, if extended also, is not applicable in respect of Erode City Municipal Corporation who is not the applicant. The questions raised is on the eligibility of the applicants to the exemptions at Sl.No. 3/3A of Notification No. 12/2017 dated 28.06.2017 and if exempted whether the notifications regarding TDS are applicable to the supply and the authority has ruled the applicability to that supply, whereas the question is on the liability of the recipient of the services who is not the applicant in the case at hand. Therefore, this question is not admissible as per Section 97 read with Section 95 of the Act and therefore not admitted. 2020 (11) TMI 324 Detention of goods alongwith vehicle - wrong destination is noticed - appealable order or not - Section 107 of the S.G.S.T. Act, 2017 - HELD THAT:- Noticing the conveyance at a wrong destination without anything more cannot be said to be a contravention of the CGST Act/Telangana GST Act, 2017 and it is not an taxable event, for there could be several reasons for the same including the driver losing his way or stopping for repair or to answer a call of nature. Admittedly the vehicle at the time of its detention on 27.01.2020 at Katedhan at 07:50 a.m. by the 1st respondent was accompanied by tax invoice dt.26.1.2020 and e -Way Bill dt.26.01.2020 issued by M/s. Jeevaka Industries Private Limited, Chegunta Village and Mandal, Medak District, Telangana and IGST at the rate of 18% had already been charged thereon - Once the conveyance/vehicle driver had the tax invoice and the e-way bill, there is prima facie compliance with the provisions of the CGST Act and Telanaga GST Act and the rules made thereunder and as per para 5 of the circular dt.14.9.2018 referred to above, it did not warrant initiating of proceedings under Sdc.129 of the Telangana GST Act, 2017. It is not as if when goods are in transit there is a prohibition of their sale by the purchaser to a third party. In fact the court can take judicial notice that it is quite a common thing and a well recognized trade practice. - It is also important to note that 26.1.2020 i.e., the day when the goods were loaded on the vehicle was a Public Holiday, i.e., Republic Day. If there is any transaction between the petitioner and M/s.Laxmi Narasimha Constructions, Proddatur, Andhra Pradesh on 27.01.2020, the next working day after 26.1.2020, there is no need to suspect the bona fides of transaction merely because the Ex.P9 - e - Way Bill was generated at 9.48 am, along with a tax invoice in favour of purchaser, viz., M/s.Laxmi Narasimha Constructions, Proddatur, about two hours after the vehicle s detention at 7.50 am and cannot be construed that petitioner had an intention to unload the goods at Katedan, Hyderabad, which is somehow contrary to law. Any defect, if any, in the documentation accompanying the goods has to be looked at in terms of the Circular dt.14.09.2018 issued by the Central Board of Indirect Taxes and Customs, New Delhi. The action of 1st respondent in collecting the sum of Rs. 4, 30, 778/- from petitioner on 30.01.2020 is declared as arbitrary and violative of Articles 14 and 265 of the Constitution of India, and also the provisions of CGST Act, 2017 and TGST Act, 2017, and also the Circular CBEC / 20 / 16 / 03 / 2017 GST dt.14.09.2018, issued by the Government of India - Petition allowed. 2020 (11) TMI 323 Grant of Bail - offence punishable under Sections 132(1)(b) and 132(1)(l) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The petitioner has been indicted in a heinous and serious offence, i.e., economic offence causing loss of Rs. 19 crores revenue to the Government Exchequer, as revealed from the materials produced and also his such alleged overt act contributed to frustrate the avowed object of bringing reform tax law brought by the Union of India in the shape of G.S.T. and Rourkela is stated to be an epicentre of such fraudulent activities in India which has spreaded to other parts of the Country, this Court is not inclined to review its earlier order rejecting the prayer for bail of the petitioner only on the ground that the petitioner remained in custody for some times more. The Court in seisin over the matter before release of the petitioner shall put such other terms and conditions as deemed just and proper to ensure his return to custody. Notwithstanding such interim release of the petitioner, the Court shall do well to take all effective steps to conclude the trial within six month hence and the complainant shall also take all such steps as desired by the court concerned for conclusion of the same within the time stipulated. Petition disposed off. 2020 (11) TMI 322 Availment of credit - late filing of returns - Petitioner submits that the petitioner has filed its Returns in the prescribed form in GSTR-3B for the month of March 2019 on 12.12.2019 along with the late fee for the delay in filing the Returns - HELD THAT:- This Court is of the considered view that the writ petition could be disposed of, without expressing any opinion on merits, permitting the petitioner to file a representation with the Assistant Commissioner of Commercial Taxes - LGSTO - 20, Bengaluru enclosing a copy of this order, and this Officer shall expeditedly consider the petitioner s representations but within an outer period of 6 [six] weeks from the date of such representations. 2020 (11) TMI 321 Ex-parte order - non application of mind - It is the contention of the petitioner that arbitrarily, without application of mind to the reply dated 05.06.2020 as well as the reply dated 09.09.2020, the respondent has issued the impugned show cause notices all dated 21.09.2020 - HELD THAT:- It is settled law that a show cause notice can be challenged through a writ petition, only, if it has been issued without authority under law. In the case on hand, the petitioner has admittedly challenged the show cause notices issued by the respondent. Admittedly, no final orders have been passed by the respondent. The apprehension of the petitioner is that the respondent has not applied his mind and has not considered the replies dated 05.06.2020 09.09.2020 sent by the petitioner. According to him, arbitrarily and without considering the said replies, the impugned show cause notices have been sent to the petitioner. These writ petitions are disposed of by directing the respondent to consider the petitioner s replies dated 05.06.2020 09.09.2020, as well as the supporting documents placed by him - Petition disposed off. 2020 (11) TMI 320 Grant of Regular Bail - Irregular availment of input tax credit - offence under Section 132(1)(i) of Central Goods and Services Act, 2017 - HELD THAT:- On perusal of the entire record would reveal that the allegation against the petitioner herein is illegal/ wrongful claim of 14 crores of Input Tax Credits without supply of goods - The petitioner is in jail from 23-09-2020. Admittedly, there is no explanation in the counter filed by the respondents with regard to stage and completion of investigation from 23-09-2020 - this Court is inclined to grant regular bail to the petitioner herein. Petition allowed. Income Tax 2020 (11) TMI 326 Deduction of interest expenditure - nexus between the borrowed funds on which assessee has paid interest - HELD THAT:- We notice from the records that the assessee has earned interest income from the deposits in bank. These deposits are out of the balance of liquidating certain investments. Since the assessee is under the direct control of Hon ble Spl. Court and all the issues are pending before the Hon ble Spl. Court. The plea of the assessee is that there is oral contract between the parties to pay 12% per annum and whatever the interest income earned by the assessee are out of the surplus of the liquidation of certain investment. The investment as well as the fund management are under the supervision of the Hon ble Spl. Court, assessee has no role to play. From the facts on record, prima facie, it appears that there is a nexus between the borrowed funds on which assessee has paid interest and the investment on which it has earned interest income. Therefore, the assessee should get deduction of interest expenditure to the extent of interest income earned. It is relevant to observe, in assessee s own case in AY 2017-18, the AO himself has allowed claim of deduction of interest expenditure to the extent of interest income earned during that year, In view of the aforesaid, the ground is allowed as indicated above. Levy of collection of interest under section 234A, 234B 234C and charging of interest excluding the income which is subject to TDS - HELD THAT:- Interest levied under section 234A, 234B 234C be recomputed after excluding the income which is subject to TDS. Considering the decision in [ 2017 (12) TMI 1668 - ITAT MUMBAI] the Assessing Officer is directed to re-compute the interest accordingly, In the result, these grounds of appeal are allowed for statistical purpose. Capitalization of interest - HELD THAT:- We are of the view that to the extent the interest relate to the investment, i.e. being disallowable under Section 57 will become part of cost of acquisition of shares and therefore the AO is directed to take it as part of the cost of shares for determining profit on sale of the shares. Thus, the additional ground stands allowed to that extent. 2020 (11) TMI 319 Payment of interest u/s 244A - petitioner admits that the petitioner has received the refund sought for in the present petition and no interest has been paid till date of payment u/s 244A -HELD THAT:- As respondent assures and undertakes to this Court that the petitioner s request for payment of interest under Section 244A of the Act shall be processed by respondent no.2 within eight weeks in accordance with law. The undertaking given by learned counsel for the respondent is accepted by this Court and respondent is held bound by the same. Recording the aforesaid undertaking, the present writ petition stands disposed of. 2020 (11) TMI 318 Allowability of the expenditure applying the test of the commercial expediency - expenditure incurred towards community welfare? - HELD THAT:- This issue was dealt by us in the Revenue s appeal for AY 2007-08 [ 2019 (3) TMI 1826 - ITAT CHENNAI ] wherein we remitted this issue to the file of AO for fresh adjudication on the touch stone of commercial expediency. Similarly, this issue for the year under consideration also, we remit this issue to the file of AO for fresh adjudication on the similar directions. Expenses incurred by contributing to Chennai Open Tennis Tournament - According to the assessee they are entitled to claim it as reduction because it amount to commercial expediency as the assessee would get visibility by contributing towards the programme - HELD THAT:- Letter issued by the Government of Tamil Nadu has been held to be only intimation/invitation and that cannot be the sole reason for the appellant to claim the same as an expenditure under Section 37 - As relying on MALAYALAM PLANTATIONS LIMITED [ 1964 (4) TMI 9 - SUPREME COURT ] Revenue may realise the amounts from the business assets is a consequence of the default of the assessee in not discharging his statutory obligation, but it does not make the expenditure any the more expenditure incurred in the conduct of the business. It is manifest that the amounts in question were paid by the assessee as a statutory agent to discharge a statutory duty unconnected with the business, though the occasion for the imposition arose because of the territorial nexus afforded by the accident of its doing business in India. - Decided against assessee. 2020 (11) TMI 317 Recovery proceedings - stay of the demand u/s 220(6) - HELD THAT:- Writ applicant has preferred an application dated 12.3.2020 addressed to the Principal Commissioner of Income Tax-2, Surat, seeking stay of the demand under Section 220(6) - Mr. Vora would submit that although his application is of the month of March, yet till this date, the Principal Commissioner has not taken any decision. We dispose of this application with the direction to the Principal Commissioner of Income Tax-2, Surat to take up the application filed by the writ applicant dated 12-3-2020 and pass appropriate order in accordance with the law within a period of 15 days from the date of receipt of the writ of this order. 2020 (11) TMI 316 Offences u/s 276 C(2) - petitioners had filed their income tax return in time admitting their liability but then the tax was not remitted in time as there was delay - whether this will amount a wilful evasion attracting the aforesaid penal provisions? - HELD THAT:- The act of submitting returns is not connected with the evasion of tax. It is only an act which is closely connected with the intended crime, that can be construed as an act in attempt of the intended offence. It is admitted in the counter affidavit itself that the petitioner have since cleared the dues and as on date no tax dues are payable in respect of the aforesaid financial years. Inasmuch as the tax has been subsequently paid, I am of the view that continuance of the impugned prosecution would only amount to an abuse of legal process. Respectfully following the judgment in M/S. VYALIKAVAL HOUSE BUILDING CO OPERATIVE SOCIETY LTD. [ 2019 (7) TMI 184 - KARNATAKA HIGH COURT ] the impugned proceedings stand quashed and the criminal original petition is allowed. 2020 (11) TMI 315 Reopening of assessment u/s 147 - validity of reasons to believe - HELD THAT:- Reasons recorded by the Assessing Officer is based on presumption and without application of mind by stating therein that assessee has not filed its return of income whereas the evidences produced by the assessee in the shape of paper book before the CIT(A) as well as before the Tribunal, establish that the assessee has filed the return of income for the assessment year in dispute, hence, decision of RMG Polyvinyl [ 2017 (7) TMI 371 - DELHI HIGH COURT] is squarely applicable here and therefore, applying the said ratio, the reassessment in the present case is bad in law and accordingly quashed and appeal of the assessee is allowed. 2020 (11) TMI 314 Disallowance of the claim u/s 54EC - permissible investment in a particular financial year - a sum of Rs. 50 lacs each was invested during F.Ys 2012-13 and 2013-14 respectively and as per first proviso of Section 54EC maximum amount allowable as an exemption under Section 54EC is only one financial year is Rs. 50 lacs - Whether the first proviso to Section 54EC(1) of the Act would restrict the benefit of investment of capital gains in bonds to that financial year during which the property was sold or it applies to any financial year during the six months period? - HELD THAT:- An identical issue came up for consideration before the Hon ble Madras High Court in the case of CIT Vs. Coromandel Industries Ltd. [ 2014 (12) TMI 852 - MADRAS HIGH COURT] rom a reading of Section 54EC(1) and the first proviso, it is clear that the time limit for investment is six months from the date of transfer and even if such investment falls under two financial years, the benefit claimed by the assessee cannot be denied. It would have made a difference, if the restriction on the investment in bonds to Rs. 50,00,000/- is incorporated in Section 54EC(1) of the Act itself. However, the ambiguity has been removed by the legislature with effect from 1.4.2015 in relation to the assessment year 2015-16 and the subsequent years Tribunal rightly held that the exemption granted under proviso to Section 54EC(1) of the Act should be construed not transaction-wise, but financial year-wise - if an assessee is able to invest a sum of Rs. 50,00,000/- each in two different financial years, within a period of six months from the date of transfer of the capital asset, it cannot be said to be inadmissible - Decided in favour of assessee. 2020 (11) TMI 313 Validity of reopening of assessment - notice under section 148 issued at wrong address - HELD THAT:- AO before issuing notices did not verify with the details that is already available with the revenue like address mentioned on PAN card etc., filed by assessee. AO should have verified the details available with department before issuing any notice. Under such circumstances, impugned notice under section 148 issued at wrong address cannot be held to be valid, and the assessment order passed consequent to such notice deserves to be quashed. Re-assessment order dated 29/2/2016, passed is without offering proper opportunity of being heard to assessee, which is not in accordance with law. While passing impugned reassessment order, principle of natural justice and audi alterm partem needs to be followed. We therefore quash impugned notice issued under section 148 dated 28/04/2015 at the wrong address and the consequential assessment order passed is set aside. Penalty u/s 271(1)(c), 271(1)(b) for non compliance of notice - Penalty u/s 271F for not filing Return of income - HELD THAT:- We note that all these penalty notices and consequential orders were issued and passed with wrong address, which cannot be sustained. Notice u/s 271(1)(b) and 271E are unsustainable in the eyes of law as assessee did not receive any notice u/s 148 and consequential notices being 143(2) and 141(1) of the Act which were issued by Ld.AO at wrong address. Therefore, assessee could not furnish any return of income in response. In our view, notice u/s 271(1)(b) and 271E also deserves to be quashed and set aside. Notice u/s 271(1)(c), is consequential to assessment order dated 29/02/2016, which we have already held to be bad in law as passed without granting proper opportunity of being heard to assessee. - Decided in favour of assessee. 2020 (11) TMI 312 Disallowance u/s 54F - Investment of Sale consideration for claiming exemption on LTCG - Advance was given for purchase of new residential property but the transaction was not materialized due to litigation - purchase of new residential property thereafter after getting refund of advance - failure to deposit into the capital gain account with the authorized banks - HELD THAT:- In view of decisions of Sunayana Devi [ 2017 (9) TMI 961 - ITAT KOLKATA] and Mrs. Seema Sabharwal V/s ITO (supra) reliance has been placed on the judgment in the case of CIT V/s K. Ramachandra Rao (supra) [2015 (4) TMI 620 - KARNATAKA HIGH COURT] and a liberal view has been taken for the benefit of an assessee if he/she purchases within two years or construct within 3 years a residential house then the exemption u/s 54F cannot be denied for the reason that the assessee failed to deposit un utilized amount in capital gain account scheme before the due date prescribed u/s 139(1) of the Act. Examining the facts of the instant case in the light of above two decisions, we find that both are squarely applicable in the case of assessee as in the instant case. Assessee s case is on a much strong footing for the reason that at the time when he received the advance from sale of original property, the assessee with an intention to purchase the residential flats at Bhopal have given the advance of to the builder. This fact was duly shown by the assessee in the computation of income and exemption u/s 54F of the Act was claimed on the basis of the advance given to buy the residential property at Bhopal and also the advance given to purchase the property at Thane. This fact is not rebutted by the revenue authorities. A.O has also not given any contradictory finding to the fact that the assessee has parted off with whole of the sale consideration from sale of original capital asset for purchase of residential property at Bhopal before the due date of filing of return of income for Assessment Year 2013-14. Even before Ld. CIT(A) this fact was brought to notice but since the Bhopal project could not take up and assessee had no more hope of getting residential property at Bhopal, he focused on investment made in the residential property at Thane. As truly discernable that assessee tried to fulfill the condition of purchase of residential house before one year from the date of transfer but due to litigation the Bhopal project could not take up and assessee s fund were blocked which were subsequently realized in parts. But he in order to fulfill the condition of purchasing the residential house within two years from the date of sale of property, took loans as well as used his own funds to invest for purchasing residential property at Thane. Thus the bonafide intention of the assessee of fulfilling the substantive conditions of provisions of Section 54F(1) cannot be doubted. Since the assessee has fulfilled the substantive condition of Section 54F(1) of the Act by way of utilizing the sale consideration from sale of the capital asset (other than residential house) within two years of sale of original capital asset, assessee is eligible for deduction u/s 54F(1) - Ground No.1 of the assessee s appeal is allowed. 2020 (11) TMI 311 Addition on account of excess stock - discrepancies in stock records, unaccounted sales - Excess stock over and above the excess stock surrendered by the assessee during the survey proceedings - CIT-A deleted addition - HELD THAT:- As regards addition for excess stock of cotton bales cotton bales of lot No. 139, 143 and 144 were issued out of stock on 24.1.2012. Gate passes and weighing slip of toll kanta supporting the fact that the cotton of lot No.139, 143 and 144 outwarded from stock records were loaded in trucks for dispatch. However the invoices No. 163, 164 and 165 were issued for lot No. 139, 143 and 144 respectively on 25.1.2012. Thus we are satisfied with the documentary evidence that the alleged stock of cotton bales were part of book stock and they were issued out of stock on 24.1.2012 and were sold through the invoices issued on 25.1.2012. Physical stock was taken by the revenue authorities on the date of survey. Thus the action of the Ld. A.O making the addition for the unaccounted stock of cotton bales is not justified. Addition for unaccounted stock available at Phulambari, Aurangabad - During the perusal of the sales/invoices recorded by the Ld. A.O forming part of the assessment order, details of invoices issued from Aurangabad directly to the parties at Tamil Nadu, sales tax returns filed by the assessee, we are satisfied with the details filed by the assessee that against the quantity of goods purchased from Pragati Cotton, Phulambari equivalent quantity of goods were sold to other parties at Tamil Nadu and Maharashtra, though at loss due to poor market conditions but the quantity of goods purchased matches the quantity of goods sold from Aurangabad. Since the revenue authorities failed to prove anything contrary to the fact that there is no mismatch of quantity of goods purchased and sold at Aurangabad, the action of Ld. A.O making addition for the alleged stock at Rs. 55,05,835/- lying at Aurangabad is not justified. Ld. CIT(A) has rightly appreciated the facts and deleted the addition, which thus needs no interference from our end. Excess stock on account of recasted trading account - A.O has adopted the never heard before method for recasting the trading account computing the closing stock as balancing figure even when the revenue authorities have taken the physical stock at the time of survey on 24.01.2012. Since the figure of unrecorded sales and the figure of recasted closing stock by the Ld. A.O totals to Rs. 6,77,17,000/- and duly matches with the closing stock shown in the books of accounts, this observation of the Ld. A.O of the alleged unrecorded sales is devoid of any merit. Further the excess stock i.e. over and above at Rs. 6,77,17,000/- computed by the survey team at Rs. 1,91,20,210/- has already been offered to tax as undisclosed income in the profit and loss account. The fact that 5 sales bills totalling to Rs. 1,12,75,871/- were wrongly added by the Ld. A.O in the pre survey sale period is proved with the details placed on record showing invoice No. 164 to 168 were Rs. 1,08,67,153/- and VAT and CST of Rs. 4,08,718/- are levied there on. We thus in the given facts and circumstances of the case find no inconsistency in the finding of Ld. CIT(A) deleting the addition of unrecorded sale at Rs. 1,13,66,913/-. CIT(A) has rightly deleted the addition made by the Ld. A.O on account of excess stock. - Decided in favour of assessee. 2020 (11) TMI 310 Validity of notice u/s 143(2) - Eligibility of issuance of notice u/s. 143(2) - as argued notice u/s 143(2) was issued by an officer who had no jurisdiction over the assessee - Assessee argued the competent person to issue notice u/s 143(2) was Income Tax Officer-6, Kanpur who had passed the assessment order as the income of the assessee was less than Rs. 20 lacs whereas the notice u/s 143(2) has been issued by DCIT and that too by two DCITs from Circle-4 6 - HELD THAT:- In the present case instead of order having been passed by Commissioner, the transfer memo has been prepared by DCIT-6 and records have been transferred to jurisdictional Assessing Officer. CBDT instruction clearly states that for corporate assessees having income upto Rs. 20 lac, the assessment is to be done by Income Tax Officer. In the present case, admittedly the assessee is a corporate assessee and its returned income is less than Rs. 20 lac as the assessee had filed return for an income of Rs. 11,11,750/-. Therefore, as per the above instructions, the jurisdictional Assessing Officer was Income Tax Officer and not DCIT or ACIT who had issued noticed u/s 143(2) of the Act. It is also an admitted fact that jurisdictional Assessing Officer which is Income Tax Officer, Ward-6, Kanpur had not issued any notice u/s 143(2). In the present case we have already held that statutory notice u/s 143(2) was not issued by the jurisdictional Assessing Officer and therefore, the reliance placed by Learned D. R. on 292BB is of no help to Revenue. Keeping in view the above facts and circumstances and legal precedents, we allow the jurisdictional ground taken by the assessee that the notice u/s 143(2) was not issued by an officer having jurisdiction on the assessee and who had passed the assessment order and therefore, we hold that in view of non issue of statutory notice u/s 143(2), the assessment order is bad in law and void ab in initio and hence all further proceedings including the order passed by the learned CIT(A) is bad in law and therefore, the appeal filed by Revenue against the order of learned CIT(A) does not stand and is dismissed. - Decided in favour of assessee. 2020 (11) TMI 309 Exemption u/s 10(23C)(iiiab) - As per AO grants received during the year were not received wholly from Government but from other sources also - institutions receiving substantial grant less than 50% of the total contribution by the Government - HELD THAT:- From gross receipts if we deduct the receipt on account of interest, rent and sale of tender from which are not exactly in the shape of grant/fees the remaining amount will be Rs. 5,48,47,957/-. The Government grant for the year was Rs. 2,71,00,000/- which in percentage will be 49.40%. Thus the Government grant is almost (though not exact) 50% of the total receipt of fee and grant during the year. Undoubtedly the Government grant is substantial looking to the quantum of contribution as well as the control of the State Government in the functioning of the society as well as the movement of funds. We, therefore held that the assessee society has been rightly held by Ld. CIT(A) to be eligible for exemption u/s 10(23C)(iiiab) of the Act since almost 50% of the grants were given by Ministry of Human Resources Department of Madhya Pradesh and for the year under appeal this grant has been received for 20 poly technical colleges and thus the assessee educational institute running society solely for educational purposes and not for the purpose of earning profits and is substantially financed by the Government is therefore eligible for exemption u/s 10(23C)(iiiab) - Ground No.1 2 of revenue s appeal are dismissed. Claim of incidental expenditure u/s 57(iii) - Allowability of the expenses claimed in the return of income - HELD THAT:- Assessee society is a registered under the Madhya Pradesh Society Registration Act 1959 since 26.06.1962 wth the sole purpose of establishing and running institution to impart technical education in Civil, Mechanical and Electrical and such other branches of Engineering. The assessee institute runs solely for educational purposes and not for the purpose of earning profits. Most of the grants are received from Government of Madhya Pradesh. Irrespective of the fact that the assessee is eligible for exemption u/s 10(23C)(iiiab) of the Act or not even if the revenue authorities wanted to tax receipts during the year as income under the head income from other sources, they were not justified in grossly denying the benefit of genuine claim of incidental expenditure u/s 57(iii) of the Act being the expenditure (not been in the nature of capital expenditure) laid out by the assessee institution wholly or exclusively for the purpose of making or earning such income. We thus confirm the finding of Ld. CIT(A) to this effect and allow the claim of expenses u/s 57(iii) of the Act and dismiss revenue s Ground No.3. 2020 (11) TMI 308 Eligibility of deduction u/s 54B - Claim denied as investment made prior to the date of the sale of the land on which the capital gain arose - AO held that only the amount utilized/invested till the due date of the filing of the return of income u/s 139(1) was eligible for deduction u/s 54B and the remaining amount would be eligible for deduction only is such amount was deposited in the account in a specified bank or institution before the due date as provided under section 139(1) - as argued investment made in purchase of agriculture land till the extended date of filing of the return of income as provided under section 139(4) - HELD THAT:- CIT(A) has claimed to have followed the decision of the Hon ble Jurisdictional High Court in the case of Jagriti Agrwal [ 2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT] but according to him, the benefit of utilising the capital gains amount to the extended date as provided under section 139(4) would be allowable only to the date of the actual filing of return of income by the assessee. In this case, limitation for filing of the return of income in terms of section 139(4) expires on 31/03/2012 but the actual return of income was filed on 29/09/2011 and, therefore, the Ld. CIT(A) restricted the deduction for the amount invested in purchase of the agriculture land till 29/09/2011. The coordinate bench in the case of Smt. Vatsala Asthana [ 2019 (10) TMI 1025 - ITAT DELHI] has allowed benefit of deduction under section 54 of the Act for the payment made towards purchase of the residential house up to the due date of the filing of the return of income prescribed under section 139(4) - The Section 54B is pari-materia with Section 54 of the Act. Also see SH. VIJAY CHAUDHARY C/O RAVI GUPTA, ADVOCATE VERSUS ITO, WARD 4 (4) GURGAON [ 2019 (7) TMI 857 - ITAT DELHI] Parties could not get verified the exact amount invested in purchase of agricultural land till the qualifying period, thus, we feel appropriate to set aside the finding of the Ld. CIT(A) and restore the issue in dispute of deduction under section 54B of the Act to the file of the Learned Assessing Officer for verifying the investment in purchase of agriculture land and decide the issue of deduction u/s 54B of the Act afresh in accordance with law after providing adequate opportunity of being heard to the assessee. As per the record, we find that against the order of the Learned CIT(A), the Revenue is not in appeal, which means the Revenue has accepted the decision of the Ld CIT(A) - Appeal of the assessee is allowed for statistical purposes 2020 (11) TMI 307 Notice u/s 143(2) with wrong date of filing of return - assessee filed its original return of income under section 139 of the Act on 30/07/2013, and notice under section 143(2) of the Act, was issued to assessee on 19/11/2013 - HELD THAT:- On analysing the argument advanced by Ld.AR having regard to the notices issued it is a fact that return of income for assessment year under consideration could not have been filed on 31/07/2012. And therefore in our view date of filing of return for assessment year 2013-14 mentioned in notice issued under section 143 (2) of the Act on 19/11/2013 could only be a typographic mistake. Therefore, contentions of Ld.AR cannot be appreciated. In our view the error has occurred due to typographical mistake and hence it is curable as per provisions of section 292B of the Act. Limitation for issuing notice under section 143(2) of the Act for year under consideration expires on 30/09/2014. We also note that, Ld.AO issued notice again under section 143(2) of the Act, on 04/09/2014, placed at page 56 of paper book within period of limitation. We also note that, said notice was received by assessee on 10/09/2014, thereby complying with requirements for assuming jurisdiction by Ld.AO, within period of limitation, as observed in case of Hotel Bluemoon [ 2010 (2) TMI 1 - SUPREME COURT] - In our view, decision of Hon ble Supreme Court in case of Hotel Bluemoon will not come in support of assessee in the present facts. Accordingly Grounds 6-7 raised by assessee stands dismissed. Exemption u/s 54F - not considering deposit in capital gains account scheme - assessee declared long term capital gain at nil , after claiming indexed cost of acquisition of Rs. 6,90,120/- and claimed exemption of Rs. 97,09,800/- under section 54F, consisting of Rs. 44 lakh kept in capital gains account and 55 lakh held in PD account by income tax Department - whether the amount so deposited has been utilised for construction or purchase of house would arise only in assessment year 2016-17? - HELD THAT:- In the present facts of the case, we note that assessing officer has examined the withdrawals/deposits found in the capital gains account scheme during the year under consideration. In our view such action by Ld.AO is not in accordance with provisions of section 54F(4) - assessee is eligible to claim exemption under section 54F, to the extent the amount was deposited as on 31/03/2013 i.e before the end of financial year relevant to assessment year under consideration i.e Rs. 44,00,000/-. Assessee has claimed that advance of Rs. 4,84,020/- was paid to telecom employees co-operative society with an intention to purchase site, and that, said amount was refunded back, since BDA did not allot the site. Ld.AR brought to our notice specific ground no.3, raised in respect of the same, as assessee is denied said amount as deduction under section 54F - CIT(A) rejected assessee s contention only on the ground that no details were filed in respect of cancellation of deed with BDA.We note that this claim was made before Ld.AO during assessment proceedings. At the outset we also note that Ld.Ar fairly admitted that assessee is not eligible for deduction of Rs. 44,00,000/- - As submitted that the advance given proves that assessee was genuinely perusing investment in a new asset as required under the law. Accordingly, Ground no.3-4 raised by assessee stands partly allowed. Amount seized by revenue lying in PD account - HELD THAT:- The seizure of cash and keeping in PD account is a separate procedure prescribed in the act which is different from deposits made into capital gains account scheme. As observed by Ld.CIT(A) amount kept in PD account is under the control of Department, while amount kept in capital gains account scheme is under the control of assessee. There is no provision under the Act, to link both the types of deposits. Assessee could avail deduction under section 54F(1) of the Act, only if the deposit is actually made in the capital gains account scheme. Accordingly, we are of the view that Ld.CIT(A) rightly rejected the claim of deduction under section 54F of the Act in respect of Rs. 55 lakh seized by Department and kept in PD account. - Decided against assessee. Interest charged under section 234B - AR submitted that the amount of Rs. 55 lakh seized and kept in PD account should be treated as payment of tax and accordingly interest under section 234B of the Act should be computed by deducting the said sum as payment of tax - HELD THAT:- Provisions of section 132B of the Act governs the manner of utilisation of funds seized by the Department. If the amount seized and kept in PD account is more than the liability payable by assessee, then the assessee is entitled to interest also as per the provisions of section 132B of the Act - this amount cannot be treated as equal and to advance tax for purpose of computing interest under section 234B of the act. We, therefore do not find any infirmity in the observations of Ld.CIT(A). - Decided against assessee. 2020 (11) TMI 306 Disallowance of interest expenditure - CIT(A) had disallowed interest expenditure on the ground that details pertaining to nexus between borrowed funds and the investments in various assets is not available on record and hence it is not possible to determine the quantum of interest expenditure allowable - HELD THAT:- As decided in own case [ 2017 (12) TMI 1668 - ITAT MUMBAI] we set aside the order of the CIT(A) and direct the AO to allow deduction in respect of said interest accrued and calculated at 12% per annum after disallowing proportionate interest in respect of the investment in shares after verifying the calculation of the interest quantification. Capitalization of interest - interest attributable to acquisition of shares and securities - HELD THAT:- As decided in own case [ 2017 (12) TMI 1668 - ITAT MUMBAI] direct the AO to treat the proportionate interest disallowed in each assessment year to be part of cost of acquisition of shares and securities. Addition of personal household expenses - HELD THAT:- Reduce the addition on account of household expenses to 50% and sustain the addition left. Levy of interest u/s 234A, 234B and 234C - HELD THAT:- As relying on own case[ 2017 (12) TMI 1668 - ITAT MUMBAI] issue has been sent back to the Assessing Officer to recompute interest u/s. 234B of the Act with a direction. 2020 (11) TMI 305 Estimation of income - bogus purchases - HELD THAT:- As decided in own case we are inclined to restrict the disallowance @ 2% of alleged purchases. Therefore, we direct the AO to restrict the disallowance @ 2% of the alleged bogus purchases. Accordingly, we partly allow the ground raised by the assessee. Addition u/s 68 on undisclosed income - HELD THAT:- We notice from the records that assessee has introduced the capital in the firm and not disclosed the proper source. It is fact that assessee is in the business for so many years. But the funds were not deposited in the bank, but introduced in the business. It is the duty of the assessee to disclose the proper source. The profit declared by the assessee is also not considerable to support the contention of the assessee. If it is private source from family or friends, it should be properly disclosed. Since, no documentary evidence or any confirmations were filed before us, it is possible that assessee might have certain private savings. Therefore, we are inclined to allow 50% of the capital introduced by him as genuine. Accordingly, ground raised by assessee is partly allowed. 2020 (11) TMI 304 Penalty u/s. 271(1)(b) - Non-compliance by the assessee with respect to the statutory notices issued u/s. 142(1) - HELD THAT:- We are bound by the judicial precedent laid down by the Co-ordinate Bench of this Tribunal in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust [ 2007 (8) TMI 386 - ITAT DELHI-G] wherein the Tribunal had taken a view that where the assessee had not complied with notice u/s. 142(1) of the Act but the assessment order was passed u/s. 143(3) of the Act and not u/s. 144 of the Act, that meant that subsequent compliance of assessment proceedings was considered as good compliance and defaults committed earlier were ignored by Assessing Officer and, therefore, levy of penalty u/s. 271(1)(b) was not justified. - We set aside the impugned orders in all the four appeals and direct the Assessing Officer to delete the penalty. - Decided in favour of assessee. 2020 (11) TMI 303 Disallowance of Depreciation on the building known as Business @ Mantri at Pune - Asset used for business purposes OR house property - HELD THAT:- This is not in dispute that the assessee is in the business of leasing out building and once the building is completed, it is being used for the purposes of the business Even if the building is not actually let out and the assessee is not occupying the same for the purpose of business, Annual Value of the building is to be estimated at the sum for which the property might reasonably be expected to let from year to year and it is brought to tax. Hence, actual use is not a precondition to bring the property to tax under the head Income from House Property. Section 22 is not applicable in a case where the property is occupied by the assessee for business purpose and we find that in the present case, the property is ready on 24.09.2013 but still, the AO has not brought its Annual Value to tax in the present year under the head Income from House Property and this also indicates in our opinion that the AO also accepts silently that the building in question is occupied by the assessee for business purpose and he states this objection only that it was not put to use in the present year because actual let out has happened subsequently AO should allow the claim of depreciation on this basis that the building was put to use for the purposes of the business on 24.09.2013 i.e. the date of completion and keeping this in mind that the assessee was already in the hunt for lessee and keeping this also in the mind that this is not the case of the AO or CIT (A) that income from this house property is taxable under the head income from house property and not under the head income from business because had it been the case of the AO or CIT (A), Annual Value would have been brought to tax and deduction would have been allowed of interest u/s 24 and only depreciation would have been disallowed. Disallowance of interest u/s 36 (1) (iii) in respect of funds borrowed for construction of the same building known as Business @ Mantri at Pune - disallowances alleging that the said building was not put to use by the assessee in the present year - HELD THAT:- Requirement of section 32 and proviso to section 36 (1) (iii) is similar and once, we hold that the building was put to use and depreciation is allowable, the conditions specified in this proviso to section 36 (1) (iii) also gets satisfied and interest is also allowable from the date of completion of the building i.e. 24.09.2013 in the present case. Accordingly, we delete the disallowance of interest also and Ground Nos. 2 and 3 are allowed. Deemed Dividend u/s 2 (22) - HELD THAT:- We find force in the submissions of assessee that the learned CIT (A) should have decided this issue on merit instead of upholding the assessment order by following the Judgment of Hon ble apex court rendered in the case of Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] . Accordingly, we set aside the order of CIT (A) on this issue and restore this matter back to CIT (A) for a decision on merit. 2020 (11) TMI 302 Disallowances on telephone and vehicle maintenance and business promotion expenses - allowable revenue expenditure u/s 37(1) or not? - HELD THAT:- AO made the ad-hoc additions without reference to any specific instance where the said expenses were incurred for personal purpose. Such disallowance without pointing out any specific defect in the statutorily mandated audited books of the assessee, and with reference to any specific instances where the expenses have been incurred by the assessee not for business purposes, cannot be sustained. While respectfully following the reasoning in assessee s own case for the A.Y. 2010-11[ 2017 (6) TMI 1309 - ITAT DELHI] are of the considered opinion that the additions made by the Ld. AO by alleging that the said expenses are not related to the business of the assessee without bringing any evidence on record are bad in law and cannot be sustained. - Decided in favour of assessee. 2020 (11) TMI 301 Capital Grants Subsidies and Consumers Contribution - addition on the ground that the appellant should transfer 15% of the total Grants/subsidies/consumer contribution received during the year as against 11.75% offered by the appellant - HELD THAT:- Submissions of the assessee before us is that the uniform rate of 15% adopted by the CIT(A) is not justified. As per provisions of section 43(1) of the Act, the capital grant should be reduced from the cost/WDV of the relevant asset, and thereafter the depreciation is to be calculated. Thus, the capital grant receipt in respect of asset, on which depreciation is allowable at the rate different from 15% should be worked out as per the applicable rate. The DR could not point out any mistake in the above submission of the assessee, which we find is in accordance with law. Referring to decisions of Co-ordinate Benches of the ITAT in the case of the assessee itself [ 2019 (9) TMI 376 - ITAT AHMEDABAD] and [2015 (6) TMI 1096 - ITAT AHMEDABAD] we restore this issue to the file of Assessing Officer for re-adjudication as directed above after verification of the proportionate amount of grant relating to different assets and upon applying the actual rate of depreciation relates to those assets, therefore, this ground of appeal is allowed for statistical purposes. Correct head of income - interest income from staff loan and advances - income from other sources or business income - HELD THAT:- On perusal of the material on record, we could not find similar component of income treated as business income in the case of group concern of the assessee Gujarat Urja Vikas Nigam Ltd. Under these circumstances, we restore this issue to the file of Assessing Officer for re-adjudication denovo after verification of components of income in the group concern Gujarat Urja Vikas Nigam Ltd. which was adjudicated as business income as per the decision of the Hon ble Gujarat High Court [ 2020 (3) TMI 232 - GUJARAT HIGH COURT] . In this regard, the assessee is directed to furnish the relevant material/detail in support of its claim in the light of the decision of the Hon ble Jurisdictional High Court in the case of the group concern as supra. Accordingly, this issue is restored to the file of the Assessing Officer for deciding afresh. Disallowance of prior period expenses - As per AO assessee company has shown prior period income of Rs. 130.05 lacs after adjustment of prior period expenses - HELD THAT:- As gone through the decision in Group concern Gujarat Urja Vikas Nigam Ltd. vs. ACIT for assessment year 1988-89 [2017 (5) TMI 1718 - ITAT AHMEDABAD] wherein similar issue has been set aside to the file of Assessing Officer for adjudicating afresh according to the direction laid down by the Hon ble Gujarat High Court in the case of Adani Enterprises Ltd. [ 2016 (7) TMI 1564 - GUJARAT HIGH COURT] - we restore this issue to the file of Assessing Officer for deciding de-novo after verification the facts and material as per the ratio laid down above. Appeal of the assessee is allowed for statistical purposes. 2020 (11) TMI 300 Deduction u/s.36(1)(viia) - assessee had not made any provision for bad and doubtful debts during the previous year as per the provisions contained in section 36(2)(v) and clarification in Explanation 2 to section 36(1)(vii) by the Finance Act, 2013, w.e.f 1.4.2013 - Assessee is a rural regional bank engaged in the business of banking - HELD THAT:- As decided in own case [ 2020 (1) TMI 995 - ITAT BANGALORE ] AO was justified in disallowing the claim for deduction on account of provisions for bad and doubtful debts u/s.36(1)(viia) of the Act as admittedly the Assessee did not debit its profit and loss account any sum towards provision for bad and doubtful debts. We therefore restore the order of the AO and allow Gr.No.1 raised by the revenue. Disallowance of excess deduction claimed u/s. 36(1)(viii) - Quantum of deduction to be allowed u/s.36(1)(viii) - AO has calculated the eligible advances as per Annual Report - AO has adopted the figure of profit after tax and reduced Other Incomes while computing the deductions - CIT-A deleted addition - HELD THAT:- There is no dispute that the Assessee was an eligible entity and that to the extent of 20% of the profits derived from the eligible business, the Assessee was entitled to claim deduction u/s.36(1)(viii). A perusal of the CIT(A) order shows that the relief allowed by the CIT(A) to the assessee is based on the decision of Karnataka State Finance Corporation [ 1985 (10) TMI 5 - KARNATAKA HIGH COURT ] - CIT(A) has not given a factual finding as to how the deduction claimed by the Assessee is in accordance with the statutory provisions - since no finding has been given by the CIT(A) as to the basis on which the relief was given by the CIT(A), we deem it fit and proper to set aside the order of the CIT(A) and remand to the AO for fresh consideration the question of proper deduction to be allowed u/s 36(1)((viii) - Appeal by the revenue is allowed for statistical purposes. 2020 (11) TMI 299 Disallowance u/s 14A r.w.r 8D - AO noticed that assessee had invested huge amount in shares but had not disallowed any expenditure u/s 14A - As per assessee no exempt income has been earned by the assessee and therefore no disallowance u/s 14A is called for - HELD THAT:- Submissions of the assessee have not been controverted by the Revenue. We find that in the case of PCIT vs. GVK Project and Technical Services Ltd. [ 2019 (5) TMI 725 - SUPREME COURT] upheld the Tribunal s order holding that in the absence of any exempt income reported by the assessee, no disallowance u/s 14A can be made. We are of the view that the ratio of decision of Hon ble Apex Court relied upon by Revenue is not applicable to the present facts. In view of the aforesaid facts, we find no reason to interfere with the order of CIT(A). Thus the ground of Revenue is dismissed. Miscellaneous income - assessee submitted in assessment proceedings in the absence of the Accountant of the assessee, assessee had voluntarily surrendered the income to avoid any litigation - CIT(A) after examination of the facts has given partial relief to the assessee - HELD THAT:- CIT(A) after noting and considering the fact that the amount which was agreed by the assessee for addition before the AO included Rs. 17,13,716/- which was already added back to the income of earlier years. He accordingly granted the relief of Rs. 17,13,716/- and upheld the addition of the balance amount of Rs. 14,61,414/-. Before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue. Considering the aforesaid facts, we find no reason to interfere with the order of CIT(A) thus the ground of Revenue is dismissed. 2020 (11) TMI 298 Gifts received by the assessee from his parents - routing of the funds to the firm - withdrawals made by the parents from the partnership firm - HELD THAT:- The perusal of the dates on which the cash is withdrawn from the firm as extracted earlier, when considered with the dates on which the amounts have been deposited in the assessee s bank account which clearly shows that the deposits are much after the dates of withdrawals. Even as far as the assessment order, the Assessing Officer does recognize that the withdrawals are recorded. It is the evidence of the physical movement of funds that is being questioned by the AO. The fact that the amounts have been withdrawn and nothing has been found to show that these funds which had been withdrawn had been used for any other purpose, the claim of the assessee that these funds have been gifted to him from his parents cannot be doubted - The gifts of Rs. 5 lakhs each received by the assessee from his parents are actually the withdrawals made by the parents from the partnership firm M/s. Vedic Partners. Addition as made by the Assessing Officer and sustained by the Ld.CIT(A) stands deleted. - Decided in favour of assessee. 2020 (11) TMI 278 Eligibility for deduction of interest u/s.57 - interest income of deposits under the head income from other sources - CIT(A) had restricted allowability of interest expenditure only to the extent of interest receipts under the head income from other sources - HELD THAT:- As decided in CASCADE HOLDINGS PVT. LTD. AND VICE-VERSA. [ 2020 (3) TMI 1252 - ITAT MUMBAI] the investment as well as the fund management are under the supervision of the Hon ble Spl. Court, assessee has no role to play. From the facts on record, prima facie, it appears that there is a nexus between the borrowed funds on which assessee has paid interest and the investment on which it has earned interest income. Therefore, the assessee should get deduction of interest expenditure to the extent of interest income earned - It is relevant to observe, in assessee s own case in AY 2017-18, the AO himself has allowed claim of deduction of interest expenditure to the extent of interest income earned during that year. In view of the aforesaid, the ground is allowed as indicated above. Thus we direct the ld. AO to restrict the disallowance of interest to the extent being the interest income received on term deposits. Accordingly, the ground No.1 raised by the assessee is allowed for statistical purposes. Charging of interest u/s.234A, 234B 234C - Interest for all the assessment years which was charged without giving credit for tax deducted at source - HELD THAT:- As in case of Sudhir S. Mehta [ 2017 (12) TMI 1668 - ITAT MUMBAI] the issue was decided that interest levied under section 234A, 234B 234C be recomputed after excluding the income which is subject to TDS. Therefore, Assessing Officer is directed to recompute the interest accordingly. In the result, these grounds of appeal are allowed for statistical purpose. Law of Competition 2020 (11) TMI 297 Termination of Contract - Appellant claimed that it had taken orders for supply of KAMCO products from the farmers but KAMCO failed to supply the machinery and it suffered losses - HELD THAT:- Reasoning of CCI appears to be well founded. It appears to be a dispute between manufacturer and authorised dealer which is tried to be converted into a competition case. The CCI has already considered the table which is being relied on by the Learned Counsel for the Appellant and has come to the conclusion that there is no abusive conduct established. No dominance as such has been found. The Ld. CCI has rightly referred to the agreement which is at Page 49 of this Appeal, which includes termination clause - It appears to be a contractual dispute between the parties which is being tried to be converted into a competition case. We do not find that it is a case made out for interference under the Competition Act, 2002. Appeal dismissed. Corporate Laws 2020 (11) TMI 296 Maintainability of petition - Oppression and Mismanagement - criteria under Section 244 of the Companies Act, 2013 fulfilled or not - Whether the Joint Petition by three members (Appellants) is maintainable? - HELD THAT:- Admittedly the total number of members of the Respondent No. 1 company are nine. Hence, even Appellant No. 1 being a member i.e. more than one-tenth of the total number of members can maintain the petition under Section 241 of the Act. However, there is no such averment in the petition. Therefore, in the absence of pleading, the petition is not maintainable on this ground. Whether written consent is required to be filed alongwith the Petition? - HELD THAT:- The requirements contained in Regulation 18 of Company Law Board Regulation, 1991 can hardly be said to be mandatory in the sense that non-compliance would ipso facto result in the dismissal of the petition. Thus, we can say that sub-section 2 of Section 244 of the Act only speaks of obtaining of written consent of members. Though Rule 81 of NCLT rules, 2016 provides that the letter of consent signed by the members shall be annexed to the petition, however, non-compliance would not ipso facto result in the dismissal of the petition. We can say that such defect can be cured subsequently by filing of the written consent of members. It is not out of context to refer that Rule, 58 of the National Company Law Tribunal, Rules, 2016 provides that failure to comply with any requirements of these Rules shall not invalidate any proceedings, merely by reason of such failure, unless the Tribunal is of the view that such failure has resulted in miscarriage of justice. Thus, the written consent obtained under Section 244(2) of the Act is not annexed with the Petition as per the Rule 81 of NCLT Rules, 2016. Such non-compliance of this rule shall not invalidate the proceedings. Whether consent should be given by a member personally or power of attorney holder of such member can give consent? - HELD THAT:- Hon ble Supreme Court in the case of BHAGWATI DEVELOPERS (P.) LTD. VERSUS PEERLESS GENERAL FINANCE INVESTMENT CO. LTD. [ 2013 (4) TMI 252 - SUPREME COURT] has settled law that is not required that consent should be given by a member personally. Such consent can be given by the Power of Attorney Holder of such member and the consent must be decided on the basis of a broad consensus approach, in relation to the avoidance and subsistence of the case. The same must not be decided on the basis of the form of such consent, rather on the substance of the same. Whether General Power of Attorney of Appellant No. 2 3 in favour of Appellant No. 1 is doubtful? - HELD THAT:- N on-filing of written consent ipso facto would not result in dismissal of the petition. The GPA executed and notarized on 04.04.2019 and the petition under Section 241 and 242 of the Act filed on 30.04.2019. There is no finding rendered by the Tribunal that the GPA is back dated or a forged document and the Appellant Nos. 2 and 3 are not denying the execution of this document - the GPA cannot be rejected as being a forged one because it was not filed along with the main Company Petition or there was no reference in the petition or reasons for execution have not been assigned. Admittedly, the Respondent No. 1 is a family Company, in which there are total 9 Members. The Appellant No. 1 is the husband of Appellant No. 2 and father of Appellant No. 3. It is pertinent to note that all the Appellants have signed the Vakalatnama accompanied with the petition - it is evident from the Balance Sheet of the Respondent No. 1 Company for the Financial Years 2016- 2017 and 2017-2018 that the Appellants are holding shares 8.93%, 8.10% and 8.52% total 25.55%. Thus, the Appellants hold one-tenth of the total paid up share capital. Therefore, they fulfil the requirement for maintaining the Petition as stipulated under Section 244 (1) of the Act. The Joint Petition of the Appellants is fulfilled the requirement under Section 244(1) of the Act. Thus, the Petition is maintainable and impugned order passed by the Learned Tribunal is not sustainable in law - Appeal allowed. 2020 (11) TMI 295 Restoration of the name of the company on the registrar of companies maintained by the ROC Mumbai - company is registred as a LLP - section 252 of the Companies Act, 2013 - HELD THAT:- It is pertinent to note that the definition of company under Section 2(20) of the Companies Act, 2013, means a company incorporated under this act or under any previous company law. If we look at the definition of Previous Company law under sec 2(60), Previous Company law means and include Companies act 1956. Further it is seen that the LLP Act was enacted in the year 2008, before the introduction of Companies Act 2013. However, in the year 2010 the notification dated 06.01.2010 expressly declared that the provision of Companies Act 1956 more particularly section 560 of the Companies Act would be applicable to any LLP under LLP Act, 2008 - There is no provision of restoration of stuck off company under the LLP Act, 2008 and therefore we need to seek restoration of the company under the erstwhile section 560 of the companies act, 1956 and more particularly in view of the definition of the company of section 2(20) which includes the previous company law as well. This Bench is of the opinion that in the absence of any relevant provision of restoration of struck off LLP under the LLP Act 2008, the law maker has made provisions to bridge the gap and as such a declaration under section 67 of the Companies Act which expressly provided that section 560 of the Companies Act, was made applicable to LLP Act and in view of the declaration of Central Government on 6.01.2010, LLP could be restored under the erstwhile Companies Act, 1956. Therefore applying the same analogy that under the Companies Act 2013, the legislature intended to include previous company law in the definition of Company under Sec 2(20), which categorically includes Companies Act 1956. We conclude that provisions of Sec 560 of Companies Act 1956 are akin to the provisions of section 252 of the Companies Act 2013, therefore LLPs which was struck off under section 75 of the LLP Act, 2008 shall be restored under Sec. 252 of Companies Act 2013. The appeal filed by the appellant under section 252(3) of the Companies Act, 2013 is allowed r/w 11 of the NCLT rules, 2016. 2020 (11) TMI 294 Restoration of the name of the struck off company - Section 252(3) of the Companies Act, 2013 - HELD THAT:- The company has failed to file returns for three Financial Years which prompted ROC, (Dadra Nagar Haveli) Gujarat to strike off the name of such company from its Register of Companies. No plausible explanation has been given for such failure. Although, it has been claimed that notice u/s 248(1) was not served but it is noted that notice in Form STK-5 containing name of this company was published. The Company is no doubt having business operations and has got capital liabilities as well as assets in its balance sheet. Company has already substantial revenue of Rs. 33.64 Crores and Rs. 14.58 Crores in the year 31.03.2018 and 31.03.2017 respectively. The revenue is increased in yearly basis. Thus, the name of the company needs to be restored in the Register of Companies maintained by ROC, (Dadra Nagar Haveli), Gujarat from the date of its striking off - However, for non-compliance of provisions of Companies Act, 2013 relating to filing of statutory returns without plausible explanation, even after having substantial operations, suitable cost needs to be imposed. Application allowed. 2020 (11) TMI 293 Approval of Amalgamation Scheme - sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme of Amalgamation appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, the Company Scheme Petitions are made absolute. The Transferee Company to file a copy of this Order duly certified by the Deputy/Assistant Registrar of this Tribunal along with a copy of the Scheme with the concerned Superintendent of Stamps for the purpose of adjudication of stamp duty, if any, payable on the same, within 60 (sixty) days from the date of receipt of the Order - The Petitioner Companies are directed to file a copy of this Order alongwith a copy of the Scheme of Amalgamation with the concerned Registrar of Companies, electronically in E-Form INC 28 in addition to the physical copy, as per relevant provisions of the Companies Act, 2013. The Scheme is sanctioned and Appointed Date is fixed as 1st April 2018 - Application allowed. 2020 (11) TMI 292 Restoration of name of the Company on the register maintained by the Registrar of the Companies - section 252 (3) of the Compaq Act, 2013 - HELD THAT:- It is admitted by the applicant that the company did not file its annual returns and financial statement for the year 2017-18 2018-19 - The applicant produced on record the audited annual financial statements for the year 2017-18 to 2018-19 to show that the company was carrying on business. On perusal of the documents placed on record, it is found that the Company was in the operation and have fixed assets liabilities - Moreover, admittedly upon service of notice under section 248 (5) of the Companies Act, 2013, the applicant had filed representation pointing out that the company is going concern, but, annual return could not be filed due to inadvertence. In our considered opinion ROC, Gujrat, ought to have considered that observation. Be as that as it may from material on record, we find that the company carries the business, Hence, its name has to be restored in the register of companies maintained by ROC. The Registrar of Companies, Ahmedabad, the respondent herein, is ordered to restore the name of company in Register of Companies as if the name of the Company has not been struck off from such Register. 2020 (11) TMI 291 Restoration of the name of the Company in the Register of Companies - Section 252(3) of the Companies Act, 1956 - HELD THAT:- The Appellant has submitted sufficient evidence that it has been in operation since incorporation and during the period preceding strike off, therefore it could not be termed as a defunct company as per section 252 of the Act. Thus, taking into consideration the provisions of Section 252(1) of the Companies Act, 2013 which vests this Tribunal with a discretion where the Company, whose name has been struck off, and such Company is able to demonstrate that there is a running business as on the date when the name was struck off and also keeping in consideration that it is just to do so, can restore the name of the Company, in the Register and in the interest of all stakeholders, including the Appellant itself, who seeks restoration of the name of the Company in the register maintained by Registrar of Companies, the company deserved to be restored. The Public Notice of Registrar of Companies, striking off the name of the company is hereby declared illegal and set aside - Appeal allowed. 2020 (11) TMI 290 Restoration of the name of the Applicant Company in the Register of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- It is evident from the plea of the Applicant that the Applicant has not questioned the process undertaken by the RoC in striking off the name of the Appellant Company as envisaged under Section 248 of the Companies Act, 2013 read with attendant Rules. However, the Applicant is seeking restoration of its name in the register as maintained by RoC by relying up on the ground that the Applicant Company as of date is carrying on the business for which it was incorporated and it is in operation and in the circumstances, it is just that the name of the Company should be restored on the Register of Companies as maintained by the Respondent. Further, a perusal of the GST Returns and the bank statement of the Company also goes on to show that the Company has been doing business. However, even though it will not absolve the Company from filing the necessary returns and documents and adhere to the provisions of Companies Act, 2013 as an onus is placed on the Company to strictly comply with the provisions of Companies Act, 2013 without any let, in the instant case the Company has demonstrated mitigating circumstances. Thus, taking into consideration the provisions of Section 252 of the Companies Act, 2013 which vests this Tribunal with a discretion where the Company whose name has been struck off and such Company is able to demonstrate that there is a running business as on the date when the name was struck off and also keeping in consideration that it is just to do so, can restore the name of the Company in the register, subject to conditions imposed. Application allowed. 2020 (11) TMI 289 Restoration of the name of the Company in the Register of Companies - Section 252(3) of the Companies Act, 2013 r/w Rule 87A of the National Company Law Tribunal (Amendment) Rules, 2017 r/w other related provisions of the Companies Act, 2013 and Companies (Removal of Names of Companies From the Register of Companies) Rules, 2016 - HELD THAT:- Taking into consideration the financial statement as filed by the Applicant/Petitioner along with Income Tax Returns as pointed out above as well as the bank statement all of which establish that the Company was in operation immediately for a two year period prior to the strike off the name of the Company from the Register of Companies by the RoC. Taking into consideration the provisions of Section 252(3) of the Companies Act, 2013 under which this Application has been filed, it is deemed fit to restore the name of the Company on the file of the RoC/Respondent concerned as maintained, on the grounds that the Company has been able to demonstrate that it has been carrying on business/operations for a period of two years prior to strike off, subject to conditions imposed - application allowed. Insolvency & Bankruptcy 2020 (11) TMI 288 Upfront Charges - arrangement of the remaining amount by way of bank finance - Applicant submits that the performance guarantee is on the higher side when the Resolution Plan itself is for Rs. 23 Crores - HELD THAT:- Considering the facts and circumstance of the case and the time required for the CoC to take such a decision, in the interest of justice we order that the CoC may consider the Resolution Plan by accepting the bank performance guarantee of Rs. 3 Crores as agreed to be provided by the Resolution Applicant. Application disposed off. 2020 (11) TMI 287 Exclusion of the period of lockdown due to Covid-19 imposed by the Central Government and the State Government of Telangana from the Corporate Insolvency Resolution Process period - HELD THAT:- It is true lockdown commenced from 22.03.2020. It is the case of Resolution Professional that Resolution Applicants are from Singapore and Hongkong, those countries are affected with Covid-19 and hence the process of evolving the resolution process could not be completed - Learned counsel for Resolution Professional relied on Regulation 40C of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and contended that lockdown period to be excluded from CIRP. The COC also approved the same. Therefore, there are grounds to allow the application for excluding the lockdown period from CIRP and as such CIRP to be completed by 06.09.2020. The application is allowed directing completion of CIRP by 06.09.2020. Service Tax 2020 (11) TMI 286 Withdrawal of form SVLDRS-3 (exhibit-K) - direction to the respondents to refund the amount collected from the petitioner - whether petitioner s application (declaration) under the scheme should be construed as one under the pending litigation category or under the arrears category ? - HELD THAT:- The appeal filed by the petitioner before the CESTAT against the order-in-original dated 18.09.2018 was pending as on 30.06.2019 and therefore, the application (declaration) of the petitioner should be treated as one under the pending litigation category and not one under the arrears category . This is because in addition to the above discussion, to be eligible under the arrears category in terms of section 121(c), no appeal should be filed by the declarant against the order-in-original before expiry of the limitation period for filing appeal or the order-in-appeal has attained finality or the declarant has admitted the tax liability but has not paid the same which is not the position in the present case as petitioner had filed appeal against the order-in-original before expiry of the limitation period. It was held in the case of Capgemini Technology Services India Limited [ 2019 (3) TMI 349 - BOMBAY HIGH COURT ] and Thought Blurb [ 2020 (10) TMI 1135 - BOMBAY HIGH COURT ] , declaration of the petitioner filed under the scheme on 23.12.2019 has to be construed to be one under the pending litigation category . The matter is remanded back to the Designated Committee to take a fresh decision as to the consequential relief to be granted to the petitioner, including refund of the amount paid by the petitioner, treating the declaration of the petitioner as one under the pending litigation category after affording reasonable opportunity of hearing to the petitioner - Petition allowed by way of remand. 2020 (11) TMI 285 Classification of services - construction of residential flats - to be classified under construction of residential complex service or under the Works Contract Service? - HELD THAT:- The adjudicating authority must be given an opportunity to examine the case in the light of: (a) The order of this bench in the case of VASANTHA GREEN PROJECTS VERSUS CCT, RANGAREDDY GST [ 2018 (5) TMI 889 - CESTAT HYDERABAD] and PNR INFRA INDIA PVT LTD VERSUS CCCE ST, HYDERABAD - IV [ 2018 (12) TMI 1243 - CESTAT HYDERABAD] with respect to the land owner s share of the flats. (b) Letter F.No.332/22/2015-TRU dt.05.09.2016 of TRU regarding classification of work undertaken. (c) Examine if there is any provision in the Works Contract (Composition Scheme for payment of service tax) Rules, 2007 whereby the department can, in the absence of any request from the assessee, impose the composition scheme or calculate the amount of service tax based on it. Appeal allowed by way of remand. 2020 (11) TMI 284 Refund of Service Tax - constitutional validity of levy of service tax is sub-judice before the Hon ble Apex Court - renting of immovable property or any other service in relation to such renting, for use in the course of or, for furtherance, of business or commerce - HELD THAT:- By placing reliance on the reference made to nine Judges Bench in the case of MINERAL AREA DEVELOPMENT AUTHORITY ETC. VERSUS M/S STEEL AUTHORITY OF INDIA ORS [ 2011 (3) TMI 1554 - SUPREME COURT] , the Hon ble Supreme Court in the case of UNION OF INDIA AND ORS. VERSUS UTV NEWS LTD. [ 2018 (5) TMI 1367 - SUPREME COURT ] were pleased to defer the matter till disposal of the issues pending before such Constitutional Bench. Since the constitutional validity of the issue of levy of service tax on the disputed service is sub-judice before the Hon ble Apex Court, we are of the considered view that the present appeal filed by the appellant cannot be taken up for a decision on merits at this juncture and the matter should be remanded to the original authority for deciding the issue of leviability of service tax on the disputed taxable service along with other issues, after disposal of the Special Leave Petitions (SLPs)pending before the Constitutional Bench of Hon ble Supreme Court in the case of Mineral Area Development Authority ors. The matter is remanded to the original authority for re-adjudication of the matter, on the basis of the subject issue to be decided by the Hon ble Supreme Court. Central Excise 2020 (11) TMI 283 Demand of central excise arrears - Purchase of property in a public auction - whether there was attachment of liabilities and the same was passed along with the property or not? - When the question of recovery comes, there shall be a liability to pay the sum? HELD THAT:- The respondents 1 to 3 have not exercised the powers conferred under them and seized or attached the goods for which, they have granted exemption of duty. Once there is no charge over the plant or machinery, or other properties, the respondents 1 to 3 will fall under the unsecured creditors and they cannot prevail over the rights of the secured creditor - the transaction between the assesses or licensee and authorities is personal between them. It will not continue unless and otherwise there is a specific condition attached to the same. The auction purchasers cannot be held liable for the arrears incurred by the previous licensee or industry in facour of whom the tax benefits are granted. In various judgements, the categorical declaration is that the auction purchaser is not liable to pay any arrears, or duty or statutory dues for the default of the previous establishment. The right of the auction purchaser is absolute and independent of all the liabilities of the erstwhile establishment or owner. That transaction is personal, right or interest in personam between those parties will not bind on the auction purchaser - Reliance can be placed in the case of SPECIAL OFFICER, COMMERCE, NORTH EASTERN ELECTRICITY COMPANY OF ORISSA (NESCO) ANR. VERSUS M/S RAGHUNATH PAPER MILLS PRIVATE LIMITED ANR. [ 2012 (11) TMI 406 - SUPREME COURT ] . Thus, the notice issues by the respondents 1 to 3 demanding arrears of tax or duty, committed by the previous owner from the petitioner / auction purchaser is without jurisdiction. The auction purchaser need not file an appeal against the notice or demand or order passed by the respondents. Since the notice is without jurisdiction, the writ petition is maintainable without any exhaustion of alternative remedy. It is always open to the respondents 1 to 3 to claim or demand the arrears of duty from the licensee or the beneficiary of the license and not from the writ petitioner who is a third party to that license - demand notices set aside - appeal allowed. 2020 (11) TMI 282 Reversal of CENVAT Credit - common input services used by the appellant for providing both taxable output services and exempted services - non-maintenance of separate records - telephone mobile services - banking financial services - C F agent services - annual maintenance services - legal professional services - manner of computation of proportionate reversal of credit determined under rule 6(3A) of the Rules - HELD THAT:- It would be clear from a conjoint reading of sub-rule 6(1), (2) and (3) of rule 6 that the total CENVAT credit for the purpose of formula under rule 6(3A) is only total CENVAT credit of common input service and cannot include CENVAT credit on input service exclusively used for the manufacture of dutiable goods - This position is also clear from the underlying object of the amendment made in rule 6(3A) of the Rules by Notification dated March 1, 2016, to consider only common input services and not total input service credit, for the purpose of computing the amount of reversal. Such amendment was also clarified by the Tax Research Unit Circular dated February 29, 2016 to apply retrospectively in as much as the clarification clearly mentions that the provisions of rule 6 providing for reversal of credit in respect of input services used in exempted services, is being redrafted with the objective to simplify and rationalize the same without altering the established principles of reversal of such credit. It has been further clarified at paragraph (iv) of the Circular that the purpose of the rule is to deny credit of such part of the total credit taken, as is attributable to the exempted services and under no circumstances this part can be greater than the whole credit. The confirmation of demand, therefore, cannot be sustained - Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2020 (11) TMI 281 Reopening of assessment - Assessment for escaped turnover - time limitation - Section 25(1) read with Section 42(3) of the KVAT Act - assessment year 2013-2014 - HELD THAT:- Under the provisions of Section 25(1), as amended by Kerala Finance Act, 2017, and before repeal of KVAT Act on 22.06.2017, six year period of limitation for reopening assessments cannot be relied upon to issue preassessment notices in cases, where by 31.03.2017, five year period for re-opening assessments under the unamended provisions of Section 25(1) had already expired - In the case of BAIJU A.A. AND OTHERS VERSUS STATE TAX OFFICER, STATE OF KERALA AND OTHERS [ 2019 (12) TMI 469 - KERALA HIGH COURT] , this Court declared that the amendments to Section 25 of the KVAT Act, through the Kerala Finance Act, 2018 are illegal and unconstitutional inasmuch as they were beyond the legislative competence of the State Legislature. In the instant case, the period of limitation with respect to the assessment year 2013-14 had expired on 31.03.2019 - therefore, Ext.P1 notice dated 18.01.2020 issued under Section 25(1) read with Section 42(3) of the KVAT Act, for the assessment year 2013-14, proposing to carryout assessment for escaped turnover, is clearly barred by limitation. It is declared that the assessment in respect of which the period of limitation for re-opening under Section 25 of the KVAT Act was to expire by 31.03.2019 cannot be re-opened on 18.01.2020 by issuing Ext.P1 notice - petition disposed off. 2020 (11) TMI 280 Levy of Penalty - Section 10 (b) of CST Act - class of goods being exempted from payment of tax, when such goods are permitted to be purchased as per the list annexed to the Certificate of Registration - the learned Government Advocate submits that the authorities under the Act be granted liberty to verify the issue as to whether the goods purchased by the respondent are included in the Registration Certificates of the respondent. HELD THAT:- Application disposed off. 2020 (11) TMI 279 Time Limitation - discrepancies and defects in the books of accounts - Validity of assessment order - TNVAT Act. Time Limitation - case of petitioners is that orders of deemed assessment under Section 22(2) of the Act have been passed and as such, the impugned orders are barred by limitation insofar as they have been passed beyond the time limit stipulated under Section 27 of the Act - HELD THAT:- The proceedings initiating an assessment should commence prior to the date of expiry of limitation. In the present case, notices initiating proceedings for revision of assessments have admittedly been issued on 17.02.2017 in all cases, before the expiry of the period of limitation. This argument is thus rejected. Defects in the books of accounts - the argument of Mr.Shaffiq is to the effect that all material particulars as required by Rule 10(6)(b)(i)(B) of the Tamil Nadu Value Added Tax Rules, 2007, have not been supplied, particularly a certificate evidencing receipt of goods returned within a period of six months from date of sale - HELD THAT:- It was incumbent on the part of the Officer to have tabulated the materials filed by the assessee in the first instance and compare the same with the requirements of the aforesaid Rule and thereafter come to a conclusion as to whether the Rule stands satisfied. This exercise has not been done and the Officer merely rejects the petitioner s contention on the assumption that there is a failure to produce documentary evidence in support of the claim of sales/returns. The exercise of reconciliation has not been conducted in the manner as required by law. The impugned assessments are thus set aside. The petitioner will appear before the Assessing Officer on Monday, the 7th December, 2020 at 10.30 a.m., without awaiting any further notice in this regard, with all relevant particulars in support of its claim of sales returns and orders of assessment de novo on this aspect shall be passed within a period of four (4) weeks from 07.12.2020, in accordance with law. Petition disposed off.
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Newsletter: Where Service Meets Reader Approval.

TMI Tax Updates - e-Newsletter November 11, 2020

Articles

1. CONSTITUTIONAL VALIDITY OF REGULATION 7A OF ‘INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (INSOLVENCY PROFESSIONALS) REGULATIONS, 2016

Notifications

1. 35/2020 - dated 10-11-2020 - ADD

Circulars / Instructions / Orders

1. 37/2020 - dated 9-11-2020

Highlights / Catch Notes

GST

Court Rules Unlawful Detention and Collection of Fees Violates Articles 14, 265, CGST Act, and CBIC Circular.

Bio-mining of Dumped Garbage in Compost Yards Classified as Solid Waste Management, Eligible for Tax Exemption per AAR.

Income Tax

Reassessment Order Quashed: Section 148 Notice Sent to Wrong Address Violates Natural Justice Principles.

High Court Rules Prosecution for Non-Filing of Tax Returns Invalid After Petitioner Clears Outstanding Dues u/s 276C(2.

Section 143(2) Notice Error: Typo in Tax Return Date Curable u/s 292B, Doesn't Invalidate Notice.

Interest on Seized Funds: Section 132B Entitles Taxpayers to Interest, Not Applicable for Section 234B Advance Tax Calculations.

Institution's Tax Exemption Upheld Despite Less Than 50% Government Grants u/s 10(23C)(iiiab) of Income Tax Act.

Notice u/s 143(2) Invalid; Assessment Order Void Due to Lack of Jurisdiction by Issuing Officer. Revenue Appeal Dismissed.

Court Deletes Addition for Unaccounted Cotton Bales After Evidence Shows Proper Invoice and Sale Documentation.

Assessee qualifies for Section 54F exemption despite not depositing in a capital gains account, meeting substantive conditions.

Chennai Open Tennis Tournament expenses disallowed as business deductions; deemed statutory duty expenses unrelated to business.

Central Excise

CENVAT Credit Reversal: Rule 6(3A) Only Applies to Common Input Services, Excludes Exclusively Dutiable Goods Inputs (3A.

Auction Purchasers Not Liable for Previous Owner's Central Excise Arrears in Property Sales, Court Rules.

VAT

Kerala High Court: Tax Assessments with Expired Limitation by March 31, 2019, Cannot Be Reopened in 2020.

Case Laws:

GST

Income Tax

Law of Competition

Corporate Laws

Insolvency & Bankruptcy

Service Tax

Central Excise

CST, VAT & Sales Tax

Quick Updates:

TMI Tax Updates - e-Newsletter
November 11, 2020