Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 12, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Mandatory e-Invoicing - Turnover limit reduced to 100 Crores from 500 crores - Seeks to amend Notification No. 13/2020 – Central Tax, dated the 21st March, 2020 - Notification
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Profiteering - purchase of Flats - allegation that the Respondent had not passed on the benefit of Input Tax Credit (ITC) availed by him by way of commensurate reduction in the price of the fiats - The Respondent has passed on some benefit to his buyers on account of ITC which has been duly confirmed by the DGAP. Therefore, the Respondent is directed to pass on the balance benefit of ITC to the remaining 148 residential flat buyers and to the remaining 9 commercial shop buyers - NAPA
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Detention of goods alongwith vehicle - The show cause notice under Section 130 of the Act cannot be issued on a mere suspicion. There has to be some prima facie material on the basis of which the authority may arrive at the satisfaction that the goods are liable to be confiscated under Section 130 of the Act. - HC
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Seizure of goods alongwith the vehicle - non-production of E-Way Bill - when the vehicle was intercepted, the driver was able to produce a valid E-way bill and also the invoice, at least, the goods and the conveyance should be ordered to be released subject to the final outcome of the confiscation. - HC
Income Tax
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Exemption u/s 11 - AO made the addition on the ground that since the five years period expires in AY 2013-14, and since the assessee did not utilize the sum accumulated for charitable purpose in terms of section 11(3)(c) - AO directed to verify, if AY 2013-14 is not the period within which the accumulated surplus has to be applied, then the addition made should be deleted. - AT
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TP Adjustment - addition on account of notional interest on export receivables - When the assessee is adopting the uniform policy for none charging interest on export receivable from AE and none AE and moreover the transaction with regard to sale of cut and polished diamonds has been accepted by the TPO at ALP, no notional interest was warranted. - AT
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Short valuation of closing jobs in progress - it would not be in the interest of justice to deprive the AO to examine the submissions now made by the ld. AR for the taxpayer because the facts in entirety are required to be examined by the AO first and thereafter by ld. CIT (A), if so requires - AT
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Revision u/s 263 - loss on sale of shares - non-mentioning of the reasons for allowing the claim, will not make the assessment order erroneous. To hold the assessment order to be erroneous it has to be stablished that the AO had not applied his mind to the facts of the case or that he has not applied the correct law or has not appreciated the facts correctly. Thus, the assessment order cannot be held to be prejudicial to the interests of the revenue on this issue. - AT
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Exemption u/s 10A - total export less than 75% of the total sales - the Commissioner of Income Tax (Appeals) has held that there is no provision under Section 10A of the Act, which requires such a condition to be fulfilled and no finding in this regard has been recorded by the tribunal. Therefore, the order passed by the tribunal to the extent of fulfillment of the requirement under Section 10A(2)(ia) of the Act cannot be sustained. - HC
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Assets leased out to various companies - Whether assets were in existence at the relevant time and whether the transactions in question were genuine or not - finding of fact - The aforesaid finding of fact has been affirmed by the Income Tax Appellate Tribunal. Thus, the matter stands concluded by concurrent findings of fact, which by no stretch of imagination can be said to be either based on no evidence or perverse. - Depreciation allowed - HC
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Offence punishable u/s 276C(2) - In the present case, the allegations in both the proceedings are similar - demand raised by the Department is not crystallized as the appeal preferred by the petitioner is pending adjudication on merits.Since the petitioner has already deposited a substantial part of the demand raised by the Department, this Court is of the opinion that the continuation of the prosecution against the petitioner for the same allegations could not be permitted. - Prosecution proceedings stayed - HC
Customs
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Interest on delayed Refund of excess Customs Duty paid - Evidently, the Learned Commissioner has taken the date of receipt of Final Order of the Tribunal as the relevant date for calculation of interest to be paid on the refunded amount. This is clearly contrary to the provisions of Section 27A which has only one date for calculation of interest which is the date of refund application. - AT
IBC
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Eligibility to become insolvency professional - Constitutional validity of Regulation 7A - The time limit under Regulation 12 A(7) of the Model Bye-Laws IPA Regulations clearly runs from the date of receipt of the order, and the Petitioner would be entitled to reckon limitation from 16.07.2020 if that were indeed the date of receipt of the order of rejection as alleged. More importantly, in contrast to a withdrawal of registration or loss of professional membership as an IP, the rejection of the application for an AFA is not final and apart from the appellate remedy, it is always open to the IP concerned to remedy the non-compliance, as cited in the order of rejection, and re-apply - Regulation 12A is not unconstitutional - HC
Central Excise
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Refund of Excise Duty - Unjust enrichment - The moment it raised the invoice on M/s.IOCL and M/s.IOCL issued Invoice on M/s.PPN, the incidence of Excise Duty is definitely passed on to the buyer or consumer of raw naptha, viz., M/s.PPN. Therefore, the right to claim refund by the Appellant M/s.CPCL is completely lost. - HC
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Irregular availment of Cenvat credit - Ineligible inputs - if the invoice issued by the manufacturer contains the details of the Appellant as consignee, they are entitled to Cenvat credit even if the buyer is unregistered - AT
VAT
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Time Limitation for issuing notices and assessment order - The time limits specified in Rule 58(20) of KVAT Rules offer a safe guarding factor to define the limits of power under Section 42(3) of the Act. Meaning thereby, it would not be proper to re-open assessments to bring the tax escaped turnover, which cannot be exercised in a manner that prejudicially affect an assessee, who would not be in a position to meet the charge against him for want of books of accounts and other relevant material - HC
Case Laws:
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GST
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2020 (11) TMI 388
Seizure of goods alongwith the vehicle - non-production of E-Way Bill - HELD THAT:- We should not interfere at this stage of show cause notice as the inquiry is in progress. However, considering the fact that when the vehicle was intercepted, the driver was able to produce a valid E-way bill and also the invoice, at least, the goods and the conveyance should be ordered to be released subject to the final outcome of the confiscation. We do not propose to observe anything further as the same may cause prejudice to either of the parties. We dispose of this writ application with a direction to the respondent No.2 to release the vehicle and the goods after obtaining a bond of ₹ 11,73,480/- from the writ applicant. Application allowed in part.
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2020 (11) TMI 387
Detention of goods alongwith vehicle - demand based on assumptions - E-way bill generated was valid for the period between 08.09.2020 and 13.09.2020 - HELD THAT:- The ground on which the authority proposes to confiscate the goods and the vehicle is not tenable in law. The show cause notice appears to have been issued on an assumption that the driver of the vehicle might have indulged in the past in contravention of the provisions of the Act and the Rules made thereunder. It appears the entire basis for the issue of the show cause notice is conjectures and surmises. The goods and the vehicle can be detained under Section 129 of the Act only if such goods are transported in contravention of the provisions of the Act or the Rules made thereunder - The show cause notice under Section 130 of the Act cannot be issued on a mere suspicion. There has to be some prima facie material on the basis of which the authority may arrive at the satisfaction that the goods are liable to be confiscated under Section 130 of the Act. Application allowed.
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2020 (11) TMI 386
Maintainability of petition - availability of alternative remedy of appeal - Provisional release of goods - HELD THAT:- The writ application is disposed off with a direction to the authority concerned to immediately take up the application filed by the writ applicants under Section 67(6) of the Act for the provisional release of the goods and the conveyance and pass an appropriate order in accordance with law within a period of one week from the date of the presentation of this order.
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2020 (11) TMI 385
Profiteering - purchase of Flats - allegation that the Respondent had not passed on the benefit of Input Tax Credit (ITC) availed by him by way of commensurate reduction in the price of the fiats - contravention of section 171 of CGST Act - penalty - HELD THAT:- It is established from the perusal of the facts that the Respondent has benefited from the additional ITC to the extent of 2.67% of the turnover during the period from July 2017 to December 2018 and hence the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has not passed on the benefit of ITC to his customers. Thus the profiteered amount is determined as ₹ 1,95,86,429/- inclusive of GST @ 12% or 8% in terms of Rule 133 (1) of the CGST Rules, 2017. Further, it is also determined that the Respondent has realized an additional amount of ₹ 25,282/- from each of the Applicant No. 1 and Applicant No. 2 which includes both the profiteered amount @ 2.67% of the taxable amount (base price) and 12% GST on the said profiteered amount. The Respondent has passed on the benefit of ₹ 2,06,88,394/- to his buyers on account of ITC which has been duly confirmed by the DGAP. Therefore, the Respondent is directed to pass on the balance benefit of ITC of ₹ 19,40,731/- to the remaining 148 residential flat buyers and ₹ 5,67,310 to the remaining 9 commercial shop buyers, mentioned at Sr. 2 4 of Table-E, as per Annexure-3 and Annexure-5 of the DGAP s Report dated 28.02.2020. The details of the profiteered amount and the buyers have been mentioned by the DGAP in the above Annexures. These buyers are identifiable as per the documents placed on record and therefore, the Respondent is directed to pass on an aggregate amount of ₹ 25,08,041/- to the above mentioned 157 buyers along with the interest @ 18% per annum from the dates from which the above amount was collected by him from them till the payment is made, within a period of 3 months from the date of passing of this order as per the details mentioned in Annexure-3 and Annexure-5 attached with the Report dated 28.02.2020 in terms of Rule 133 (3) (b) of the above Rules. The Respondent shall not adjust any excess ITC benefit which he has passed on as per Annexure-2, Annexure-4, and Annexure-6 against the benefit which is due to the beneficiaries as per Annexure-3 and Annexure-5. In case the above amount is not refunded by the Respondent during the above period it shall be recovered by the concerned Commissioner CGST/CGST and paid to the eligible buyers. It is also apparent from the record that the Respondent has passed on ITC benefit of ₹ 2,06,88,394/- during the month of March, 2019 and August, 2019. Therefore, he is also liable to pass on interest @18% on profiteered amount to the flat buyers from the dates from which he has received the additional amount of consideration from them till the passing on of the ITC benefit, as he has used this amount in his business, as per the provisions of Section 171 (1) of the CGST Act, 2017 read with Rule 133 (3) (b) of the above Rules. Accordingly, the DGAP is directed to ensure that the interest is paid to be eligible house buyers and submit report confirming payment of the interest. In case the interest is not paid the same shall be recovered by the concerned CGST/SGST Commissioner and paid to the eligible buyers. Penalty - HELD THAT:- The Respondent has denied the benefit of ITC to the buyers of the flats being constructed by him in his above project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus resorted to profiteering. Hence, he has committed an offence under Section 171 (3A) of the CGST Act, 2017, and therefore, he is liable for imposition of penalty under the provisions of the above Section. Accordingly, a Show Cause Notice be issued to him directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
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2020 (11) TMI 384
Profiteering - Respondent had not passed on the benefit of additional Input tax Credit - violation of the provisions of Section 171 (1) of CGST Act - Penalty - HELD THAT:- Respondent has not passed on the benefit of additional Input tax Credit (ITC) to the above Applicant as well as other buyers who had purchased flats from the Respondent during the period from 01.07.2017 to 31.08.2018 and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017. Penalty - HELD THAT:- It is also revealed from the perusal of the CGST Act and the Rules framed under it that no penalty had been prescribed for violation of the provisions of Section 171 (1) of the above Act, therefore, the Respondent was issued show cause notice to state why penalty should not be imposed on him for violation of the above provisions as per Section 122 (1) (i) of the above Act as he had apparently issued incorrect or false invoice while charging excess consideration and GST from the buyers. However, from the perusal of Section 122 (1) (i) it is clear that the violation of the provisions of Section 171 (1) is not covered under it as it does not provide penalty for not passing on the benefits of tax reduction and ITC and hence the above penalty cannot be imposed for violation of the anti-profiteering provisions made under Section 171 of the above Act. Since, no penalty provisions were in existence between the period w.e.f. 01.07.2017 to 31.08.2018 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, the notice dated 01.04.2019 issued to the Respondent for imposition of penalty under Section 122 (1) (i) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped.
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2020 (11) TMI 332
Transitional credit under Rule 117 of CGST Rules and Rule 117 of the U.P. GST Rules - Time limitation for taking credit - power of Commissioner to extend the period of 90 days - HELD THAT:- On perusal of the order dated 22.1.2020, it is clear that the rejection of the application is based upon the understanding that the GST TRAN-1 could not be filed on account of technical glitch and thus following the circular no. 39/13/2018-GST dated 3.4.2018, the request was rejected. - Prima facie, the said order does not even take into account the arguments of the petitioners for revision of the GST TRAN-1 FORM. Thus, we set aside the order dated 22.1.2020 with a direction to the respondent no. 3 to hear and decide the application for revision of GST TRAN-1 filed on 24.9.2019. Petition disposed off.
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Income Tax
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2020 (11) TMI 383
Seizure of jewellery - Search proceedings - Revenue carried out the investigation under Section 131 (1A) of the Income Tax Act, prior to carrying out the search action u/s 132 (1) - HELD THAT:- Even if the proceedings conducted on 10.9.2018 had indeed been carried out under Section 131 (1A) of the Act, and action under Section 132 of the Act was taken subsequent thereto, such an exercise by the Revenue was nevertheless contrary to the scheme of the Act. Section 131 (1A) stipulates that if the officer named in the said statute, before taking action under Clauses (i) to (v) of Sub-Section (1) of Section 132, has reason to suspect that any income has been concealed or is likely to be concealed, by any person or class of persons within his jurisdiction, then for the purpose of making an enquiry or investigation relating thereto, it shall be competent for him to exercise the powers conferred under Sub-Section (1) of Section 131, notwithstanding that no proceedings with respect to such persons are pending before any Income Tax Authority. We repeatedly called upon Ms. Malhotra to show us any material on record of the Revenue that sets down the reason to suspect that any income had been concealed, or was likely to be concealed by the non-applicant, before initiating action under section 131(1A) of the Act. She very fairly submits that, indeed, there was no such material on record of the Revenue. Notwithstanding the contention of the Revenue that the proceedings conducted on 10.09.2018 were under Section 131 (1A) of the Act, our reasons recorded in our judgment and its final outcome are not affected in any manner. Review Petition dismissed.
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2020 (11) TMI 382
Offence punishable u/s 276C(2) - unsecured loan towards the sale of land and unsecured loan - settlement of the tax dispute under the scheme Vivad se Vishwas Scheme rejected - HELD THAT:- As evidently, the demand raised by the Department has not been crystallized since the appeal filed by the petitioner in the year 2015 against the order dated 23.10.2015 passed by the CIT(A) is still pending before the ITAT and has not adjudicated on merits. Had it been so that the petitioner had not taken the legal recourse available for restoration of the appeal dismissed for want of prosecution on 12.01.2018, then the demand raised by the Department could be said to have been crystallized. In the present case, the petitioner immediately took necessary legal recourse by filing the restoration application, which came to be allowed and the appeal was restored to the file of the ITAT and is pending adjudication as on date. Appeal filed by the petitioner before the ITAT was dismissed on 12.01.2018; however, it was not dismissed after being adjudicated on merits. Subsequently, the appeal has been restored to the file of ITAT vide order[ 2019 (8) TMI 1576 - ITAT AHMEDABAD] . Unless and until the said appeal is adjudicated and disposed of on merits, the demand raised by the petitioner cannot be said to have been crystallized. Under the circumstances, the continuation of prosecution under section 276C(2) of the IT Act could not be permitted as it would amount to a double whammy to the petitioner. If the ITAT has set aside the order of concealment and penalty, then there is no concealment in the eyes of law, under which circumstance, the prosecution cannot be proceeded with by the Department and the further proceedings will be illegal and without jurisdiction. The appeal is pending adjudication before the ITAT. There is no dispute about the proposition that adjudication proceeding and criminal prosecution can be launched simultaneously. Both the proceedings are independent in nature. The finding in the adjudication proceeding in favour of the person facing trial for identical violation will depend upon the nature of finding. In the present case, the allegations in both the proceedings are similar - demand raised by the Department is not crystallized as the appeal preferred by the petitioner is pending adjudication on merits.Since the petitioner has already deposited a substantial part of the demand raised by the Department, this Court is of the opinion that the continuation of the prosecution against the petitioner for the same allegations could not be permitted. Petition is partly allowed. The prosecution initiated against the petitioner by way of Criminal Case for the offence punishable under section 276C(2) of the Income Tax Act, 1961 shall remain stayed until the final judgment is delivered by the ITAT in the pending appeal
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2020 (11) TMI 381
Attachment of Bank A/c. - proceedings under Section 226 - demand notice was issued u/s 156 as the tax was not deposited the petitioner - HELD THAT:- Relief sought for quashing of Bank A/c attachment notice is rendered infructous. As to challenge to Assessment Order since the petitioner has already availed the remedy of Statutory Appeal, we are not inclined to cause indulgence, merely on the contention that there are over 600 Appeals pending and for non-availability of the Appellate Authority there is no likelihood of early hearing. Non-availability of the Appellate Authority is however seriously disputed by the respondents. Since the petitioner has already filed an appeal against the impugned assessment order, we are not inclined to cause any indulgence. Petitioner, however would be at liberty to file appropriate application for early hearing which may be considered by the Appellate Authority on its merit.
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2020 (11) TMI 380
Assets leased out to various companies - Whether assets were in existence at the relevant time and whether the transactions in question were genuine or not - finding of fact - HELD THAT:- On the basis of meticulous appreciation of evidence on record has held that the assessee has produced sanction letters, master / supplemental lease agreements, purchase invoices, installation certificates and inspection reports, a joint inspection conducted by the bank officials, independent valuation report in respect of assets leased out to the companies as well as inspection reports pertaining to pre search and post search period. On the basis of the aforesaid material on record, it was held that the transactions of the assessee with the companies in question was genuine and the assets, which were leased out were in existence and the assessee was entitled to depreciation. The aforesaid finding of fact has been affirmed by the Income Tax Appellate Tribunal. Thus, the matter stands concluded by concurrent findings of fact, which by no stretch of imagination can be said to be either based on no evidence or perverse. Even otherwise, no perversity in the findings could be pointed out to us. It is well settled in law, that this court in exercise of powers under Section 260A of the Act would not interfere with the finding of fact until the same is perverse - Decided against the revenue and in favour of the assessee.
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2020 (11) TMI 379
Exemption u/s 10A - estimated overhead expenses of STP units and non STP units should be taken into account for computing exemption u/s 10A - Whether the appellate authority were correct in accepting the estimation in respect of payments to sub contractors, royalties, technical fees, communication expenses based on the turnover? - HELD THAT:- CIT(A) has concluded that since, the assessee has identified the turnover relating to STPI units and there is a reasonable basis for quantifying direct and indirect expenses pertaining to STPI units, the income pertaining to STPI units and therefore, exemption under Section 10A of the Act can be worked out. The tribunal in para 22 of its order has held that the assessee has units spread over various part of the country and may be abroad, the only plausible method of reasonable of allocating the overhead expenses is by relating them to the turnover. Thus, the tribunal has affirmed the finding that the aforesaid exercise would result in determination of the profit to a near accurate figure or a reasonable figure and has upheld the order of the Commissioner of Income Tax (Appeals) to the extent of ₹ 68,72,88,748/- holding the same to be a reasonable figure. The aforesaid concurrent findings of fact are based on meticulous appreciation of evidence on record. The tribunal has rightly held that the allocation of the overhead expenses have to be made on turnover basis. No perversity in the aforesaid concurrent findings of fact could be pointed out. For the aforementioned reasons, we answer the first and second substantial question of law against the revenue and in favour of the assessee. Requirement of holding of separate accounts for STP and non STP units - HELD THAT:- In the instant case, in sub-Section (2) of Section 10A of the Act, there is no requirement of maintenance of separate accounts and the assessee is entitled to exemption under Section 10A of the Act. Therefore, the assessee cannot be deprived of the benefit of Section 10A of the Act, on the ground that it had not maintained separate accounts. It is pertinent to note that even in the substituted section viz., under Section 10(2) of the Act, there is no requirement to maintain separate accounts. The requirement of maintenance of separate accounts has been provided in STPI Registration Scheme and no consequences for its non compliance have been prescribed. Therefore, the same has rightly been held to be directory. Thus, the third substantial question of law is also answered against the revenue and in favour of the assessee. Double deduction - payments made to sub contractors who have separately exported and have been issued foreign inward remittance certificate and have also claimed 10A exemption - HELD TH AT:- CIT-A held that sub contractor has given software support activity to the assessee and not to the customers of the assessee. It has further been held that the employees of the sub contractors are operating from the STP unit itself and the sub contractors have claimed exemption under Section 10A of the Act on the basis of foreign inward remittance certificate, which has no bearing with regard to assessee's claim of exemption under Section 10A of the Act. It has further been held that the question of double deduction being claimed does not arise as to the extent the assessee has paid to the sub contractors the profits claimed as exempt by the assessee stand reduced. The aforesaid finding has been affirmed by the tribunal in para 22 of its order. Therefore, in the fact situation of the case, the question of double deduction does not arise. Fourth substantial question of law is also answered against the revenue and in favour of the assessee. Violation of the condition prescribed under Section 10A(2)(ia) - entitled to exemption under Section 10A of the Act when the export (56.056%) is less than 75% of the total sales as contemplated under Section 10A(2)(1a) of the Act - HELD THAT:- undertaking which beings to manufacture or produce any article or thing on or after 01.04.1995, its export of such articles or things are not less than 75% of the total sales thereof during the Previous Year. Thus, the total export has to be not less than 75% of the total sales. However, the Commissioner of Income Tax (Appeals) has held that there is no provision under Section 10A of the Act, which requires such a condition to be fulfilled and no finding in this regard has been recorded by the tribunal. Therefore, the order passed by the tribunal to the extent of fulfillment of the requirement under Section 10A(2)(ia) of the Act cannot be sustained. Accordingly, the fifth substantial question of law is answered.
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2020 (11) TMI 378
Exemptions under sections 11 12 - assessee is involved in widespread commercial activities in nature of business and the activity of the assessee is covered under the provisions of section 2(15) - HELD THAT:- The questions proposed by the Revenue are no longer res integra in view of the judgment of this very Court rendered in the Tax Appeal[ 2020 (2) TMI 1359 - GUJARAT HIGH COURT] - All the questions proposed are squarely covered by the decision rendered in the case of Ahmedabad Urban Development Authority vs. ACIT (Exemption) [ 2017 (5) TMI 1468 - GUJARAT HIGH COURT]
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2020 (11) TMI 377
Rectification u/s 254 - Rejecting the claim of the assessee about payment of share premium - HELD THAT:- Tribunal has noted this aspect also that both the AO and CIT(A) has given several reasons for rejecting the claim of the assessee about payment of share premium. It is also stated by the Tribunal in the same para that in the opinion of the Tribunal and in the light of various facts and reasons noted by both the lower authorities which could not be controverted by the learned AR of the assessee, no interference is called for. Hence, it is seen that the primary decision of the Tribunal is on the same basis on which claim of the assessee was rejected by the lower authorities. Tribunal has proceeded further to deal with this argument of the learned AR of the assessee that the sale of shares by the assessee for a partly sum of ₹ 10,000/- as against the cost of acquisition of ₹ 300 lakhs was for this reason that the assessee wanted to stop loss and on this aspect also, the Tribunal held that the sale itself is not beyond doubt but even after observing this, the Tribunal observed that the assessee cannot be worse of at the Tribunal and hence, the Tribunal cannot reduce the amount of loss allowed by the AO. This is not the basis of the Tribunal order in the present case that the sale is in doubt. The primary basis of the Tribunal order is this that in the light of various facts and reasons noted by both the lower authorities which could not be controverted by assessee, no interference is called for in the order of CIT(A). - no apparent mistake in the impugned Tribunal order - Decided against assessee.
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2020 (11) TMI 376
Rectification u/s 254 - no noting in the log book also about any arguments regarding these ground Nos. 8 to 19 - HELD THAT:- Although contentions were raised that the Tribunal is not correct in saying that no argument was advanced by the learned AR of the assessee in course of hearing of the appeal in respect of ground Nos.8 to 19 but no evidence has been furnished by learned AR of the assessee in this regard establishing that arguments were in fact made by learned AR of the assessee in respect of these grounds also in course of hearing. In view of these facts that neither our log book nor the Paper Book filed by learned AR of the assessee and in the absence of any evidence being filed by learned AR of the assessee establishing that arguments were in fact raised by him regarding ground No.8 to 19 in course of hearing of the appeal, we find no merit in the MP filed by the assessee. Miscellaneous petition filed by the assessee is dismissed.
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2020 (11) TMI 375
Rectification u/s 254 - defect memo did not reach to the appellant i.e., ACIT, TDS Circle 1(1), Bengaluru and hence, he had no occasion to rectify the defect pointed out by the Tribunal and therefore, in the interest of justice, this Tribunal order should be recalled to afford opportunity to the appellant to cure the defect - HELD THAT:- Appeal was filed by the Revenue on 04.05.2018 and defect memo was issued by the Tribunal along with first notice for hearing of the appeal being the hearing fixed for 05.09.2018 - this acknowledgment of notice is also addressed to ACIT, Circle 1(1), Bengaluru, issued on 28.06.2018 as per which, date of hearing was fixed on 05.09.2018. As per the order sheet entries in the appeal folder, we find that on 05.09.2018, Smt. Nandini Das, Additional CIT appeared on behalf of the Revenue and it means that the acknowledgment / notice issued by the Tribunal for fixing the hearing of the appeal on 05.09.2018 was very much received by the AO appellant and then only, Additional CIT, DR appeared before the Tribunal on this date i.e. on 05.09.2018. Having received the notice of hearing issued on the same date, the Revenue cannot take this stand that defect memo issued by the Tribunal was not received by the appellant Revenue. No merit in this contention raised by the Revenue in the MP and raised by the DR of the Revenue in the course of hearing of the MP that the defect memo issued by the Tribunal has not been received by the appellant Revenue. the said notice and the defect memo both were issued on the same date i.e. 28.06.2018 addressed to the same authority i.e. ACIT, Circle 1(1), Bengaluru, and we have already noted that on this date of hearing i.e. on 05.09.2018, Smt. Nandini Das, Addl. CIT, DR, appeared which implies that the notice of hearing issued by the Tribunal has been received by the appellant Revenue and therefore, this argument has no merit that the defect memo was not received by the appellant Revenue. In view of the above discussion, we hold that there is no merit in the MP filed by the Revenue and we dismiss the same. - Decided against revenue.
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2020 (11) TMI 374
Revision u/s 263 - Reopening of assessment u/s 147 - Settlement commission order - HELD THAT:- There is no infirmity in the application for settlement commission made by the assessee before the ITSC on 5 December 2019 and therefore the learned CIT cannot have assumed the jurisdiction u/s 263 - The settlement commission has also passed an order admitting the application of the assessee u/s 245D (1) on 18 December 2019. The settlement commission assumes exclusive jurisdiction to exercise the powers and perform the functions of an income tax authority in relation to the case from the date on which the application is made and until an order u/s 245D (4) of the act is passed. In the present case, therefore from 5 December 2019 till the order u/s 245D (4) of the act is passed the only authority which can exercise the jurisdiction for the income tax matters is only settlement commission. This issue was also raised before the settlement commission which dealt with it in the similar manner. Therefore also we are of the view that assumption of jurisdiction by the learned and CIT in passing an order u/s 263 of the act on 30th of March 2020 is not proper. Revisionary proceedings is assessment of the short-term capital gain earned by the assessee on sale of shares - This issue has already been considered by the settlement commission which has been offered by the assessee as an additional income on which tax at appropriate rate is payable. Therefore even otherwise there is no prejudice caused to the revenue because assessee has already offered the above income as additional income before the settlement commission. Only grievance of the revenue to say that the order is erroneous and prejudicial to the interest of the revenue for the reason that assessee has been saved from penalty and prosecution on the issue. We have carefully considered the argument of the learned CIT DR on this aspect and find that when a specific authority is given to the settlement commission u/s 245H of the act to grant immunity from prosecution and penalty. Therefore, when a settlement commission is given a special power to grant immunity from prosecution and penalty Under the income tax act itself, it cannot be said that assumption of jurisdiction by the settlement commission in accordance with the law wherein there are chances for waiver of penalty as well as immunity from prosecution is an order which will constitute prejudicial to the interest of the revenue. More so, there is no error in such order, which is yet to be passed. The assessee may get and immunity from prosecution and penalty order or it may not get. Therefore such situation cannot be preempted to assume jurisdiction u/s 263 of the act. We quash the order passed by the learned CIT u/s 263 - Decided in favour of assessee.
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2020 (11) TMI 373
Bogus purchases - burden of proof - HELD THAT:- As assessee has duly discharged the burden to prove the genuineness of purchases. On the contrary, the AO has simply relied upon the report given by the investigation wing. In this view of the matter, we are of the view that no addition is called for on account of alleged bogus purchases. Since there is an order of ITAT in the assessee s own case [ 2017 (8) TMI 1302 - ITAT MUMBAI] DR has not been able to rebut this, we follow the co-ordinate bench decision in the assessee s own case and decide the issue in favour of the assessee. We find that facts in the present case are identical. Further sales have not been doubted. Rather in the present case as noted by the ld. CIT(A) all the details are on record and hence the ld. CIT(A) held that there was not any need of issuing notice to the impugned supplier. - Decided against revenue.
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2020 (11) TMI 372
TDS u/s 195 - payment of agency commission outside India for promotion of export sales outside India - addition u/s. 40(a)(i) - HELD THAT:- As decided in assessee's own case [ 2018 (6) TMI 1724 - ITAT DELHI] wherein relying WELSPUN CORPORATION LIMITED AND VICE-VERSA [ 2017 (1) TMI 1084 - ITAT AHMEDABAD] held that on payments made by assessee for services rendered by non-resident agents could not be held to be fees for payment for technical services, these payments were in nature of commission earned from services rendered outside India which had no tax implications in India. As in the case of CIT vs. Kikani Exports Pvt. Ltd. [ 2014 (9) TMI 96 - MADRAS HIGH COURT] wherein it was held that the services rendered by the non-resident agent could at best be called as a service for completion of the export commitment and would not fall within the definition of fees for technical services and, therefore, section 9 was not applicable and, consequently, section 195 did not come into play. Therefore, the disallowance made by the AO towards export commission paid by the assessee to the non-resident was rightly deleted. - Decided against revenue.
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2020 (11) TMI 371
Disallowance u/s 14A r.w.r. 8D - as per assessee he not made any investment for earning of the interest income from its H.O - HELD THAT:- We find ourselves to be in agreement with the claim of the ld. A.R that the disallowance under Sec. 14A r.w Rule 8D(2)(ii) as regards the interest expenditure has to be carried out after netting of the interest paid by the assessee on borrowings and the taxable interest income earned during the year under consideration. Accordingly, we direct the A.O to recompute the disallowance under Sec. 14A r.w Rule 8D(2)(ii) in terms of our aforesaid observations. Somewhat similar claim was raised by the assessee in its appeal before the Tribunal for A.Y. 2011-12, which, however, was rejected by the Tribunal. In its case for the aforementioned preceding years, it was the claim of the assessee that the disallowance of administrative expenses under Rule 8D(2)(iii) may be restricted to the extent of 1% to 2% of its exempt income. However, the Tribunal taking cognizance of the fact that from A.Y. 2008-09 onwards disallowance under Sec. 14A was to be computed in accordance with Rule 8D, had thus, rejected the aforesaid claim of the assessee. In our considered view as there is no substance in the claim of the assessee that de hors any investment made for earning of the interest income from its H.O no disallowance was called for under Sec. 14A r.w. Rule 8D(2)(iii), we decline to accept the same. Deduction u/s 44C - attributing part of the head office expenses incurred by an assessee, a non-resident, to the business of the assessee in India - HELD THAT:- Legislature in all its wisdom had provided a basis for attributing a part of the head office expenses incurred by an assessee, a non-resident, to the business of the assessee in India. For purpose for making available of the aforesaid statutory provision i.e Sec. 44C on the statute, we find, that the same was backed by the reason that it was extremely difficult to scrutinise and verify the veracity of the claims of the non-resident assessee‟s carrying on any business or profession in India, as regards their head office expenses attributable to such business or profession in India - unable to concur with the view taken by the lower authorities that the absence of the head office expenses attributable to its business in India, in the audit report or the notes to accounts of the Indian branch would therein render it ineligible to claim the deduction under Sec. 44C - Assessee had rightly claimed deduction of 5% of the adjusted total income , as the same is lower than the amount of the head office expenditure incurred by the assessee as is attributable to its business in India - No favour with the view taken by the lower authorities, therein set aside‟ the order of the CIT(A) and direct the A.O to allow the assessee‟s claim for deduction under Sec. 44C Disallowance u/s 14A - A.Y. 2010-11 - Whether no exempt income has been earned or received by the Assessee? - HELD THAT:- Amount of the disallowance under Sec. 14A is liable to be restricted to the extent of the exempt interest income. Our aforesaid view is fortified by the judgments of the Hon ble High Court of Delhi in the case of JCIT Vs. Joint Investments Pvt.ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT ] and Cheminvest Ld. Vs. CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT ] - Accordingly, in terms of our aforesaid observations, the A.O is directed to restrict the disallowance under Sec.14A to the extent of the amount of the exempt income of the assessee for the year under consideration.
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2020 (11) TMI 370
Revision u/s 263 - loss on sale of shares - HELD THAT:- As during the assessment proceedings u/s 143(3) of the Act, vide notice u/s 142(1) AO had required the assessee to furnish the details of loss on sale of shares. The assessee vide letter dated 29.2.2016 had explained that the loss is on account of sale of shares and vide letter dated 14.3.2016, the circumstances under which such loss was incurred was explained. It appears that the AO has allowed the business loss claimed by the assessee only after considering the reply of the assessee. As held in a number of cases that the AO may not record anything in the assessment order if he was inclined to allow the claim of assessee. Therefore, non-mentioning of the reasons for allowing the claim, will not make the assessment order erroneous. To hold the assessment order to be erroneous it has to be stablished that the AO had not applied his mind to the facts of the case or that he has not applied the correct law or has not appreciated the facts correctly. Thus, the assessment order cannot be held to be prejudicial to the interests of the revenue on this issue. Set-off of unabsorbed depreciation from the income - unabsorbed depreciation of the partnership firm, the business of which has been taken over by the assessee in his individual capacity, which has been set off by the assessee from his income as an individual - Succession to business otherwise than on death - HELD THAT:- Consequences on retirement of all the partners except one of a partnership firm is that the partnership firm gets dissolved because, for a partnership to exist, there has to be more than one partner. On retirement of all the partners except one, the partnership firm gets dissolved and if the sole partner carries on the business it becomes a proprietary concern. In view of the Section 32(2) of the Act, the unabsorbed depreciation becomes the depreciation of the current year of the business and the same is eligible for set off against the individual income of the assessee u/s 170 of the Act as he is the successor to the business. Capital gain Computation - application of Sec.50C - difference between the sale consideration received by the assessee and the SRO value - HELD THAT:- In the case before us, it is the difference between the sale consideration received by the assessee and the SRO value. Sec.50C as it prevailed at that point of time, does not make any discount in respect of difference between the SRO value and the sale consideration received by the assessee. Therefore, order of CIT on the application of Sec.50C is confirmed. Short term capital loss claimed by the assessee against the sale of vehicle - As submitted submitted that the provisions of Sec.50 are applicable to this case and since the assessee has committed an error in the computation and the AO has not looked into it - HELD THAT:- Having regard to rival contentions particularly the contention of the assessee that there is a mistake in the computation of income by the assessee in relation to the loss on sale of car, we deem it fit and proper to direct the AO to reconsider the issue in accordance with law. Assessee s appeal is partly allowed.
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2020 (11) TMI 369
Addition pertaining to surrender made during the course of survey - main contention of the Ld A.R. was that the assessee did not maintain books of account at the time of survey and hence she surrendered the additional income - HELD THAT:- Assessee has subsequently maintained books of accounts and got it audited also. We notice that the AO has not examined books of accounts at all - assessee has surrendered the income during the course of survey and the assessee has tried to rebut the same by furnishing regular books of accounts. AO should have examined the books of accounts and should have given proper reasoning as to why the surrendered amount of ₹ 60.00 lakhs is still liable to be taxed. AO has accepted the books of account and hence assessed the business income declared by the assessee voluntarily. CIT(A) has reduced the same to ₹ 5.00 lakhs, which may not be a correct action. The relief, if any, could be granted in respect of additional income only and it should be presumed that the relief of about ₹ 21.69 lakhs granted by the Ld CIT(A) is towards alleged additional income of ₹ 60.00 lakhs. Further, the Ld CIT(A) has also made various observations without examining books of accounts. Examination of books of accounts of the assessee would help to decide the question as to whether the addition of ₹ 60.00 lakhs (to the extent sustained by Ld CIT(A)) is still warranted or not. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO for examining the issue afresh duly examining the books of accounts. Non-granting of set off of brought forward loss and depreciation - submission of the assessee that she has furnished copies of returns of income filed by her for earlier years - HELD THAT:- If the said returns of income have been accepted as it is and if they have been filed within the due dates prescribed u/s. 139 (1) of the Act, in our view, there should not be any impediment in allowing the claim. Since it is a matter of verification of facts, we restore this issue also to the file of the AO with the direction to examine the claim of the assessee vis- -vis the documents furnished and decide the same in accordance with law.
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2020 (11) TMI 368
Unexplained cash sales - AO in his affidavit has given a statement under oath that, there has been no sales outside the books, and that, books were audited that were filed before authorities below - HELD THAT:- In assessment order passed, we note that, assessing officer has not provided bifurcations of cash sales added as unaccounted in books of account. AO has not provided details of impugned addition for years under consideration in the assessment order passed.AO has also not recorded details of alleged cash sales from sales register that was unaccounted by assessee. The issue needs to be remanded to Ld.AO with a direction to provide details of impugned additions for relevant assessment years were identified by Ld.AO to be unaccounted in the books of account. Assessee is directed explain the cash sales found in the sales register alleged to be unaccounted with supportive documents. Ld.AO is directed to pass a detailed order after considering the material is filed by assessee in support of its claim in accordance with law. - Decide in favour of assessee for statistical purposes.
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2020 (11) TMI 367
Short valuation of closing jobs in progress - adding the same to the cost incurred by the taxpayer relating to the work pertaining to the unbilled amount - HELD THAT:- Taxpayer has made extensive submissions before the AO which have not been examined by the AO to decide the issue in controversy. AO rather decided the issue by following its own order for AY 2009-10 confirmed by the ld. CIT (A) and thereby made this addition on account of undervalued the closing job in progress. When undisputedly AO without applying his mind qua the year under assessment has made the addition by following its own order for AY 2009-10, which is no more in existence as the issue in controversy has been remitted back to the AO for de novo assessment by the Tribunal, it would not be in the interest of justice to deprive the AO to examine the submissions now made by the ld. AR for the taxpayer because the facts in entirety are required to be examined by the AO first and thereafter by ld. CIT (A), if so requires - Decided in favour of assessee for statistical purposes. Disallowance of loss incurred on the jobs commenced prior to 1st April, 2003 and after 1st April, 2003 respectively - HELD THAT:- AO has not applied his mind by examining the extensive submissions made by the taxpayer rather proceeded to make this addition by bluntly following its own order passed in AY 2009-10 and confirmed by the ld. CIT (A) in taxpayer's own case, which is no more in existence having been set aside by the Tribunal for de novo assessment, it would not be in the interest of justice to consider the arguments addressed by the taxpayer before the Tribunal as the same are required to be examined first by the AO by examining the facts of the case at hand in entirety, otherwise it will cause prejudice to the Revenue who has merely decided this issue by following its own order for AY 2009-10 which is no more in existence. So, this issue is also remitted back to the AO to decide afresh. Disallowance u/s. 40A(2)(b) - expenses having been incurred on behalf of its sister concern being not related to the business of the taxpayer company - HELD THAT:- When sub-contracted value for computing the losses out of the said project (Soil Health Card) has already been considered in AY 2009-10, the disallowance of aforesaid payment to CES Technologies Pvt. Ltd. would amount to double taxation. AO is directed to verify these facts and delete the addition accordingly. Ground No. 5 is determined in favour of the taxpayer. Disallowance of expenses - no job-wise details, vouchers or other evidences and absence of method of recognition of revenue followed by the taxpayer by following its own order for AY 2009-10 - HELD THAT:- DRP has reached the conclusion by deleting the disallowance made by the AO being the expenses pertaining to numerous projects i.e., pre-2003 and post-2003 after calling remand report from the AO. Ld. DR for the Revenue has failed to point out any infirmity and irregularity in the aforesaid findings. So, we find no perversity or illegality in the deletion of disallowance made by the ld. DRP, hence ground no. 1 of Revenue's appeal is determined against the Revenue. Disallowance of expenses claimed by the taxpayer having been incurred toward entrance fee and subscription - HELD THAT:- When in Annexure to Tax Audit Report Item No. 17D(1) it has been intimated that amount of ₹ 8,462/- is debited to P L account being expenditure incurred at club entrance fee and subscription, causal observation made by the AO that same are not wholly and exclusively spent for business purpose, is not sustainable. So, keeping in view the meager amount and the fact that the same has been incurred as entrance fee and subscription for club has been rightly deleted by the ld. DRP. So, ground no. 2 of Revenue's appeal is determined against the Revenue. TP Adjustment - interest on delayed payment on receivables - DRP enhanced the addition by applying SBI rate as on 30th June of relevant previous year plus 150 basis point - taxpayer challenging the impugned addition is that the ld. DRP enhanced the addition without issuing prior notice to the taxpayer - HELD THAT:- Undisputedly, the amendment made by the Finance Act, 2012 in section 92B is prospective in nature DRP has enhanced addition on account of delayed payment on receivable without giving any notice to the taxpayer for said enhancement, the addition in question is not sustainable being hit by rule of natural justice. So, it would be in the interest of justice to remit the case back to ld. DRP to decide afresh in the light of what has been discussed hereinbefore, after providing an opportunity of being heard to the taxpayer. Needless to say that ld. DRP is also directed to take into account the rule of consistency as the LIBOR of the taxpayer has been accepted for charging interest on delayed receipts of receivables in the subsequent years. So, transfer pricing issue is decided in favour of the taxpayer for statistical purposes
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2020 (11) TMI 366
Disallowance of foreign exchange fluctuation loss - HELD THAT:- During the course of appellate proceedings before the CIT(A), the assessee has submitted ledger account of the foreign exchange loss for assessment year 2013-14 demonstrating that there was reversal of the entry pertaining to unrealized loss. Therefore, we do not find any infirmity in the above elaborated finding of CIT(A) in deleting the impugned addition on the basis of reversal entry made in the assessment year 2013-14. Therefore, this ground of appeal of the revenue is dismissed.
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2020 (11) TMI 365
Interest expenses paid to the related parties being excessive - Disallowance u/s. 36(I)(iii) - assessee has paid interest to various parties @ 24% and to some of the parties @ 12% - assessee explained that non banking financial institutions were charging interest between 18 to 24% for short term loan and also need security or mortgage against the loan - AO not agreed with the assessee and stated that assessee was unable to prove the reasonableness of the payment made u/s. 40A(2)(b), therefore, restricted the rate of interest on loan to the extent of 18% as against 24% paid by the assessee, the excess interest - HELD THAT:- As decided in own case [ 2020 (6) TMI 193 - ITAT AHMEDABAD ] There cannot be any disallowance for the year under consideration on the money borrowed in the earlier year. As relying on SRIDEV ENTERPRISES [ 1991 (1) TMI 52 - KARNATAKA HIGH COURT ] we hold that there cannot be any disallowance on account of interest expenses being excessive paid to the related parties under section 40A of the Act. Hence we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him - disallowance on excess interest payment made u/s. 36(1)(iii) is deleted. Therefore, this ground of appeal of the assessee is allowed. Disallowance u/s. 14A - HELD THAT:- We hold that no disallowance of interest expense claimed by the assessee can be made on account of investments under the provision of section 14A r.w.r. 8D of Income Tax Rules. Hence, we reverse the order of the authorities below. The AO is directed to delete the addition made by him on account of the interest expenses component. Accordingly, this ground of appeal is partly allowed. Disallowance u/s. 36(1)(va) r.w.s. 2(24)(x) - assessee has defaulted in depositing the contribution of employee s provided fund and ESIC within the prescribed due date - HELD THAT:- During the course of appellate proceedings before us, the ld. counsel has agreed that this issue has been decided by the Hon ble Jurisdictional High Court in the case of CIT vs. GSRTC [ 2014 (1) TMI 502 - GUJARAT HIGH COURT ] against the assessee.
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2020 (11) TMI 364
Addition u/s. 14A - AO stated that assessee has shown exempt income as dividend of ₹ 3,35,994/- from investment made in shares and securities and claimed interest expenditure of ₹ 10,28,811/-. - HELD THAT:- AO has incorrectly taken exempt income as ₹ 3,35,994/- while disallowing ₹ 14137/- u/s. 14A of the Act. However, the amount of ₹ 3,35,994/- was represented as investment made by the assessee as on 31-03-2010. From paper book furnished by the assessee comprising annual account showing investment of ₹ 4,12,451/- and as on 31st March, 2009 and investment of ₹ 3,35,994/- as on 31st March, 2010. The total exempt income of dividend was shown at ₹ 4,206/- only. The assessee has not furnished any other evidences to substantiate that no expenditure including administrative expenditure was incurred towards earning except income. We observe that lower authority has incorrectly computed the disallowance u/s. 14A r.w.r. 8D of the Act, therefore, we restrict the disallowance to the extent of dividend income of ₹ 4,206/- earned by the assessee. Accordingly, this ground of appeal of the assessee is partly allowed. Addition u/s. 69 - assessee has made investment in immovable property jointly - share of the assessee in the property was of 50% - CIT(A) has partly allowed the appeal of the assessee - HELD THAT:- We observe that assessee had tried to explain the part investment made out of ₹ 76 lacs in the earlier years which had already been deleted by the ld. CIT(A). However, in respect of payment made during the previous year relevant to the year under consideration, the assessee had only explained the source of payment of ₹ 10 lacs out of the total amount of payment of ₹ 32,82,528/-. - no error in the decision of ld. CIT(A) in restricting the addition to the extent of ₹ 22,85,528/- since the assessee had failed to substantiate the source of this investment during the year under consideration. Accordingly, this ground of appeal of the assessee is dismissed. Addition u/s. 68 - Unsecured loan taken from various parties - CIT(A) has restricted the addition to the extent of loan amount of ₹ 2,55,500/- obtained by the assessee during the year under consideration - HELD THAT:- As gone through the paper book furnished by the assessee comprising copies of confirmation letter, identity of the lender, ledger account of the depositors placed at pages 50 to 99 of the paper book. However, the Assessing Officer has not made any verification and inquiry to disprove the correctness of the information furnished by the assessee. CIT(A) has also not given any reasons and findings in support of his decision to restrict the addition in respect of loan amount of ₹ 2,55,500/- obtained during the year under consideration. We consider that the decision of ld. CIT(A) is not justified, therefore, this ground of appeal of the assessee is allowed.
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2020 (11) TMI 363
Penalty u/s 271(1)(c) - non complying notices issued u/s 142(1) - HELD THAT:- We notice that in the assessment order passed u/s 143(3) r.w.s. 147 of the Act, AO himself acknowledges that notice u/s 142(1) was issued and served on the assessee and in response, assessee has made his submission, through mail, which clearly indicates that assessee has complied the notices issued u/s 142(1) of the Act, therefore the penalty levied u/s 274 r.w.s. 271(1)(b) is not proper and justifiable. Accordingly, the grounds raised by the assessee are allowed.
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2020 (11) TMI 347
MAT computation - profits chargeable to tax u/s 115JB - Assessee showed the outstanding interest as credit to profit and loss account because of waiver of interest on account of One Time Settlement - as submitted outstanding interest amount was not shown as either as reserve or provision and it was shown as liability and even the corresponding debits in the earlier years were not added back - Tribunal has held that the AO on perusal of the balance sheets as on 31.03.2006 and 31.03.2007 has held that amount of interest has neither been shown as reserve nor provision anywhere but the same has been shown in Schedule C as a liability - HELD THAT:- No provision can be made for ascertained liability and therefore, no provision has been made by the assessee for interest payable and therefore, waiver of interest by IREDA cannot be considered as withdrawal of provision and cannot be reduced from the book profit. As held that the contention of the assessee that a sum should be considered as waiver of interest and part of book profit as interest payable for pre commencement period, needs examination and therefore, the matter was remitted for adjudication in accordance with law. The aforesaid findings by all the authorities under the Act are based on meticulous appreciation of evidence on record and does not suffer from any perversity warranting interference of this court in this appeal. In view of preceding analysis, the substantial questions of law framed by a bench of this court are answered against the assessee
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2020 (11) TMI 346
Entitled to deduction u/s 54G - Short term capital gain - contemporaneous notification No.9447 dated 6.1.1994 - Whether the tribunal was right in classifying Bangalore as a non-urban area for the purposes of Section 54G when it was previously categorized as an urban area until 1990? - Whether the tribunal was right in finding that an urban area such as Bangalore could be classified as a non-urban area for the purpose of Section 54G from 1990 and then once again be classified as an urban area from 27.04.2006? HELD THAT:- Explanation to Section 54G(1) of the Act expressly provides that having regard to population, concentration of industries need for proper planning of the area and other factors, the Central Government may by general or special order declare to be an area to be urban area for the purposes of sub-Section (1) of Section 54G of the Act. In exercise of powers under the aforesaid provision, the Central Government has issued a Notification dated 27.04.2006 and has declared Anekal where the factory of the assessee is situated to be an urban area for the purposes of sub-Section (1) of Section 54G of the Act. However, from perusal of the Notification no inference can be drawn that the same has any retrospective operation. The Notification comes into force on the date of its publication in the Official Gazette. Section 280ZA of the Act was omitted by Finance Act, 1987 with effect from 01.04.1988. The Central Board of Direct Taxes (CBDT) has issued a Notification under Section 280Y(d) vide Notification dated 22.09.1967, by which Bangalore Corporation is declared as urban area for the purposes of Chapter XXIIB of the Act. However, the aforesaid Notification is applicable for Tax Credit Certificates for shifting of industrial undertakings from urban areas under Section 280YD read with Section 280ZA of the Act and therefore, the same cannot be held applicable for exemption under Section 54G of the Act. Decided against the assessee and in favour of the revenue
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2020 (11) TMI 345
Advances to sister concerns without charging any interest for payment of Municipal Taxes - allowable business expenditure - HELD THAT:- It is pertinent to mention here that the aforesaid amount pertains to export transactions to avail export benefits and the assessee had an understanding with Hinduja Relators Pvt. Ltd. in this regard. For improvement of a new building which was being constructed for the assessee under the lease agreement. AO did not comment anything in this regard in the remand report. CIT (Appeals), therefore, held that the aforesaid amount was advanced by the assessee for business purpose as well as commercial expediency. The aforesaid finding of fact has been affirmed by the tribunal. The aforesaid concurrent findings of fact neither suffer from any infirmity nor can be termed as perverse. Therefore, the first substantial question of law is answered against the revenue and in favour of the assessee. Advances to sister concerns for acquiring the land for textile Special Economic Zone (SEZ) - Acquisition/identifying and liaison of a textile Aparel Park - HELD THAT:- Assessee has not let in any evidence to establish the fact that the amount was either advanced for business purpose or for commercial expediency and it was not the case of the assessee itself that the amount was advanced in previous year. The CIT (Appeals) has recorded a finding that the assessee has neither acquired the land nor has set up any SEZ. Therefore, in the fact situation of the case, we deem it appropriate to remit the matter for re consideration to the tribunal afresh. Accordingly, the second substantial question of law is answered. MAT Computation - Disallowance u/s 14A not be added to the Book Profits of the assessee under section 115JB - HELD THAT:- Tribunal by placing reliance on decision of the Supreme Court in APOLLO TYRES [2002 (5) TMI 5 - SUPREME COURT] has held that Assessing Officer while determining book profits under Section 115JB of the Act cannot tamper with the profits as per profit and loss account prepared in accordance with the Companies Act except in the manner provided in Explanation 1 to Section 115JB - As held that the additions made by the Assessing Officer while determining the book profits under Section 115JB of the Act cannot be sustained. Any disallowance computed under Section 14A of the Act pertain to computation of income under normal provisions of the Act and cannot be read into the provisions of Section 115JB of the Act pertaining to computation of book profits by levy of Minimum Alternate Tax (MAT) and there is no express provision in clause (f) of Explanation 1 to Section 115JB of the Act to that extent - Third substantial question of law is answered against the revenue and in favour of the assessee Addition of portion of common expenses allocated - as per AO expenses incurred are to be apportioned among all the units in the ratio of their respective turnovers - as per CIT-A amount related to the employees employed in non export oriented units and the assessee had separately debited salaries and wages in respect of export oriented units in the communication which was forwarded to the Assessing Officer - ITAT deleted addition - HELD THAT:- AO has not mentioned anything contrary in his remand report, therefore, the Commissioner of Income Tax (Appeals) has permitted the allocation of the expenses incurred by the assessee viz., legal and professional fees, rates and taxes, insurance, managerial remuneration and miscellaneous expenses. ITAT has held that the expenses related exclusively to non export oriented units and has affirmed the finding recorded by the Commissioner of Income Tax (Appeals). For the aforementioned reasons, the fourth substantial question of law is also answered against the revenue and in favour of the assessee. Set of EOU profits against non EOU losses and brought forward depreciation - Whether deduction has to be allowed from the total income of the assessee and as per section 2(45) the total income should be computed from various sources after set off of losses from one source against income from other sources - HELD THAT:- It is evident that the revenue has not disputed that the ratio laid down in YOKOGAWA [2016 (12) TMI 881 - SUPREME COURT] is applicable to the facts of the present case. It is pertinent to mention that the decision of this court in M/S KARLE INTERNATIONAL PVT. LTD . [2020 (9) TMI 968 - KARNATAKA HIGH COURT] is not applicable to facts of the case as in the aforesaid case, the assessee had not claimed any deduction under Section 10B of the Act. For the aforementioned reasons, the fifth substantial question of law is also answered against the revenue and in favour of the assessee.
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2020 (11) TMI 344
Depreciation claimed in respect of assets leased - Question of fact or law - Whether or not the assets leased out by the assessee to various companies were in existence at the relevant time? - whether the transactions in question were genuine or not is a pure question of fact? - HELD THAT:- CIT(A) on the basis of meticulous appreciation of evidence on record has held that the assessee has produced sanction letters, master / supplemental lease agreements, purchase invoices, installation certificates and inspection reports, a joint inspection conducted by the bank officials, independent valuation report in respect of assets leased out to the companies as well as inspection reports pertaining to pre search and post search period. As held that the transactions of the assessee with the companies in question was genuine and the assets, which were leased out were in existence and the assessee was entitled to depreciation. The aforesaid finding of fact has been affirmed by the Income Tax Appellate Tribunal. Matter stands concluded by concurrent findings of fact, which by no stretch of imagination can be said to be either based on no evidence or perverse. Even otherwise, no perversity in the findings could be pointed out to us. It is well settled in law, that this court in exercise of powers under Section 260A of the Act would not interfere with the finding of fact until the same is perverse. - Decided in favour of the assessee
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2020 (11) TMI 343
Reopening of assessment - Bid loss disallowance - assessee claimed loss on bidding as deduction - As per revenue such Bid Loss pertains to period beyond the accounting period relevant to the assessment year under consideration and the same should not have been allowed for the sake of consistency? - HELD THAT:- The tribunal has not taken note of the fact that the AO had recorded reasons and has held that a statement of income from assessment has taken place due to failure to disclose fully and truly all material facts necessary on the part of the assessee.Tribunal has further held that it has not been disputed before the tribunal that proviso to Section 147 is not applicable to the fact situation of the case. The contention of the assessee that the Assessing Officer has not recorded the finding that the assessee has failed to disclose fully and truly all material facts necessary for assessment does not deserve acceptance, which is evident from the satisfaction recorded by the Assessing Officer. Similarly, the question whether or not the Assessing Officer has recorded satisfaction in consonance with the requirements of Section 147 of the Act, has to be dealt with in the facts of each case. Therefore, the contention that the issue involved in this appeal is squarely covered by decision of the Supreme Court in NEW DELHI TELEVISION [ 2020 (4) TMI 133 - SUPREME COURT ] cannot be accepted. For the aforementioned reasons, the second substantial question of law is answered in favour of the revenue.
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2020 (11) TMI 342
Bogus purchases - addition to 12.5% - HELD THAT:- We find no reason to interfere with the order of Ld. first Appellate Authority. Evidently, the assessee was in possession of primary purchase documents and corresponding sales formed part of books of account. At the same time, notices issued u/s. 133(6) remained unserved and assessee failed to produce even a single party. Truly, there could not be any sale without actual purchase of material and therefore a presumption could be drawn that the material was purchased from the open market while invoices were procured from tainted suppliers. Therefore, estimating the additions @12.5% was quite fair and reasonable. Therefore finding no substance in the appeal, we dismiss the same.
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2020 (11) TMI 341
Penalty u/s. 271(1)(c) - omission of inclusion of capital gain on transfer of shares that too arising out of a book adjustment - HELD THAT:- Explanation furnished by the assessee that by inadvertent mistake and human error, the capital gain derived from transfer of equity shares has not been reported in the return of income filed for the relevant year appears to be bonafide. Had it been the case of the AO that the assessee has received consideration for transfer of equity shares and yet not reported capital gain from transfer of shares in the return of income, then obviously explanation furnished by the assessee cannot be held to be bonafide. It is quite possible when a transaction is settled by book adjustment that too on the direction of Hon'ble High Court, there is every possibility to have an understanding that particular transaction cannot lead to tax. Moreover, in the instant case, even after computation of long term capital gain from transfer of equity shares the assessed income for the impugned year results into net loss. There is no deliberate attempt from the assessee to conceal particulars of income or evade payment of taxes. Therefore, the explanation furnished by the assessee that it was by inadvertent mistake omitted to include long term capital gain derived from transfer of shares in the return of income is bonafide and for this liability cannot be fastened u/s.271(1)(c) of the Act. The learned CIT(A) without appreciating these facts simply confirmed the penalty levied by the Assessing Officer u/s.271(1)(c) - Decided in favour of assessee.
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2020 (11) TMI 340
Interest u/s 234A 234B - Charging of interest u/s 220(2) - HELD THAT:- As relying in SHRI ASHWIN S. MEHTA [ 2019 (7) TMI 932 - ITAT MUMBAI] issue of charging of interest u/s 234A, 234B, 234C 220(2) has already been delved into by the co-ordinate bench - revenue authorities have been directed to follow the order passed in the case of Late Harshad S. Mehta vide para nos. 29 to 30.10 and charged interest accordingly. As held that interest u/s 220(2) was to be charged from the date of default of fresh demand notice issued after the fresh assessment made in consequent of the orders of the appellate authorities. Similarly, the issue of charging of interest u/s 234A, 234B 234C has also been dealt with by the coordinate bench, in other paras. Since a view has already been taken by the coordinate bench in the matter, refraining from delving into the issues any further, we direct Ld. AO to follow the cited order of the Tribunal. Also in LATE SHRI HARSHAD S. MEHTA (LEGAL HEIR JYOTI H. MEHTA) [ 2019 (2) TMI 1198 - ITAT MUMBAI] when there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. In this case before us, there is a failure of computation of interest provision due to non-filing of valid return by the assessee, interest u/s 234C cannot be levied and we accordingly direct the AO not to charge interest u/s 234C. Levy of interest u/s 220(2) - No illegality or infirmity in the order of the CIT(A) directing the AO to charge interest u/s 220(2) from the date of default of the fresh demand notice issued after the fresh assessment made in consequence of the order of the appellate authorities
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2020 (11) TMI 339
Disallowances u/s.14A - Addition of interest expenditure on the ground that the assessee is having interest free funds being equity share capital and free reserves which is far less than the interest free funds available with the assessee and therefore no disallowance of interest expenditure is called for - HELD THAT:- In this case, the assessee has made out a case with necessary evidence that it has interest income free funds being share capital and surplus reserve in excess of investments which yield exempt income. AO as well as CIT(A) have erred in disallowing interest expenditure under Rule 8D(2) of Income Tax Rules, 1962. Accordingly, we direct the AO to delete interest disallowances under rule 8D(2)(ii) of IT Rules 1962. Disallowance of expenditure @ 0.5% average value of investment under 3rd limb of Rule 8D(2)(iii) - AO has taken value of investments in partnership firm as on 31.03.2012 on the basis of amount disclosed in the financial statements, whereas the assessee claimed that original investment was at ₹ 1.5 crores only and remaining balance was out of accrued profit of the firm which needs to be excluded while computing average value of investments. This aspect needs verification from the AO because the facts are not clear as the Assessing Officer stated that investments in partnership firm is at ₹ 7.35 crores, whereas the assessee claimed investment in partnership firm is ₹ 1.5 crores. As regards investments in mutual funds we have given our thoughtful consideration to arguments of the assessee in light of provisions of section 14A - what is to be considered in exempt income in form of dividend received by an assessee, but not capital gain derived on transfer of such investments to decide applicability of disallowances of expenditure. If dividend from mutual fund is exempt from tax, then certainly expenditure relatable to such exempt income needs to be disallowed. In this case, there is no clarity whether any exempt income is received from such investments from mutual funds. Receipt of exempt income is a precondition for including investments in average value of investments, because investments which do not generate exempt income for the year cannot be included in average value of investments. In this case, the fact with regard to nature of investments and whether any exempt income was earned from investment is not clear from the orders of the lower authorities. Therefore, to ascertain correct facts with regard to nature of investments, the issue needs to be go back to the file of the Assessing Officer. Therefore, we remit issue relatable to computation of disallowances under 3rd limb of Rule 8D regarding 0.5% of average value of investments to the file of the AO to reconsider the issue. AO is therefore, directed to consider the investments made in partnership firm as well as mutual funds while computing average value of investments in accordance with law. - Appeal filed by the assessee is partly allowed for statistical purposes.
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2020 (11) TMI 338
TDS u/s 194C - Disallowance u/s 40a(ia) - assessee did not submit any confirmation from the payee to the effect that returns of income including receipts from the assessee was filed u/s.139(1) by the payee - HELD THAT:- CIT(A) has recorded categorical finding to the effect that gold plating done by the supplier M/s.Spectronic Plating Pvt. Ltd., would not come within the mischief of section 194C of the Act, because the payment was in the nature of purchase of materials which attracts central sales tax. In the case of M/s. Hindustan Coco cola Beverage [ 2007 (8) TMI 12 - SUPREME COURT] that when the payee has included the amount received from the assessee in its return of income and also paid taxes on the said receipts, then there was no question of making any addition u/s. 40a(ia) of the Act for failure to deduct TDS u/s.194C. CIT(A) has also taken support from the decision in the case of M/s.Ansal Land Mark Township P.Ltd.. [ 2015 (9) TMI 79 - DELHI HIGH COURT] that as long as the payee filed return of income disclosing payment received from the payer and in which the income earned by it is embedded and also paid tax on such income, the assessee would not be attracted as person in default, consequently no disallowance can be made u/s.40a(ia) of the Act for non-deduction of TDS under section 194C of the Act. There is no error in the findings recorded by the learned CIT(A) to delete the addition made by the AO towards disallowance of expenditure u/s. 40a(ia) of the Act for the failure to deduct TDS u/s.194C of the Act. Hence, we uphold the findings of the learned CIT(A) and dismissed the appeal filed by the Revenue.
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2020 (11) TMI 337
TP Adjustment - adjustments made under the licensed manufacturing segment being exchange fluctuation, bank charges, interest charges, management fee - HELD THAT:- In the show cause notice issued to assessee by Ld. TPO under section 92CA, Ld. TPO failed to follow the due process of law in respect of proposing comparables for computing the ALP of international transaction in manufacturing segment. Ld. TPO is therefore, directed to issue show cause notice with proposed comparables in accordance with law. Also, in respect of bank charges, interest charges, management fees assessee should establish categorically based on cogent materials/evidences of how it should not be considered as operating for the purposes of computing margin of licensed manufacturing segment. Assessee is therefore directed to file all relevant documents/evidences/information necessary to establish its claim in respect of aggregation/segregation of the costs alleged in the order passed by Ld. CIT(A)/Ld. TPO. Assessee is also directed to file its response to various comparables proposed by Ld. TPO. Ld. TPO shall then pass a detailed order considering all the material evidences placed by assessee and compute the margin in accordance with law. Remand the issue to Ld. AO/TPO for de novo assessment as per Transfer Pricing provisions in accordance with law. Grounds raised by assessee and revenue stands allowed for statistical purposes.
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2020 (11) TMI 336
Exemption u/s 11 - AO made the addition on the ground that since the five years period expires in AY 2013-14, and since the assessee did not utilize the sum accumulated for charitable purpose in terms of section 11(3)(c) - HELD THAT:- A reading of Clause (c) of Sec. 11(3) of the Act would show that the time allowed for applying accumulation for charitable purpose is 5 year and one year following the expiry of 5 years. This is clear from the expression used or in the year immediately following the expiry thereof . The previous year following the expiry of period of 5 years from AY 2008-09 will be AY 2014-15 and not AY 2013-14. This appeal relates to AY 2013-14 in which the AO sought to apply the provisions of section 11(3)(c). The Assessee did not raise such a plea regarding the applicability of the aforesaid provisions in AY 2014-15 only. There is a reference to section 11(3)(d) in the order of AO, which in our opinion, is not the correct provision of law. Since the assessee did not give any explanation in not utilising the surplus funds accumulated, the AO brought to tax a sum of ₹ 1,93,54,000. CIT(Appeals), the plea of assessee was that it had utilised the accumulated surplus for construction of a hostel building and products accounts evidencing income expenditure towards the same. Period of 5 years for spending the accumulated surplus for AY 2008-09 or in the year immediately following the expiry thereof is only AY 2014-15. The issue raised now before the Tribunal in the form of grounds of appeal which we have extracted in the earlier part of the order should be considered by the AO. If AY 2013-14 is not the period within which the accumulated surplus has to be applied, then the addition made should be deleted. We therefore set aside the order of CIT(Appeals) and remand this issue for fresh consideration by the AO, after affording opportunity of being heard to the assessee. Appeal by the assessee is treated as allowed for statistical purposes.
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2020 (11) TMI 335
TP Adjustment - Comparable selection - functional similarity - HELD THAT:- The assessee is primarily engaged in the business of development of software and other allied services to its AE thus companies functionally dissimilar with that of assessee need to be deselected. Acropetal Technologies Limited - Income from software development services is less than 75% of the total revenue and the company is not comparable towards software development service provider. e-Zest Solutions Limited rendering product development and end to end technical services which comes under the category of KPO services and this cannot be compared to software development providers. E-Infochips Limited company is engaged in diverse activities such as product development and provisions for IT enabled services for which no separate segmental information is available in its Annual Report. On the contrary, the diverse activities of software development and IT enabled services are considered and reported together in one segment. Thus, in the absence of such segmental details, the company is functionally not comparable to assessee which is a captive software development provider. ICRA Techno Analytics Limited - company has significant growth in the business intelligence and analytics space which shows that the activities carried out are different from that the assessee. The revenue recognition policy of the company also shows that the company is engaged in rendering diverse services. The services rendered by the company as per its website also include services akin to IT enabled services/KPO services. Persistent Systems Solutions Limited to be excluded from the list of comparables as composite data of revenue as well as margins of this company pertaining to the sale of software services and products cannot be considered as comparable with the software development services segment of the assessee. Since we have directed the exclusion of five comparables, the final list of comparable is only Evoke Technologies Private Limited and R S Software (India) Limited. The assessee's margin being 14.87% for provision for software development services would be more than the arithmetical means of the working capital adjusted margin of the above two comparables. Therefore, the international transaction of provision of software development services by the assessee to its AE for the relevant assessment year is to be concluded as being at Arm's length. It is ordered accordingly. Non-receipt of refund for the assessment year 2011-2012 - HELD THAT:- As DRP had directed the A.O. to verify the objections of the assessee and take necessary action in the matter. However, we find that in the final assessment order no such examination/verification has been done by the A.O. Therefore, we direct the A.O. to examine the objections of the assessee whether it was not in receipt of refund for the relevant assessment year.
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2020 (11) TMI 334
TP Adjustment - treating provision of corporate guarantee by the appellant to its AE as an international transaction - appellate authority upheld the findings of TPO in treating corporate guarantee as international transactions and the rate of commission was reduced from 3% to 2.5% - HELD THAT:- The contentions raised by ld. Counsel are unsustainable in the light of decision rendered by Hon'ble Jurisdictional High Court in the case of Everest Kento Cylinders Ltd. [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] . Thus, we hold Corporate Guarantee facility provided to overseas AE by the assesse is an international transaction. In so far as the rate of commission is concerned, the Hon'ble High Court in the aforementioned decision has upheld corporate guarantee commission at 0.5%. The corporate guarantee rate in the present case is accordingly restricted to 0.5%. The ground No. 1 of the appeal is partly allowed in the terms aforesaid. ALP of the corporate guarantee commission should be restricted to the extent of facility availed by assessee's A.E . - HELD THAT:- In the case of Corporate Guarantee there is no commitment of financial or capital assets of the entity. The guarantee is issued without any security or underlying asset. Corporate guarantee is extended by one corporate entity to a third party for or on behalf of its subsidiary/group entity/associated enterprise. It is in the nature of contingent liability. Keeping in view, the nature and extent of exposure and liability of guarantor in the case of corporate guarantee, it would be justified if guarantee commission is charged to the extent of actual exposure of facility availed instead of gross amount of facility extended. See BS LTD. case [ 2018 (4) TMI 1742 - ITAT HYDERABAD] . In the instant case, the assessee has purportedly availed facility of ₹ 2.48 crores as against corporate guarantee of ₹ 15.19 crores. For the purpose of determination of corporate guarantee commission in line with our observations and for the purpose to ascertain/verify the extent of corporate guarantee exposure, we deem it appropriate to restore this issue to the Assessing Officer. The ground No. 2 of the appeal is allowed for statistical purpose in the above said terms. Addition on account of unexplained paintings - paintings found during search operation at the premises of the assessee - HELD THAT:- We have examined the evidence on record in respect of only three paintings, as test check. The Assessing Officer has failed to rebut the evidences furnished by the assessee. The Assessing Officer has rejected the evidences furnished by the assessee by making generic remarks. We find merit in the contentions of ld. Counsel, these paintings were acquired by the assessee in assessment years much prior to the date of search. Hence, addition in respect of said paintings cannot be made in search proceedings. There are other 37 paintings in respect of which documents/evidences on record are required to be examined. The factual matrix, manner of addition and nature of evidence in the present case is similar to the case of Ms. Kavita Singh [ 2017 (12) TMI 581 - ITAT MUMBAI] - we deem it appropriate to restore this issue to the file of AO with a direction to decide the issue in line with the Tribunal decision in the case of Ms. Kavita Singh (supra). Appeal of the assessee is partly allowed.
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2020 (11) TMI 333
TP Adjustment - addition on account of notional interest on export receivables - scope of amendment in Sec. 92B - assessee submits that outstanding receivables are not international transaction for A.Y 2009-10 - outstanding receivable is merely incidental transaction of sale of goods and not per-se separate international transaction - Whether amendment in Sec. 92(B) by way of insertion of Explanation was brought in the statue book by Finance Act, 2012, which has no retrospective application? - HELD THAT:- We have noted that explanation to Sec. 92B of the Act has been inserted vide Finance Act, 2012 and held as prospective . Further, we have noted that there is average delay in receivable from AE of 39 days and in case of none AEs 44 days. There is no dispute that the assessee is not charging interest from none AE on such export receivable. Coordinate Bench of Tribunal in Gitanjali Exports Corporation Ltd.[ 2016 (3) TMI 1337 - ITAT MUMBAI] also held that where no interest is charged from Non-AEs, i.e. independent transactions, as well, there cannot be any occasion to make an ALP adjustment, for notional interest, on delay in realisation of trade debts from AEs. When the assessee is adopting the uniform policy for none charging interest on export receivable from AE and none AE and moreover the transaction with regard to sale of cut and polished diamonds has been accepted by the TPO at ALP, no notional interest was warranted. In the result Grounds No. 1 to 5 of the appeals are allowed. Disallowance of mark to market loss - assessee is following mercantile system accounting and AS-11 - HELD THAT:- The Hon ble Supreme Court in case of Woodward Governor India (P) Ltd., [ 2009 (4) TMI 4 - SUPREME COURT] held that losses on revaluation of unmature foreign exchange forward contract and such are not notional losses and are allowable as expenditure u/s 37 of the Act. In M/S. D. CHETAN CO. [ 2016 (10) TMI 629 - BOMBAY HIGH COURT] held that forward contracts for purpose of hedging in course of normal business activities of import and export done to cover up losses on account of differences in foreign exchange valuations would not be speculative activity, but business activity.Therefore, we direct the AO to delete the disallowance. In the result, Ground No. 6 7of the appeal is allowed. Disallowance u/s 14A read with Rule 8D(ii) 8D(iii) - HELD THAT:- As decided in RELIANCE UTILITIES POWER LTD. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC BANK LTD. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] no disallowance under Rule 8(D)(ji) is warranted in case the reserve and surplus of the assessee are in far excess to the investment made by the assessee. Assessee has surplus reserve available with it at the end of financial year, when the investments were made foreign exempt income and therefore no disallowance under Rule 8(D)(ii) is warranted. Delhi High Court in the case of Joint Investments (P.) Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT] held that the window for disallowance is indicated in section 14A and is only to the extent of disallowing expenditure incurred by the assessee in relation to tax exempt income. This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. Considering the fact that disallowance u/s 14A of the Act cannot exceed the exempt income in view of the decision of Bombay High Court in PCIT Vs. HSBC Invest Direct (India) Ltd [ 2019 (2) TMI 731 - BOMBAY HIGH COURT] we direct the AO to restrict the disallowance u/s 14A of the Act at ₹ 1.62 lakhs only. In the result this ground of appeal is also partly allowed.
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Customs
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2020 (11) TMI 362
Grant of Bail - smuggling of foreign origin gold - Sections 135(1)(a)(i)(A) read with Section 104,110,111,119,123 of Customs Act, 1962 - HELD THAT:- Considering the submissions of learned counsel for the parties, facts and circumstances of the case, accusation and the nature of supporting evidence, reasonable apprehension of tampering the witnesses and prima facie satisfaction of the court in support of the charges, without expressing any opinion on the merit of the case, the applicant is entitled to be released on bail. Applicant is directed to be released subject to conditions allowed - application allowed.
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2020 (11) TMI 361
Smuggling - imported cigarettes - opportunity to cross-examine the person whose statements were recorded, not provided - main contention of the petitioners is that there has been a violation of principles of natural justice by the 2nd respondent by relying on the statements made under Sections 108 of the Customs Act, 1962 without permitting the petitioners to cross-examine them - levy of penalty u/s 112(a)(i)/112(b)(i) also under Section 114AA of the Customs Act, 1962 - HELD THAT:- There is no doubt that where a plea of violation of principles of natural justice by denying a party an opportunity to cross examine witnesses is raised in proceedings under the Customs Act,1962 or similar legislation, the question of prejudice suffered to such party by such denial has to be gone into. If there is no prejudice caused by such denial, no relief can be granted to him. Having perused the impugned order passed by the 2 nd respondent, prima facie, it appears to us that the basis for levying penalty against the petitioners were their statements recorded under Section 108 of the Customs Act, 1962, wherein certain confessions appear to have been made by them implicating themselves in the smuggling of cigarettes, which was subject matter of enquiry - no prejudice has been caused to the petitioners by the action of the 2nd respondent in denying an opportunity to them to cross-examine the other persons who had implicated them in the said act of smuggling. This Writ Petition is dismissed at the admission stage as not maintainable, giving liberty to the petitioner to avail the alternative remedy of Appeal under Section 129A of the Customs Act, 1962.
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2020 (11) TMI 360
Condonation of delay in filing appeal - sufficient cause for condonation of delay present or not - HELD THAT:- It is well settled in law that the expression 'sufficient cause' should receive liberal consideration so as to advance the cause of justice and the same should not be used as a penal statute to punish the erring parties. From perusal of the order passed by the Commissioner of Customs (Appeals), it is evident that the order is solely based on non-issuance of EODC. The appellant was prosecuting the matter before the Director General of Foreign Trade for issuance of EODC and therefore, the delay has been caused in filing the appeal. In the facts and circumstances of the case, in our considered opinion and in the light of the aforesaid legal position, sufficient cause for condonation of delay in filing the appeal is made out. In the result, delay in filing the appeal is condoned and the substantial question of law framed by this Court is answered in favour of the appellant and against the revenue. Matter is remitted to the Tribunal to decide the appeal preferred by the appellant in accordance with law, after affording an opportunity of hearing to the parties - Appeal allowed.
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2020 (11) TMI 331
Valuation of imported goods - Automotive Consumables - rejection of transaction value - main contentions of the Appellants are that the Appellant was not party to the market enquiry; copy of the report was not provided by him and that the Commissioner has not proceeded sequentially in terms of Customs Valuation Rules - it was held by CESTAT that The values of disputed items were arrived at without following the CVR and without giving any cogent reasons for arriving at such a value. We are of the opinion that such a valuation has neither statutory backing nor legal acceptability. The Ld. Commissioner has erred in rejecting the transaction value and in fixing the value of the impugned goods. HELD THAT:- There are no reason to interfere with the order impugned in the Civil Appeal. The Civil Appeal is dismissed.
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2020 (11) TMI 330
Valuation of goods - Aluminium scrap - enhancement of value based upon the NIDB data - it was held by CESTAT that enhancement stands set aside by Commissioner (Appeals) by referring the earlier matters of the same assessee in which case such assessments were set aside. HELD THAT:- The order of CESTAT upheld - appeal dismissed.
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2020 (11) TMI 329
Demand - Anti dumping duty - Classification - Confiscation - Notification No. 138/2002-Cus dated 10.12.2002 - It is not in dispute that the plastic base of the item can be inserted into a socket/holder in General Lighting System (GLS) or in the casing of an emergency lamp - it was held that it is held that the goods imported by the appellant, being CFLs without choke , classifiable under SH 8539 31 10 of the First Schedule to the Customs Tariff Act, would attract Anti-Dumping Duty in terms of Notification No. 138/02-Cus and, therefore, the order passed by the learned Commissioner in the second round of adjudication is liable to be upheld. HELD THAT:- There are no reason to interfere with the impugned order of the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai - appeal dismissed.
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2020 (11) TMI 328
Interest on delayed Refund of excess Customs Duty paid - Benzothiazole - appellant paid the enhanced duty under protest - Section 27A of the Customs Act, 1962 - HELD THAT:- Evidently, the Learned Commissioner has taken the date of receipt of Final Order of the Tribunal as the relevant date for calculation of interest to be paid on the refunded amount. This is clearly contrary to the provisions of Section 27A which has only one date for calculation of interest which is the date of refund application. If the refund is not paid within three months from the date of receipt of refund application interest has to be paid. The appellant is entitled to interest on the delayed refunds from three months from the date of receipt of refund application till the date of which the refund has actually been paid and order the Department to pay the interest - Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2020 (11) TMI 359
Redemption of Debentures - main contention of the Appellant is that NCLT did not specifically address to the prayer for repayment but rather gave a direction to explore all possibilities of settlements of claims of Petitioners and granted six months time, which is ultra vires to Section 71(8) and Section 71(10) of the Companies Act, 2013 - Whether the provisions under Section 71(10) of the Companies Act 2013 was adhered to by NCLT while disposing of the Petition? HELD THAT:- It is significant to mention that Section 71(11) of the Companies Act, 2013 speaks of Penalty for Default . Section 71(12) provides a contract with a Company to take up pay for any debentures of the Company may be enforced by a decree of Specific Performance . As a matter of fact, Section 73 of the NCLT Rules, 2016 relates to Applications under Section 71(9), 71(10), 73(4) and Section 74(2) Section 76(2) of the Companies Act, 2013. It is relevant to mention that the relief for Specific Performance is allowed as a rule when there is no other relief which would meet the circumstances of the given case. A perusal of the Reply filed by the Respondent Company in the Company Petition before the Tribunal shows that there is a clear admission by the Respondent Company in paras 12 to 18 that there is a default of payment of interest on the Non-Convertible Debentures and that they proposed to settle the dues and that the matter was under due process. It is relevant to mention that in para 17 of their Reply, the Respondent Company had averred that there is an Arbitration proposal pending between the Parties, but the material on record does not evidence any such initiation of Arbitration proceedings - A perusal of the record shows that the Tribunal had taken into consideration the Financial Status of the Company , the interest of all Stake Holders and has given a direction for settlement. However, the fact remains that the Respondent Company did not make any effort to settle the matter nor was there any representation on their behalf before this Tribunal, despite service of notice. Section 71(10) provides a clear mechanism for issue and repayment of debentures, including the enforcement of repayment obligations. Section 71(10) provides that the Tribunal may hear the Parties concerned and direct, by Order, the Company to redeem the debentures forthwith on payment of principal and interest due thereon. Having regard to the provisions of Section 71(8) read with Section 71(10) of the Companies Act 2013 and also the fact that no concerted efforts have been made by the Respondent Company to explore the possibilities of settlement and also the fact that the time of six months granted by the National Company Law Tribunal has lapsed, though this Tribunal is of the considered view that Section 71(10) of the Companies Act 2013, ought to have been strictly adhered to, keeping in view the facts and circumstances of the attendant case on hand, this Appeal is disposed of with a specific direction to the Respondent Company to repay the amounts due and payable to the Appellants herein within a period of two months from today.
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2020 (11) TMI 358
Enlargement of period of payments by granting 6 more months time to make the first tranche of payments and to make subsequent tranches payments with 6 months difference each - HELD THAT:- It is clear from the very language of the Office Memorandum that the same has been issued in the limited context of disruption of supply chains, and contractual breach occurring therefrom. The Memorandum of Settlement is undoubtedly neither a procurement contract nor any such class of contract where a 'disruption of the supply chains' would result in a breach of the contract between the parties. It is merely a settlement agreement under which the Respondents herein have withdrawn pending legal proceedings against the Applicants and the Applicants have undertaken the reciprocal obligation of purchasing the shares of the Company held by the Respondents at the rate and within the time frame as agreed under the Memorandum of Settlement. Therefore, the Office Order sought to be relied upon by the Applicants is not relevant to this case and the Applicants cannot refuse to perform their obligations under the Memorandum of Settlement seeking refuge under the same. There is a breach of undertaking between the parties. The TCP/25/KOB/2019 was disposed of on certain agreements between the parties. Applicants herein cannot absolve from the responsibility in making the payments to the Respondents, as believing the undertaking in the Memorandum of Settlement the Respondents had undertaken Financial Commitments with others. Considering the pandemic situation, in order to avoid litigation, the Respondents have already accepted the request of the Applicants for extension of time till 15.08.2020. However, without carrying out their obligation as per the Order dated 17.02.2020 in TCP/25/KOB/2019, they have come forward with the present Application seeking time from 31.12.2020. The applicants shall make the requisite payments to both Respondents - application disposed off.
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2020 (11) TMI 327
Restoration of name of the company in the Register maintained by the Registrar of Companies, Mumbai - Section 252 (3) of the Companies Act, 1956 - HELD THAT:- It is observed that the Petitioner Company has Short term borrowings of ₹ 1,170, 034/-, has fixed Assets of ₹ 12,38,464/-, for the Financial Year 2017-2018 and 2016-2017 - The Company has Fixed Assets (Land) valued of ₹ 12,38,464/- in its Balance Sheet. The Company had taken on lease the premises at MAHAD MIDC, got NOC from MIDC for power supply and also obtained approval for water supply from MIDC as stated in pre-paras. The Company has also produced various approval letters from the authorities, Lease Deed with MIDC to satisfy the Bench that the Company is carrying on its business operations. The Bench is of the opinion that the Company is taking various steps towards the commencement of its production - the books of the Petitioner Company reflects that Members intend to continue its business operations of the company. Therefore, in the interest of justice the name of the company deserves to be restored in the Register of Companies maintained by the Respondent Registrar of Companies Petition allowed.
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Insolvency & Bankruptcy
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2020 (11) TMI 357
Eligibility to become insolvency professional - it became necessary for IPs to obtain a valid AFA - Rejection of application for AFA - Constitutional validity of Regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (the IP Regulations) read with Bye-Law 12A of the Insolvency and Bankruptcy Board of India (IBBI) (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 - power to frame the impugned regulations and bye-laws - excessive delegation or not - HELD THAT:- It is clear that the said regulations were framed under the power conferred by Sections 196, 207 and 208 read with 240 of the IBC. In an earlier judgment, namely, V. Venkata Sivakumar v. IBBI, [2020 (8) TMI 58 - MADRAS HIGH COURT] , this Court rejected a challenge by the Petitioner herein to Regulation 7(2)(ca) of the IP Regulations as regards the power of the IBBI to charge a fee from IPs by using the annual turnover as a measure, including the allegation that there was excessive delegation. In this case, in addition to Regulation 7A of the IP Regulations, Regulation 12A of the Model Bye-Laws IPA Regulations is under challenge. On perusal of the Model Bye-Laws IPA Regulations, we find that the said regulations were framed by the IBBI under the power conferred by Sections 196, 203 and 205 read with Section 240 of the IBC. Given the fact that the IBBI has framed the Model Bye- Laws IPA Regulations and IPAs, such as the IIIPI, have framed bye-laws in consonance with the model bye-laws, it cannot be said that there is excessive delegation. Indeed, Section 205 of the IBC expressly stipulates that, subject to the provisions of the IBC and rules and regulations thereunder, after obtaining the approval of the IBBI, an IPA should frame bye-laws that are consistent with the model bye-laws framed by the IBBI - as regards the criteria for accepting or rejecting an application for an AFA, Regulation 12A(2) of the Model Bye-Laws IPA Regulations stipulates the criteria. Therefore, it certainly cannot be said that principles or norms have not been laid down in respect of the exercise of power by IPAs. Whether the impugned regulations violate Article 14, 19 and 21 of the Constitution of India - primary ground on which the regulations are assailed is that it subjects registered IPs to the added requirement of obtaining an AFA from the IPA - HELD THAT:- The existence of more than one authority with regulatory or disciplinary control over a professional is per se not a ground to hold that the impugned regulations are unconstitutional. In the specific context of IPs, the registration of an enrolled professional member as an IP and the cancellation of such registration are within the domain of the IBBI, whereas the grant of or cancellation of membership and the issuance, renewal and cancellation of an AFA are within the domain of the IPA, which functions under the supervisory control of the IBBI - Whether the equality clause is violated by the impugned regulations is, however, a separate matter to be examined. IPs perform a distinct function in insolvency resolution and liquidation under the IBC and the regulations framed thereunder. Therefore, they indubitably constitute a distinct class. The admitted position is that there are only three IPAs in India, and the Petitioner has admittedly obtained membership from the IIIPI. Accordingly, as per Regulation 12A of the Model Bye-Laws IPA Regulations, he is required to apply for and obtain the AFA from the IIIPI - Section 238 A of the IBC does not apply in this situation. The time limit under Regulation 12 A(7) of the Model Bye-Laws IPA Regulations clearly runs from the date of receipt of the order, and the Petitioner would be entitled to reckon limitation from 16.07.2020 if that were indeed the date of receipt of the order of rejection as alleged. More importantly, in contrast to a withdrawal of registration or loss of professional membership as an IP, the rejection of the application for an AFA is not final and apart from the appellate remedy, it is always open to the IP concerned to remedy the non-compliance, as cited in the order of rejection, and re-apply - Regulation 12A is not unconstitutional - thus, the time limit prescribed in Regulation 12A(7) may be revisited by the IBBI by considering an appropriate amendment either providing for a larger time limit or by conferring power to condone delay for sufficient cause. The Petitioner has failed to make out a case to declare the impugned regulations as unconstitutional - Petition dismissed.
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2020 (11) TMI 356
Maintainability of application - initiation of CIRP - Corporate Debtor committed default in not completing the Construction of the flat in time and handing over possession of the same in terms of Agreement - Financial Creditor/Home Buyer committed default in making payment of the instalments or not - Time Limitation. Time Limitation - HELD THAT:- There is nothing on record to show that the Corporate Debtor has ever offered possession of the flat and that the occupation certificate was applied for within the stipulated time of handing over possession. When the Corporate Debtor failed to complete the Construction and could not deliver the possession, the default was committed. The petition is filed within three years from the date, when possession was scheduled to be delivered. Thus, it is clear that the objection of the Appellant regarding limitation is not sustainable. Whether the Corporate Debtor has committed default in not completing the Construction of the flat in time and handing over possession of the same in terms of Agreement? - Whether Financial Creditor/Home Buyer committed default in making payment of the instalments as per 'ABA' under construction link Plan? - HELD THAT:- Based on the admission of the Corporate Debtor, it is clear that till 22nd November 2018, flooring and finishing work of the Apartment was still going on. The Appellant has annexed the copy of a letter dated 29th October 2019 by which the concerned authorities granted permission for the occupation of the said building. The Corporate Debtor had applied for issuance of Occupation Certificate on 03rd July 2019, which was granted on 29th October 2019. From facts of this case, it is evident that the corporate debtor has failed to honour its promise in completing the Project and handing over possession in time as per terms of the Agreement. Therefore due to non-payment of an instalment on account of delay in Construction cannot be treated as default committed by the Allottee - the Corporate Debtor had committed default in not completing the construction work of the flat in time and failed to deliver the possession on the stipulated date as per Agreement. The Corporate Debtor himself has admitted in its reply to notice dated 15th November 2018, that unlike most builders who have abandoned the Project and stopped the work, it is completing the Project which is at the final stage where flooring and finishing work is underway. It is also evident that flat was to be delivered by 2nd week of February 2016, but the Corporate Debtor failed to honour its promise and could not deliver the flat in time. The Appellant admits the overall situation prevailing everywhere; therefore, in such a situation, there would have been reasonable apprehension in the mind of Allottee that building may not be completed. Therefore, the possibility cannot be ruled out that in the circumstances stated above the Allottee might have stopped further payment after 2013. It is also on record that in 20th December 2016 the Corporate Debtor raised a demand of VAT charges of ₹ 3,00,615/, which was paid by the Allottee. The Corporate Debtor had not placed any record to show as to when the internal finishing and flooring work started. Mandatory condition of issuing Notice through speed post or courier to the Allottee, at every stage of Construction as per Agreement has not been followed. Therefore in terms of Clauses 2.17 2.18 of the Agreement, it cannot be said that the Allottee/Financial Creditor has committed default in paying the instalments when due. It is undisputed that flat was to be delivered latest by 2nd week of February 2016, but construction work was still going on in the year 2018. Whether the Application U/S 7 of the Code is filed fraudulently with malicious intent for the purposes other than for the Resolution of Insolvency or liquidation, as defined under Section 65 of the I B Code, 2016? - HELD THAT:- The Appellant /Real Estate Developer has failed to prove that Allottee is a speculative Investor and is not genuinely interested in purchasing the flat/Apartment and has initiated proceeding under the Code to pressurise the Corporate Debtor. Thus there are no justification to invoke Section 65 of the I B Code against the Allottee. The Order of Adjudicating Authority in admitting the petition filed U/S 7 of the Code needs no interference - Appeal dismissed.
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2020 (11) TMI 355
Recovery of Arrears from Corporate Debtor - applicant s contention is that the rejection under Regulation 14 is not sustainable for the reason that there is no un-preciseness in the amount claimed by the creditor either due to any contingency or other reasons - HELD THAT:- It is true that the claim of GST amounting to ₹ 28,41,59,349.06 has been made from the Corporate Debtor by the applicant, as per the detailed statement furnished by them to the Resolution Professional. It is stated that different notices envisaged under Section 46 was issued by the applicant for the period from April, 2018 to September, 2019 (18 months). In this connection, it is to be noticed that the Corporate Debtor was inoperative from July, 2019 and the applicant made the claim before the Resolution Professional only in February, 2020.. It is not clear as to why the applicant slept over till 19.2.2020 to recover the amount from the Corporate Debtor. The Resolution Professional even though has admitted the full amount, as per Regulation 14(2) of the CIRP Regulations, the RP can revise the amounts of claims admitted, including the estimates of claims made under Sub-Regulation (1) when he comes across additional information warranting such revision, This additional information he has received from the suspended Managing Director on 13th Jul, 2020 that the amount charged by the GST Department is not correct, as the GST is to be charged only on certain heads of income and not on total turn over of the Corporate Debtor. After re-assessing the amount payable by the Corporate Debtor with the assistance of the Internal Auditor of the Corporate Debtor, the amount worked out to be ₹ 1,06,09,299, which fact has been intimated to the applicant - It was resolved to file an appeal before the Joint Commissioner after getting the audited financial statements of the financial year 2018-19. The RP was directed that after receipt of proper and validated information from the part of the promoters of the Corporate Debtor he shall revise the claim amount after due verification and to explore other possibilities to arrive at a correct GST liability. Since the quantification of the actual amount to be paid as GST due by the Corporate Debtor is to be decided in an appeal going to be filed by the Resolution Professional before the concerned authorities, this Tribunal is not going into the question whether the Resolution Professional has adjudicatory power to decide the amount of GST due from the Corporate Debtor. - the Resolution Professional is directed to immediately, at any rate within two weeks from today, to file an appeal before the Joint Commissioner, State Sales Tax Department with the relevant papers for re-assessing the GST amount payable, based on the audited financial statements for the financial year 2018-19 and also based on the Notification No.9/2017-Integrated TA (Rate) dated 28.6.2017 issued by the Government of India. Application disposed off.
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2020 (11) TMI 354
Continuation of Liquidation Process - exclsusion of time period between February 20, 2020 to November, 30, 2020 from calculation of 365 days/One year as provided under Regulation 44 of the IBBI (Liquidation Process) Regulations, 2016 - HELD THAT:- In the Report No.100/KOB/2020, regarding E Auction conducted on 30th September, 2020 it is stated that No bid has come for Asset Blocks numbered 1 to4 ie., Land and Building and Plant and Machinery. There were many interested buyers who had shown interest, however one of the reasons for the bid not being received could be due to a demonstration in front of the factory on 4.9.2020 by few workmen/employees which was also published in the newspaper in Kochi and that have scared away the prospective buyers to come forward. As mandated in Regulation 44(2) a report explaining why the liquidation has not been completed and specifying the additional time that shall be required for liquidation. The applicant is permitted to continue with the liquidation process - The period between February 20,2020 to November, 30,2020 is excluded from calculation of 365 days/One year as provided under Regulation 44 of the IBBI (Liquation Process) Regulations, 2016 for completing the Liquidation Process, following the norms prescribed in the Regulations. Application disposed off.
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Service Tax
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2020 (11) TMI 353
Imposition of service tax on royalty and allied charges paid by the petitioner on the minerals extracted by it - Grant of mining lease by the Government - Legality of imposition of tax - HELD THAT:- If the order impugned is appealable, we relegate the petitioner to approach the appropriate forum in accordance with law. At this point of time, Mr. A.K. Mohanty, learned counsel for the petitioner contended that the petitioner has no objection to approach the appropriate forum under the provisions of law, but the pre-condition of entertaining the appeal is to deposit 75% of the demanded amount, which will cause prejudice to the petitioner. Therefore, the petitioner has approached this Court by filing the present writ petition. As the matter is pending before the Apex Court for adjudication, whether service tax is leviable on the royalty collected from the petitioner for winning of minerals and, as such, an interim order has been passed by the Apex Court to that extent, it is open to the petitioner to bring all these facts before the appellate forum by filing interlocutory application seeking waiver of pre-deposit of the amount for entertaining the appeal. If such application is filed, the appellate authority shall consider the same taking into consideration the orders passed by the Apex Court and pass appropriate order in accordance with law.
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Central Excise
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2020 (11) TMI 352
Refund of Excise Duty - allegation that the incidence of duty not passed on to the buyer - Revenue submitted that not only the show cause notice clearly refuted the claim of the Assessee to claim such refund, inter alia on the grounds of 12B Presumption, but also on the ground that the Appellant/ Assessee was not entitled to any refund of such Excise Duty - HELD THAT:- The scheme of the Act contained in Section 11B of the Act read with other relevant provisions of the Central Excise Act as it then prevailed before the introduction of GST regime with effect from 1 July 2017, with regard to refunds is very clear viz., that it is only the person who has borne the incidence of Excise Duty, which was not leviable in law is entitled to claim refund of the same, subject to his locus standi and the limitation prescribed in Section 11B of the Act. There is hardly any doubt on facts in the present case, where, admittedly, the invoice of the appellant for the supply of raw naptha which is a dutiable product, was raised by the appellant M/s.CPCL on its marketing company M/s.IOCL, which is a separate company, who in turn raised invoice on the purchaser or buyer of the said raw naptha M/s.PPN, who in turn, manufactured power by use of such raw naptha and other raw materials. If at all, duty can be said to have been collected in excess on account of over valuation of the supplies, it is the consumer of the said raw material/raw naptha, viz., M/s.PPN who could have claimed the refund of Excise Duty as per the settled legal position. Merely because M/s.IOCL issued a credit note to the buyer M/s.PPN, it cannot be said that the incidence of Excise Duty was not passed on to the purchaser M/s.PPN. Once the incidence of Excise Duty has been passed on, whether it is further passed on to the ultimate buyer or consumer or not, is not the relevant question. The appellant Assessee M/s.CPCL, cannot be said to have borne any incidence of Excise Duty illegally levied and therefore, the right of the appellant Assessee to claim any refund cannot arise. The question raised before us relates to question of locus standi of the person who is claiming the refund and not on what basis it is claimed. Whether on the basis of Credit Note issued by M/s.IOCL, a refund of Excise Duty could be made or not is not the question, and the claim of the Assessee is not fortified merely because the show cause notice refuted the claim of the Assessee on the basis of credit note alone - The facts are clear and undisputed and there is no material or facts available on record which even prima facie could indicate that the appellant Assessee has borne the incidence of Excise Duty which in law could not be charged from it. The moment it raised the invoice on M/s.IOCL and M/s.IOCL issued Invoice on M/s.PPN, the incidence of Excise Duty is definitely passed on to the buyer or consumer of raw naptha, viz., M/s.PPN. Therefore, the right to claim refund by the Appellant M/s.CPCL is completely lost. Appeal dismissed.
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2020 (11) TMI 351
Irregular availment of Cenvat credit - Ineligible inputs - It is the case of the department that the said inputs as claimed to have been received by the appellant assessee in their factory premises on the strength of invoices issued by M/s. Roshanlal Bhagirathmal are not the eligible inputs for the purpose of taking credit in terms of Cenvat Credit Rules, 2004 and Central Excise Rules, 2002, as the same were not purchased from the said dealer - CBIC vide Circular No. 1003/10/2015-CX dated 05.05.2015 - HELD THAT:- From the Circular, it is unambiguously clear that if the invoice issued by the manufacturer contains the details of the Appellant as consignee, they are entitled to Cenvat credit even if the buyer is unregistered. The Tribunal in HYDRO ELECTRO MACHINERY VERSUS COMMISSIONER OF C. EX., MUMBAI-III [ 2017 (2) TMI 876 - CESTAT MUMBAI ] where it was held that Even if the purchase of the inputs were made by the appellant from an agent of the second stage dealer but duty paying invoices is consigned to the appellant, credit is legally admissible to the appellant. Appeal allowed - decided in favor of appellant.
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2020 (11) TMI 350
Clandestine Removal - non-examination of correctness of opening balance and confirmed demand of ₹ 11,22,927/- - imposition of penalty - documents not verified - HELD THAT:- Learned Commissioner (Appeals) has recorded that the appellant has not disputed clandestine removal of the goods but their grievance is about confirmation of the Central Excise duty on the entry as opening balance of ₹ 96,77,194/- appearing in duty calculation worksheet. Since, the Commissioner (Appeals) has clearly held that the correctness of ₹ 11,22,927/- and verification of documents related them to be re-examined, therefore, stating that appellant has not disputed clandestine removal is clear contradictory. The Learned Commissioner (Appeals) s observation that appellant has not disputed the clandestine removal of goods, needs to be expunged and the remand made by the Commissioner (Appeals) has to be considered as open remand in respect of the total duty remand of ₹ 11,22,927/- - Appeal disposed off.
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2020 (11) TMI 349
CENVAT Credit - input service or not - Service Tax paid under the head Business Auxiliary Service for sales commission paid to their commission agents - credit has been denied alleging that sales agents are directly concerned with sales rather than sales promotion - period September, 2008 to April, 2013 - HELD THAT:- The issue under dispute in this appeal was analysed in COMMISSIONER OF CENTRAL EXCISE, LUDHIANA VERSUS AMBIKA OVERSEAS [ 2011 (7) TMI 980 - PUNJAB HARYANA HIGH COURT] , where it was held that l earned counsel for the revenue was unable to justify that the claim of cenvat credit by the assessee was erroneous in any manner - Following the said final Order, we are of the considered opinion that the demand cannot sustain. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (11) TMI 348
Time Limitation for issuing notices and assessment order - Amendment of Section 42 brought vide notification dated 13.11.2016 having a retrospective effect - whether period of limitation as provided in Section 25 or rule 58 will be applicable and would give cause to the State to issue notice by commencing the proceedings or otherwise? - HELD THAT:- The time limit prescribed vide amendment was, from five years, extended to six years as per the amendment brought in 2017 in v the judgment in Baiju A.A Others v. State Tax Officer [2019 (12) TMI 469 - KERALA HIGH COURT] . In view of the judgment, the amendment, extendimg period of limitation has been held to be prospective in nature and Assessment proceedings ,initiated after expiry of 5 years, were held to be beyond limitation. The question which is to be seen by this Court is that the amendment of Section 42 brought vide notification dated 13.11.2016 having a retrospective effect, whether period of limitation as provided in Section 25 or rule 58 will be applicable and would give cause to the State to issue notice by commencing the proceedings or otherwise. The time limits specified in Rule 58(20) of KVAT Rules offer a safe guarding factor to define the limits of power under Section 42(3) of the Act. Meaning thereby, it would not be proper to re-open assessments to bring the tax escaped turnover, which cannot be exercised in a manner that prejudicially affect an assessee, who would not be in a position to meet the charge against him for want of books of accounts and other relevant material - petition allowed.
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