Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 16, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Articles
News
Notifications
Highlights / Catch Notes
GST
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Condonation of delay of a period of 3 and ½ years in filing present petition - appellant contend that the limitation would start to run only after a notification is issued constituting the Tribunal - The writ petition is restored to the file of this Court with a direction to the appellant to pay 20% of the balance disputed tax within a period of six weeks from the date of receipt of the server copy of this judgment - HC
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Cancellation of GST registration of the petitioner - The explanation offered by the petitioner in not making GST payment, filing returns and preferring an appeal deserves to be accepted and by adopting a justice oriented approach, it is deemed just and appropriate to set aside the impugned orders and direct the 2nd respondent to restore the GST registration of the petitioner, subject to payment of all dues by the petitioner. - HC
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Cancellation of GST registration of petitioner - The petitioner neither filed a reply to the show-cause notice nor did it’s authorized representative appear before the concerned officer. This litigation could have been avoided if the petitioner had taken the necessary steps to protect its interests - Revenue to directed to submit its response for "cancelling the registration could be recalled on terms and conditions deemed fit by the respondents/revenue". - HC
Income Tax
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Taxation of redemption amount of the policy prematurely surrendered - Case of the department that the petitioner had received the surrender value of policy upon its premature redemption and the same was liable to tax under Section 80CCC (2) of the Act, stands erroneous. Once it is a position obtained that the petitioner- assessee had not obtained a relief under Section 80CCC (1) of the Act, the redemption amount of the policy prematurely surrendered would not be liable to be taxed. - HC
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Levy of interest invoking Section 220(2) - The appellants and the company are two separate and distinct assessees. Further, the amount was demanded based on search conducted. None of the limbs of Section 220(2A) of the Income Tax Act, 1961 has been satisfied by the appellants to claim waiver. - HC
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Exemption u/s 11 - donations received by the Appellant - it is clear that should there be any violation with regard to receipt of capitation fee, the AO could not have denied the benefit under Section 11 of the Act so long as the certificate is in force - HC
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Addition of gift u/s 56(2)(vii) - gift been received by the assessee directly from the uncle - The only reason to treat the same as the income of the assessee is that the amount has been transferred from bank account of uncle’s son and his daughter-in-law who are residing abroad as non-resident. - The gifts so received could be construed as constructive gift from uncle. - Addition deleted - AT
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Disallowance of interest made or borrowed funds - Even before us also, general submissions have been made that the amounts have been utilized for commercial expediency purposes. It is for the assessee to prove that it is a part of commercial expediency and such interest free advance are given for the purpose of business and profession and if the assessee fails to satisfy then, the assessee cannot escape from such disallowance of interest expenditure - AT
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Addition on account of Sales Commission - Non-deduction of TDS u/s 194H - Payment of commission of employees as part of sale or otherwise - Merely, the claim made by the assessee that the business of the Appellant is sales/purchase of liquor and all these employees are directly or indirectly related to sales of the company is not sufficient to hold that the findings of the authorities below are not tenable. - AT
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Addition u/s. 41(1) - bogus creditors - cessation of liability in case of outstanding of above sundry creditors - the given facts and circumstances suggests that the liability to pay the creditors had ceased to exist being bogus in nature as there is no real business concern selling/purchasing of goods and these are merely paper adjustment entry - additions confirmed - AT
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Addition made u/s 41(1) - Cessation of Liability u/s 41(1) - assessee has never claimed these expenses in its return of income - when no claim has been made by the assessee for the allowance of these expenses that the disallowance so made by the Ld. AO is not warranted and it is directed that the same be deleted. - AT
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Revision u/s 263 by CIT - Disallowance u/s 40(a)(ia) - Applicability of TDS on payment of commission, labour charges and advertisement - The amounts referred under three Heads do not require deduction of any TDS and in this situation, no disallowance u/s 40(a)(ia) is called for. Commissioner has failed to examine the issue analytically in right perspective and, therefore, it is not sustainable in the eyes of law. - AT
Customs
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Levy of penalty on CHA u/s 112(a) and 114A of the Customs Act - If the proceedings against the importer has thus come to an end, it will be discriminatory and unfair to continue the proceedings as against the CHA in relation to the very same transaction. The order of the Customs and Central Excise Settlement Commission, dated 30.11.2010 granting immunity to the importer from prosecution, fine and penalty, will also enure to the benefit of the appellant.- HC
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Request for denotification of alloted land in the midst of the SEZ - despite the land was allotted to the petitioner and even after lapse of 12 years, the petitioner had not utilized the land and had kept it vacant - The first respondent is therefore directed to reconsider the request of the petitioner for de-notifying the land allotted to the petitioner from the operation of Special Economic Zones Act, 2005 afresh - HC
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Smuggling - Gold/studded jewellery - baggage rules - In the absence of recourse to section 123 of Customs Act, 1962, the linkage of the several inferences and suppositions must be established with material and/or oral evidence to be compliant with normative requirement of customs officials having to establish that one or the other reasons for confiscation under section 111 of Customs Act, 1962 are manifest. The essential requirement of evidencing association with goods liable for confiscation has not been discharged. - AT
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Appeal before the Tribunal - Under Customs Act or Central Excise Act - Scope of the order passed by proper officer - demand in respect of import of goods at concessional rate of duty - Since the order was passed by the second respondent, Commissioner of Central Excise, Chennai III, appeal was only to be filed before the Tribunal in Form AE-3 under Section 35(B) of the Central Excise Act, 1944 and not under Section 129(A) of the Customs Act, 1962. - HC
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Seeking provisional release of imported goods seized - dry dates - it is also important to note that the investigation is ongoing and country of origin of the goods will be determined only after the investigation is concluded. At this point of time, it cannot be said with certainty that the goods were imported from Pakistan. - The goods namely dry dates being edible is obviously in the perishable nature. It has been considered consistently by various forums that in case of perishable goods provisional release of the goods should be allowed expeditiously. - AT
Corporate Law
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Restoration of name of the company in the Register of Companies - there was no situation to justify the restoration of name of the Company - It is true that this Tribunal is taking lenient view in Appeals filed against the refusal of restoration of the Company but if such leniency is adopted in each and every Appeals certainly the provision contained under Section 248 of the Companies Act, 2013 may be termed as redundant. - AT
IBC
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Validity of approved Resolution Plan - Authorized Representative on behalf of majority of home buyers represented - the view of individual homebuyer is therefore subsumed in the majority (of more than 50%) decision - Even if some of the homebuyers have not voted in favour of the plan, but the majority (more than 50%) have voted in favour of the resolution plan approving the same, the dissenting homebuyers who are in minority have to go along with the views of the majority - AT
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Seeking replacement of IRP - When the ingredients of Section 22 (3) (b) of the Code explicitly spells out for the Appointment of the proposed Resolution Professional, then, this Tribunal is of the considered opinion that the ‘invocation of Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 cannot be pressed into service, in the teeth of the I&B Code, 2016, showering Powers only on the Committee of Creditors, to replace the Interim Resolution Professional. - AT
SEBI
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Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Sixth Amendment) Regulations, 2022 - Notification
Service Tax
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Extended period of limitation - suppression of facts or not - it is not only the larger bench decision which settled the law law but there were contrary circulars of the board on the issue of payment of service tax by the sub-contractor. In view of this position, there is no suppression of fact or any mala fide intention to evade payment of service tax on the part of appellant - AT
Central Excise
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Reversal of CENVAT Credit - Valuation of exempted goods - The formula under Rule 6(3A) only requires the value of the exempted goods removed to be reckoned and not the value of the intermediate goods. The exempted good in this case is the urea. Its value is not in dispute. - The value of urea does not change for calculation of Cenvat to be reversed under Rule 6(3A). - AT
Case Laws:
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GST
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2022 (11) TMI 680
Condonation of delay of a period of 3 and years in filing present petition - appellant contend that the limitation would start to run only after a notification is issued constituting the Tribunal - HELD THAT:- Delay and laches are not to be calculated solely by the length of the time taken by the party to approach the legal forum. It is elementary principle that none stands to benefit by lodging an appeal or a petition belatedly. Unless and until there are material to show that owing to mala fide intentions and with certain ulterior motive, the petition was belated filed - it is found that there is no such allegation against the appellant. That apart, we also note that the appellant had deposited 10% of the disputed tax while filing an appeal before the first appellate authority and had the Tribunal been constituted and the appellant had filed an appeal before the Tribunal, it would have deposited further 20% of the disputed tax. The dispute being one of classification of goods manufactured and marketed by the appellant, an adjudication is required to be done for which unless the respondents file their affidavit, the Court will not be in a position to give a binding decision - this Court is of the view that the writ petition should be heard and decided on merits rather being rejected on the ground of delay and laches. However, to be entitled to such benefit, the appellant is put on certain conditions. The writ petition is restored to the file of this Court with a direction to the appellant to pay 20% of the balance disputed tax within a period of six weeks from the date of receipt of the server copy of this judgment - Appeal allowed.
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2022 (11) TMI 679
Cancellation of GST registration of the petitioner - non-filling of GST returns and non-payment of tax within stipulated time - case of appellant is that due to untimely demise of his Auditor, such non-compliance took place - satisfactory reason or not - HELD THAT:- Though the 1st respondent appellate authority does not have any power to condone the delay in preferring an appeal under Section 107 of the CGST Act, in a given case, it is open for this Court to condone the delay by exercising its powers under Article 226 of the Constitution of India - In the instant case, it is the specific assertion of the petitioner that due to untimely demise of his Auditor and on account of bonafide reasons, unavoidable circumstances and sufficient cause, it was not possible for him to not only file the GST returns and make payment within the stipulated time but also could not prefer the appeal within the prescribed period. The explanation offered by the petitioner in not making GST payment, filing returns and preferring an appeal deserves to be accepted and by adopting a justice oriented approach, it is deemed just and appropriate to set aside the impugned orders and direct the 2nd respondent to restore the GST registration of the petitioner, subject to payment of all dues by the petitioner. Petition allowed.
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2022 (11) TMI 678
Seeking impleadment of Additional Directorate General of GST Intelligence, Nagpur Zonal Unit and Additional Directorate General of Goods and Services Tax Intelligence, Guwahati Zonal Unit, as respondent Nos.12 13, respectively - HELD THAT:- The least that the petitioner concern s proprietor could have done was to furnish reasons for his inability to appear and supply the copies of the documents sought by the concerned authority. Ms Anjali J. Manish, who appears on behalf of the petitioner, says that several agencies, who are investigating the applicant/petitioner have been furnished copies of the documents - this is not a good enough reason to avoid furnishing documents, sought by the concerned authority. Application allowed.
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2022 (11) TMI 677
Cancellation of GST registration of petitioner - appeal was dismissed on the ground that it was time-barred - HELD THAT:- The petitioner, concededly, did not file a reply to the show-cause notice. There is, however, a reference to a reply dated 01.11.2021 in the first line of the order dated 28.12.2021. This observation is followed by another observation which indicates that no reply to the show-cause notice was submitted by the petitioner - the order cancelling the registration i.e., the order dated 28.12.2021 is a cut and paste job. There has been no application of mind either while framing the show-cause notice or while passing the order of cancellation of registration. The petitioner neither filed a reply to the show-cause notice nor did it s authorized representative appear before the concerned officer. This litigation could have been avoided if the petitioner had taken the necessary steps to protect its interests - the procrastination on the part of the petitioner got compounded in the appeal being filed well beyond the time prescribed under the Act. The respondents/revenue are requested to return with instructions as to whether, having regard to the fact that the petitioner is a professional chartered accountancy concern, the order cancelling the registration could be recalled on terms and conditions deemed fit by the respondents/revenue. Issue notice to the respondents - List the matter on 05.12.2022.
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2022 (11) TMI 676
Detention of goods - goods detained on the ground that no documents were produced at the time of inspection and the genuineness of the goods in transit and/or documents requires further verification - HELD THAT:- In view of statement made by learned AGP Mr. Kathiria prayers made by the petitioner would be satisfied and other prayers would be taken care of by the Appellate Authority while deciding the appeal on merits. Instead of entertaining the petition on merits, the same is disposed of with a direction to the respondent no.4 to decide the appeal within a period of two months and preferably on or before 15.11.2022 in accordance with law - the petitioner is entitled to raise all the contentions which are raised in this petition before the Appellate Authority. The petition is disposed off.
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2022 (11) TMI 675
Maintainability of petition - availability of alternative remedy of appeal - Seeking release of conveyance without demanding any security - HELD THAT:- It is not in dispute that conveyance in question has been released pursuant to the interim order. As the petition comes up for consideration today, there is no gainsaying that the order impugned in this petition is amenable to the statutory appeal provided under section 107 of the Central Goods and Services Tax Act, 2017. The statutory appeal being available to challenge the order impugned in this petition, the court is not inclined to entertain this petition on the said ground alone. The various issues sought to be raised to assail the impugned order in this petition, is better appreciated and adjudicated before the appellate authority - Even otherwise, it is trite that when the statutory appeal is available, the court would be loath to entertain the petition by exercising writ jurisdiction. The petitioner is relegated to prefer the appeal in accordance with the provisions of the Act to challenge the order impugned in this petition. No opinion is expressed on merits - Petition dismissed.
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2022 (11) TMI 674
Entitlement to interest on delayed refund made - Zero Rated Supplies - Section 56 of the Goods and Services Tax Act, 2017 - HELD THAT:- When the authorities have already paid refund amount, as per the interest aspect is concerned, the court is of the view that the petitioner could make appropriate application since grant of interest is contemplated under the statute, before the Goods and Services Tax Authority putting forth his claim for interest on the refund. If such application is made within 15 days from today, the competent authority shall consider it in accordance with law to decide the same regarding grant of interest to the petitioner within six weeks from the date of receipt of such application. Petition disposed off.
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Income Tax
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2022 (11) TMI 681
TP adjustment - reimbursement of expenses on the ground that the same pertained to Assessment Year 2007- 08 (and not the relevant Assessment Year 2008-09), a period prior to the execution of the Inter-Corporate Agreement - HELD THAT:- As per Clause 5 of Schedule-17 of Notes to Accounts forming part of the financial statements for the Financial Year 2007-08 relevant to Assessment Year 2008-09 dealing with related parties disclosures, the reimbursement made to the related parties for the Assessment Year 2008-09 was INR 3,98,09,317/- as opposed to INR 7,87,13,678/- for the Assessment Year 2007-08. Thus, it clear that the aforesaid amount of INR 7,87,13,678/- was not debited to the Profit Loss Account for the Assessment Year 2008-09. Since the deduction for the aforesaid amount was not claimed by the Appellant while computing taxable income for the Assessment Year 2008-09, the question of making the disallowance or addition of the same during the relevant previous year does not arise. Accordingly, Ground No. 2.1 raised by the Appellant is allowed and addition is deleted. TP adjustment - upward adjustment of ALP of transaction of purchase of asset - HELD THAT:- In the case before us, the TPO has determined ALP by computing WDV of the Asset without making any effort to identify a comparable transaction or the price paid by third party. Further, while doing so the TPO has taken depreciation rate of 60% as per the provisions of the Act without considering any other factor(s). Therefore, we delete the transfer pricing addition - Ground No. 2.2 raised by the Appellant is allowed. Addition of reimbursement of out of pocket expenses by the Appellant to its AE - HELD THAT:- TPO/AO has not pointed out any defect/discrepancy in the bills/supporting documents furnished by the Appellant which constitute 78% of the out of pocket expenses reimbursed by the Appellant to its AE. The Appellant has not furnished bills/supporting documents which constitute balance 22% out of pocket expenses reimbursed and only 3.5% of the total expenses reimbursed by the Appellant to its AEs for the relevant assessment year. In view of the aforesaid facts, we are inclined to accept the submission advanced by the Ld. Authorised Representative for the Appellant that the Appellant has substantially complied with the directions given by the Assessing Officer and therefore, in our view, the TPO/AO was not justified in making additions - Further, in our view, the TPO has also failed to determine the ALP of the transaction and has, in effect, made disallowance holding that the Appellant had failed to substantiate the claim. Accordingly, in view of the aforesaid, we delete the addition - Ground No. 2.3 raised by the Appellant is allowed. Computation of loss - Appellant submitted that while computing the total loss the Assessing Officer has committed computation error - HELD THAT:- Assessing Officer has incorrectly added the depreciation amount of INR 48,04,318/- to arrive at incorrect figure of loss of INR 10,68,91,995/- instead of correct figure of INR 11,65,00,631/-. In view of the aforesaid, the Assessing Officer is directed to increase the amount of loss by the amount of by the depreciation amount of INR 48,04,318/-. Ground No. 5 raised by the Appellant is allowed. Disallowance after carrying out verification of total expenses incurred by the Appellant during the relevant previous year but prior to execution of the Inter-Corporate Agreement - HELD THAT:- Having perused the material on record including invoices, we concur with the Assessing Officer to the extent of disallowance being payments made by the Appellant for arrival/departure tax briefing for employees and tax returns for employees only. In our view, the aforesaid amount was not incurred wholly and exclusively for the benefit of the Appellant and was for the personal benefit of employees. The aforesaid amount has also not been taxed as prerequisite in the hands of the employees. Accordingly, disallowance is confirmed while balance disallowance is deleted. In view of the aforesaid, Ground No. 7 is partly allowed.
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2022 (11) TMI 673
Deduction u/s 36(1)(iii) on the interest - Tribunal and the CIT(A) justification in holding that interest expenditure is liable to be treated as capital expenditure and allowance u/s 36(1)(iii) on the ground that the assessee has incurred the same for business purpose - HELD THAT:- It is not in dispute that the EMD paid by the assessee has been received back with interest and the said interest has been offered to tax. It is also not in dispute that the assessee is in the business of Real Estate Development and the EMD amount was paid to acquire properties as a part of its business, which should be treated as Stock-in-trade. The Tribunal has rightly noticed that the proviso was inserted with effect from 01.04.2004 and the amount borrowed was not for acquisition of any asset for extension of existing business. Therefore, assessee was entitled for the benefit under Section 36(1)(iii) - The question of law is answered in favour of the assessee and against the Revenue.
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2022 (11) TMI 672
Exemption u/s 11 - donations received by the Appellant - whether Only voluntary contributions can be considered to give exemption under Section 11 and not involuntary contributions? - HELD THAT:- Section 11(1)(d) of the Act relied upon by Shri. Sanmathi, makes it clear that the voluntary donation made with a specific direction shall form a part of the corpus. The person who makes a contribution can make such contribution either with a specific direction or without any direction. Section 11(1)(d) of the Act refers to only such contribution which are made for a specific purpose. For example, the donor may desire that his donation be used for construction of a building. If no direction is given by the donor, the money received by the assessee shall be taxable subject to such exemption which may be claimed u/s 11 of the Act. In the instant case, it is not in dispute that the entire amount received as 'contribution' has been shown in the Income and Expenditure account. The denial of benefit u/s 11 of the Act is on the premise that the donations received are not voluntary in nature. AO under the Income Tax Act cannot deny the exemption u/s 11 on the assumption that there is violation of any other statutory provision. He also adverted to Section 12(AA) (4) (b) and contended that the said provision has been substituted with effect from 01.09.2019, giving power to the Principal Commissioner or the Commissioner of Income Tax to cancel the registration of a trust or institution. Thus, it is clear that should there be any violation with regard to receipt of capitation fee, the AO could not have denied the benefit under Section 11 of the Act so long as the certificate is in force. - Decided in favour of the assessee.
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2022 (11) TMI 671
Addition made on various counts including estimation of interest income, estimation of C F commission @ 50% and then estimation of profit on the sales made during the year under the business carried out - HELD THAT:- Looking to the consistency of the business, C F charges and commission income being received from limited company and the receipts are duly accounted for in Form no. 26AS and they are also getting reflected in the bank statement and there being no other business carried out under the name of M/s. Chakraborty Enterprise which remained undisclosed and simultaneously also considering the fact that both the lower authorities could not examine the correctness of the assessee s income for the year due to lack of evidences and necessary details, we, in order to put an end to the controversy and in the interest of justice and being fair to both the parties, hold to apply net profit rate of 14% on the total turnover of M/s. Chakraborty Enterprise and against this amount since the assessee has already offered the net profit the remaining amount is the addition confirmed in the hands of the assessee. Thus ground partly allowed. Addition being made for excess wastage of bricks shown by the assessee - HELD THAT:- We find that the assessee gave complete production details of the manufacturing of bricks before ld. AO and against the total consumption of 1,29,845 Cubic Feet of soil purchased from West Bengal Government, the assessee manufactured a saleable quantity of 6,18,000 pieces of bricks. AO has only referred to the excess wastage as suppressed sales. However, looking to the consistency of the business carried out by the assessee in the past and the financial statements being audited and accepted by the Revenue authorities, we, in order to bring the end to the controversy and being fair to both the parties estimate a net profit of 8% on the gross turnover of M/s. Maa Bricks Field shown and compute the profit and after deducting the profit offered by the assessee in the profit loss account the remaining amount is the income confirmed in the hands of the assessee. Assessee gets relief of Rs. 7,99,477/-. Thus, ground of the assessee s appeal is partly allowed.
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2022 (11) TMI 670
Revision u/s 263 by CIT - eligibility of deduction of construction expenses claimed u/s 37(1) - AO noticed that assessee-firm had claimed provision for construction expenses under the head direct expenses in the profit and loss account as well as in Income Tax Return - HELD THAT:- PCIT has not set out as to why this item of provision for expenditure need to be investigated and as to what type of inquiry ought to have conducted by the AO. A mere observation that no proper details have been obtained, cannot be sufficient to come to a conclusion that the AO did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case. In the conclusion we are of the view that none of the reasons set out by the ld PCIT for invoking the jurisdiction u/s 263 of the Act are sustainable. The impugned order of the PCIT has to be quashed for the reason that order of the AO sought to be revised in the impugned order was neither erroneous nor prejudicial to the interest of the revenue for the reason of any lack of inquiry that the AO ought to have made in the given facts and circumstances of the case. We accordingly quash the order passed by PCIT u/s 263 of the Act and allow the appeal of the assessee.
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2022 (11) TMI 669
Deduction u/s. 80P(2)(a)(i) - Interest earned from saving bank account - in the instant case alleged interest is neither earned on any surplus/idle funds nor from any fixed deposits. The said sum is in the nature of saving bank interest - HELD THAT:- Since the alleged sum is earned from saving bank account, which is akin to the business activities carried out by the assessee the alleged interest is not earned from any surplus or idle funds and it is part of the business income and therefore, the judgment of the Hon ble Apex Court in the case of Totgars Co-op Sale Society Ltd [ 2010 (2) TMI 3 - SUPREME COURT ] is not applicable on the facts of the instant case. Thus the alleged sum is eligible for deduction u/s. 80P(2)(a)(i) of the Act and should not be treated as income from other sources . Therefore, reverse the findings of the ld. CIT(A) and allow all the grounds raised by the assessee for the AY 2017-18.
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2022 (11) TMI 668
Reopening of assessment u/s 147 - accommodation entries in the nature of sales/unsecured loans and share application money - HELD THAT:- Additional ground can be seen that from the perusal of assessment records that approval was sought prior to recording reasons, therefore, the additional ground taken by the assessee does not sustain hence dismissed. As regards, Ground No. 1 related to notice from the records presented by the Ld. D.R. before was it can be seen that the reasons were properly recorded and the notice was issued to the assessee. In respect to the contention of the assessee that no cross-examination was done related to statement of Shri Praveen Jain it appears to be genuine as the Assessing Officer has not given any opportunity for the assessee to counter the statement made by Shri Praveen Jain. As regards, the merit of the case is concerned the assessee has provided all the details related to creditworthiness, identity and genuineness of the transaction thereby provided share application form, copy of Gold Resolution of the Company to invest in shares of assessee company of those two companies. The assessee before the AO presented the bank statement of said company i.e. Yash V. Jewels Ltd. Ostwal Trading India Pvt. Ltd. reflecting these transactions of investment in assessee s company as well as the financial capacity of the said companies. In fact, no statement of the Directors of Creditors Company were recorded by the authorities and Praveen Jain was not the Director of the Creditor company. Nearly reliance on the statement of third party cannot be the sole criteria for making addition under Section 68 - Appeal of the assessee is partly allowed.
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2022 (11) TMI 667
Addition u/s 68 - share application money and premium claimed as received during the concerned period unexplained - identity, creditworthiness of shareholders and the genuineness of the transactions were unexplained at stage of assessment proceedings - HELD THAT:- As noted from the perusal of the two summons issued u/s. 131 that there was no such requirement from the ld. AO to produce the director of the shareholder companies. It was only the director of the assessee who were called for personal attendance and produce the required details and documents which were complied by the assessee. The shareholder company is one of the group companies having a common director namely Shri Raj Kumar Gupta. We note that all these verifiable facts have been duly considered by the CIT(A) and has granted relief after his due verification and examination - we do not find any reason to interfere with the findings given by the ld. CIT(A) who upheld the deletion of addition made by the Ld. AO - Accordingly, the grounds raised by the revenue are dismissed.
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2022 (11) TMI 666
Addition u/s 40A(3) - payments of expenditure in cash to any individual/entity exceeded Rs. 20,000/- - HELD THAT:- We note that all the payments were made to various parties either on account of labour charges or painting work or purchases etc. and all these payments are below Rs. 20,000/-. In our opinion, the provisions of Section 40A(3) of the Act are not attracted to these payments and therefore the order of CIT(A) is wrong and cannot be sustained. All the evidences were furnished and placed before the authorities below and somehow escaped their attention. We are inclined to set aside the order of CIT(A) on this issue and direct the AO to delete the addition. Addition on account of closing balances as made by the AO in respect of sundry creditors - HELD THAT:- AO during the course of assessment proceedings issued notice u/s 133(6) of the Act to various sundry creditors and on perusal of the ledger copies received from Mousum Hardware and Paras Aluminium, the AO noted that closing balances as on 31.03.2014 stood at Rs. 150,709/- and 5,44,000/- respectively whereas as per the books of account of the assessee the outstanding balances were Rs. 360,457/- and Rs. 734/- respectively as on that date resulting into difference of Rs. 7,53,014/- which was informed to the assessee vide letter dated 02.12.2016 but assessee did not reply the same and finally it was added to the income of the assessee. Addition on account of closing balance difference of sundry creditor i.e. Mondal Enterprise - HELD THAT:- No discrepancy in the ledger account and the payments made to this supplier as all bills were paid by account payee cheques. So in view of these facts the order of CIT(A) confirming the additions cannot be sustained. In respect of Mousam Hardware and Sanitary a copy of which is filed at page no. 182 of PB and bills and vouchers are placed we note that the said firm is a regular suppliers of the assessee. We observe that in this case also all the payments were made through banks namely Axis Bank as is placed and State Bank of India placed and all the cheques were duly paid and presented during the year except the last cheque issued on 23.03.2014 which was credited in next year. Therefore, considering these details, bills and vouchers and payments by cheques, we are not in agreement with the conclusion drawn by the CIT(A) on this issue and accordingly we set aside the order of CIT(A) and direct the AO to delete the addition. Accordingly ground no. 4 ,5, and 6 are allowed. Addition on account of difference of rental expenses - HELD THAT:- The assessee has also paid room rent vide cheque drawn on State Bank of India amounting to Rs. 25,000/- and similarly the car parking rent of Rs. 10,000/- was paid on 4.12.2013. We note that both the authorities have not considered room rent and car parking rent paid over and above which has attributed to the discrepancy - Undisputedly all these documents as placed before us were also available before the lower authorities but somehow overlooked. Considering these facts and circumstances of the case, we are inclined to set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the addition - The ground is allowed.
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2022 (11) TMI 665
Addition of gift u/s 56(2)(vii) - gift been received by the assessee directly from the uncle - HELD THAT:- The gift received from such relatives is considered exempt for recipient for the simple reason that such gifts could normally be received by a person out of natural love and affection. Such eventualities are made an exception u/s 56(2)(vii). In the present case, the assessee s uncle falls within the term relative and it is clear that the gift has happened on instruction of the uncle. The uncle has, unequivocally, confirmed the grant of gift to the assessee. The uncle is assessed to tax in India. The only reason to treat the same as the income of the assessee is that the amount has been transferred from bank account of uncle s son and his daughter-in-law who are residing abroad as non-resident. Under such circumstances, the gift so received by the assessee could not be considered as income of the assessee. The son and daughter-in-law are not alien to the uncle but very close relatives and it could be construed that the gift was given by the son and daughter-in-law first to uncle and thereafter, it was remitted by uncle to the assessee. The gifts so received could be construed as constructive gift from uncle. On the given facts and circumstances, the addition so made could not be considered to be income of the assessee and the same is liable to be deleted.
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2022 (11) TMI 664
Addition on account of notional interest on the credit balance in the capital account of the assessee with a Partnership Firm - Partnership firm has not paid interest to partner and not claimed deduction u/s 40(b) - HELD THAT:- A.O. has not disputed the fact that there was no payment of interest or credit of interest by the partnership firm in the account of the assessee partner. A.O. has added the said income as notional interest on the capital balance of the assessee with the partnership firm. The assessee has now produced the audited financial statements of partnership firm as well as the assessment order passed under section 143(3), dated 18.11.2019 to show that the partnership firm has neither made any provision of the interest to the partners nor claimed any deduction on this account. CIT(A) has passed the ex parte order after granting six opportunities to the assessee however, on the last date of hearing, the assessee sought adjournment vide application filed online alongwith the medical certificate of the A.R. of the assessee. Therefore, once the assessee has requested for adjournment of hearing on the ground of illness of the A.R. and proof of illness was also filed then the CIT(A) ought to have granted one more opportunity of hearing to the assessee. Matter restored before the CIT(A) for fresh adjudication. - Appeal of the assessee is allowed for statistical purpose.
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2022 (11) TMI 663
Disallowance of interest made or borrowed funds which have been utilized for giving interest free loans to related parties - HELD THAT:- The onus is on the assessee to show that this deal was for commercial expediency purposes and the said sum was part of the stock in trade for the land so purchased. Even after being provided various opportunities by the lower authorities, the assessee failed to provide any details for the reason for such interest free advances. For the amount paid to M/s. Sigma Steel Engineers Pvt. Ltd and M/s. Horizon Hitech Engicon Limited, the assessee has merely mentioned that outstanding amounts for work executed. We fail to understand that if it was an outstanding against the work executed then, it should be a part of the current liability which the assessee has to pay and in case it is not an outstanding and given as an interest free advance for a work contract then, where are such work contract agreements. Neither before the ld. Assessing Officer nor before the ld. CIT(A), the assessee has been able to furnish any such details. Even before us also, general submissions have been made that the amounts have been utilized for commercial expediency purposes. It is for the assessee to prove that it is a part of commercial expediency and such interest free advance are given for the purpose of business and profession and if the assessee fails to satisfy then, the assessee cannot escape from such disallowance of interest expenditure which are in the instant case where the assessee has borrowed funds, paid interest thereon claimed it as an expenditure and used the interest bearing funds for making interest free advances. We, therefore, fail to find any infirmity in the finding of the ld. CIT(A) and the same is confirmed. Appeal of the assessee is dismissed.
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2022 (11) TMI 662
Unexplained investment - undisclosed income earned - AO being not satisfied with the submission of the assessee holds that source of investment in purchase of land to the extent remained unsubstantiated and added the same to the return income of the assessee - HELD THAT:- Assessee had duly explained the source of deposit i.e previous years saving and we have no hesitation to accept the same , as it would been presumed that this small amount of Rs. 2,21, 000/would have been accumulated or saved by her from various activities undertaken by her for and on behalf of family in last many years . No additions can be made by lower authority. Further even if we ignore the explanation, for the sake of argument, then also it is for the assessing officer to bring on record some cogent evidence to prove that the amount deposited in the bank was undisclosed income arising from the business or from any other activities. No evidence has been brought on record by the lower authorities. The intention of the Parliament in enacting section 69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under section 69 has to be considered in the light of the facts of each case - a discretion has been conferred on the ITO under section 69 to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case. In the present case, the discretion had not been properly exercised by the ITO and the ld. CIT(A) in taking into account the circumstances in which the assessee was placed and in view of that matter we hold that the past saving and receipt from relatives and family members would be genuine sources of investments of disputed amount. Thus, the amount stands explained. Appeal filed by the assessee is allowed.
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2022 (11) TMI 661
Disallowance of exemption u/s 11 - assessee rectified the intimation u/s 143(1) and informed that the assessee is only eligible exemption as an educational trust - Whether assessee is eligible for exemption u/s 10(23C)(iiiad)? - HELD THAT:- The claim of the assessee is very specific purpose. The criterion for claiming exemption u/s 10(23C) (iiiad) are that running the educational institution and the turnover should be below Rs. 1 crore. The assessee accumulated both the conditions for getting exemption u/s 10(23C) (iiiad). We set aside the order of the CIT(A). The addition made by the ld. AO amount u/s 143(1) is liable to be quashed. Accordingly, the appeal of the assessee is allowed.
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2022 (11) TMI 660
Addition on account of Sales Commission - Bogus Expenditure - Non-deduction of TDS u/s 194H or 192 - Payment of commission of employees as part of salary or otherwise - whether CIT-A erred in upholding the addition on account of Sales Commission paid to employees of the company being not directly relating to Sales Department? - HELD THAT:- At the time of hearing, the learned counsel asked whether the appellant assessee has furnished detailed information regarding the nature of payments of the expenses claimed as sales commission and whether direct whether any TDS has been directed on such payments before the authorities below. Since the assessee has failed to furnish any information to establish that the payments were made towards the sales commission relating to promotion of sales and TDS the deduction on the sales commission thereof before the authorities below and in the present proceedings as well. Merely, the claim made by the assessee that the business of the Appellant is sales/purchase of liquor and all these employees are directly or indirectly related to sales of the company is not sufficient to hold that the findings of the authorities below are not tenable. In view of the matter, we do not find any infirmity or perversity in the observation and finding of the CIT appeal on the facts of the case. The order in the case of Subash Chander Co. [ 2009 (1) TMI 357 - ITAT AMRITSAR ] is not applicable to the facts of the present case of the assessee as in that case the Tribunal has dealt with the issue and genuineness and payments of 15% interest to the relatives u/s. 40A(2) whereas in the present case, the issue is claim of payment of sales commission against sales incentives paid as part of salary package to the employees of the assessee company without deducting TDS. Similarly, the judgment given by Hon'ble Apex Court in the case of S.A. Builders Lt vs. CIT [ 2006 (12) TMI 82 - SUPREME COURT ] on the issue of commercial expediency is of no help to the appellant assessee because, the issue involved is claim of sales commission without TDS deduction in violation of provisions of the section 194H of the Income Tax Act, 1961. Considering factual matrix and legal intricacies, we find no merit and substance in the contentions of the appellants counsel and accordingly, the orders of the CIT(A) are sustained in upholding the addition on account of Sales Commission.
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2022 (11) TMI 659
Unexplained agricultural income under the head income from other sources - HELD THAT:- Since the assessee has not filed any documentary evidence in compliance to the queries raised by the AO in support of the agricultural income claimed during the assessment year under consideration. The appellant assessee has failed to furnish any documentary evidence in support of its claim of agriculture income by way of ownership document of size of agricultural land holding, details of expenses incurred on carrying out cultivation activities, nature of agriculture activities, contract of agricultural lands given on lease if any and bills of agriculture produce either before the CIT appeal or before us. Therefore, we find no infirmity or perversity on the facts, in the observation and finding of the learned CIT appeal in treating as unexplained agricultural income under the head income from other sources. We find no merit and substance in the contention of the appellant assessee regarding addition on account of unexplained agricultural income under the head income from other sources. Accordingly, the order of the CIT appeal confirming the addition on account of income from other sources is hereby sustained.
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2022 (11) TMI 658
Addition u/s. 41(1) - bogus creditors - cessation of liability in case of outstanding of above sundry creditors - addition by observing that the liability of alleged sundry creditors had ceased to exist in the case of assessee - HELD THAT:- The liability which is appearing in the books of account for which the assessee has claimed purchases in the P L account is bogus and both the sundry creditors, M/s. Anurag Packaging M/s. Maa Kamakhya Packaging, in our considered view are fictious creditors and in real term there is no liability to pay. Therefore the given facts and circumstances suggests that the liability to pay the creditors, M/s. Anurag Packaging M/s. Maa Kamakhya Packaging, had ceased to exist being bogus in nature as there is no real business concern selling/purchasing of goods and these are merely paper adjustment entry and since the liability in books ceased to exist, provisions of section 41(1) of the Act are attracted. Thus, we confirm the addition made in the case of M/s. Anurag Packaging made in the case of M/s. Maa Kamakhya Packaging made u/s. 41(1) treating it as cessation of liability. Grounds are partly allowed.
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2022 (11) TMI 657
Bogus purchase of cut and polished diamonds in his business - HELD THAT:- The assessee at the same time has filed all possible evidences to prove genuineness of the purchase, giving quantitative details of stock, purchases and consumption and sale of the said type of diamonds, bills, bank statements showing payment made for purchases and also evidence showing utilization of the said purchase in making jewellery. As noted from the audited financial statements that the assessee has returned higher net profits in the impugned year, Rs.18.83 lacs net profit against turnover of Rs. 246.65 lacs, being 7.6% of turnover ,as against that in the preceding year of Rs.4.6 lacs net profit against turnover of Rs.204.82, making it 2.24 % of turnover. Moreover in the succeeding year the Ld.CIT(A) restricted identical purchase of bogus diamonds to the extent of 25% of the purchases. No reason to disallow the entire purchases when the facts as above suggest the possibility of the assessee having not probably purchased diamonds of the said worth from Mayank Impex, but from some other party. The consistent decisions of the coordinate benches of the ITAT in similar facts and circumstances, relied upon by the Ld.Counsel for the assessee, holding disallowance of profit element only embedded in such purchases as reasonable, as also the decision of the Ld.CIT(A) in the case of the assessee itself in the succeeding year restricting disallowance of similar bogus purchases to 25%, warrant no different view being taken in the present case before me. The said decisions we have noted have dealt with the Hon ble Apex Court decision in the case of N K Proteins[ 2017 (1) TMI 1090 - SC ORDER] heavily relied upon by the Revenue before me. Direct restricting addition in the present case to the extent of 25% (twenty five percent) of the purchases found bogus, as done in the succeeding year in the case of the assessee. The ground of appeal of the assessee is allowed.
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2022 (11) TMI 656
Addition made u/s 41(1) - Cessation of Liability u/s 41(1) - HELD THAT:- It is a fact on record that assessee has written off the said liability and offered it to tax in AY 2017-18 considering which we are inclined to accept the submission made by the Ld. Counsel and direct the ld. AO to delete the addition so made. Further it is settled position of law that unilateral right off in the manner which the AO has done cannot be sustained u/s 41(1) of the Act. In respect of second and third issue taken together, we note that it is an uncontroverted fact that assessee has never claimed these expenses in its return of income while reporting the total income. Thus, when no claim has been made by the assessee for the allowance of these expenses that the disallowance so made by the Ld. AO is not warranted and it is directed that the same be deleted. Disallowance u/s 14A read with Rule 8D(2)(iii) - We note that the assessee had capital, reserve and surplus far exceeding investment made in securities yielding exempt income. We also note that Ld. AO has straightway applied Rule 8D(2)(iii) for the purpose of making a disallowance without complying with the requirements of Section 14A to record a satisfaction having regard to the books of account of the assessee. AO has not brought on record the proximate relationship between the expenditure and the tax exempt income. We note that application of Section 14A read with Rule 8D(2) is not automatic and it is mandatory on the part of Ld. AO to record an objective satisfaction before resorting to computation of disallowance under rule 8D(2). Accordingly, we direct the Ld. AO to delete the disallowance made by applying Rule 8D(2)(iii). Appeal of the assessee is allowed.
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2022 (11) TMI 655
LTCG on gain on sale of shares - treatment of Long Term Capital Gain earned on sale of shares and claimed as exempted u/s 10(38) as Short Term Capital Gain brought to tax by the ld. AO - HELD THAT:- AO has called for various documentary evidences and details, all of which have been placed on record by the assessee as referred by the ld. Counsel in his submission. AO has acknowledged and confirmed the submission of all the relevant documentary evidences stated in the order itself. We also note that ld. AO has observed that shares have been purchased in cash. Despite the documentary evidences placed on record in respect of purchase of shares, ld. AO noted that no documentary evidences have been produced to support the claim that shares were purchased in F.Y. 2011-12 and thus he arrived at a conclusion that the year of purchase is the current year under the consideration and not the financial year 2011-12. By considering the purchases as made during the year which in our observation is without any basis, ld. AO treated the Long Term Capital Gain on sale of shares as Short Term Capital Gain and brought it to tax under the Act. Considering the facts and circumstances of the case and the material placed on record which has not been doubted or disputed by the ld. AO, we find it proper to treat the profit on sale of shares as Long Term Capital Gain. It has been claimed as exempt u/s 10(38) of the Act by the assessee and thus we set aside the treatment given by the AO of Short Term Capital Gain. Accordingly, the appeal of the assessee is allowed.
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2022 (11) TMI 654
Revision u/s 263 by CIT - Disallowance u/s 40(a)(ia) - Applicability of TDS on payment of commission, labour charges and advertisement - According to the assessee, section 40(a)(ia) is applicable on the amounts, which are payable and not on the amounts, which already paid - distinction between lack of inquiry or inadequate inquiry - HELD THAT:- Assessee has explained the issues before the ld. Assessing Officer. It is a different thing that ld. Assessing Officer did not translate his satisfaction in the assessment order. It is pertinent to observe that how to draft assessment order is in the discretion of the ld. Assessing Officer and assessee has not controlled over it. But a perusal of the ld. Commissioner s order would indicate that ld. Commissioner has not applied his mind on any of the details available on the assessment record. We failed to note what type of examination he has made when assessee has demonstrated that these are Credit Card sales. Such plea was supported with the Bank details, then Commissioner ought to have cross verified all these aspects from the assessment record including the Bank details and thereafter should have doubted about the finding of the AO. The amounts referred under three Heads do not require deduction of any TDS and in this situation, no disallowance u/s 40(a)(ia) is called for. Commissioner has failed to examine the issue analytically in right perspective and, therefore, it is not sustainable in the eyes of law. We allow the appeal of the assessee and quash the impugned order. Appeal of the assessee is allowed.
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2022 (11) TMI 653
Undisclosed income - Addition towards cash deposited in bank account during demonetization period - As submitted assessee has regularly earned salary substantially to cover cash deposit - HELD THAT:- Admittedly, it is noted that assessee has earned salary income of Rs.4,00,000/- during the year and filed the return of income with total income - Deposit of cash has been claimed to be out of current year s salary income and past savings of the assessee. After hearing the rival contentions, we are of the considered view that assessee had duly explained the source of deposit i.e her previous years savings and we safely presume that this amount is the accumulation out of past savings and current year s income. Accordingly, we direct the Ld. AO to delete the addition made. The ground of appeal is allowed.
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2022 (11) TMI 652
Validity of order of CIT(A) deleting the additions made the AO - AO passed the order as per the direction of CIT in the revision order u/s 263 by CIT - disallowance made by the AO beyond the scope of direction given by the CIT - HELD THAT:- Hon ble Gujarat High Court in the case of CIT vs. D.N. Dosani. [ 2005 (10) TMI 35 - GUJARAT HIGH COURT] has observed that the powers of the AO is confined to items for which revisional directions have been given and the AO is not entitled to consider any other item afresh for making additions under guise of framing fresh assessment in pursuance of revisional directions. The same view has been echoed in plethora of other judicial precedents, many of which has been noticed by the CIT(A) as well. We are thus not inclined to reiterate the sacro sanct principles. The action of the CIT(A) in reversing the additions made by AO wholly unconnected to the directions given in revisional order is thus in consonance with law delineated in judicial precedents and hence does not warrant any interference. We thus see no merit in the appeal of the Revenue.
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2022 (11) TMI 642
Reopening of assessment u/s 147 - Taxation of redemption amount of the policy prematurely surrendered - HELD THAT:- Facts relating to issue on the basis of which the reopening of the assessment was sought to be acted upon were earlier called for by the Assessing Officer and all such information was supplied by the petitionerassessee. The petitioner- assessee clarified its stand with clear and convincing facts relating to the investment by him in the pension policy, source of funds applied and further pointing out that the deduction was not claimed in that regard under the relevant provisions rendering the receipt of surrender value not liable to be offered to tax. Case of the department that the petitioner had received the surrender value of policy upon its premature redemption and the same was liable to tax under Section 80CCC (2) of the Act, stands erroneous. Once it is a position obtained that the petitioner- assessee had not obtained a relief under Section 80CCC (1) of the Act, the redemption amount of the policy prematurely surrendered would not be liable to be taxed. Section 80CCC deals with the deduction in respect of contribution to certain pension funds to provide in Sub section (1) that where any individual assessee has in the previous year paid amount out of his income chargeable to tax in respect of annuity plan of Life Insurance Corporation of India, such amount shall be allowed deduction in computation of total income. Sub section (2) says that any amount standing to the credit of assessee referred in Sub section (1) which was allowed deduction along with the bonus etc. would be liable to tax upon surrender of annuity plan or as a pension received from such plan. Therefore, the condition for taxability of policy surrender value is that the amount invested was claimed as relief under Section 80CCC (1) of the Act which is not the case here. AO wanted to undertake a fishing inquiry in relation to issue, about which he had already solicited information and examined the same. The reassessment powers could not be exercised either for the purpose of reverification or to have a merry sailing for a rowing inquiry. The petition deserves to be allowed. Resultantly, notice issued by AO u/s 148 seeking to reopen the assessment in the case of the petitioner for the assessment year 2013-14 is hereby set aside. - Decided in favour of assessee.
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2022 (11) TMI 641
Income deemed to accrue or arise in India - India - USA DTAA - payments received by the Assessee from its Indian Customers on account of Centralized Services viz. sales and marketing, loyalty programs, reservation service, technological service, operational services and training programs/human resources do not constitute Fee for Technical Services as defined u/s 9(l)(vii) or 'Fee for included services as defined under Articles 12(4) (a) of the Indo- US DTAA - HELD THAT:- Admittedly, this Court in Sheraton International Inc. [ 2009 (1) TMI 27 - DELHI HIGH COURT ] has decided the issue involved in the present appeal in favour of the Assessee. The counsel for the Revenue has not brought anything on record to distinguish the facts of present case from the facts of Sheraton International Inc. (supra) case. Also, this Court [ 2022 (11) TMI 631 - DELHI HIGH COURT] dismissed the appeals of the Revenue arising out of the same common impugned order. Though the judgment of this Court in Sheraton International Inc. (supra) has been challenged and is pending adjudication before the Supreme Court, yet there is no stay of the said judgment till date. Consequently, in view of the judgments passed in Kunhayammed and Others vs. State of Kerala and Another [ 2000 (7) TMI 67 - SUPREME COURT ] and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras [ 1992 (4) TMI 183 - SUPREME COURT ] the present appeal is covered by the judgment passed by the learned predecessor Division Bench in Sheraton International Inc. (supra). No substantial question of law arises for consideration in the present appeal and the same is dismissed.
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2022 (11) TMI 640
Levy of interest invoking Section 220(2) - Interest on interest by the respondents u/s 220(2) - main contention of the appellants is that consequent upon the assessment, the appellants have paid the tax including penalty and interest as demanded by the Department and therefore, levy of interest invoking Section 220(2) was not only harsh but also amounts to interest on interest, as interest computed under Sections 234(A), 234(B) and 234(C) - HELD THAT:- The appellants are under an erroneous belief that they have been wrongly foisted with interest on interest by the respondents under Section 220(2) of the Income Tax Act, 1961. A reading of the provision of the Income Tax Act, 1961, makes it very clear that non submission of returns and non-payment of tax in time, attracts penalty and interest. To be eligible for the benefit of waiver under Section 220(2A) of the Income Tax Act, 1961, the appellants have to satisfy the requirement of the said provision. The authority has rightly come to the conclusion that the appellants have not satisfied the requirement of Section 220(2A) - Therefore, the appellants are liable to pay the amount demanded by the Department. The appellants cannot blame the income tax department for the delay in refund of the amounts to the company of which the appellants are directors. The appellants and the company are two separate and distinct assessees. Further, the amount was demanded based on search conducted. None of the limbs of Section 220(2A) of the Income Tax Act, 1961 has been satisfied by the appellants to claim waiver. There is no error apparent on the face of record in the order passed by the learned single Judge while rejecting the request of the appellants. Appeal dismissed.
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2022 (11) TMI 631
Income deemed to accrue or arise in India - payments received by the Assessee from its Indian Customers on account of Centralized Services viz. sales and marketing, loyalty programs, reservation service, technological service, operational services and training programs/human resources do not constitute Fee for Technical Services as defined under Section 9(l)(vii) of the Income Tax Act, 1961 or 'Fee for included services as defined under Articles 12(4) (a) of the Indo- US DTAA - HELD THAT:- Admittedly, this Court in Sheraton International Inc. [ 2009 (1) TMI 27 - DELHI HIGH COURT ] has decided the issue involved in the present appeals in favour of the Assessee. Though the judgment of this Court has been challenged and is pending adjudication before the Supreme Court, yet there is no stay of the said judgment till date. Consequently, in view of the judgments passed by the Supreme Court in Kunhayammed and Others vs. State of Kerala and Another [ 2000 (7) TMI 67 - SUPREME COURT ] and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras [ 1992 (4) TMI 183 - SUPREME COURT ] the present appeals are dismissed being covered by the judgment passed by the learned predecessor Division Bench in Sheraton International Inc. [ 2009 (1) TMI 27 - DELHI HIGH COURT ]
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Customs
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2022 (11) TMI 651
Appeal before the Tribunal - Under Customs Act or Central Excise Act - Scope of the order passed by proper officer - demand in respect of import of goods at concessional rate of duty - specific case of the petitioner in the present writ petition is that the order passed by the Appellate Tribunal was erroneous inasmuch as an Officer of the Central Excise Department was a Officer of the Customs under notification issued under Section 4(i) of the Customs Act, 1962 - HELD THAT:- Two show cause notices came to be issued by the Commissioner of Central Excise, Chennai III, Commissionerate within whose jurisdiction to the third respondent has its factory to demand the customs duty in terms of Rule 8 of Customs (Import of goods at concessional rate of duty for manufacture of excisable goods) Rules, 1996 - it is only the Central Excise Officer as defined Section 2(b) of the Central Excise Act, 1944 and not a Proper Officer as defind in Section 2(34) of the Customs Act, 1962 who is empowered to demand duty payable by the third respondent to recover duty under Section 28 of the Customs Act, 1962. Show Cause Notices dated 11.02.2001 and 18.02.2002 seeking to recover the customs duty together with interest thereon issued by the second respondent Commissioner of Central Excise, Chennai III, Commissionerate was within the four corners of law - the second respondent Commissioner of Central Excise, Chennai III, was also competent authority to decide and pass order on the improts made by the petitioner under the resepctive customs notification in terms of Rule 8 of Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. Since the order was passed by the second respondent, Commissioner of Central Excise, Chennai III, appeal was only to be filed before the Tribunal in Form AE-3 under Section 35(B) of the Central Excise Act, 1944 and not under Section 129(A) of the Customs Act, 1962. Therefore, the Customs Appeal filed by the petitioner in C/104/03/MAS against an order passed by the Commissioner of Central Excise, Chennai III was not proper - The second respondent Commissioner of Central Excise, Chennai III ought to have filed an appeal against final order No.1409 of 2007 dated 31.10.2007 of the first respondent, Appellate Tribnal under Section 35 G of the Central Excise Act, 1944. Petition dismissed.
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2022 (11) TMI 650
Seeking provisional release of imported goods seized - dry dates - country of origin - department is of the contention that the packing bags bear the name of some Pakistani Company - whether the goods imported by importer is of Pakistan origin or UAE origin? - HELD THAT:- As per the facts all the bags do not bear the name of Pakistani Company. It is also found that the bags do not bear name of any dates manufacturer Company or dates supplier of Pakistan. All the documents submitted by the appellant show that the goods are of UAE origin. However, the investigations are under process, therefore on the basis of investigation and outcome of the adjudication, it can be finally ascertained that whether the goods imported by the appellant is of Pakistan origin or UAE origin. Therefore, at present considering the stage of investigation only a prima facie view can be drawn. Since the goods have been provisionally released. The dispute of ownership of the goods is no longer subject matter in the present case. Moreover, there is no dispute that Ms. Bharti is the proprietor of M/s. K L International and the department also issued summons to her, a criminal case was also filed in the court of law against her. Therefore, at this stage, the issue of identity cannot be said to be in dispute. Section 110A of the Customs Act, 1962 provides for provisional release of goods, documents and things seized pending adjudication. Any goods, documents or things seized under Section 110 of the Act, may, pending the order of the adjudicating officer, be released to the owner on taking a bond from him in the proper form with such security and conditions as the Commissioner of Customs may require - Discretion is cast upon the adjudicating authority for determining the value of the bond to be taken and the security deposit as also the conditions to be imposed while passing an order for provisional release of the goods. The exercise of this discretion has to be fair and reasonable and should not be exercised on irrelevant considerations. The goods namely dry dates being edible is obviously in the perishable nature. It has been considered consistently by various forums that in case of perishable goods provisional release of the goods should be allowed expeditiously. On this ground also the appellant deserve for leniency as regard the condition for provisional release of the goods. The ends of justice will be met when provisional release of the goods is allowed on execution of bond for 100% value of seized imported goods with Bank guarantee for an amount of Rs. 1 crore and an payment of duty applicable on the import of dry dates of UAE origin - Appeal allowed.
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2022 (11) TMI 639
Levy of penalty on CHA u/s 112(a) and 114A of the Customs Act - undervaluation of goods - it is alleged that the appellant as CHA has abetted the importer to undervalue the goods and that the appellant had prior knowledge as to the actual value of the imported goods - samadhan scheme - Confiscation - HELD THAT:- Where the benefit has been granted under the Samadhan Scheme to the main party, that benefit must also enure in favour of the other co-noticees and it would be unreasonable and discriminatory if the benefit is not extended. Once an order of settlement is passed by the Settlement Commission, the entire dispute comes to an end and thereafter, the case cannot be adjudicated qua the other co-noticees - In this case, the Settlement Commission found that the importer had made true and full disclosure of all the facts relating to imported goods. The Commission also took into consideration the additional amount of Customs duty and interest paid by the importer. Accordingly, the importer was granted immunity from prosecution, fine and penalty. If the proceedings against the importer has thus come to an end, it will be discriminatory and unfair to continue the proceedings as against the CHA in relation to the very same transaction. The order of the Customs and Central Excise Settlement Commission, dated 30.11.2010 granting immunity to the importer from prosecution, fine and penalty, will also enure to the benefit of the appellant. The substantial questions of law having been answered in favour of the appellant, this Court holds that the appellant is not liable to pay any penalty - Appeal allowed.
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2022 (11) TMI 638
Request for denotification of alloted land in the midst of the SEZ - despite the land was allotted to the petitioner and even after lapse of 12 years, the petitioner had not utilized the land and had kept it vacant - specific case of the petitioner is that the petitioner is entitled for de-notification of the land allotted to the petitioner from the purview of the Special Economic Zones Act, 2005, as it has been done in the case of few others - HELD THAT:- The petitioner appears to have built up building / shed in 2 Acres allotted to the petitioner vide allotment letter dated 27.03.2008. It was intended to manufacture plastic injection moulded components, wire wound components and electronic assembly for Samsung Heavy Industries India Private Limited and Dell International Services India Private Limited. Thus, the petitioner was conceived as an ancillary unit for supply of plastic injection moulded components, wire wound components and electronic assembly and other parts to units in the said SEZ - At the time when the petitioner obtained the allotment letter from the first respondent, there was a global meltdown. Therefore, there was a delay in commencing and completing the construction by the petitioner. By the time the construction was completed, the two units for whom the petitioner was conceived to supply the plastic injection moulded components, wire wound components and electronic assembly exited from Special Economic Zones (SEZ). Thus, the petitioner was left in the lurch. The continuance of the petitioner as a Special Economic Zones (SEZ) Unit supplying to a unit in the Domestic Tariff Area (DTA) would render the petitioner an unviable unit. If the unit is de-notified, the petitioner will be liable to refund the duty concession availed on the goods that were imported into Special Economic Zones (SEZ) Area i.e., the goods used for constructing the factory and for installing, commencing and erecting of capital goods. The petitioner will have to repay the concession availed in terms of Section 29 read with Section 26(d) of the Special Economic Zones Act, 2005. Whether any prejudice would be caused either to the first respondent or the second respondent or for that matter to the units in the neighbourhood if the petitioner's unit is de-notified merely because the petitioner's unit is located in the midst of the Special Economic Zones (SEZ) area? - HELD THAT:- The power to de-notify an area from the Special Economic Zones (SEZ) is vested with the Central Government under Rule 6 of the Special Economic Zones Rules, 2006. However, the Central Government can de-notify a unit or an area, only on the recommendation of the Board on an application by a developer, if it is satisfied - the Central Government has to act on the recommendation of the Board on the application of the developer. In view of facts of the case, the first respondent as a developer has declined to file the application as the land that was allotted to the petitioner in the midst of the Special Economic Zones (SEZ). Though the intention of the petitioner was to operate as a Special Economic Zones (SEZ) unit, the fact remains that it was intended to supply the plastic injection moulded components, wire wound components and electronic assembly and other parts of Samsung Heavy Industries India Private Limited and Dell International Services India Private Limited. However, these units have exited from the Special Economic Zones (SEZ) units making the petitioner's unit unviable as a SEZ unit - After the implementation of Goods and Services Tax Act, 2017, adequate safeguards are in force with effect from 01.07.2017. All supplies to be made by the petitioner as a non Special Economic Zones (SEZ) unit, i.e. as a Domestic Tariff Area (DTA) unit, will attract the Goods and Services Tax under the provisions of Central Goods and Services Tax Act, 2017 (CGST), respective State Goods and Services Tax Act, 2017 and Integrated Goods and Services Tax Act, 2017 (IGST) and the rules made thereunder. Likewise, all goods cleared will attract the respective GSTs. The first respondent is therefore directed to reconsider the request of the petitioner for de-notifying the land allotted to the petitioner from the operation of Special Economic Zones Act, 2005 afresh and thereafter recommend to the Central Government to issue appropriate Notification under Rule 8 of the Special Economic Zones Rules, 2006 provided the petitioner agrees to such terms as may be imposed by the first respondent to safeguard the interest and integrity of SEZ. The petition is disposed off.
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2022 (11) TMI 637
Seeking grant of regular bail - recovery of contraband item - 41 spheroid shaped pellets wrapped in transparent tape, which was found positive for Cocaine, weighing 595 grams - recovery corroborated by statement of the witnesses and circumstances of the case - HELD THAT:- In the present case, de hors the statement recorded under Section 67 of the NDPS Act, the following factors are taken into account: i) Recovery of Cocaine from the possession of the petitioner; ii) Recovered Cocaine falls in commercial quantity; iii) Petitioner was intercepted near the exit gate of Customs Arrival Hall at the airport; iv) Statements of recovery witnesses were recorded at the time of recovery; v) Samples were drawn before the learned Magistrate and proceedings were duly photographed and videographed and vi) The trial has commenced and Examination of the witnesses is under progress. The strict conditions for granting bail under Section 37 of the NDPS Act cannot be said to be satisfied in the present case. None of the ground argued by the learned counsel for the petitioner can be made basis of reaching to the conclusion that there are reasonable grounds to believe that the petitioner is not guilty of the offence. These may be good grounds to be argued at the stage of final arguments, but at the present stage, this Court cannot reach to a reasoned conclusion that petitioner has not committed the offence - Similarly, there is nothing on record to satisfy that if the petitioner is released on bail, she will not again indulge in the same crime, during the bail period. The twin conditions set out in Section 37 of the NDPS Act for granting bail are not satisfied. No grounds are made out for grant of bail to the petitioner at this stage - bail application is accordingly dismissed.
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2022 (11) TMI 636
Smuggling - Gold/studded jewellery - baggage rules - discharge of burden to prove - preponderance of probability - section 123 of Customs Act, 1962 - whether a person who was intercepted once with such goods for proceedings under the regular law and whose suggested facilitation of unaccounted stock of such goods at the premises of another is intended to be penalized by recourse to this special provision in relation to another set of such goods alleged to have been smuggled even earlier? HELD THAT:- The studded jewellery impugned in the appeal were not intercepted in a customs area; it is also not in doubt that it was not an interruption of a transaction of the appellants that commenced these proceedings. Under the normal procedure of confiscation under the statute, it would be necessary to present evidence, even if not necessarily direct, of the impugned goods having been in the baggage of Mrs Vihari Sheth during one or more of her inbound travels to invoke the penal provisions against the three appellants; section 123 of Customs Act, 1962 obviates that in relation to goods considered by the State as warranting such recourse. The scope for invoking of section 123 of Customs Act, 1962 must now be turned to. Section 123 of Customs Act, 1962 is all about responsibility for discharging onus of licit possession and, in terms of the law as it stands today, it is cast on the person from whom the suspectedly smuggled goods were seized and, in the event of any such assertion, on the person claiming ownership. It is on record that the impugned goods were neither seized from any, or all, of the appellants and nor have any of them claimed to be the owner; the first is incontrovertible fact and the second is not one that can be foisted for reason of an established past, or probability of a future, incident of offence - the goods, nonetheless, are studded jewellery which is a description, in common parlance, of precious stones set in articles of precious metals, most commonly gold, and to those not familiar with the chronological mutation of section 123(2) of Customs Act, 1962 coverage of the impugned goods therein may even be acceptable. In the absence of recourse to section 123 of Customs Act, 1962, the linkage of the several inferences and suppositions must be established with material and/or oral evidence to be compliant with normative requirement of customs officials having to establish that one or the other reasons for confiscation under section 111 of Customs Act, 1962 are manifest. The essential requirement of evidencing association with goods liable for confiscation has not been discharged. Licit possession in the course of domestic transaction having been satisfactorily furnished, without being controverted by the lower authorities, on the part of owners of the impugned goods, the arbitrary arrogation of empowerment to subject the sellers to the presumption of having been in possession of smuggled goods sans authority of law to do so deprives the finding of liability to penalty under section 112 of Customs Act, 1962 of legal sanctity. Without evincing illicit trafficking, in the form in which it was recovered from customers, from outside the country, even by the stretched framework of preponderance of probability, there is no onus on the appellants to establish that the conjectures entertained by customs authorities are incorrect. Appeal allowed.
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Corporate Laws
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2022 (11) TMI 649
Seeking restoration of name of the company in the Register of Companies - non-filing of the return/ statement of account before the RoC - Section 252 (3) of the Companies Act, 2013 - HELD THAT:- In the Companies Act, 1956 the power for striking off the company was primarily incorporated in Section 560 of the Act - In the present case it is noticed that under Section 560 (1), 560 (2) and 560 (3) notices were issued due to non-filing of the return/ statement of account before the RoC. It has not been disputed that from the Appellant side any steps were taken to cure the defect enabling the Registrar to pass an order for withdrawal of the notice. On the contrary after waiting for long time finally on 28.11.2011 exercising power under sub Section (5) of Section 560 of the Companies Act, 1956 the Appellant/Companies name was struck off and the Company was directed to be dissolved. On going through the order dated 13.11.2014 it is difficult to decipher as to whether the Appellant in terms of provision contained in Section 252 (3) of the Companies Act, 2013 had given any indication that at the time of striking off the Company i.e. as on 28.11.2011 the Appellant/Company was carrying on any business or was in operation nor there was any otherwise situation to justify the restoration of name of the Company. It is true that this Tribunal is taking lenient view in Appeals filed against the refusal of restoration of the Company but if such leniency is adopted in each and every Appeals certainly the provision contained under Section 248 of the Companies Act, 2013 may be termed as redundant. In the present case considering the fact that dispute which is being raised before this Appellate Tribunal has finally been set at rest by Hon ble Supreme Court there is no reason to pass a different order than to dismiss this Appeal - appeal dismissed.
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Insolvency & Bankruptcy
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2022 (11) TMI 648
Validity of approved Resolution Plan - Authorized Representative on behalf of majority of home buyers represented - Appellant has claimed that resolution plan, which was approved by the Adjudicating Authority, was non-compliant with the provisions of section 30(1) and 30(2) of the IBC and suffers from serious irregularities and is fraught with surreptitious amendments and insertions which are prejudicial to the genuine and legitimate interests of the members of the Committee of Creditors (CoC). HELD THAT:- A perusal of the provisions relating to selection of Authorised Representative, the manner and modality of her/his participation in the CoC meetings to represent the views of the financial creditors in class is provided very clearly and elaborately in the IBC and the CIRP Regulations. The Authorised Representative so selected to participates in the CoC meetings as well as in decision making in the CoC, he does so on behalf of all the home allottees/homebuyers and the view of individual homebuyer is therefore subsumed in the majority (of more than 50%) decision coming through that process when the financial creditors in class express views and voted in any matter. This view is then placed before the CoC by the Authorised Representative. The Authorised Representative s primary duty and responsibility is to present the views of the financial creditors in class in the CoC meetings. We note that there is no deficiency or irregularity pointed out by the Learned Counsel for Appellant in the selection of the Authorised Representative. The fifteen Appellants in the present appeal are homebuyers. The Respondent No. 1 has stated that out of these 15 appellants, the name of one homebuyer Mr. Sharad Bhatnagar does not appear in the record of CoC - it is clear that a miniscule number of homebuyers have come before us as applicants and out of this small number, six have not even cared to cast their vote, have to sail with the decision of the majority of homebuyers. This is the scheme of IBC. Even if some of the homebuyers have not voted in favour of the plan, but the majority (more than 50%) have voted in favour of the resolution plan approving the same, the dissenting homebuyers who are in minority have to go along with the views of the majority - The appeal is disposed of on the ground of non-maintainability.
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2022 (11) TMI 647
Seeking replacement of IRP - seeking replacement on the ground that the Interim Resolution Professional is working under the influence of the Suspended Board of Directors - bonafide intention or not - existence of nexus between Corporate Debtor and the Interim Resolution Professional - HELD THAT:- The principle of an interpretation of the Statute is that, when the language employed in the Relevant Section / towards a Proviso of Code / Act / Statute, then, it has to be read in a simple / plain and harmonious manner, without causing any volatile harm to the language used therein, and not in any other manner. The ingredients of Section 22 (3) of the Insolvency Bankruptcy Code, 2016 very clearly confers power on the Committee of Creditors to replace the Interim Resolution Professional, by preferring an Application before the Adjudicating Authority, for the Appointment of the Proposed Resolution Professional (along with the Written Consent from the Proposed Resolution Professional in the Specified Form) - When the ingredients of Section 22 (3) (b) of the Code explicitly spells out for the Appointment of the proposed Resolution Professional, then, this Tribunal is of the considered opinion that the invocation of Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 cannot be pressed into service, in the teeth of the I B Code, 2016, showering Powers only on the Committee of Creditors, to replace the Interim Resolution Professional. This Tribunal, holds that the conclusion, arrived at by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench, Bengaluru), observing that the said Interlocutory Application is not maintainable, for the Replacement of the Interim Resolution Professional, is free from any Legal Flaw - Appeal dismissed.
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2022 (11) TMI 646
Maintainability of petition - initiation of CIRP - Corporate debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time Limitation - threshold limit of debt involved - service of demand notice - whether the demand notice in Form 3 dated 01.02.2020 was properly served? - HELD THAT:- The petitioner has placed a copy of e-mail and registered post details which was delivered to the corporate debtor. Therefore, demand notice was duly served. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- The claim amount was not disputed. Rather, it is admitted that the amount was not paid due to financial crunch in the business. Whether this application is filed within limitation? - HELD THAT:- This application was filed on 06.10.2022 vide Diary No. 00724. Whereas the date of default is 30.01.2020, therefore, this Adjudicating Authority finds that this application has been filed within limitation. Threshold limit of debt - HELD THAT:- There is a total unpaid operational debt (in default) of Rs. 1,67,27,124/-. The operational creditor supplied goods to the corporate debtor and raised invoices attached as Annexure A-2. Accordingly, the petitioner proved the debt and the default, which is more than Rupees one lakh (prior to the amendment in threshold limit of one crore vide notification No. S.O.1205(E) dated 24.03.2020) by the respondent-corporate debtor. It is seen that the petition preferred by the petitioner is complete in all respects. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition deserves to be admitted. Petition admitted - moratorium declared.
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2022 (11) TMI 635
Scheme of going concern sale of the Corporate Debtor - Seeking permission of this Tribunal to execute and conclude the purchase/acquisition of the Corporate Debtor as a whole on a going concern basis under liquidation by way of implementation of the acquisition plan submitted by the Applicant - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Applicant is directed to deposit the balance sale consideration into the Liquidation Account in accordance with Regulation 41 of the Liquidation Process Regulations. Upon payment of the Final Consideration, the Acquirers shall be deemed to have been granted all the rights, title and interest in the whole and every part of the Corporate Debtor, including but not limited to the assets, properties, contracts and Approvals, free and clear of all security Interest. The said sale consideration shall be distributed by the Liquidator in terms of Section 53 of the Code. Further, the Acquirers shall have no financial obligation or liability to any Person or Stakeholder apart from payment of Final Consideration - On the date of approval by the Adjudicating Authority, all such claims which are not a part of statement of claims, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim which is not a part of the statement of claims. The cancellation and extinguishment of existing share capital of the Corporate Debtor, issuance and allotment of shares to the Acquirers and filing intimation to the Stock Exchange and other Government Authorities are allowed - the application deserves to be allowed. Application allowed.
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Service Tax
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2022 (11) TMI 634
Rejection of Application under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - rejection on the ground that the amount of duty in the case of Petitioners was not quantified on or before 30th June, 2019 - HELD THAT:- Section 125(1)(e) does not disqualify a person who has been issued a show cause notice after 30 th June, 2019. It only says if a person has been subjected to an inquiry or investigation or audit and the amount of duty involved in the said inquiry or investigation or order has not been quantified on or before 30th June, 2019. The only requirement therefore is to see whether the amount of duty involved has been quantified on or before 30th June, 2019. The answer to this is, amount of duty has been quantified. In the reconciliation statement submitted, copy whereof is at Annexure-D to the Petition, the amount of duty payable has been quantified as Rs.97,82,935/-. In the statement of Petitioner No.2, recorded on 26 th June, 2019, copy whereof is at Exh.-C to the Petition, in answer to question No.6, an amount of Rs.97,82,935/- (48,00,700+49,82,235) has been admitted. Out of this, Rs.48,00,700/- has been paid by Petitioner and what was remaining was only Rs.48,82,235/-. Even in the impugned order, Respondents have in paragraph No.2 stated as per the DGGI report amount quantified before 30.06.2019 was Rs.97,82,935/- . Therefore before 30 th June, 2019 the amount of duty involved has been quantified. The Petitioner was eligible to make a declaration, and since Petitioner agrees and Mr. Jain orally also stated Petitioner agrees, with the estimated amount payable as communicated in the SVLDRS-2 issued by Respondents, Respondents are directed to issue Form-3 within two weeks of this order being uploaded so that Petitioner can pay the remaining amount and close the file - petition disposed off.
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2022 (11) TMI 633
Non-payment of service tax - supply of tangible goods service - renting of JCB - Service provided by appellant is in relation to power transmission tower in the capacity of sub-contractor - suppression of facts or not - extended period of limitation. Renting of JCB - supply of tangible goods - HELD THAT:- The appellant have collected the service tax and paid the same to the government exchequer therefore, the same is not under dispute on merit. The service tax demand and payment thereof on supply of tangible goods i.e. renting of JCB is maintained. Executing government contracts of erection, commissioning, installation or construction of power transmission towers - various works/services in relation to transmission of electricity namely concrete foundation, excavation of pits, establishment and maintenance of site for storage of materials relating to power transmission tower in the capacity of sub-contractor - it is alleged that appellant have not discharged the service tax liability on the service provided to their main/principal contractor - HELD THAT:- There is no dispute that the appellant have rendered the services of construction activity for concrete foundation of power transmission lines and establishment and maintenance of site for storage of material relating to transmission tower, all these services which are in relation to setting up of transmission tower for transmission of power. The period involved in the present case is 2004-05 to 2008-09, the government has issued a notification giving it retrospective effect under notification no.45/2010-ST dated 20.07.2010 - From the above exemption notification, it is clear that all the taxable service provided by an assessee relating to transmission and distribution of electricity are exempted for the period up to 26th February, 2010. Since in the present case, the period involved is prior to 26th February, 2010 entire period is covered under exemption therefore, the demand on the services in question except the demand on supply of tangible goods are exempted under Notification No.45/2010-ST. From various judgments, it is settled law that all the services provided in relation to transmission of electricity are exempted under notification no.45/2010-ST therefore, in the present case also services being provided are in relation to power transmission tower, the same are exempted hence the demand is not sustainable on merit - reliance can be placed in the case of M/S UP RAJKIYA NIRMAN NIGAM LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I [ 2015 (8) TMI 66 - CESTAT NEW DELHI] . Extended period of limitation - suppression of facts or not - HELD THAT:- The appellant has acted as a sub-contractor. Earlier, there were contrary clarifications by the government that the sub-contractor is not liable to service tax when the main contractor is discharging service. Subsequently vide circular dated 23.08.2007, the C.B.E.C has taken a U-turn and withdrawn the earlier stand and clarified that the sub-contractor is liable to pay the service tax - It is settled law that when the issue is free from doubt and matter is referred to larger bench, the larger period of limitation cannot apply. In the present case, it is not only the larger bench decision which settled the law law but there were contrary circulars of the board on the issue of payment of service tax by the sub-contractor. In view of this position, there is no suppression of fact or any mala fide intention to evade payment of service tax on the part of appellant, therefore, the demand beyond one year is not sustainable on limitation also. Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (11) TMI 645
Seeking revival of SCN - circular dated 26.05.2003 - HELD THAT:- Although, Ms Kavita Jha, in fairness, does not dispute that such a circular exists and the procedure encapsulated therein is in vogue, it was incumbent on the respondents to inform the petitioner/notice as to why the show cause notice was not being adjudicated. The assessees need to arrange their affairs and prepare themselves for bearing the burden of the financial liability that may befall them - there is no explanation as to why, after January 2017, no steps were taken to adjudicate the subject show cause notice. The matter needs examination - issue notice.
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2022 (11) TMI 644
Reversal of CENVAT Credit - Valuation of exempted goods - inputs/input services used in manufacture of the ammonia and to the extent that ammonia was used to further manufacture urea which was cleared under the exemption notification - HELD THAT:- Laws of taxation have to be strictly construed regardless of the consequences. It is true that by reckoning the value of urea which is heavily subsidized, the amount of ineligible Cenvat credit to be reversed is reduced substantially. If the value of the intermediate products viz. ammonia is reckoned the amount of ineligible Cenvat credit will be much higher. An illustration will make it clear. If the assessee had availed Cenvat credit of Rs. 1000/- and manufactured only ammonia and cleared it on payment of duty it can avail the entire Rs. 1000/- as Cenvat credit. On the other hand, if the assessee had converted the entire amount of ammonia into urea it would not have been eligible to any Cenvat credit because the urea is exempted. While applying the formula under Rule 6(3A), the subsidized urea prices would result in the amount of ineligible Cenvat credit going down substantially to the extent sale 80%. Therefore, instead of Rs. 500/- being ineligible, the appellant will be ineligible to about Rs. 100/- as Cenvat credit as per the formula. The remaining Rs. 400/- which will logically be the credit on inputs/input services which have gone into the manufacture of ammonia which finally got converted into urea will still be available to the appellant and it can use this credit for clearing other dutiable goods. However, this inherent unfairness/distortion created by the formula given in Rule 6(3A) should make no difference. An intelligent asessee, who manufactures urea can, by selling a small percentage of the intermediate product ammonia as such on payment of duty avail Cenvat credit on all the inputs and reverse a small percentage of it only. Such a tax planning by the assessee is perfectly within the frame work of law. The formula under Rule 6(3A) only requires the value of the exempted goods removed to be reckoned and not the value of the intermediate goods. The exempted good in this case is the urea. Its value is not in dispute. The 1% concessional rate of duty (without Cenvat credit) paid by the appellant is also on such value and not on the value without the subsidy. The value of urea does not change for calculation of Cenvat to be reversed under Rule 6(3A). Therefore, the appellant has correctly reversed proportionate amount of Cenvat credit reckoning the value of the urea removed instead of reckoning the intermediate product ammonia which has gone into the manufacture of such urea. The impugned order cannot be sustained and needs to be set aside - Appeal allowed.
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2022 (11) TMI 643
Short payment of duty - SS Flats - SS patta/patti - SS Utensils sold to RSSL - related party transaction - April 2015 to October 2015 - HELD THAT:- As the demand is of Rs. 1,95,598/- only and considering the difficulties in checking the price at which each of the SS Utensils was sold by RSSL, we are of the considered opinion that remanding the matter the matter may not serve any purpose and the value can be fixed by the Tribunal exercising powers under rule 11 of the Valuation Rules. The value of the SS Utensils cleared by the appellant be re-determined as 3.83% of the sale price and duty to be calculated accordingly - The order passed by the Commissioner (Appeals) in so far as it confirms the demand of duty on SS Patta is set aside and demand on SS Utensils is reduced from Rs. 1,95,598/- to Rs. 75,000/- - the penalty imposed on the appellant should be set aside. Appeal allowed in part.
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2022 (11) TMI 632
Clandestine removal - Sir Brand Gutkha and Pan Masala - requirement of corroboration from any other independent evidence of the retracted confessional statement - demand of duty based on the third party documents supported by corroborative statements, justified or not - entire evidence on record and statements of the witnesses and concerned persons, ignored - statements recorded under provisions of Section 14 of CE Act by the officers of the Department can be taken as proof of the statutory violations by the respondents or not - confiscation - redemption fine. Whether any substantial question of law arises for consideration in this appeal so as to admit it for examination within the scope of sub-section (3) and (4) of Section 35-G? - HELD THAT:- There is no dispute with regard to the factual findings recorded by the CESTAT that all persons including the Authorized Signatory of the manufacturers in their cross-examination before the Adjudicating Authority had retracted from their statements recorded under Section 14, during investigation, with the categorical statements that their previous statements were recorded by the officers of the Central Excise Department under duress - The findings returned by the Adjudicating Authority that Sri Rajesh Agarwal in his various voluntary statements and acceptance had confirmed his active involvement in the tax evasion by management of raw materials and managing removal of clandestinely manufactured Sir Brand Gutkha/ Pan Masala to various destinations, thus, suffers from apparent perversity. On the basis of the said findings and in view of the statement of Sri Rajesh Agarwal, the Authorized Signatory of three manufactures in his cross-examination, it cannot be accepted that his statement recorded by the Central Excise Officers was voluntary. The question is not of admissibility of the statement recorded under Section 14. The admissibility of the evidence recorded by the investigating authority, when the persons making statements were examined as a witness before the Adjudicating Authority is not under question. The issue is about the weight of the evidence appreciated by the Adjudicating Authority - No presumption or assumption can be drawn to record any perversity in the findings of the CESTAT, the Appellate Tribunal, which has recorded that the appellants manufacturers are neither consignor or consignee for the alleged transportation of goods in the third party transporters records. No question of law much less substantial question of law arises for consideration, in the facts and circumstances of the case, inasmuch as, no perversity can be seen in the decision of the CESTAT in setting aside the findings of the Adjudicating Authority based solely on the retracted confessional statements recorded during investigation under Section 14 of the Act by the officers of the Central Excise Department - Appeal dismissed.
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