TMI Tax Updates - e-Newsletter
November 2, 2021

Case Laws in this Newsletter:

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

Articles

1. SELF-ASSESSMENT UNDER GST

   By: Dr. Sanjiv Agarwal

2. SIGNIFICANCE OF HUMAN INTERVENTION IN OIDAR UNDER GST

   By: Siddeshwar Yelamali

News

1. GST collection for October 2021 registered the second highest since implementation of GST

2. Roll out of new Annual Information Statement (AIS)

3. Income Tax Department conducts searches in Bihar and Jharkhand

4. India and World Bank sign agreement to strengthen health systems in Meghalaya

Notifications

GST - States

1. F.12(97)FD/Tax/2017-77 - dated 31-10-2021 - Rajasthan SGST

Amendment in Notification No. F. 12(29) FD/Tax/2021-269, dated 24.02.2021

2. 1238-F.T. - dated 21-10-2021 - West Bengal SGST

Seeks to amend notification No. 1851-F.T. dated 18.10.2017 regarding Pustahar to reduce rate of tax on Rice Kernel (Premix) supply for ICDS or similar scheme to 5%.

3. 1237-F.T - dated 21-10-2021 - West Bengal SGST

Seeks to amend notification No. 1128-F.T. dated 28.06.2017 regarding goods on which tax is payable on RCM basis to insert some essential oils.

4. 1236-F.T. - dated 21-10-2021 - West Bengal SGST

Seeks to amend notification No. 1126-F.T. dated 28.06.2017 regarding exempted goods of seeds.

5. 1235-F.T. - dated 21-10-2021 - West Bengal SGST

Seeks to amend notification No. 1125-F.T. dated 28.06.2017 regarding rates of goods of renewable energy devices, mineral ores (Iron ore, Copper ore etc.), packing materials of paper and paper board, plastic scrap, calendars & printed materials etc.

6. 1234-F.T - dated 21-10-2021 - West Bengal SGST

Seeks to amend notification No. 1136-F.T. dated 28.06.2017 regarding NIL rated services relating to AFC Women's Asia Cup 2022 to be hosted in India, Services by way of granting National Permit to a goods carriage etc.

Income Tax

7. 128/2021 - dated 31-10-2021 - IT

U/s 35(1) (ii) of IT Act 1961 Central Government approved ‘Pimpri Chinchwad College of Engineering’, Pune

Highlights / Catch Notes

GST

• High Court Orders Reevaluation of Petitioner's UPGST Registration Due to Unclear Notice and Portal Update Failures.

  Case-Laws - HC : Cancellation of registration of petitioner - section 129 of UPGST Act - In the facts of the present case, undisputedly the notice that was uploaded on the GST Portal was unintelligible - the bar of alternative remedy is lifted, as it is found that the petitioner's registration was cancelled without issuance of any prior show cause notice. Also, the delay is largely on account of the conduct of the State respondents or conduct attributable to the State respondents as they alone were responsible to update the information on the GST Portal. - Fresh ordered directed to be passed - HC
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Income Tax

• Assessment Reopening u/s 147 Challenged Due to Missing Details on Employee Status in Recorded Reasons.

  Case-Laws - HC : Reopening of assessment u/s 147 - undisclosed activity of money lending and borrowing - the reasons for reopening of assessment has to be tested / examined only on the basis of the reasons recorded and those reasons cannot be improved upon and/or submissions much less substituted by an affidavit and/or oral submission. In the reasons for the reopening, the Assessing Officer does not state anywhere that specified person was an employee of petitioner. - HC
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• Interest from Member Deposits Qualifies for Deduction u/s 80P(2) of Income Tax Act.

  Case-Laws - AT : Deduction u/s 80P(2) on interest income - To invest the deposits accepted from the members or the surplus funds available with it, is part of the banking/credit business of the assessee-society. Therefore, the investment of the surplus amount in the banks by the assessee-society cannot be said to be not related to the business activity of the assessee-society. Therefore, the interest/dividend income earned by the assessee for such investment, will be eligible for deduction u/s 80P(2). - AT
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• Court Rules Net Profit from Ghee Sales as Taxable Income, Directs Assessing Officer to Exclude Additional Amounts.

  Case-Laws - AT : Addition of gross profit instead of net profit from the sale of Ghee - It was the duty of the revenue to pinpoint the infirmity in the expenses apportion by the assessee towards the activity under consideration. To our understanding, all the expenses apportion by the assessee cannot be ignored without bringing any cogent reason on record. Hence, we set aside the finding of the CIT (A) and direct the AO to take the net profit declared by the assessee as taxable income and delete the amount over and above such taxable income of the assessee. - AT
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• DCIT's Jurisdiction Invalid: Failed to Issue Section 143(2) Notice Timely for 2015-16 Assessment Year, Procedural Flaw Found.

  Case-Laws - AT : Jurisdiction of the AO to frame the assessment order - Admittedly, when the ITO realized that he did not had the pecuniary jurisdiction to issue notice, he duly transferred the file to the DCIT, Circle-4, Guwahati, when the DCIT issued notice u/s 142(1) of the Act and did not issue notice u/s 143(2) of the Act within the time limit prescribed for issuance of notice u/s. 143(2) of the Act for the assessment year 2015-16. We note that the DCIT by assuming the jurisdiction after the time prescribed for issuance of notice u/s. 143(2) of the Act notice became coarum non judice after the limitation prescribed by the statute was crossed by him. - AT
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• Swiss Entity's Reimbursement Claim Rejected; Rs. 3.88 Crore Taxed as Royalty at 10% in India.

  Case-Laws - AT : Taxability of receipts - Royalty / Fee for technical services - Switzerland based non-resident assessee from its Indian affiliate - Cumulative satisfaction of both the conditions is essential for constituting 'reimbursement'. If one of them is lacking, the test of reimbursement fails. We are instantly confronted with a situation in which both the conditions are failing. Neither the undiluted benefit of the software cost was passed on to RIPL nor did the assessee recover the amount as it is from RIPL. We are ergo disinclined to countenance the contention of 'Reimbursement', which is hereby jettisoned. - the authorities below were fully justified in including ₹ 3,88,94,824/- in the total income of the assessee and charging it to tax at 10% in parity with the assessee suo motu offering ₹ 20.04 crore to tax at that rate. - AT
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• Principal Commissioner's Section 263 revision invalid; Assessing Officer's view on unregistered agreement upheld, no possession by trust.

  Case-Laws - AT : Validity of revisionary jurisdiction u/s.263 - the conveyance deed was executed only after the Order of the Charity Commissioner ; that the assessee trust was never in possession, that the possession of the Purchaser in respect of certain portions was in their capacity as lessees. In the present case, the agreement i.e the Consent Terms is not registered and hence the doctrine of part performance cannot be applied and consequently section 2(47)(v) of the Act cannot be made applicable. - AO having taken a possible view - Revision jurisdiction u/s.263 of the Act invoked by the ld. PCIT, is devoid of merit and against the provisions of the Act - AT
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Customs

• Cosmetic Imports Regulated: CDSCO Certificate Required for Make-up Kits Under Cosmetic Rules, 2020; Non-listed Goods Restricted.

  Case-Laws - AT : Import of cosmetics products (the make-up Kit) - prohibited or restricted goods? - For this purpose that the CDSCO Certificates are issued by the afore-mentioned organization in terms of the provisions of Cosmetic Rules, 1945, which stands amended with Cosmetic Rules, 2020. The certificate is issued by the Central Licensing Authority for registration of cosmetic manufactured for import into India and use in India - This particular perusal makes it abundantly clear that the goods which are not mentioned in CDSCO Certificate are the restricted goods. - AT
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• SAD Refund Claim Not Time-Barred, Yet Rejected Due to Other Discrepancies in Application.

  Case-Laws - AT : Refund of SAD - time limitation - Though the issue of limitation is not applicable to the present refund claims and the refund claim of SAD cannot be held to be barred by limitation calculating the period of one year from the date of payment of said SAD - owing to the other two discrepancies, the refund claim has been held to have been rightly rejected - AT
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Service Tax

• Tribunal to Determine if Services to Singapore-Based Firm Qualify as Intermediary Services u/r 2(f) of 2012 Rules.

  Case-Laws - HC : Levy of service tax - intermediary services or not - providing marketing support services and technical support services to Excelpoint Systems (Pvt. Limited), Singapore and having its office in India - Rule 2(f) of the Rules, 2012 - It was mandatory on the part of the authorities to consider the scope and effect of the amended provisions and its application to the case on hand. The Tribunal ought to have examined on this aspect also. - HC
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• Railway Contracts for MRVC Not Automatically Excluded from Work Contract Services, But Tax Exclusion Applies Under Relevant Section.

  Case-Laws - AT : Scope of the term Railways Works contract in relation to Mumbai Railway Vikas Corporation Ltd (MRVC) - The definition of 'Works Contract' do not state that the contracts, of railway do not fall within the scope of work contract service but state that the work contract services, in respect of railways, are excluded from taxable category as defined by the said section. The work contract has been defined by the explanation, and any contract which satisfies to the requirements specified therein will fall under the category of work contract. However if the said contract falls within the exclusion category the same cannot be taxed under the said taxable category. - AT
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Central Excise

• CENVAT Credit Allowed for Business-Related Air Travel Services: Consistent Department Ruling Supports Appellant Company's Claim.

  Case-Laws - AT : CENVAT Credit - input services - air travel agency - There is no denial to the fact that the air-travel agency service, in the present case has been used for business purpose i.e. for the purpose of promotion of sales, auditing, review of various business processes, inspection of vender premises and other business purposes. None of these services were used for personal use or consumption by any employee. Accordingly, they were all for the purpose of the appellant company, its corporate office and all other units - in respect of air-travel services itself in appellant’s own case the Department has allowed the credit. - AT
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VAT

• High Court Affirms Tribunal's View: "Value of Contract" Includes All Received Amounts, Taxes, and Labor Charges for VAT Deduction.

  Case-Laws - HC : Valuation - difference in labour charges - in excess of eligibility or not - standard rate of deduction in respect of labour and like charges - The meaning assigned to the phrase “value of the contract” by the Tribunal that it includes all the amount received whether as taxes or labour cannot be faulted with - HC
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• M-Sand taxed under Entry 83 of Karnataka VAT Act, 2003; taxpayers can claim reduced 5/5.5% rate.

  Case-Laws - HC : Classification of goods - Manufactured Sand (M-Sand) - covered under Entry 83 of Schedule III to the Karnataka Value Added Tax Act, 2003 or not? - The Notification dated 31.03.2015 is only clarificatory and that would not disentitle the assessee to claim the reduced rate of tax at 5/5.5% under Entry 83 of the Third Schedule of the KVAT Act. On the other hand, to classify it under the residuary entry different from the claim by the assessee, the department has to discharge the burden of proof. - HC
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Case Laws:

• GST

• 2021 (11) TMI 64
  Maintainability of appeal - appeal filed by the petitioner under Section 107 of the UPGST Act, has been rejected on the ground of limitation - requirement of e-way bill under UPGST Act read with Rules framed thereunder - It is contended that the central e-way bill was downloaded on 27.03.2018 at 9.41 pm and the same was accompanying the goods during the transit - HELD THAT:- The matter is squarely covered by the decisions of this Court in M/S VARUN BEVERAGES LIMITED VERSUS STATE OF U.P. AND 2 OTHERS [ 2021 (10) TMI 429 - ALLAHABAD HIGH COURT ], the present writ petition is allowed. Impugned order set aside - petition allowed.

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• 2021 (11) TMI 63
  Time limit for grant of refund and interest - date immediately after the expiry of sixty days from the date of receipt of application in FORM RFD-01 till the date of refund - grant exemplary damages to petitioner - HELD THAT:- Issue notice. Mr.Naushad Ahmed Khan, learned ASC accepts notice on behalf of the respondents. He, on instructions, undertakes to this Court that the petitioner s representations dated 22nd September, 2021 and 05 th October, 2021 shall be disposed of in accordance with law within three weeks from today. Petition disposed off.

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• 2021 (11) TMI 62
  Cancellation of registration of petitioner - section 129 of UPGST Act - HELD THAT:- Undeniably cancellation of registration has serious and far reaching consequences on the rights of the dealer/person engaged in any business. Such cancellation may even take away the right to conduct business. Also, in the context of the GST Laws, it has further consequence of upsetting ITC entitlement on sale and purchase by such a person/dealer. Even so, the Act itself obligates the authority to issue a prior notice and afford a proper opportunity of hearing to the concerned before cancellation of his registration. This mandatory requirement is contained in the first proviso to Section 29(2) of the UPGST Act, 2017. In the facts of the present case, undisputedly the notice that was uploaded on the GST Portal was unintelligible - the bar of alternative remedy is lifted, as it is found that the petitioner s registration was cancelled without issuance of any prior show cause notice. Also, the delay is largely on account of the conduct of the State respondents or conduct attributable to the State respondents as they alone were responsible to update the information on the GST Portal. That not done, the petitioner/citizen may not be relegated to the forum of alternative remedy as his valuable right to do business has been curtailed in violation of principle of natural justice. The order dated 30.6.2018 cancelling the petitioner s registration is set aside. The matter is remitted to respondent no.3 to pass a fresh order, in accordance with law - Petition allowed by way of remand.

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• 2021 (11) TMI 61
  Seeking a direction to upload the Form GST TRAN-1 within extended timeline - HELD THAT:- Identical controversy has been dealt with in M/S RATEK PHEON FRICTION TECHNOLOGIES PRIVATE LIMITED VERSUS PRINCIPAL COMMISSIONER AND 2 OTHERS AND M/S MODERN PLYWOOD CENTRE, M/S ALLIED AGENCIES VERSUS UNION OF INDIA AND 5 OTHERS [ 2021 (9) TMI 1042 - ALLAHABAD HIGH COURT] where it was held that there is no hesitation in observing that a reasonable opportunity ought to have been granted to all registered persons /taxpayers to submit/revise/re-revise electronically their Form GST TRAN-1/TRAN-2. Petition allowed.

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• 2021 (11) TMI 60
  Provisional attachment of petitioner s Account - Seeking restraint on petitioner from utilising its money lying in its bank account - submission of petitioner is that merits of the action taken by the respondents apart, today, by virtue of the operation of law, the revenue authorities are not entitled to continue the attachment beyond 10.05.2021 - HELD THAT:- In absence of any contrary position existing in law and in absence of any other action being shown to have been taken by the respondent authorities, whereby they may claim entitlement to attach petitioner s bank account, it is found that the communication dated 11.05.2020 issued by the Assistant Commissioner (A.E.), Central Tax, Gautam Budh Nagar has outlived its life and perhaps its utility. The writ petition is disposed off with the observation that the provisional attachment of the petitioner s bank account may not survive under the communication.

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• 2021 (11) TMI 9
  Seeking grant of Bail - tax evasion - allegation is that as from the said unit liquor was transported to various licensees in different districts of State and by using a duplicate GST invoice/bilty a different consignment was sent under an already exhausted GST Invoice/bilty and this has caused excise loss and revenue to the State - submission of learned counsel for the applicant is that the applicant has been falsely implicated - HELD THAT:- There is ample materials to indicate that he is an employee of the different firm altogether namely Stellar Capital Services Limited. There is nothing to indicate that the services of the applicant were utilized by the Cooperative Company Ltd. Nothing has been pointed except for incriminating statement made by the co-accused that the applicant has been involved. Moreover, it also to be noticed that the applicant does not have any criminal history and this fact is not disputed. The charge sheet has been filed and there is no apprehension expressed that the applicant is in position to either influence or tamper with the evidence or is at the risk of fleeing from justice. No electronic evidence has been pointed out and in any case the matter is yet to be tested in trial. The material available on record as well as considering the nature of allegations and accusation against the applicant, the severity of the punishment if convicted and the period of incarceration as well as the fact that no apprehension has been expressed by the learned AGA that the applicant is at the risk of fleeing justice or that he would tamper with evidence or influence any witness, hence, at this stage, without expressing any opinion on the merits of the case, this Court is of the view that the applicant is entitled to be released on bail - Application allowed.

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• Income Tax

• 2021 (11) TMI 59
  Reopening of assessment u/s 147 - Change of opinion - HELD THAT:- As fact was not discussed by the AO while finalizing the assessment and the same has not been brought to the notice of the AO by the assessee with a view to conceal the above facts from the AO. The second part of this observation is incorrect inasmuch as in the Affidavit-in-Reply and as it appears from the reasons for reopening of assessment itself, the details have been brought to the notice of the AO when the original Assessment Order was passed. As regards non-discussion by the Assessing Officer while finalizing the assessment, it is settled law that it is not necessary that an Assessment Order should contain reference and / or discussion to disclose its satisfaction in respect of every item. If the AO has materials before him but has not chosen to deal with that in his Assessment Order, he is deemed to have accepted the explanation or returns of the assessee. We find support for this view in Aroni Commercial Ltd . [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] It is settled law that an Assessing Officer cannot reopen an assessment even within a period of 4 years merely on the basis of a change of opinion. In this case, the assessment is sought to be reopened after a period of 4 years and hence the proviso to Section 147 of the Act is applicable which stipulates a requirement that there must be a failure on the part of the assessee to disclose fully and truly all material facts necessary. It is also settled law that the AO has no power to review an assessment which has been concluded - In the reasons for reopening of assessment, there is not even a single ground for reopening mentioned. As noted earlier, the entire basis for reopening is based on the balance-sheet which has been filed by Respondents.

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• 2021 (11) TMI 58
  Reopening of assessment u/s 147 - Eligibility of reasons to believe - change of opinion - HELD THAT:- In the facts of the present appeal a query was raised by the Assessing Officer in original assessment in respect of waiver of loan on account of One Time Settlement with the banks and assessee had filed detailed submission as to why principal amount was waived by the bank on account of One Time Settlement is not taxable. Once there was query raised with regard to a particular issue during regular assessment proceedings it must follow that the Assessing Officer had applied his mind and taken a view in the matter as reflected in the assessment order. See Aroni Commercials Ltd. vs. Assistant Commissioner of Income Tax - [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] - Decided in favour of assessee.

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• 2021 (11) TMI 57
  Reopening of assessment u/s 147 - undisclosed activity of money lending and borrowing - reasons that based on statements recorded of partners of M/s Evergreen Enterprises and employees - issuance of notice is that information was received from the Dy. Director of Income Tax Mumbai that a search and survey action u/s 132 was carried out in the case M/s Evergreen Enterprises and based on the statement recorded of the partner and documentary evidences found in the search of the premises of M/s Evergreen Enterprises unearthed an undisclosed activity of money lending and borrowing in unaccounted cash being operated at the premises of M/s Evergreen Enterprises - HELD THAT:- There is absolutely no mention as to how either the partners of M/s Evergreen Enterprises or the employees of Ms/ Evergreen Enterprises or this Bharat Sanghavi is connected to petitioner. Mr. Suresh Kumar relied upon the affidavit in reply to submit that Bharat Sanghavi was an employee of petitioner and, therefore, the reasons have been correctly recorded and the Assessing Officer has reason to believe that income had escaped assessment. As noted earlier, the reasons for reopening of assessment has to be tested / examined only on the basis of the reasons recorded and those reasons cannot be improved upon and/or submissions much less substituted by an affidavit and/or oral submission. In the reasons for the reopening, the Assessing Officer does not state anywhere that Bharat Sanghavi was an employee of petitioner. In the reasons for reopening, the Assessing Officer does not even disclose when the search and survey action u/s 132 was carried out in the case of M/s Evergreen Enterprises, whether it was before the assessment order dated 30th December 2016 in the case of petitioner was passed or afterwards. The reasons for reopening is absolutely silent as to how the search and survey action on M/s Evergreen Enterprises or the statement referred or relied upon in the reasons have any connection with petitioner.

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• 2021 (11) TMI 56
  Maintainability of appeal - low tax effect - Order u/s 234E as maintainable under Section 260 - present petitions invoking Article 226 of the Constitution of India contending that the tax effect involved is below monetary limits as prescribed in Central Board of Direct Taxes (hereinafter referred to as CBDT ) Circular No.17 of 2019 dated 8th August 2019 and the issue involved in the interpretation of Section has a cascading effect - HELD THAT:- It is undisputed that the subject-matter of present writ petitions does not fall within any criterion prescribed in clause 10 of Circular No.3 of 2018 as amended by Circular dated 20th August 2018. The right to challenge the order passed by the Tribunal by way of statutory appeal has been circumscribed by the involvement of substantial questions of law to be decided by the High Court. While a High Court would normally not exercise its writ jurisdiction under Article 226 of the Constitution if an effective and efficacious alternate remedy is available, the existence of an alternate remedy does not by itself bar the High Court from exercising its jurisdiction in certain contingencies - See REGISTRAR OF TRADE MARKS, MUMBAI ORS. [ 1998 (10) TMI 510 - SUPREME COURT] . None of the exceptions as laid down by the Supreme Court in the case of Radha Krishan Industries (Supra) has been fulfilled. On an overall consideration of the issue involved, particularly in view of the case of the Petitioner that the issue involved is of interpretation of Section which has a cascading effect, it was open for the Petitioner to avail statutory remedy under Section 260A of the Act. Having failed to avail the statutory remedy and the case of the Petitioner does not fall into the exceptions laid down by the Supreme Court in the case of Radha Krishan Industries [ 2021 (4) TMI 837 - SUPREME COURT] , we decline to exercise extraordinary jurisdiction under Article 226 of the Constitution of India.

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• 2021 (11) TMI 55
  Reopening of assessment u/s 147 - Reason to believe - consideration received from the issue of shares that exceeds the face value of such shares requires to be assessed to tax u/s 56(2)(viib) - HELD THAT:- Single Bench, after noting the facts, found that no tangible material or fresh material has come to the notice of the Assessing Officer, as could be seen from the reasons for reopening. After referring to Section 147 of the Act, the learned Single Bench rightly held that, if such type of reopening is permitted, there would be no end to the number of times when successive officers might apply and re-apply their mind to the same set of materials and come to different conclusions every time. On facts, the Court found that the financials annexed to the return of income disclose two lot of shares, one numbering 1,00,000 and the second numbering 2,17,870 and the valuation thereof has also been clearly stated. After noting the said fact, the learned Single Bench rightly observed that this has not escaped the attention of the Assessing Officer at the original instance and he has, in fact, made a modification to the valuation of the first lot of the shares and for the reasons best known to the Assessing Officer, the second lot has been left untouched. Thus, the Court rightly held that there is no material that has come to the notice of the Assessing Officer in the year 2018, warranting re-assessment. Hon ble Supreme Court in the case of Commissioner of Income Tax v. Kelvinator India Limited [ 2010 (1) TMI 11 - SUPREME COURT] and observed that the existence of new tangible material is a jurisdictional fact and this fact must necessarily exist in order to validate the assumption of jurisdiction in law. We are of the clear view that the learned Single Bench had rightly allowed the writ petition and quashed the impugned proceedings and the Revenue has not made any ground to interfere with the said order.

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• 2021 (11) TMI 54
  Unexplained income of the assessee - Unexplained cash deposits - Assessee submitted that the assessee has deposited an amount out of the amount given by his son Mr. Tinku Chaudhary after sale of his buffalows, cow and popular trees - HELD THAT:- Admittedly, the assessee during the course of assessment proceedings had explained before the A.O. regarding the source of cash which was given by his son Mr. Tinku Chaudhary after sale of his Buffallows, cow and popular trees. Neither the A.O. asked the assessee to produce his son for examination nor the assessee had volunteered to produce him before the A.O. Now that Assessee is willing to produce Mr. Tinku Chaudhary before the A.O. for his examination and substantiate the cash payment therefore, considering the totality of the facts and circumstances of the case and in the interest of justice, I deem it proper to restore the issue relating to addition to the file of A.O. with a direction to give an opportunity to the assessee to substantiate the cash deposit by producing cogent evidence - Decided in favour of assessee for statistical purposes. Addition of long term capital gains - As per Assessee when the property was purchased by the wife of the assessee and sold by the wife of the assessee, no addition on account of long term capital gains can be made in the hands of the assessee and the lower authorities have not properly appreciated the facts of the case - HELD THAT:- We deem it proper to restore the issue to the file of A.O. for adjudicating the issue afresh as per fact and Law, after giving due opportunity of being heard to the assessee - Decided in favour of assessee for statistical purposes.

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• 2021 (11) TMI 53
  CIT(A) enhancing the total income by exercising his powers u/s 251 - addition u/s 68 - income from plying of mini truck - Gp estimation - HELD THAT:- We note that the assessee s case is that he is into the business of potato/onion/grocery and has offered presumptive tax u/s 44AE of the Act since he is not maintaining any books of accounts. According to the assessee, he has gross receipt from this business to the tune of Rs. 18,17,625/- and therefore he has offered presumptive tax of Rs. 1,45,410/- which is 12.5% of the gross receipt. This income of the assessee from potato/onion/grocery need to be accepted since it has been brought to our notice that the assessee has been consistently assessed in the earlier assessment years also the income from this business and therefore the same to be accepted from this business Income from plying of mini truck - As action of the authorities below not to accept the genuinety of gross receipt from freight from a mini truck is a plausible view. CIT(A) for want of any proof in respect of the credit entry in the bank account has made addition u/s 68 of the Act without giving any consideration to the debit/withdrawal of the money. So the action of the Ld. CIT(A) on this score cannot be per-se countenanced. And it is equally interesting to note that both AO/Ld. CIT(A) has accepted the presumptive tax from mini truck offered by assessee u/s 44AE of the Act which means the authorities below has accepted that the assessee is in to the business of plying vehicle and eligible for adopting presumptive tax u/s 44AE of the Act which action we also concur/confirm. Therefore we order accordingly. Cash deposits in the assessee s bank account as depicted in the chart given by the AO - It goes without saying that when there is cash deposits in his account, he is duty bound to explain the nature and source of the deposits in it during the proceedings before the AO. Be that as it may be, reasonable estimation of the income of the assessee need to be made on the cash deposit/withdrawal made in the assessee s bank account. Therefore, we set aside the order of the Ld. CIT(A) and remand to the AO for estimation of income in respect of the sums deposited. For that the AO to consider the withdrawn amount also and after allocation of reasonable gross receipt from the mini-truck and taking in to consideration from grocery, reasonable estimation of income to be computed in accordance to law - we set aside the impugned order of the CIT(A) and remand the matter back for the limited purpose as afore-stated. The assessee is directed to file written submission/documents to substantiate his claim and the AO to give an opportunity of hearing if the assessee avails for it. Appeal of the assessee is partly allowed for statistical purposes

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• 2021 (11) TMI 52
  Deduction u/s 80P(2) on interest income - assessee is a primary agricultural credit society registered under the West Bengal Cooperative Societies Act and carrying on business of banking and providing credit facilities to its members and also taking deposits from its farmer members - HELD THAT:- As in case of a cooperative society engaged in carrying on business of banking or providing credit facilities to its members, the whole of the amount of profits of business attributable to any or more of such activities as mentioned in section 80P(2), are exempt from taxation. Admittedly, as mentioned by the AO in the assessment order itself, the assessee-society was carrying on business of banking and providing credit facilities to its members and also taking deposits from its farmer members. Therefore, accepting deposits on interest is one of the activities of the assessee-society. In the business of banking or credit facilities, not only accepting deposits but also investment of the deposits is also the part of the business activity of such an entity. To invest the deposits accepted from the members or the surplus funds available with it, is part of the banking/credit business of the assessee-society. Therefore, the investment of the surplus amount in the banks by the assessee-society cannot be said to be not related to the business activity of the assessee-society. Therefore, the interest/dividend income earned by the assessee for such investment, will be eligible for deduction u/s 80P(2).

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• 2021 (11) TMI 51
  Protective addition - assessee runs a Society of Education - case was selected for scrutiny through CASS and reason for scrutiny selection substantial cash deposit in the bank account - HELD THAT:- CIT(A) has made a categorical finding of fact that there was no substantial addition of such an amount made prior in the case of M/s. Society of Education and this finding of fact has not been rebutted/controverted or assailed by the revenue before us by filing specific ground to this effect in this appeal. From a perusal of the grounds of appeal raised by the revenue it is clear that the revenue has only assailed the decision of the Ld. CIT(A) in deleting the protective addition made by the AO. And it can be very well seen that the basis for deletion resorted by Ld CIT(A) to delete the protective assessment in the hands of assessee was because there was no substantial addition in the hands of M/s. Society of Education. This crucial fact has not been rebutted/controvered/assailed before us. No infirmity in the action of Ld. CIT(A) to have deleted the protective assessment in the hands of the assessee when the fact was that there was no substantive addition in the hands of M/s. Society of Education or other assessee s and ergo the same is confirmed. - Decided against revenue.

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• 2021 (11) TMI 50
  Addition of gross profit instead of net profit from the sale of Ghee - apportion the expenses to different activities for determining the net profit - assessee is engaged in the trading activity of Ghee which is not possible without incurring the indirect/administrative expenses - HELD THAT:- As it is not possible for any organization to run its activities without incurring the basic expenditures. Likewise, the assessee among other activity, is also carrying out the activity of trading in Ghee which is not possible to run without incurring the administrative expenses. The assessee is engaged in multiple activity and some of the activity are eligible for deduction u/s 80P - some of the activity of the assessee are taxable. But the assessee is maintaining common books of accounts, common infrastructure, common facilities, manpower etc. Thus in such a situation, the only option available to the assessee is to apportion the expenses to different activities for determining the net profit of each activity. Accordingly, we are not convinced with the finding of the authorities below by treating the gross profit as taxable income of the assessee. It was the duty of the revenue to pinpoint the infirmity in the expenses apportion by the assessee towards the activity under consideration. To our understanding, all the expenses apportion by the assessee cannot be ignored without bringing any cogent reason on record. Hence, we set aside the finding of the CIT (A) and direct the AO to take the net profit declared by the assessee as taxable income and delete the amount over and above such taxable income of the assessee. Hence the ground of appeal of the assessee is allowed. Non granting the deduction provided u/s 80P (2)(c)(ii) - CIT (A) observed that the activity of the assessee falls under clause (b), therefore the assessee cannot claim the deduction u/s 80P(2)(c)(ii) - HELD THAT:- As coordinate bench of Hyderabad Tribunal in case of Film Nagar Co-operative Society Ltd . [ 2002 (7) TMI 233 - ITAT HYDERABAD-B] by following the judgment in case of CIT vs. Ratanabad Co-operative Housing Society Ltd. [ 1994 (12) TMI 31 - BOMBAY HIGH COURT] held that The expression profits and gains in clause (c) of sub-section (2) of section 80P is not confined to Profits and gains of business under clause (a) . Thus, in case of co-operative credit society, income to which benefit of section 80P(2)(a)(i) is not allowed, e.g., rental income, interest income from surplus funds kept in FDs of banks, etc., basic exemption of Rs. 50,000/- as provided for in section 80P(2)(c)(ii) must be granted. It appears that, though the word activity is not defined, yet the investment activity, activity of renting of immovable property, trading of Ghee etc., and the consequent income attributable to such activities would be covered u/s 80P(2)(c). Hence, we set aside the finding of the learned CIT (A) and direct the AO to allow the deduction to the assessee under the provisions of section under section 80P(2)(c)(ii) of the Act. Hence the ground of appeal of the assessee is allowed.

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• 2021 (11) TMI 49
  TP Adjustment - determination of arm s length price of specified domestic transaction ( SDT )involving purchase of raw materials by the assessee from its sister concern/AE - manner of application of CUP Method challenged - assessee has benchmarked the SDT with the arithmetical mean rate at which the related parties sold the same product to independent buyers and TPO has benchmarked it by taking the lowest/minimum rate at which the related parties sold the same product to independent buyers - HELD THAT:- As taxing statute must be strictly construed and, therefore, save and except the words and phrase expressly used or employed by the legislature, nothing more can be taken into account while interpreting any provision. Casus Omissus is not permitted. At the same time, it has to be kept in mind that the judicial/quasi judicial authorities are also not permitted to ignore or overlook the expression or words expressly used. There is no scope for intendment while interpreting a deeming provision of a taxing provision, particularly when the words employed are of precise meaning. The proviso to Section 92C(2), as it stood during the relevant year, clearly states that where more than one price is determined by the most appropriate method, the arm s length price shall be taken to be the arithmetical mean of such prices. Hence, when the computation of arithmetical mean has been expressly set out in the said provision, this Tribunal is not permitted to ignore or overlook the said expression and read weighted average mean in its place. No force in the Ld. CIT, DR s contention for use of weighted average mean as against arithmetical mean computed by the assessee. Revenue s contention that when the assessee has accepted the draft assessment order, pursuant to the TPO s order making the T. P. adjustment, by not filing objections before the DRP, resulted in automatic acceptance of the T.P. adjustment - As in the statute that if the assessee is not agreeable to the T.P. Adjustment which has been incorporated in the draft assessment order pursuant to the TP order, then the assessee has two alternative appellate routes viz., (a) to object to the draft order inter alia including the T P Adjustment before the DRP or (b) post passing of the final assessment order, prefer an appeal against the action of the TPO before the Ld. CIT(A). In the facts of the present case, the assessee has availed the alternate remedy and chose to challenge the action of the TPO before the Ld. CIT(A). Such action of the assessee of choosing to file appeal before the CIT(A) rather than the DRP cannot be objected to by the AO/Revenue nor does it in any manner tantamount to acceptance of the draft assessment order by the assessee. Taxability of power subsidy and VAT subsidy received by the assessee under the State Industrial Policy by way of revenue receipt - The incentive in the form of sales tax/VAT subsidy and power subsidy have been granted for setting up new units in the States of West Bengal which lagged behind in industrial development for development of industries and generation of employment opportunities. The object of the assistance was not to enable the assessee to run the business more profitably but encourage them to set up a new unit or expand the existing unit for overall economic development of the State and so we concur/endorse this finding of Ld CIT(A) on this issue to the same effect. We find that this particular issue is now no longer res integra in light of the decision in the case of CIT Vs Chaphalkar Brothers [ 2017 (12) TMI 816 - SUPREME COURT] wherein the Supreme Court after analysing the ratio laid down in their earlier judgments in the cases of CIT vs Rajaram Maize Products[ 2001 (8) TMI 13 - SC ORDER] , M/s Sahney Steel Press Works Ltd. vs. CIT [ 1997 (9) TMI 3 - SUPREME COURT] and CIT vs. Ponni Sugar Chemicals Ltd.[ 2008 (9) TMI 14 - SUPREME COURT] held that the subsidies granted under the State Industrial Scheme to accelerate industrial development and generate employment in the State, is capital in nature - Decided in favour of assessee.

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• 2021 (11) TMI 48
  Addition u/s 2(24)(x) read with section 36(1)(va) - delay in payment of ESI and PF made by CPC - whether CPC as no power to make adjustment u/s 143(1) of the Income Tax Act for disallowance of ESI/PF late deposit u/s 36(1)(va)/43B ? - HELD THAT- In the instant case, admittedly and undisputedly, the employees contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) - D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021 - there are express wordings in the said memorandum which says these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years . In the instant case, the impugned assessment year is assessment year 2019-20 and therefore, the said amended provisions cannot be applied in the instant case. The addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the deposit of the employees s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted. - Decided in favour of assessee.

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• 2021 (11) TMI 47
  Jurisdiction of the AO to frame the assessment order - scrutiny assessment instruction for non corporate assessee - As argued since the assessee has declared more than Rs. 20 lacs as his returned income, then the scrutiny assessment could have been done by only the ACIT/DCIT and not by the ITO who does not have the pecuniary jurisdiction to do so - scope of CBDT Instruction No. 1/11 (F. No. 187/12/2010-IT(AT) dated 31.01.2011 CBDT has fixed new monetary limit in Mufassil areas - HELD THAT:- As per Instruction of the CBDT it is evident that the pecuniary jurisdiction conferred by the CBDT on ITOs is in respect to the non corporate returns filed where income declared is only upto Rs. 15 lacs; and the ITO doesn t have the pecuniary jurisdiction to conduct assessment if it is above Rs. 15 lakhs. Above Rs. 15 lacs income declared by a non-corporate person i.e. like assessee, the pecuniary jurisdiction lies before AC/DC. In this case, admittedly, the assessee an individual (non corporate person) who undisputedly declared income of Rs. 20,03,070/- in his return of income cannot be assessed by the ITO as per the CBDT circular (supra). From a perusal of the paper book, it reveals that the statutory notice u/s. 143(2) of the Act was issued by the then ITO, Ward- 4(3), Guwahati on 20.09.2016 and the same was served upon the assessee as noted by the AO in the assessment order. Later on the ITO taking note that since the returned income is more than Rs. 15 lacs, he transferred the case to DCIT, Circle- 4, Guwahati who issued interim notice u/s 142(1) dated 03.03.2017 and framed the assessment order without issuing notice u/s 143(2) of the Act. Admittedly, when the ITO realized that he did not had the pecuniary jurisdiction to issue notice, he duly transferred the file to the DCIT, Circle-4, Guwahati, when the DCIT issued notice u/s 142(1) of the Act and did not issue notice u/s 143(2) of the Act within the time limit prescribed for issuance of notice u/s. 143(2) of the Act for the assessment year 2015-16. We note that the DCIT by assuming the jurisdiction after the time prescribed for issuance of notice u/s. 143(2) of the Act notice became coarum non judice after the limitation prescribed by the statute was crossed by him. Therefore, in this case, the omission/non-issuance of notice by the DCIT, Circle-4, Guwahati before the limitation period for issuance of statutory notice u/s. 143(2) of the Act has set in, goes to the root of the case because the DCIT gets jurisdiction to frame assessment order u/s 143(3) of the Act only thereafter. Ergo, the assessment order passed by the DCIT, Circle-4 u/s. 143(3) of the Act is not valid in the eyes of law and, therefore, is null and void in the eyes of law, and consequently we quash it. Therefore, the legal issue raised by the assessee is allowed. Since we have quashed the assessment and the appeal of assessee is allowed on the legal issue, the other grounds raised by the assessee need not to be adjudicated because it is only academic. Therefore, the additional ground raised by the assessee is allowed.

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• 2021 (11) TMI 46
  Revision u/s 263 - lack of inquiry/inadequate inquiry - whether case of difference of opinion ? - assessee s case had been reopened u/s 147 - Unexplained cash deposits - as per CIT AO had not conducted inquiries which were required to be done in the present case - HELD THAT:- Assessee s justification for the cash deposited in his bank account, as having been received from one Shri Pradeep Singh for leasing out his agricultural land to him for 10 years substantiated by an affidavit, is contradicted by the nakal jamabandi of the said land for the period which records the assessee as cultivator of the land. Clearly these are contradictory facts, with the affidavit stating Shri Pradeep Singh as cultivator, while the Revenue records showing the assessee as the cultivator and controverting his claim that he had leased out his land to Shri Pradeep Singh. We agree with the Revenue that this contradict ion should have prompted further inquiry by the AO regarding the genuineness of the claim of the assessee that he had received amount by leasing out his land to Shri Pradeep Singh. The documents on record by no stretch justify the acceptance of the claim of the assessee by the AO. No person of sound and logical mind could have, in the circumstances, found the claim of the assessee justifiable in the light of the conflicting documents before the AO - AO, therefore, not proceeding with conducting further inquiry on the issue and having accepted the claim of the assessee, the order passed by the AO we agree with the ld. PCIT, is erroneous and prejudicial to the interest of the revenue. In the present case, it is not a case of difference of opinion but infact it is clear that the opinion of the AO was one which was not justified by the evidences on record and therefore, the finding of error by the Ld.Pr. CIT on account of lack of inquiry/inadequate inquiry by the AO on the issue is, we hold, in accordance with law for the purpose of exercising revisionary jurisdiction u/s 263 of the Act. The order of the Ld. Pr.CIT is accordingly upheld. - Decided against assessee.

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• 2021 (11) TMI 45
  Deduction u/s 54F denied - owning more than one residential house at the time of sale of original asset - scope of amendment brought in Finance (No.2) Act 2014 to the proviso to section 54F(1) - as submitted residential property in Jayanagar has to be considered as one residential house since it is a duplex house containing single Khatha number, single Property Identification (PID) number - HELD THAT:- As in case of Bhatkal Ramarao Prakash [ 2019 (2) TMI 1059 - ITAT BANGALORE ] has held that a residential house where ground floor is used for assessee s own residence and the first floor was let out has to be considered as one residential house for the purposes of S. 54F of the Act though having independent entries, deduction has to be allowed. The assessee is having one building which consists of two units; one was let out and another is self-occupied by the assessee. The assessee owns one independent building which has two units one in ground floor and another in first floor and having two units cannot change the nature of the building, it remains as one residential house as in the case of Shri Ramaiah Harish [ 2021 (9) TMI 1138 - ITAT BANGALORE ] Thus, we direct the AO to allow deduction u/s. 54F of the Act. The grounds raised by the assessee are allowed.

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• 2021 (11) TMI 44
  Disallowance of salary to specified person u/s. 40A(2)(b) - excessive or unreasonable payments - mandation of recording satisfaction - HELD THAT:- No addition is allowed without placing on record any material which could prove to the hilt that the payments were excessive or unreasonable, having regard to the fair market value of the services for which the same were made or keeping in view the legitimate needs of the business of the assessee or the benefit derived by or accruing to the assessee therefrom. Be that as it may, we are of the considered view that in the absence of satisfaction of the basic condition for invoking of Sec. 40A(2)(a) by both of the lower authorities, the disallowance of the related party expenses made under Se. 40A(2)(a) cannot be sustained - Decided in favour of assessee. Gain on sale of shares - LTCG or Business income - assessee has not shown the sold share in the balance sheet as investment and treated the same as business income - HELD THAT:- As assessee has specifically submitted in his submission that he has invested in the shares of Infosys in 1990 - Infosys declared bonus shares and capital gain was earned on the sale of bonus shares. In this regard, the assessee has also placed copies of contract note, demat statement, statement of holding of Infosys shares in the paper book. After perusal of the detail filed by the assessee, it is clear that Assessing Officer has not taken into consideration the relevant submission along with copies of document filed by the assessee in support of his claim of long term capital gain on the sale of impugned shares. Therefore, we restore this issue to the file of the Assessing Officer for deciding de-novo after verification of the detail filed - Decided in favour of assessee for statistical purposes. Disallowance of bad debt - since the assessee has not offered the corresponding income in its books, therefore, claim of bad debt is not allowable - HELD THAT:- As per the agreement in case of non-recovery from such parties, the same will be recovered from the sub-broker. In this regard, the assessee has placed copy of debit not of Motilal Investment Services, statement of bad debt written off, copy of customer account from books of the assessee etc. After perusal of the aforesaid facts and material filed by the assessee, we are of the view that the issue of trading loss instead of bad debt as claimed by the assessee is required to be examined from the submission made by the assessee, therefore, we restore this issue to the file of Assessing Officer for deciding de-novo after examination/verification of the details to be furnished by the assessee in the set aside proceedings upon affording adequate opportunity to the assessee. Accordingly, this ground of appeal of the assessee is allowed for statistical purposes. Addition of unexplained capital - assessee has claimed that the source of addition to the capital account was out of withdrawal made in the past three years - HELD THAT:- As assessee has not furnished any relevant supporting evidences before the lower authorities. On this issue, we find that even during the course of appellate proceedings before us, the assessee has only furnished the copy of balance sheet of the assessee without any relevant supporting evidences to demonstrate that the source of addition to the capital accoun was actually out of the explained withdrawal. Therefore, we do not find any infirmity in the decision of ld. CIT(A) on this issue. Accordingly, this ground of appeal of the assessee is dismissed.

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• 2021 (11) TMI 43
  Faceless proceedings - Violation of principles of natural justice - without issuing a notice of hearing to the assessee - HELD THAT:- Under the new scheme of faceless proceedings before the CIT(A), there is no requirement of physical hearing unless and until it is considered as necessary but that does not mean that the right to have a proper opportunity of hearing is either forfeited or obliterated. It is pertinent to note that the CIT(A) has stated in the caption of the impugned order in the column of presence of appellant as well as presence of Department as not applicable. There is no mention about any notice issued by the CIT(A) before passing the impugned order. Even otherwise the impugned order was passed by the CIT(A) without considering any submissions including written submissions of the assessee. Therefore, it is manifest from the record that the CIT(A) has not granted even an opportunity to the assessee to file the written submissions as well as a documentary evidence in support of its claim. Accordingly in the facts and circumstances of the case we are of the considered view that the impugned order is passed by the ld. CIT(A) without giving an opportunity of hearing much less a sufficient opportunity of hearing to the assessee which has resulted violation of principles of natural justice rendering the impugned order as not sustainable in law. Hence, the impugned order is set aside and matter is remanded to the record of the ld. CIT(A) for deciding the same afresh after granting sufficient opportunity of hearing to the assessee.

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• 2021 (11) TMI 42
  Assessee in default u/s 206C - assessee has not collected tax at source (TCS) from buyers on sale of iron ore for the period July 2012 to March 2013 and the tax levied - HELD THAT:- It is not dispute that the assessee has already paid the tax due on it. However, there was a confusion prevailing regarding the appropriate Form 27C. Accordingly, the assessee did not collect any TCS from the buyer who were using the goods for the purpose of manufacturing, processing or producing articles of things or for the purpose of generation of power and not for trading purposes and also collected such declaration in old Form 27C and also submitted the same to the appropriate authorities and thus complied with the spirit of the law, details including copies of Form 27C as well as copy of the Income Tax Returns and taxes paid therein for the Assessment Year 2013-14 were filed by the Buyers. The same were not considered by the AO as well as the CIT(A). CIT(A) dismissed the appeal of the assessee by observing that the buyers did not submit Form 27C at the purchase of iron ore and confirmed the order of the AO. It was amended later on and Form 27C placed before us - as agreed by both the parties, we set aside the order of the authorities below and remit the matter back to the file of the AO to verify the documents as submitted by the assessee i.e. Form 27C required for considering the case of the assessee and pass order as per law after giving due opportunity to the assessee. Hence, the issue is remitted for limited purposes i.e. verification of Form 27C - Appeal of the assessee is allowed for statistical purposes.

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• 2021 (11) TMI 41
  Addition of profits on account of circular transaction - assessee has made purchases and sales from one M/s. Balaji Electronics Pvt. Ltd. and at the end of the year the amounts of purchases and the amounts of sales made from this party is almost equal - AO was of the view that in the sale and purchase bill shown the description of the material only as electronic goods and the manner of the creation of the circular activity is also doubtful - HELD THAT:- Assessing Officer could not show any legal bar of making purchases and sales from the same party. Further Balaji Electronics Pvt. Ltd. in response to notice under Section 133(6) of the Act has confirmed the transactions. Further, for assessment year 1998-99 it is shown that the assessee accepted the GP ratio of 1.09% only for the reason that in that case the transaction with the circular trading parties resulted into profit of just 0.53%. In the present case, the Assessing Officer has made a profit of 1.5% whereas the assessee has itself shown the profit of 2.28%. Therefore, the estimate of the profit made by the Assessing Officer is far less than the income of such circular income disclosed by the assessee. In view of this, we do not find any reason to disturb the order of the ld. CIT (Appeals). Accordingly, the order of the ld. CIT (Appeals) deleting the addition confirmed. Disallowance of deduction u/s 80IB - deduction with respect to its software unit at Goa - HELD THAT:- As survey team took the action one year after the operations stopped at those units where the software was manufactured/developed. The signatory to the Excise record of the assessee was the same employee whose statement was used by the assessing officer. It is also a fact that the deduction under those sections were already allowed to the assessee u/s 143 (3) of the income tax act by the learned assessing officer after completely examining all these details. In view of this, we do not find any reason to interfere with the order of the learned CIT A deleting disallowance made by ld AO u/s 80IB of the act. No evidences were produced before us that there was no manufacturing facility available at those plants, the details submitted by the assessee with respect to the manpower available at those units was also not denied, the learned assessing officer has also categorically accepted after verification of the excise records that it matched with the books of accounts of the assessee and there is a production according to those records. In view of these overwhelming evidences, we confirm the order of the learned CIT appeal and dismiss ground number 2 of the appeal of the AO. Disallowance of expenditure on research and element expenditure - AO made the disallowance for the reason that according to him there was no research and development facility existing at Solan - HELD THAT:- Assessee has shown the correspondence exchanged between the appellant and Department of science and technology government of India and further there is an evidence in the form of meeting with the Ministry of science on the projects undertaken by the appellant in the minutes of the meetings cannot be said to be merely a paperwork and general research. In fact the assessee is also having recognition letter from the Ministry of science with respect to the research and development activity of the assessee. In fact himself has allowed part of the expenditure therefore it cannot be said that there is no research and activities carried out by the assessee it may not be fruitful. However, for this reason disallowance of expenditure cannot be made. Further in the original assessment proceedings u/s 143 (3) of the act the learned assessing officer after proper examination has allowed the complete claim of these expenditure. It is not also the claim of the AO that these expenditure are found to be bogus and have not been at all incurred by the assessee. In view of this, we confirm the order of the learned CIT appeal in deleting the above disallowance. Disallowance of travelling expenditure - family members of the directors have travelled abroad with them and therefore all the visits of the family members cannot be attributed bullion exclusively for the purpose of business - unexplained foreign expenditure - HELD THAT:- AO has failed to bring on record any specific instance of the company s fund being used in funding the tour of the family members of the directors. The disallowances also made on ad hoc basis. In the original assessment proceedings u/s 143 (3) of the act no such disallowances were made despite verification of the complete details at the time. In absence of any definite finding by the learned assessing officer, naturally the disallowance made by the learned assessing officer is merely on conjectures and surmises which cannot be upheld and rightly deleted by the learned CIT A . Addition of advances given to the subsidiary company as written off by the assessee - HELD THAT:- Subsidiary company was engaged in the business of paging services and the loan and advances given to that company become not recoverable because of the usual losses suffered by that particular company. The fact was also noted that the entire capital of that particular subsidiary company was eroded by the accumulated losses by more than 2.5 times of itself capital. Thus, it was a bona fide decision of the assessee company to write of the above amount under the head of its finance business and claim it as a business loss. Merely because the subsidiary company has not shown the cessation of the liability, the claim of the assessee cannot be disallowed. CIT A after considering the various judicial pronouncements has allowed the claim of the assessee on both the above account. Before us, the revenue could not show that there were an incriminating evidences available with the revenue during the course of search with respect to the above claim of the assessee or the loss incurred by the assessee has not arise and during the course of the finance business of the assessee. Late deposit of employees contribution towards the respectively provident fund and ESIC account in view of the provisions of Section 2 (24) (x) read with Section 36 (1) (v) - HELD THAT:- We uphold the order of the learned CIT A in deleting the disallowance of late payment of employee s contribution of provident fund according to the respective due dates prescribed Under the respective law but paid before the due date of filing of the return of income. Disallowance of expenses on ad hoc basis due to the non-production of the books of accounts - CIT-A deleted the disallowance - HELD THAT:- Before us, the learned DR could not produce any material to show that the disallowance made by the learned assessing officer was based on any particular incident of or instances of expenditure debited by the assessee that are not incurred wholly and exclusively for the purposes of the business. Appeal of the learned assessing officer for assessment year 2004 05 wherein similar disallowances were made out of the total expenditure incurred by the assessee is deleted by us confirming the order of the learned CIT A. Adoption of the profit rate of 1.09% of circular trading transactions - assessee is aggrieved by the order of the learned CIT A wherein he has upheld the addition to the extent of Rs. one point to 09% of the profit. - HELD THAT:- We e find that identical issue is involved in the appeal of the assessee for assessment year 2005 06 wherein we have confirmed the order of the learned and CIT A because of the reason that overall profit in circular trading transaction entered into by the assessee has resulted into loss. In earlier years in assessee s own case i.e. AYs 98 99 and 99 2000 the gross profit rate of one point to 09% on circular trading has been upheld by the learned CIT A not been challenged by the assessee before the higher forum. Therefore we find no reason to deviate from that order and accordingly we confirm the order of the learned and CIT A upholding the addition to the extent of profit at the rate of 1.09% on circular trading transactions entered into by the assessee. Thus, the appeal of the assessee is dismissed.

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• 2021 (11) TMI 40
  Disallowance u/s.14A r.w.r. 8D - investment was made out of own surplus fund - HELD THAT:- As decided in SOUTH INDIAN BANK LTD. VERSUS COMMISSIONER OF INCOME TAX [ 2021 (9) TMI 566 - SUPREME COURT] proportionate disallowance of interest is not warranted, under Section 14A of Income Tax Act for investments made in tax free bonds/securities which yield tax free dividend and interest to Assessee Banks in those situations where, interest free own funds available with the Assessee, exceeded their investments. With this conclusion, we unhesitatingly agree with the view taken by the learned ITAT favouring the assessee. The above conclusion is reached because nexus has not been established between expenditure disallowed and earning of exempt income. The respondents as earlier noted, have failed to substantiate their argument that assessee was required to maintain separate accounts. Their reliance on Honda Siel [ 2011 (7) TMI 275 - SC ORDER] to project such an obligation on the assessee, is already negated. The learned counsel for the revenue has failed to refer to any statutory provision which obligate the assessee to maintain separate accounts which might justify proportionate disallowance. - Decided in favour of assessee. Disallowance of amortization of premium paid at the time of purchase of securities over the remaining period of securities - HELD THAT:- As decided in THE CHANASMA NAGRIK SAHAKARI BANK LTD. AND VICE-VERSA [ 2017 (10) TMI 478 - ITAT AHMEDABAD] at the aforesaid amount represents the excess of acquisition cost over the face value of Government securities taken under HTM category. We find that the issue is squarely covered in favour of assessee by the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Rajkot Dist. Co-op Bank Ltd.. [ 2014 (3) TMI 110 - GUJARAT HIGH COURT] - reliance upon the CBDT Circular No. 17 of 2008 and held that loss on account of premium paid on the face value of the security is required to be amortized for the remaining period of maturity - claim of the assessee towards amortization of security premium requires to be accepted. - Decided in favour of assessee.

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• 2021 (11) TMI 39
  Levying penalty u/s 271F - failing to file SFT-014 for assessment year 2017-18 for which the last data was expired on 31st Jan, 2016 - HELD THAT:- The amount of penalty was computed as per the provision of section 271FA. We do not find any merit in the plea of the assessee stating that it was unaware about the filing of impugned statement. Regarding the contention of the assessee that it had not received the notices reported in the penalty order, it is observed that the ld. DIT(I IC) has also not mentioned the date of serving the two notices dated 11-04-2017 1-6-2017 upon the assessee. We hold that penalty of Rs. 25,800/- (258 days x Rs. 100 per day) on the assessee will be justified. Accordingly, the appeal of the assessee is partly allowed. Appeal of the assessee is partly allowed.

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• 2021 (11) TMI 38
  Addition under the head conveyance allowance - AO is of the view that the appellant is eligible for exempt conveyance allowance - HELD THAT:- As per circular No. 6/2004 dated 6.12.2004, the assessee-individual is entitled to deduction of Rs. 9600/- per year with regard to conveyance allowance. In this case, the assessee has claimed Rs. 36,649/-, which is not in accordance with the CBDT circular. Therefore, we concur with the findings of ld. CIT(A) in confirming the disallowance. This ground of appeal is dismissed. Addition of interest income - HELD THAT:- Assessee had deposited of Rs. 3,00,000/- as fixed deposit and has shown Rs. 1,00,000/- in the return of income. Therefore, the AO calculated the interest income of Rs. 18,000/- on the fixed deposit of Rs. 2,00,000/- and added to the total income of the assessee. We also observe that during the appellate proceedings, the ld. A.R. of the assessee accepted the addition and same was confirmed. If this is the position, there was no necessity to agitate the issue before the Tribunal. Hence, we confirm the addition and this ground of appeal is dismissed. Unexplained cash deposits and cheque deposits in bank account - undisclosed sources of income - HELD THAT:- AO has not considered the facts of the assessee on right perspective and added the cash collected by him to his income and part of the cheque collection has been allowed. When one part of collection of loan instalment has been allowed being receipt through cheque then other part cannot be disbelieved and disallowed merely because it was cash deposit. It is also not necessary that any other additional positive material should be produced by the assessee in order to discharge this burden which rests upon him. The assessee may claim to have discharged the burden by relying on the material which is on record by filing a letter dated 7.11.2016 asking the employer to intimate the collection and deposit, irrespective of whether it is complied by the employer or not. If it can be said on a preponderance of probabilities that the failure to give the collection and deposit by the employer has not arisen on account of any fraud or any gross or wilful neglect on the part of the assessee - thus direct the AO to delete the addition.

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• 2021 (11) TMI 37
  Taxability of receipts - Royalty / Fee for technical services - Switzerland based non-resident assessee from its Indian affiliate - main plank of the ld. AR for claiming the amount in question as not chargeable to tax, is that the receipt was in the nature of reimbursement of IT service cost from RIPL and, in the alternative, it was a receipt of software royalty not chargeable to tax - HELD THAT:- Given the fact that there are 19 global entities availing IT services from the assessee, we fail to comprehend as to how only the Indian entity has been allocated more than 17% of the total costs as against each of the other 18 entities getting allocation of 4.6% on average. From the above discussion, it is manifest that there is no proper and identifiable method of allocating the costs to RIPL under different IT service heads, claimed as reimbursement, thereby throwing the one-to-one correlation between the out go and in flow of the assessee on this score from RIPL to the winds. This shows that the assessee allocated costs for rendering IT Services in a peculiar manner, the modus operandi of which is not open for verification to the tax authorities. Clause (4) of the Agreement defines Consideration , which has been elaborated in Appendix-II. Relevant part of it states that: The basis for the calculation of the service fees shall include the direct as well as the indirect costs incurred. Generally for the following cost items a mark-up of 5% shall be added: Software and license fees - Charges/cost reimbursements from other related parties - It shows that the Agreement firstly, talks of incurring software and license fee in rendering the services and then, of loading software and license fee cost with mark-up of 5%. This runs contrary to the assessee s stand that firstly, it did not use third party software for rendering IT services under the Agreement and secondly, that the software costs were recharged on cost to cost basis. This brings us to the inevitable conclusion that the second constituent of Reimbursement, being, recovery of the amount incurred as it is from the other without any plus or minus, also falls on the ground thereby jeopardizing the concept of Reimbursement. Cumulative satisfaction of both the conditions is essential for constituting reimbursement . If one of them is lacking, the test of reimbursement fails. We are instantly confronted with a situation in which both the conditions are failing. Neither the undiluted benefit of the software cost was passed on to RIPL nor did the assessee recover the amount as it is from RIPL. We are ergo disinclined to countenance the contention of Reimbursement , which is hereby jettisoned. Is receipt a software royalty? - We are concerned with the second stage in which the software licenses, being in the nature of copyrighted article, were purchased by the assessee and then used in the providing various services, such as, Client Based Services (CBS), Business Applications for Sales, Marketing and Technology Users (BASMT), Business Applications for Parts and Service Users (BAPS), Business Applications for Operations Users (BAOP), Business Applications for Finance and Controlling Users (BAFC) etc. The fact that the assessee utilized the software purchased from third party vendors for integrating them with its own software for making a common centralized integrated IT infrastructure so as to render the IT services is further fortified by the details of the alleged reimbursement submitted by the assessee. First table has last two columns with captions Weights for IT infrastructure cost allocation and Weighted average allocation . On a specific query, the ld. AR submitted that the assessee company spent certain amount on IT infrastructure, independent of the software cost, which was allocated between all the 19 entities and the RIPL s share in it was determined at 17.09%. This shows that apart from purchasing the software for the centralized IT infrastructure Centre, the assessee also incurred certain IT infrastructure costs for integrating them into its centralized system so as to render services to the worldwide entities, which was charged to RIPL at 17.09%. This plentifully proves that the amount recovered by the assessee from RIPL is not towards transfer of any software so as to constitute software royalty. The contention of the ld. AR in this respect stands repelled. True nature of receipt - Since the nature of services rendered by incurring costs - on maintaining owned software and those purchased from third party vendors - is similar, the amount received by the assessee from RIPL for rendering such services cannot have two different characters viz., one part as taxable and the other as not taxable. On a pertinent query as to whether revenue of Rs. 20.04 crore received by the assessee from RIPL towards I.T. Services was offered and taxed as Royalty or Fees for technical services, as the same treatment would be given to Rs. 3.84 crore as well, the ld. AR submitted the it did not make any difference as both the royalty/FTS are taxable at the rate of 10% under the DTAA. We, therefore, hold that the authorities below were fully justified in including Rs. 3,88,94,824/- in the total income of the assessee and charging it to tax at 10% in parity with the assessee suo motu offering Rs. 20.04 crore to tax at that rate.

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• 2021 (11) TMI 36
  Proportionate disallowance of deduction claimed u/s. 80IA - services provided pursuant to ILD/NLD license constitute a new and independent undertaking - assessee claimed deduction u/s 80IA of the Act on profits derived from telecommunication services including the services rendered pursuant to these licenses for the assessment years under consideration - Since the assessee did not provide any segmental income expenditure for NLD and ILD services, proportionate disallowance is made on the basis of revenue - HELD THAT:- Since the factual matrix and the arguments are identical. Facts consider in A.Y. 2011-12, respectfully following the decision of the coordinate bench we direct the AO to delete the proportionate disallowances. TDS U/S 195 - Addition u/s. 40(a)(i) for non-withholding of taxes - Disallowance of telecommunications expenses paid to Foreign Telecom Operators - assessee contracts with its customers for providing data transmission services in India and overseas in a safe and secure manner - HELD THAT:- On finding parity of facts with the facts of A.Y. 2011-12 respectfully following the findings of this Tribunal (supra) we direct the AO to delete the disallowance. TDS u/s 194J - Disallowances of telecommunication expense paid to Domestic Telecom Operators - AO disallowed the payments made for these telecom connectivity services - HELD THAT:- It is true that the agreement between the assessee, Bharti Airtel and Reliance clearly show that each party was responsible for its network and for the provisions of services related to it. We are of the considered view that the telecom operators provided connecting, transit and termination services to each other on a reciprocal basis and neither of the parties had any rights in the equipments or in the network of the other parties. The FTOs do not grant any possession or control of any equipment or in the network deployed by them to the assessee. As relying on case of Bharti Airtel [ 2016 (3) TMI 680 - ITAT DELHI ] payment cannot be termed as covered by Explanation 2 read with Section 9(vi) - Decided in favour of assessee. Short grant of credit for TDS - HELD THAT:- We find that on short grant of TDS given by the AO, the assessee has moved a rectification application which has not been disposed of till date. We direct the AO to consider the claim of the credit of TDS as per the provisions of the law and decide the rectification application expeditiously.

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• 2021 (11) TMI 35
  CIT(A) dismissed the appeal of assessee in ex-parte proceedings - Reopening of assessment - unexplained cash deposited in his bank accountHELD THAT:- AO while passing the assessment order made on account of unexplained cash credit on the basis of deposit in his bank account. The ld.CIT(A) confirmed the action of AO by taking view that there is non-compliance on the part of the assessee. Before, us the ld. AR for the assessee undertook to be vigilant and to appeal before the ld. CIT(A). We, instead of going into controversy, whether the assessee defaulted in attending the proceedings before the ld.CIT(A). We find that the order of the ld. CIT(A) is not in accordance with mandate of section 250(6) of the Income Tax Act. Section 250(6) of the Act mandates that the Ld. CIT(A) while deciding the appeal is required to pass order on points of determination (grounds of appeals), decision therein on and reasons for such decision. Therefore, considering the facts and circumstances of the case, the appeal of the assessee is restored back to the file of the ld. CIT(A) to decide all the grounds of appeal on merit in accordance with law. The assessee is directed to appear before the ld. CIT(A) as and when the date of hearing is fixed and to provide all necessary evidence - Assessee appeal allowed for statistical purpose.

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• 2021 (11) TMI 34
  TDS u/s 194J - Non deduction of TDS on channel placement charges - cable operators are providing technical services - CIT(A) deleted the demand of tax raised u/s 201(1) - HELD THAT:- When placement charges are paid by the respondent to the cable operators/ MSOs for placing the signals on a preferred band, it is a part of work of broadcasting and telecasting covered by sub clause (b) of clause (iv) of the explanation to Section 194C. As a matter of fact, it was found by the Commissioner (Appeals) that whether the payment is towards a standard fee or placement fee, the activities involved on the part of the cable operators/ MSOs are the same. When placement fee is received, a channel is placed on a particular prime band. It was found that by an agreement to place the channel on a prime band by accepting placement fee, the cable operator/ MSO does not render any technical service. As far as Appellate Tribunal is concerned, again the definition of work in clause (iv) of the explanation to Section 194C was looked into. We must note here that a grievance was made by the learned counsel appearing for the appellant that there are no detailed findings recorded by the Appellate Tribunal. Commissioner (Appeals) has recorded detailed findings on the basis of material on record and by referring to the findings, the Appellate Tribunal has expressed general agreement with the findings recorded by the first Appellate Authority. While affirming the judgment of the first Appellate Authority, it is open for the Appellate Tribunal to express such general agreement - Decided against revenue.

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• 2021 (11) TMI 33
  Validity of revisionary jurisdiction u/s.263 - No enquiries were carried out on certain expenditure with regard to application which includes application on account of education - Whether relevant and sufficient enquiries were indeed carried out by the ld. AO in the original assessment proceedings? - HELD THAT:- Detailed examination has been carried out by the ld. AO with regard to entire expenditure incurred on the objects of the trust (charity expenses). We find that the ld. AO on examination of various details filed from time to time together with the supporting evidences, was indeed satisfied with the replies given thereon and had taken a plausible view in the matter and assessment completed accordingly u/s.143(3) of the Act. While this is so, in our considered opinion, it is incorrect on the part of the ld. PCIT to conclude that no enquiries were carried out by the ld. AO with regard to the impugned issue. In these facts and circumstances, we have no hesitation in quashing the revision order passed u/s.263 of the Act by the ld. PCIT on the issue of expenditure incurred for objects of the trust. Transfer of two plots of land and alleged capital gains resulting thereon - We find that in the original assessment, the case was selected under limited scrutiny . One such point of examination under limited scrutiny was mismatch in income / capital gain on sale of land or building . The ld. AO had duly questioned the assessee in the original assessment proceedings regarding the same vide notice u/s.142(1). As specifically pointed to the ld. AO by the assessee that, as assessee has received only advance against sale of land, the advance receipt of Rs. 71 Crores has been shown as liability in balance sheet as on 31/03/2015. It was also pointed out that the purchasers of the said property had deducted tax at source u/s.194IA while making payment of advance. Accordingly, the said amount is reflected in Form 26AS of the assessee. By this process, the assessee had explained the mismatch between the entry in Form 26AS and the income of the assessee. Later, vide letter dated 23/05/2017, the assessee enclosed a detailed note exclusively on receipt of advance pursuant to a specific query raised by the ld. AO during the course of personal hearing. As explained by the assessee before the ld. AO that since the approval of the Charity Commissioner was obtained by the assessee trust only on 22/06/2016, the conveyance deed has been executed by the assessee thereafter and accordingly, there was no taxable capital gain that arises in A.Y.2015-16. Based on this explanation, the ld. AO on due examination of the documents, took a plausible view and the correct view that capital gains does not arise in A.Y.2015-16 to the assessee. Hence, we hold that the order of the ld. AO in this regard cannot be termed as erroneous so as to invoke revision jurisdiction u/s.263. Though the remaining property is in possession of 41 Lessees/sub-lessees/their purported assignees, the purchase of the reversionary rights in respect of the Remaining Property is only by the said 6 Defendants. Since the sanction of the Charity Commissioner in the instant case was obtained only on 22/06/2016, there cannot be any taxable event in the form of capital gains that could arise to the assessee trust in A.Y.2015-16. The alternative argument advanced by the ld. AR was that even if there be any capital gains in A.Y. 2015-16 itself, the entire receipt of Rs. 71 crores was duly invested by the assessee in terms of Section 11(1A) of the Act and hence, there cannot be any taxable capital gain in the hands of the assessee trust. We find that the conveyance deed was executed only after the Order of the Charity Commissioner ; that the assessee trust was never in possession, that the possession of the Purchaser in respect of certain portions was in their capacity as lessees. In the present case, the agreement i.e the Consent Terms is not registered and hence the doctrine of part performance cannot be applied and consequently section 2(47)(v) of the Act cannot be made applicable. AO having taken a possible view in the matter after making adequate and requisite enquiries thereon and after examining the relevant documents, had framed the assessment u/s.143(3) of the Act, which in our considered opinion, cannot be termed as erroneous at all on the impugned issues - Revision jurisdiction u/s.263 of the Act invoked by the ld. PCIT on the alleged applicability of capital gains on transfer of two plots of land, is devoid of merit and against the provisions of the Act and decided judicial precedents thereon. - Decided in favour of assessee.

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• 2021 (11) TMI 32
  TP Adjustment - Comparable selection - Functional dissimilarity - upward adjustment in respect of the international transactions pertaining to Information Technology ( IT ), Information Technology Enabled Services ( ITeS ) and Business Support Service ( BSS ) segment - HELD THAT:- Exclusion of companies functionally different with that of assessee from the final set of comparables in respect of the assessee for IT ,ITES segment and BSS Segment.

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• 2021 (11) TMI 31
  Undisclosed investment u/s 69 - co-ownership - addition of 1/3rd amount of the total sale consideration - whether the documentary evidence oral evidence and the circumstantial evidence adduced by the assessee are sufficient to substantiate his contention that no payment was made by him towards sale consideration to Mr. Tejinder and Mr. Prabhu Parmatama and to further rebut the presumption that the sellers transferred the land in question to the assessee and two others for a total consideration as recorded in the sale deed? - HELD THAT:- We hold that the assessee and his co-purchasers had not paid any money towards sale consideration to their uncle Mr. Tejinder Singh or the other co-owners when the land in question was transferred in their names. The circumstantial evidence that the two purchasers transferred back their share to Mr. Tejinder Singh without any consideration further corroborates the contention of the assessee that the purchasers had not paid sale consideration to Mr. Tejinder Singh when the said land was transferred in their names. So far as the legality or permissibility of such transaction is concerned, the same is not the subject matter of this appeal. As per the settled law income tax is levied on the real income of the assessee. In the present case, since the assessee has adducing cogent and convincing evidence to demonstrate that no money was paid towards sale consideration or otherwise to Mr. Tejinder, the action of the Ld. CIT(A) is not sustainable in law. The copies of assessment orders dated 25.12.2019 27.09.2019 passed by the concerned AOs u/s 147 read with section 143(3) in the case of the co- purchasers Sh. Gurjit Singh and Sh. Jagdeep Singh respectively, show that the concerned AOs have accepted the identical contention raised by the assessee during assessment proceedings and accepted their nil returns. But in the case of the assessee the AO rejecting the same contention made addition of 1/3rd amount of the total sale consideration. Proceedings u/s 263 of the Act are being contemplated in the cases of Gurjit Singh and Jagdeep Singh is concerned, it is clear from the copies of official correspondences placed on record that the Ld. AICT Patiala Range and the Ld. JCIT Panchkula have sent proposals for initiating proceedings u/s 263 of the Act in the case of Jagdeep Singh and Sh. Gurjit Singh to the concerned Principal Commissioners on 28.12.2020 and 31.12.2020 respectively. As pointed out by the Ld. counsel, these proposals have been moved by the concerned officers during arguments of the present appeal before the Tribunal. Under these circumstances, the action of the Ld. CIT(A) cannot be justified. In the case of Smt. Amarjit Kaur [ 2019 (6) TMI 1645 - ITAT CHANDIGARH] following the ratio laid down by the Hon ble Supreme Court in the case of Berger Paints India Ltd.[ 2004 (2) TMI 4 - SUPREME COURT] and in the case of Leader Valves Ltd. [ 2007 (1) TMI 70 - HIGH COURT, PUNJAB AND HARYANA] has deleted the addition sustained by the Ld. CIT(A) in violation of the principle of consistency. CIT(A) has passed the impugned order without taking into consideration the direct and circumstantial evidence placed on record by the assessee to substantiate his contention. Further, since the Ld. CIT(A) has passed the impugned order without taking into consideration the view taken by the department in the cases of co-purchasers, the impugned order passed in violation of principle of consistency is also bad in law. Hence, in view of the discussions made on facts, evidence on record and the cases discussed in the foregoing paras, we allow the appeal of the assessee and set aside the impugned order passed by the Ld. CIT(A). Accordingly, we direct the AO to delete the addition. - Decided in favour of assessee.

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• 2021 (11) TMI 1
  Deduction u/s 80IA - benchmarking analysis was performed by the assessee to determine the ALP of power transferred by the CPP to the manufacturing unit - DRP held transfer pricing adjustment made by the TPO is distinct from claim of deduction u/s 80-IA and any transfer pricing adjustment would result in enhancement of business income of the assessee and not reduction in the claim made u/s 80-IA - HELD THAT:- For the AY 2016-17, the assessee had disclosed Gross Total Income before setting-off of brought forward business losses. After setting off the losses brought forward from the earlier years, the Gross Total Income in terms of Section 80A of the Act was NIL. Accordingly, the assessee could not have claimed any deduction under Part-C of Chapter VI-A of the Act, because as per the provisions of Section 80A(2), the deduction permissible under Chapter VI-A cannot exceed the gross total income, which in the present case was NIL. Hence, when no deduction has been claimed u/s 80-IA(4)(ii) of the Act, then even if, any transfer pricing adjustment is made to the transactions of the eligible unit referred to u/s 80-IA(8)/(10), the same will not have any bearing on the computation of total income, as the revised claim u/s 80-IA of the Act, even after the transfer pricing adjustment, would continue to remain NIL. The manner of computation of income, had the downward adjustment made u/s 80-IA(8)/(10) of the Act been upheld, as explained by the assessee in the above illustration, is thus held to be justified and in accordance with law. We agree with assessee that the ALP determined u/s 92BA, is in the context of Section 80-IA(8) of the Act, and thus the consequent transfer pricing adjustment, if any, has to be made to the quantum of the eligible deduction u/s 80-IA of the Act and not to the Business Income as held by the Ld. DRP. In the garb of making downward adjustment to the quantum of profits of the CPP eligible for deduction, the AO cannot artificially enhance the returned income, by making adjustment which is in excess of the deduction claimed under Chapter VI-A i.e. Section 80-IA of the Act. Such action is held to be unwarranted. Disallowance of club expenses - As per AO such expenses incurred by the company were personal in nature and he therefore disallowed it u/s 37(1) - HELD THAT:- For subscription fees paid to different trade associations such as Indian Paper Mfg Association, Indian Chamber of Commerce, Tappi Journal etc., which are ex28 facie for business purposes. We do not find any infirmity in the deduction claimed for the aforesaid expenses and accordingly allow the same. For expenses comprise of annual membership fees of clubs paid for the Directors of the company. It is noted that the Hon ble Supreme Court in the case of CIT Vs United Glass Mfg. Co. Ltd. [ 2012 (9) TMI 914 - SUPREME COURT] has held that the club membership fees for employees incurred by the assessee is business expense u/s 37. Assessee has also demonstrated that these club expenses were considered as non-monetary perquisite in the hands of the Directors and it formed part of their respective taxable salaries. The copies of the relevant Forms 16 of the Directors are available at Pages 129 to 136 of the paper book. Hence, the club expenses borne by the assessee was in sum and substance in the nature of employees compensation cost, which was rightly claimed as deduction u/s 37 of the Act. - Decided in favour of assessee. Additional claim for deduction of entry tax paid under protest during the relevant year u/s 43B of the Act, which had not been claimed in the return of income - HELD THAT:- AR pointed out that, although the AO had categorically observed that the amount of Rs. 62,90,188/- was allowable u/s 43B of the Act, but while computing the taxable income, separate deduction in relation thereto, had not been granted by him. The limited prayed of the Ld. AR of the assessee is to direct the AO to follow his own observations and allow deduction for the entry tax paid in the computation of total income. DR appearing on behalf of the Revenue fairly stated that this appears to be an apparent mistake committed by the AO in the computation of assessable income. Having regard to the foregoing, we accordingly direct the AO to allow deduction for entry tax aid by the assessee during the year while assessing the total income for the relevant year. This ground therefore stands allowed. Disallowance of mandi fees u/s 43B - HELD THAT:- Hon ble Apex Court in the case of NTPC Vs CIT[ 1996 (12) TMI 7 - SUPREME COURT] and Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] has held that that, if a claim which is available in law is not raised either inadvertently or an account of erroneous plea of complex legal position, in the return of income such a relief cannot be shut up for all the times to come merely because it is raised for the first time in appellate proceedings in absence of a revised return filed before the Assessing Officer. For the aforementioned reasons, we therefore admit this ground raised by the assessee. In the facts of the present case, the assessment year in question is AY 2016-17. Having regard to the provisions of Section 43B(1)(a) of the Act as applicable to this AY, we hold that fees is indeed included within the fold of Section 43B of the Act and is therefore allowable only on actual payment basis. For the reasons as aforesaid, this ground of appeal therefore stands dismissed. Direction to AO for re-computation of the set off and carry forward of unabsorbed business loss and depreciation brought forward from the earlier years - HELD THAT:- In terms of the above findings, we direct the AO to re-compute the set off and carry forward of unabsorbed business loss and depreciation brought forward from the earlier years while giving effect to this appeal. Accordingly, this ground stands allowed for statistical purposes.

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• Customs

• 2021 (11) TMI 30
  Amendment in the Bills of Entry - seeking direction to refrain from taking any steps or proceedings to deny or dispute or recover the credit taken by the Petitioner of the IGST paid in pursuance of the assessment of goods imported by the Petitioner and covered Bills of Entry - HELD THAT:- Issue notice. The present writ petition is disposed of by directing the Respondents No. 5, 6, 8 10 to decide the aforesaid letters written by the petitioner within twelve weeks in accordance with law. The Respondents shall give an opportunity of personal hearing to the petitioner before deciding the letters/applications filed by the petitioner.

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• 2021 (11) TMI 29
  Absolute Confiscation - cosmetics products (the make-up Kit) - prohibited or restricted goods? - misdeclared goods - CDSCO Registration Certificate not present - HELD THAT:- The CDSCCO Certificate are being issued by Central Drugs Standard Control Organization. All cosmetic products that are imported for sale in India need to be registered with the Licensing Authority, as is defined under Rule 21 of Drugs and Cosmetic Act which regulate the import of cosmetic to ensure safety, quality and performance. For this purpose that the CDSCO Certificates are issued by the afore-mentioned organization in terms of the provisions of Cosmetic Rules, 1945, which stands amended with Cosmetic Rules, 2020. The certificate is issued by the Central Licensing Authority for registration of cosmetic manufactured for import into India and use in India - This particular perusal makes it abundantly clear that the goods which are not mentioned in CDSCO Certificate are the restricted goods. As per the settled law of evidence admissions have to be accepted and the voluntary admissions need no further proof. There are no infirmity in the order under challenge where the goods of value of Rs. 89,829/- have been ordered absolute confiscation, Customs duty has been demanded with interest and penalty has been imposed - appeal dismissed.

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• 2021 (11) TMI 28
  Refund of SAD - time limitation - Sale invoices submitted on support of the refund claim were self certified or not - quantum of VAT/CST on sale invoices - VAT returns for the relevant period were submitted or not - HELD THAT:- The impugned claim have been filed under Notification No.102/ 2007 Cus. dated 14.09.2007 which exempts the goods falling within the First Schedule to the Customs Tariff Act, 1975 when imported into India for subsequent sale from the whole of the Additional Duty of Customs leviable thereof under Sub-section 3 of said Customs Tariff Act (CTA). Section 3 (5) of CTA indicates that SAD is the duty in the nature of sales /VAT. The intent of legislature about such duties seeking to countervailance / Sales/ VAT etc. leviable on like goods sold in India is to counterbalance the duties borne by like goods produced indigenously in India. The exemption provided in the Notification issued in exercise of the power under section 25 (1) of the Customs Act is conditional upon subsequent sale, as can been seen from the conditions required to be fulfilled in order for an importer to avail the benefit of this exemption. The limitation fixed by amending the Notification No.102 in Notification No.93/2008 (as impressed upon by ld. D.R.) is absolutely meaningless - It is also apparent that the appellant had opted to not to give any satisfactory reply to do away those deficiencies neither at the stage of issuance of deficiency memos nor at the subsequent stage of Show Cause Notice being served upon the appellants. Appellants rather to not to appear before the Investigating Officers despite opportunities being given to them. They also failed to appear before the Adjudicating Authorities below. Though the issue of limitation is not applicable to the present refund claims and the refund claim of SAD cannot be held to be barred by limitation calculating the period of one year from the date of payment of said SAD - owing to the other two discrepancies, the refund claim has been held to have been rightly rejected - Appeal disposed off.

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• Corporate Laws

• 2021 (11) TMI 27
  Rectification of mistake - error apparent on the face of record - Section 420 of Companies Act, 2013 read with Rule 11, 32 and 154 of NCLT Rules, 2016 - HELD THAT:- From the conjunct reading of Section 420(2) of Companies Act 2013 with Rule 154 of NCLT Rules 2016, it is observed that this Tribunal has jurisdiction only to rectify any mistake or error arising out of any accidental slip or omission, which is apparent on the face of record. This Bench has fixed the minimum quorum consciously, which cannot be termed as a mistake apparent on the face of record. That under the garb of modification and rectification, the Applicant Companies are seeking review of the aforesaid direction which is not permissible under the Companies, Act 2013. Since this Tribunal as well as the Appellate Tribunal have time and again held that this Tribunal is having no power to review its own order. The remuneration of Chairman, Alternate Chairman and Scrutinizer of each of the meetings is fixed at Rs. 1,00,000/- only each. That since the number of shareholders is quite high, both the chairman and alternate chairman shall work together for facilitating conduct of the meeting - That the date of the Shareholders meeting as well as the meeting of the unsecured creditors of the Transferee Company is modified to 16.12.2021 at the same time as mentioned in the order dated 31.08.2021 at the venue specified in this order. The Application is accordingly allowed partially.

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• 2021 (11) TMI 26
  Approval of Scheme of Merger by Absorption - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions regarding issuance of various notices also issued.

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• Insolvency & Bankruptcy

• 2021 (11) TMI 25
  Seeking exclusion of period of Covid 19 pandemic along with the period that had lapsed due to non-availability of records - Section 65 of The Insolvency and Bankruptcy Code, 2016 (hereinafter called IBC) alongwith Section 12 of the IBC read with Regulation 40-C of The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate persons) Regulations, 2016 and Rule 11 of NCLT Rules, 2016 - HELD THAT:- Sub section 3 of section 12 empowers the Adjudicating Authority to extend the duration of CIRP beyond 180 days upto a period which shall not be more than 90 days - It is quite clear from the averments made in the appeal that the Resolution Professional could not receive necessary cooperation from the erstwhile director of the Corporate Debtor, and consequently he had to file an application under Section 19(2) before the Adjudicating Authority, which was decided by the Adjudicating Authority. The resolution of CoC relating to filing of application for exclusion of the time period in the 5th meeting of CoC held on 29.8.2020 did not approve the request of the Resolution profession for filing of application for exclusion of time period, but left it to the wisdom of Resolution Professional. IBC provides that if the CIRP does not lead to satisfactory resolution of the Corporate Debtor in the timeline specified in section 12 of the IBC, necessary consequences relating to Corporate Debtor such as liquidation should follow. It is, therefore, duty of the Resolution Profession to bring such agenda, as may be necessary before CoC for decision. In the instant matter, this does not seem to have been done - The time period provided under IBC for completion of CIRP is 180 days as per section 12. If the CIRP is not completed within this time period, an explicit extension order is to be sought from the Adjudicating Authority, which can be of maximum of 90 days. From the averments made by the Resolution Profession and the arguments submitted before us, we do not find that after the expiry of 180 days from the date of commencement of CIRP, the Resolution Professional obtained approval of the CoC to file an application for extension of CIRP. Since the Resolution Professional could not receive any order in action with section 19(2) application, he should have filed an application for extension of CIRP as required under section 12, after a lapse of 180 days from the commencement of CIRP, after due approval of CoC. All this is requirement under Law, which cannot be lost sight of, and the Resolution Professional has been remiss in carrying out his responsibilities as per provisions of IBC. In such a situation, it is found that he is seeking extension of time period of CIRP in the garb of exclusion of time period which cannot be permitted. The Resolution Professional has not provided necessary and satisfactory reasons and justification for exclusion of the prayed time period in the CIRP - appeal dismissed.

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• 2021 (11) TMI 24
  Liquidation of Corporate Debtor - Section 33 of IBC - Validity of Board Resolution passed without securing affirmative vote of the nominee director of the Appellant No. 3 - appeal against the order of admission is barred by limitation or not - material irregularity committed by RP in conducting the CIRP of the Corporate Debtor. Whether the board resolution dated 30.03.2017 is void ab-initio as it was passed without securing affirmative vote of the nominee director of the Appellant No. 3? - HELD THAT:- Admittedly, the Resolution dated 30.03.2017 was passed in the presence of Mr. Bhadru Malloth nominee director of NSL. It was argued on behalf of the Respondents that the presence of the nominee director and his consent to the Board resolution dated 30.03.2017 satisfies the affirmative vote requirement. There is a specific distinction between an affirmative vote and mere consent. Affirmative vote matters provided in AoA generally to protect the rights of minority shareholders. Mere consent or presence of nominee director of NSL cannot equated with the affirmative vote as provided in clause 107 of AoA - on 30.03.2017 without affirmative vote of nominee director of NSL Board resolution was passed for filing the application under Section 10 of IBC. Such application is not maintainable for want of affirmative vote of nominee director of NSL. The application under Section 10 filed by the VR Chary the Chief Financial Officer of NDSL was not maintainable. Whether the appeal against the order of admission is barred by limitation? - HELD THAT:- The order of admission dated 20.09.2017 had no legal existence. Therefore, such order can be challenged at any time even beyond the prescribed period of limitation - the Appeal is time barred such defence is not maintainable. Whether material irregularity committed by RP in conducting the CIRP of the Corporate Debtor? - HELD THAT:- In the present case the publication in the newspapers was made on 16.05.2018. Regulation 36-A did not mandate the publication of invitation of Resolution Plan either in Form-G or otherwise in newspapers. It is only the amended Regulation 36A which came into effect from 04.07.2018 that requires the publication of Form-G in the newspapers. Therefore, the publication in the newspaper made by the RP in the case on hand on 16.05.2018 was statutorily not required and hence, the Appellants cannot take advantage of the amendment that came later, to attack advertisement. Since, there is no resolution plan, the members of CoC unanimously passed the resolution to liquidate the Corporate Debtor and authorized RP to file an Application for liquidation - the RP filed the Application before the Adjudicating Authority for liquidation of Corporate Debtor Company. All the false and frivolous allegation raised in this Appeal does not constitute material irregularity and the same is made without any basis. The Appeal is not maintainable and liable to be dismissed - Appeal dismissed.

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• 2021 (11) TMI 23
  Seeking restoration of amount by the Respondent to Corporate Debtor, which was placed under CIRP - seeking to declare the transaction as unauthorized and punish for violation of the moratorium - Bar u/s 14 of IBC to debit CD s bank account - HELD THAT:- This Authority imposes Moratorium after the commencement of CIRP. The objective is to facilitate orderly completion of the process and ensure that CD continues as a going concern while the creditors take a view on resolution of default. Thus, in the present case in hand, it is the plea of the Respondent that the transactions were done as the hospital (CD) cannot function without its staff like the doctors and the payments were made towards their fees which is essential especially during the pandemic. It is observed that XMC s Agreement had formally ceased just before the pandemic (March 2020), however, the services rendered by XMC were not abruptly discontinued rather certain services had to continue through XMC or through suppliers in spite of the issues of reconciliation of account by CD. It is seen that the Applicant has not given the details of the personal account of the Respondent, in the absence of that we are not able to find whether any money was transferred to his personal bank account - the expenditures had to be made by the people who had the authority as recorded with the banks (signatures on cheque books, passwords for electronic transfer etc). Application dismissed.

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• 2021 (11) TMI 22
  Seeking Liquidation of Corporate Guarantors - Section 33(1), 33(2) 34 of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- An order of liquidation can be passed in the present case as there are insignificant financial and tangible assets in the Corporate Guarantor, hence, there is no chance of resolution of the Corporate Guarantor of the Corporate Debtor. The CoC has passed resolution in terms of provisions of Regulation 39C of CIRP Regulations as well as Regulation 32, 32A of Liquidation Process Regulations to the effect that Corporate Guarantor cannot be sold as a going concern as the Corporate Guarantor of the Corporate Debtor do not possess any viable financial and tangible assets. Resolutions regarding liquidation costs as well as contribution by Financial Creditor to meet the shortfall have also been passed. The order of liquidation is to be passed - application allowed.

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• PMLA

• 2021 (11) TMI 21
  Money Laundering - scope of proceedings - issuance of summons - compliance with the mandate of Section 50(2) 50(3) of PMLA - penal/coercive action against the Applicant in purported exercise of powers under Section 19 of PMLA - arrest and sentence contemplated under Section 3 of PMLA - HELD THAT:- The learned ASG is right in contending that the reference to remedies under Cr.P.C. is significant, and reference to Article 226 of the Constitution of India is consciously omitted as the issues of law are under consideration of the Supreme Court. In the case of DEVENDRA DWIVEDI VERSUS UNION OF INDIA ORS. [ 2021 (1) TMI 302 - SUPREME COURT] , the Supreme Court had disposed of the petitions under Article 32 and left it open to the petitioner therein to pursue the remedies available in law by approaching the High Court, unlike in the present case, where the petition is pending consideration in the Supreme Court. Since the Supreme Court had disposed of the case pending before it in the case Devendra Dwivedi, the Supreme Court, in that context, made observations in paragraph-8 that the Supreme Court will have the benefit of the considered view of the jurisdictional High Court. The Supreme Court made a distinction between Article 226 of the Constitution of India and section 482 of Cr.P.C. in respect of grievance regarding the conduct of the investigation. Therefore, the Applicant s grievance will have to be considered in the light of the remedies under Cr.P.C. and cannot be considered under Article 226 of the Constitution of India. Therefore, it is not proper to decide and declare on the questions of law pending before the Apex Court in the Applicants petition. The Supreme court, in the case of NEEHARIKA INFRASTRUCTURE PVT. LTD. VERSUS STATE OF MAHARASHTRA AND ORS. [ 2021 (4) TMI 1244 - SUPREME COURT] , has laid down that the High Court shall not pass the order of not to arrest and/or no coercive steps while dismissing/disposing of the quashing petition under Section 482 Cr.P.C. and/or under Article 226 of the Constitution of India - As no case is made out by the Applicant on facts for the exercise of jurisdiction under 482 of the Cr.P.C., this dicta of the Supreme Court will be applicable. No case is made out by the Applicant for the exercise of our jurisdiction under Section 482 Cr. P.C to restrain Respondent No.1 and Respondent No.2 from taking any penal/coercive action against the Applicant. If the applicant has apprehension of arrest, he has the statutory remedy under section 438 of Cr. P.C by approaching the competent court - the prayer to direct Respondent No.2 to permit the Applicant to appear through an authorized representative or through any electronic mode and not to compel the presence of the Applicant in person, is rejected and it is left to the discretion of the Directorate of Enforcement as regards the mode. Direction to the Directorate to act in a transparent manner and not to misuse the power - HELD THAT:- It is not a specific prayer. Even if it could be considered, it must be first demonstrated that there is an arbitrary exercise of power, which the Applicant has not established. Under the provisions of PMLA, the issuance of summons is part of the investigation. The High Courts would not interfere and interdict a lawful investigation under its powers under section 482 of Cr.P.C. unless exceptional circumstances as per the settled law are present. None of these grounds exists in the present case. There is no jurisdictional error in the issuance of summonses as they have been issued by the officers duly authorized under the PMLA. The object and purpose of PMLA show that it not only confers powers on the authority to investigate the offence of money laundering but a duty to investigate it in the larger public interest. The Applicant, without any valid reason, has refused to cooperate with the investigation by not attending the summonses issued by the authorities. The Applicant has failed to establish the case of legal and factual malice on the part of the Respondent-Directorate in proceeding with the investigation in question. The Applicant has failed to make out a case for exercise of jurisdiction under 482 of Cr.P.C. to quash the impugned summonses and for order directing Respondent Nos.1 and 2 not to take coercive steps against the Applicant. Like any other person apprehending arrest the Applicant can, if so advised, approach the competent court relief under section 438 of Cr.P.C. to be decided on its own merits - application disposed off.

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• 2021 (11) TMI 2
  Money Laundering - pre-conditions under Section 32A of the IBC is satisfied or not - HELD THAT:- It is made clear that WP(C) 4680/2021 shall be listed on 30th November, 2021 to receive the status report as directed, pertaining to the issue of appointments and vacancies at the Adjudicating Authority under the PMLA. For the said purpose only, WP(C) 4680/2021 shall be treated as a part heard matter.

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• Service Tax

• 2021 (11) TMI 20
  Levy of service tax - intermediary services or not - providing marketing support services and technical support services to Excelpoint Systems (Pvt. Limited), Singapore and having its office in India - Rule 2(f) of the Rules, 2012 - HELD THAT:- Though the Tribunal has referred to the clauses and findings of the authorities, the reasoning provided to arrive at a finding in confirming the order of the authorities below is not satisfactory, we are of the considered opinion that certainly the matter requires re-examination by the Tribunal to analyze on the factual aspects to arrive at a finding, as to whether the activities of the appellant relates to provision to facilitate services or supply of goods, as the same is not forthcoming either in the orders of the authorities or of the orders of the Tribunal, in the wake of the amendment to rule 2(f) of the Rules 2012, with effect from 01.10.2014. It was mandatory on the part of the authorities to consider the scope and effect of the amended provisions and its application to the case on hand. The Tribunal ought to have examined on this aspect also. In the absence of such finding forthcoming in the orders impugned, we are of the considered view that the matter requires to be re-examined on this aspect. Matter remanded to the Tribunal to reconsider the same on these aspects - appeal allowed by way of remand.

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• 2021 (11) TMI 19
  Penalty u/s 78 - service tax short paid - service provider in their bills cannot be termed as payment of service tax on the part of the assessee - reverse charge mechanism - HELD THAT:- A proper verification of the claim made by the appellant in respect of service tax liability in respect of these transactions has to be undertaken. If the appellant claim for payment of the service tax is found correct then the same should be recorded accordingly and proceedings initiated against them by the show cause Notice dated 25.11.2013 should be dropped in totality. In case the same is not found to be correct, then appellant then this amount along with interest be recovered from them. It is made clear that the all the authorities have noted that the provisions were introduced newly, hence even in case the claim of the appellant in respect of payment tax during the relevant period cannot be established then also the no penalties should be impose in term of Section 76, 77 or 78 of Finance Act, 1994, and should be waived of in terms of Section 80, ibid. The matter is remanded back to original authority for causing the verification of the claim made by the appellant in respect of payment of service tax during the period 01.07.2012 to 31.10.2012 either by them under reverse charge mechanism, or by the service provider - appeal allowed by way of remand.

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• 2021 (11) TMI 18
  Taxability - scope of the term Railways Works contract in relation to Mumbai Railway Vikas Corporation Ltd (MRVC) - reverse charge mechanism - services provided to Appellants by the service providers located outside India not having office in India - supply of goods and supply of service separately - contract of supply is a divisible contract or not - whether during the period of dispute, i. e. 2005 to 2010, whether in contract for supply of goods and services incidental to the supply of goods, the services portion can be segregated and subjected to levy of Service Tax? HELD THAT:- The contract is not divisible as urged by the learned authorized representative. The contract price includes cost of all items included in the scope of work, technical specifications, specific requirements, drawings and/ or under any other heads of Contract Documents and to complete the subject work on turnkey basis, irrespective of whether all the items for Engineering, Supply and Erection are categorically listed out/ brought out elsewhere or not. The contract price includes cost of all works which are deemed to be performed, executed and supplied by the Supplier as stipulated in the Contract and assigned to various available heads and categories in the price schedule referred to by the authorized representative. A combined reading of clauses contained in the agreement/contract and along with the definitions and explanations given as per the dictionaries, it cannot be agreed upon with the submissions made by the authorized representative that the contract, under consideration is a divisible contract, which could have been vivisected to charge the service tax in respect of certain portion attributable to supervision undertaken by the foreign service provider as per the contract. Further the findings recorded by the Commissioner cannot be agreed upon, whereby he holds that the contract was not a turnkey contract incorporating all the activities specified in the contract as one complete whole. In case of SENTINEL ROLLING SHUTTERS ENGINEERING COMPANY PVT. LTD. VERSUS THE COMMISSIONER OF SALES TAX [ 1978 (9) TMI 157 - SUPREME COURT] wherein the Hon ble Supreme Court was considering whether it was possible to break-up one contract into two segments - one for sale of goods and the others for providing services. The definition of Works Contract do not state that the contracts, of railway do not fall within the scope of work contract service but state that the work contract services, in respect of railways, are excluded from taxable category as defined by the said section. The work contract has been defined by the explanation, and any contract which satisfies to the requirements specified therein will fall under the category of work contract. However if the said contract falls within the exclusion category the same cannot be taxed under the said taxable category. Since the work contracts in respect of railways have been excluded from the definition of taxable service the same cannot be taxed under this category. The appellant being public sector under taking of Ministry of Railway, and the project undertaken is for Railways, cannot be subject to tax in this category even after 1st June 2007. Appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 17
  Jurisdiction - revisionary powers of Commissioner under section 84 of the Finance Act, 1994 - If the Commissioner at the time of passing the order had enjoyed the Revisionary powers or not? - HELD THAT:- Section 84 of Finance Act was substituted on 19.08.2009. The powers of Commissioner for Revision of orders was done away at the effect from 19.08.2009. Tribunal in the case of has held that no Order in Revision can be passed. In the instant case powers of Revision has been exercised on 06/12/2010 whereas the power of revision under section 84 was withdrawn from 19.08.2009. Appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 16
  Refund of service tax paid - time barred claim or not - unjust enrichment - Section 11B of the Central Excise Act - HELD THAT:- Admittedly Section 11B of the Central Excise Act, 1944 provides for a limitation period of one year from the relevant date for filing of a refund application and also provides provision for establishment of the fact that tax has to be paid by the claimant as well as incidence of such tax has not been passed on to any other person by the claimant. However, going by the explanation that is appended to 11B which has defined relevant date , thus, appellant s case has been covered under Section 11B (5) e(c). Doubt may arise at this point as to what kind of order would make the appellant entitled to claim a refund? Admittedly, in the instant case there is no direction for payment of refund except a finding that the said amount of Rs. 7,65,445/-, as a component of tax under Reverse Charge Mechanism, was not payable. Explanation of relevant date at 11 B (ec) clearly indicates that if duty becomes refundable as a consequence of order/judgment , then the period of one year is to be calculated from the date of the order/judgment. Therefore, without prejudice to the submissions made for and against the issue, it can invariably lead a rational human being to a conclusion that there is no requirement of an express direction for refund of service tax paid that was not payable if as a consequence of judgment or decree such duty becomes refundable - in the instant case it is in respect of appellant itself the said order that duties was not leviable has been passed that arose as a consequence against demand of interest on the said component of duty that was paid by the appellant, may be under mistake of fact. Appellant is entitled to get refund of Rs. 7,65,445/- with applicable interest as per Section 11BB of the Central Excise Act effective after three months of filing of its original refund application - appeal allowed.

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• Central Excise

• 2021 (11) TMI 15
  Reversal of proportionate CENVAT Credit - requirement to pay 5%/10% of the value of exempted goods in terms of Rule 6(3) of Cenvat Credit Rules, 2004 - period post 01.04.2008 - applicability of retrospective amendment in Rule 6 - rule effective only up to 31.03.08 or not - HELD THAT:- There is no dispute in the fact that the appellant even though belatedly, but admittedly reversed the Cenvat credit in respect of input/input service attributed to exempted goods along with interest. Even though, the appellant initially availed the Cenvat Credit but subsequently reversed the proportionate credit along with interest, the situation is as if the Cenvat credit was not availed right from the taking credit, therefore, the demand of 5%/10% under Rule 6(3) of Cenvat Credit Rules, 2004 is not sustainable. The issue decided in the case of M/S BOMBAY MINERALS LTD. VERSUS C.C.E. S.T. RAJKOT (VICE-VERSA) [ 2019 (1) TMI 175 - CESTAT AHMEDABAD] where it was held that In the present case since the Ld. Commissioner has demanded 5% / 10% of the value of exempted goods, he has not verified the correctness of actual cenvat credit attributed to exempted goods as reversed by the assesse. It can be seen that on the identical facts that once the assessee reversed the proportionate credit along with interest in the case of any delay, the demand of 5%/10% under Rule 6(3) is not sustainable - Appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 14
  Reversal of CENVAT Credit - common input/input services used for taxable as well as exempt goods - manufacture of dutiable Spray Nozzles and trading of goods such as pipes and compressors - non-maintenance of separate records - Rule 6(3A) of the CCR 2004 - period of July 2010 to March 2015 - HELD THAT:- In one of the recent orders, learned Ahmedabad Bench of CESTAT in the case of COMMISSIONER OF CENTRAL EXCISE ST, RAJKOT VERSUS M/S. RELIANCE INDUSTRIES LIMITED [ 2019 (3) TMI 784 - CESTAT AHMEDABAD] has held that As per clause (b)(ii) (iv), it is clearly provided that entire credit in respect of receipt and use of inputs/input service is allowed when such input and input service is used in dutiable final products and taxable service. However, nowhere in Rule 6 it is provided that the input or input service used in dutiable goods shall not be allowed. Further it is observed that the adjudicating authority has raised the demand of Rs. 5,94,034/- inter alia alleging that there was a delay in exercising option, which is only as per the directions of this Bench in the first round, which should have been given by the adjudicating authority himself. Moreover, the demand raised for a mere delay in exercising the option is highly disproportionate since the delay, if at all, is a mere irregularity considering the facts of this case and the same may, at the most, attract some interest which perhaps has even been paid by the appellant while reversing the amount. Appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 13
  CENVAT Credit - input services - Works Contract Service - structuring materials - services used for construction of Road - services used for setting up of New Mill house - HELD THAT:- In the case of M/S KELLOGS INDIA PVT LTD VERSUS COMMISSIONER OF CENTRAL TAX, TIRUPATHI GST [ 2020 (7) TMI 414 - CESTAT HYDERABAD] , learned Hyderabad Bench of CESTAT has considered an almost identical issue insofar as it relates to the denial of cenvat credit availed on Works Contract Service, denial of cenvat credit availed in respect of services used for Construction of Road within the factory premises and denial of cenvat credit availed on the services used for setting up of new Mill House within the factory premises and the same has been answered in favour of the taxpayer therein. Denial of cenvat credit availed on structuring materials like Channels, Angles, Joists, HR Coil/sheet, etc., - HELD THAT:- The learned Mumbai bench of CESTAT has considered the very same issue and vide its order reported in 2020- TIOL-530-CESTAT-MUM. in the case of M/S JSW STEEL COATED PRODUCTS LTD. VERSUS COMMISSIONER, GST CENTRAL EXCISE, NAGPUR-II [ 2020 (4) TMI 144 - CESTAT MUMBAI] has held that the denial of cenvat credit was bad. The denial of cenvat credit in this case cannot sustain. Appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 12
  100% EOU - seeking refund of the duty paid, on duty free materials which were destroyed - importation of raw materials were allowed duty-free - applicability of N/N. 52/2003-CUS dated 31.03.2003 - HELD THAT:- An almost identical issue has been decided by this very Bench in the case of SAINT GOBIN CRYSTALS DETECTORS (I) LTD VERSUS BANGALORE-CUS [ 2018 (4) TMI 167 - CESTAT BANGALORE] where it was held that the refund claim has only been rejected on the ground that warehousing period has been expired whereas the fact of the matter is the Customs licence granted to the appellant had been renewed and the goods were still in the bonded warehouse. Further I find that the claim for refund under Section 27 of the Customs Act, 1962 has not been considered at all since the impugned order gives finding beyond the scope of the proceedings. It is also a fact that the goods are still in the bonded warehouse only and the appellant s unit will continue to be an EOU. The perusal of the orders of the lower authorities does not allege that the appellant had not fulfilled the export obligation and accordingly, the ratio in the Saint Gobin Crystals of this Bench squarely applies - Moreover, the Notification No.52 ibid as amended by Notification Nos. 30 and 34 ibid clearly prescribe vide new Condition No.8, that no duty shall be leviable if raw material is destroyed within the unit after intimation to the Customs authorities. A conjoint reading of the amended Notifications as well as the ratio laid down in the case of Saint Gobin Crystals, leads to the only possible inference that the Revenue authorities have erred in demanding payment of duty and consequently, the appellant is entitled for refund of the same - appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 11
  CENVAT Credit - input services - air travel agency - place of removal - amended definition of input services given in Rule 2 (l) of Cenvat Credit Rules, 2004 as is applicable w.e.f. 01.04.2011 - HELD THAT:- The input service could be any service which was used by the manufacturer and / or any output service provider directly or indirectly, in or in relation to manufacture of final products and those which are used for the purpose of clearances of final products upto the place of removal; but not limited to and include the services used in relation to, inter alia, sales promotion; procurement of inputs; quality control; auditing etc. as specified in the inclusive part of the definition - with regard to the services related to the activities specified in the inclusive part of the definition, there is no necessity to establish any direct relation or nexus with the manufacturing activity. This implies that it is not only the activities specified in the inclusive part of the definition but also any services used in relation to such activities specified in the inclusive part of the definition, would qualify themselves as an input service, under Rule 2 (l) of CCR. Air Travel Agency Service having been used by the officials of the manufacturer for traveling to different places for creating the demand for the products manufactured by them is also a service used in relation to procurement of inputs, sales promotion/ marketing activities (which is a specified activity in the inclusive part of the definition) thus it also qualify itself as an input service, even after 01.04.2011. There is no denial to the fact that the air-travel agency service, in the present case has been used for business purpose i.e. for the purpose of promotion of sales, auditing, review of various business processes, inspection of vender premises and other business purposes. None of these services were used for personal use or consumption by any employee. Accordingly, they were all for the purpose of the appellant company, its corporate office and all other units - in respect of air-travel services itself in appellant s own case the Department has allowed the credit. There are no justification in the order under challenge while denying the said eligibility despite admitting that the service was not used by the employees personally - appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 10
  Interest on refund claim - deposit made under protest or not - applicability of time limitation - Section 11B/11BB of Central Excise Act, 1944 - HELD THAT:- In the present case initially a demand of Rs. 33,02,559/- as an amount of Central Excise Duty on the goods destroyed in the fire accident in the premises of the appellant was confirmed. During the pendency of the adjudication of the said demand, the accounts of the appellant for the period 2008-09 to 2010-11 were audited. Pursuant to the directions of the Audit that the appellants reversed the Cenvat Credit of Rs. 13,96,738/- vide RG-23 A on 24.05.2012 which was an amount attributed to the inputs for the finished goods lost in the fire accident. There is nothing on record to hold that the said amount was paid under protest by the appellant. Since, there is no protest for the demand of Excise Duty on the goods destroyed, for this reason also, there is no reason to hold that the impugned amount of Rs. 13,96,738/- which was an amount for the inputs for the goods lost in the said fire, was not the amount of duty paid. The appellant is not at all entitled for the interest that too, from the date of payment of the amount i.e. 24.05.2012. The interest from the date of application also is not required to be paid for the reason that the refund was sectioned within three months - there are no infirmity in the findings given by Commissioner (Appeals) - appeal dismissed.

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• CST, VAT & Sales Tax

• 2021 (11) TMI 8
  Assessment of escaped turnover - collusion, fraud, misrepresentation or suppression - Section 16 of Tamil Nadu General Sales Tax Act, 1959 - HELD THAT:- There is no disputation or disagreement before this Court that statutory appeal qua impugned order is available to the writ petitioner under Section 31 of TNGST Act. Alternate remedy Rule, no doubt is not an absolute rule or in other words, it is a rule of discretion. It is a self imposed restraint qua writ jurisdiction. Very recently i.e., on 03.09.2021 a three member Hon ble Bench of Hon ble Supreme Court speaking through Hon ble Dr.Dhananjaya Y Chandrachud in THE ASSISTANT COMMISSIONER OF STATE TAX AND OTHERS VERSUS M/S COMMERCIAL STEEL LIMITED [ 2021 (9) TMI 480 - SUPREME COURT] set out the exceptions to alternate remedy rule and held that interference qua writ jurisdiction should be by way of huge exceptions and the exceptions have been adumbrated in Commercial Steel. In the instant case, of the exceptions adumbrated in paragraph 11 of Commercial Steel case, excess of jurisdiction i.e., 11(iii) is attracted but that is only with regard to penalty aspect of the impugned order i.e., paragraph 7 of the impugned order as Sri Ram Packages principle clearly forbids levy of penalty absent adoption of best judgment method - this is a fit case for relegating the writ petitioner to alternate remedy of statutory appeal under Section 31 (except penalty which is set aside) i.e., tax due portion of impugned order subject of course to pre deposit condition and limitation with regard to the tax due part of the impugned order, if the writ petitioner chooses to do so. Impugned order is partly set aside i.e., set aside with regard to penalty alone - writ petition is allowed with regard to the penalty levied in the impugned order and writ petition is dismissed with regard to the remaining portion of the impugned order - Petition allowed in part.

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• 2021 (11) TMI 7
  Maintainability of petition - petitions were dismissed on the ground that the petitioner have been dragging on the matter and the petitioner was unable to do the reconciliation and to reconcile the errors pointed out by the Department - allegation of suppression of turnover - HELD THAT:- It is no doubt true that the respondent had granted reasonable time to the appellant and the appellant had sought for adjournment on more than three occasions. But their contention is that the reconciliation would take certain time and they are required to explain to the Assessing Officer by comparing the slips along with the ledger. This according to them is a very cumbersome process, more particularly, when the assessment is for six years. When the writ petitions were entertained, it appears that the respondent was directed by the Court not to initiate any coercive action, not in written orders, but by making certain oral observations. Thus, the assessments have been kept pending since October, 2020. The writ petitions have now been dismissed by the impugned order. If the appellant has not made out a case for interference in a writ petition, it would be appropriate to leave it open to the appellant to avail the alternate remedy under the Act rather than foreclosing the issue - the matter stands remanded to the respondent for fresh consideration - Appeal allowed by way of remand.

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• 2021 (11) TMI 6
  Levy of Entry Tax - rubber processing oil purchased by the assessee - clarification dated 05.12.2012 issued by Government of Karnataka - HELD THAT:- It is well established rule of interpretation of taxing statutes in words of Lord Simonds that subject is not to be taxed without clear words for that purpose and that every Act of Parliament must be read according to natural construction of its words. It is evident that there is no mention of rubber processing oil in the Notification dated 30.03.2002 and therefore, the same cannot be subjected to entry tax - No reasons have been assigned for issuance of clarification dated 05.12.2012. Appeal dismissed.

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• 2021 (11) TMI 5
  Principles of natural justice - proper service of notice/order as per 53 of the KST Rules or not? eligibility for the deduction of tax collected for the period 1995-96 - Daughter after the marriage is falls under the definition of his family as per 53 of the KST Rules or not. Service of assessment orders - HELD THAT:- What is relevant is the service of the assessment order dated 27.05.2010. Even as per clause (c) of Rule 53 of the KST Rules, if the assessment orders are sent to the assessee by registered post on the address of such dealer/assessee/licensing authority known to the assessing officer or licensing authority, that would be suffice for the due service of notice/order on the assessee. Moreover, the alleged defective service of assessment orders would not prejudice the rights of the assessee for the reason that First Appeals were preferred on 08.11.2010 against the said assessment orders dated 27.05.2010 well within the period of limitation. The First Appellate Authority has considered the matter on merits and dismissed the appeals on 29.11.2011, against which appeals were preferred before the Tribunal and the same came to be dismissed on merits on 25.10.2017. Being aggrieved by the said order of the Tribunal, these revision petitions are filed. The assessee now raising the ground of defective service of the assessment order on the assessee has no relevancy for adjudicating the revision petitions filed against the orders of the Tribunal impugned - question of law framed to the extent of defective notice is wholly untenable and deserves to be rejected. Retirement of the partners Sri. K.M. Nagaraj and N. Manjunath, though noticed by the Assessing Authority - HELD THAT:- The retiring partners Sri. K.M. Nagaraj and Sri. N. Manjunath are required to be considered as necessary parties for proceeding with the assessment founds foul of the well settled principles of law since the assessment could be proceeded with, anyone of the partner of the firm, the same being not the execution proceedings i.e., recovery proceedings. It is also significant to notice from the original records placed by the learned Additional Government Advocate appearing for the revenue that Mr. N. Ajith has addressed a letter dated 29.07.2009 to the DCCT Recovery, requesting the said authority (Assessing Authority) to send all the correspondences in future to his brother s place Sri. N. Amith as he was not capable of handling the matter and thereby he has authorized his brother Sri. N. Amith to show the accounts and receive the notice/correspondences from the assessing authority. This letter was received on the same day by the assessing authority i.e., on 29.07.2009. This would clarify that no objections were raised by Sri. N. Ajith before the Assessing Authority regarding the defective service of notice or disputing the partnership deed dated 01.04.1992, as now canvassed by the learned counsel for the assessee. Failure of Tribunal to allow the deductions claimed with reference to the tax collected and paid - HELD THAT:- In the absence of the relevant books of accounts and documents placed before the authorities, it is unrealistic for this Court to expect any other finding from the Authorities/Tribunal. It is well settled legal principle that the burden of proof to justify any claim certainly lies on the dealer under Section 6-A of the KST Act. The same has been reiterated by the Tribunal. In the absence of discharge of such burden and not filing returns in Form-4 for some assessment years, claiming the deduction with respect to the tax amount said to have been collected and paid cannot be accepted. Accordingly, the arguments advanced by the learned counsel for the assessee in this regard also stands negated. There are no reasons to accede to the submissions made by the learned counsel appearing for the assessee and accordingly answer the substantial questions of law raised in favour of the Revenue and against the assessee. Revision petition dismissed.

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• 2021 (11) TMI 4
  Valuation - difference in labour charges - in excess of eligibility or not - standard rate of deduction in respect of labour and like charges - applicability of Rule 3(2)(m) of Karnataka Value Added Tax Rules on the gross turn over of the dealer inclusive of the tax collected from its customers - HELD THAT:- The total amount paid or payable to the dealer for consideration for transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract including any amount paid as advance to the dealer as a part of such consideration, the entire contract of such value has to be considered as per clause (l) of Rule 3(2) - Even the payment of tax under composition scheme under Section 15(1)(b) of the KVAT Act which employs the phrase total consideration of contract necessarily is inclusive of tax collected as there is a deduction provided before the taxable value is determined. The meaning assigned to the phrase value of the contract by the Tribunal that it includes all the amount received whether as taxes or labour cannot be faulted with - there are no perversity or illegality in the order impugned. Revision petition dismissed.

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• 2021 (11) TMI 3
  Classification of goods - Manufactured Sand (M-Sand) - covered under Entry 83 of Schedule III to the Karnataka Value Added Tax Act, 2003 or not? - revisional authority as well as the Tribunal proceeded to levy higher rate of tax bringing the M-sand under residuary entry under Section 4(1)(b)(iii) of the KVAT Act primarily for the reason that the Government of Karnataka has issued a Notification dated 31.03.2015 reducing the rate of tax on M-sand at 5.5% - HELD THAT:- It is trite that the commodity could be classified based on how ordinarily or commonly it is known and its purpose and use. It is not disputed by the revisional authority and the Tribunal that the manufactured sand is used for construction activity. The Robo Sand i.e., manufactured sand and the river/natural sand is found to be having similar physical properties as per the report of a project sponsored by the Department of Mines and Geology, Government of Karnataka and conducted by the Department of Civil Engineering of the Indian Institute of Science placed on record by the assessee. As could be seen from the material on record, the M-sand cannot be considered as excluded from Entry 83 of Third Schedule of the KVAT Act. The Hon ble Apex Court in the case of RAMAVATAR BUDHAIPRASAD VERSUS THE ASSISTANT SALES TAX OFFICER, AKOLA AND ANOTHER [ 1961 (3) TMI 55 - SUPREME COURT] held that the word vegetables must be construed not in any technical sense nor from the botanical point of view but as understood in common parlance. Everyday use it must be construed in its popular sense meaning that sense which people conversant with the subject matter with which the Statute is dealing would attribute to it . Consequently, it has been held that betel leaves are not vegetables under the Berar Sales Tax Act, 1947 - applying the principle of common parlance, sand includes manufactured sand in whatever name it would be called. The Notification dated 31.03.2015 is only clarificatory and that would not disentitle the assessee to claim the reduced rate of tax at 5/5.5% under Entry 83 of the Third Schedule of the KVAT Act. On the other hand, to classify it under the residuary entry different from the claim by the assessee, the department has to discharge the burden of proof. Except relying on the Notification dated 31.03.2015, no further material was relied on by the revenue to bring the manufactured sand under the residuary entry. The question of law is answered in favour of the assessee and against the revenue.

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