TMI Tax Updates - e-Newsletter
November 20, 2021

Case Laws in this Newsletter:

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

Articles

1. PROVISIONAL ASSESSMENT IN GST

   By: Dr. Sanjiv Agarwal

2. ERROR IN RECORDING OF MINUTES OF THE BOARD MEETING

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. DRI seizes of 85.535 kg gold, apprehends 4 foreign nationals in Operation “Molten Metal”

2. India records close to 15% rise in export of agricultural and processed food products in April-October

3. Union Finance Minister Smt. Nirmala Sitharaman to lead a team of Secretaries, GoI for discussions at GIFT City, Gandhinagar tomorrow

4. WTO needs to reassess the way it has been conducting its affairs”, says Shri Piyush Goyal

5. IBBI organises series of awareness programmes for officers Income Tax Department

6. Income Tax Department conducts searches in West Bengal

Notifications

GST

1. 17/2021 - dated 18-11-2021 - CGST Rate

Seeks to amend Notification No. 17/2017- Central Tax (Rate), dated the 28th June, 2017

2. 16/2021 - dated 18-11-2021 - CGST Rate

Seeks to amend Notification No. 12/2017- Central Tax (Rate), dated the 28th June, 2017

3. 15/2021 - dated 18-11-2021 - CGST Rate

Seeks to amend Notification No. 11/2017- Central Tax (Rate), dated the 28th June, 2017

4. 14/2021 - dated 18-11-2021 - CGST Rate

Seeks to amend Notification No 1/2017- Central Tax (Rate) dated 28.06.2017. - Prescribes CGST @ 6% on certain Textile and textile products and Garments falling under chapter 50, 51, 52, 53, 54, 55, 56, 58, 59, 60, 63, 64 w.e.f. 1.1.2022

5. 17/2021 - dated 18-11-2021 - IGST Rate

Seeks to amend Notification No. 14/2017- Integrated Tax (Rate), dated the 28th June, 2017

6. 16/2021 - dated 18-11-2021 - IGST Rate

Seeks to amend Notification No. 9/2017- Integrated Tax (Rate), dated the 28th June, 2017

7. 15/2021 - dated 18-11-2021 - IGST Rate

Seeks to amend Notification No. 8/2017- Integrated Tax (Rate), dated the 28th June, 2017

8. 14/2021 - dated 18-11-2021 - IGST Rate

Seeks to amend Notification No. 1/2017-Integrated Tax (Rate), dated the 28th June, 2017 - Prescribes IGST @ 12% on certain Textile and textile products and Garments falling under chapter 50, 51, 52, 53, 54, 55, 56, 58, 59, 60, 63, 64 w.e.f. 1.1.2022

9. 17/2021 - dated 18-11-2021 - UTGST Rate

Seeks to amend Notification No. 17/2017-Union Territory Tax (Rate), dated the 28th June, 2017

10. 16/2021 - dated 18-11-2021 - UTGST Rate

Seeks to amend Notification No. 12/2017- Union Territory Tax (Rate), dated the 28th June, 2017

11. 15/2021 - dated 18-11-2021 - UTGST Rate

Seeks to amend Notification No. 11/2017- Union Territory Tax (Rate), dated the 28th June, 2017

12. 14/2021 - dated 18-11-2021 - UTGST Rate

Seeks to amend Notification No. 1/2017-Union Territory Tax (Rate), dated the 28th June, 2017

GST - States

13. 10/2021–State Tax - dated 17-11-2021 - Delhi SGST

Amendment in Notification No. 21/2019-State Tax, dated the 17th Oct, 2019

14. 09/2021–State Tax - dated 17-11-2021 - Delhi SGST

Amendment in Notification No. 76/2018– State Tax, dated the 3rd Sept, 2019,

15. 08/2021–State Tax - dated 17-11-2021 - Delhi SGST

Amendment in Notification No. 13/2017 –State Tax, dated the 30th June, 2017

16. 13/2021-State Tax (Rate) - dated 10-11-2021 - Maharashtra SGST

Seeks to amend Notification No 1/2017- State Tax (Rate) dated 29.06.2017

17. G.O. Ms. No. 36 - dated 10-11-2021 - Puducherry SGST

Amendment in Notification G.O. Ms. No. 4, dated the 10th March, 2021

18. G.O. Ms. No. 35 - dated 10-11-2021 - Puducherry SGST

Puducherry Goods and Services Tax (Eighth Amendment) Rules, 2021.

19. G.O. Ms. No. 34 - dated 10-11-2021 - Puducherry SGST

Puducherry Goods and Services Tax (Seventh Amendment) Rules, 2021.

20. G.O. Ms. No. 33 - dated 10-11-2021 - Puducherry SGST

Puducherry Goods and Services Tax (Sixth Amendment) Rules, 2021

SEZ

21. S.O. 4775 (E). - dated 16-11-2021 - SEZ

Central Government de-notifies an area of 7.906 hectares at Pocharam Village, Hayathnagar Taluka, Ghatkesar Mandal, Ranga Reddy District, Hyderabad in the State of Telangana

22. S.O. 4774 (E) - dated 15-11-2021 - SEZ

Seeks to rescinds Notification Number S.O. 681(E) dated 23rd, March, 2010

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CFD/DIL2/CIR/P/2021/0000000659 - dated 18-11-2021

Schemes of Arrangement by Listed Entities

DGFT

2. Trade Notice 25/2021-22 - dated 19-11-2021

De-Activation of IECs not updated at DGFT

Highlights / Catch Notes

GST

• Court Orders Reopening of Portal or Hard Copy Submission for Form Tran-1 u/r 117, Sub-Rule 1(A) of CGST Rules.

  Case-Laws - HC : Filing of Form Tran-1 - vires of sub-rule 1(A) to Rule 117 of CGST Rules - There would be no requirement for issuance of Certiorari to quash Sub-Rule 1A to Rule 117 of CGST or Rule 17 inserted by notification No.48 or the circulars issued as sought for - A mandamus is issued directing the respondent authorities to open the portal to enable the petitioner to upload the necessary forms, if the portal cannot be opened to permit the assesse to file hard copies of the said form and act thereon. - HC
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Income Tax

• Printing Society's Profits Used for Charity, Exempt from Tax u/s 11, No Profit Motive Detected.

  Case-Laws - HC : Benefit of exemption u/s 11 - assessee fell under the last limb of Section 2(15) - The assessee/society is running a printing press and publishing a newspaper. The profit so generated is used for charitable purposes and apparently there is no profit motive in the activities of the assessee - the mischief of Proviso to Section 2(15) of the Act is not attracted. - HC
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• Court Revives Kar Vivad Samadhan Scheme Application, Overturns Denial Due to Delayed Writ Appeal Process.

  Case-Laws - HC : Benefit under the Kar Vivad Samadhan Scheme, 1998, ('KVS Scheme') denied - reason for denying the benefit was stated as the non-existence of tax liability for the said years on the date of application under the scheme - Even though the KVS Scheme is not in existence now, the appellant ought not to be prejudiced on account of the long pendency of this writ appeal before this Court. As we have set aside the invocation of the IVP’s and the consequent adjustment of the amounts encashed and restored status quo ante, the application for the grant of benefit under the KVS Scheme shall stand revived. - HC
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• Assessee's Grossing Up of Interest on ECBs Disallowed by TPO and DRP for Violating Agreement and Legal Provisions.

  Case-Laws - AT : TP Adjustment - TDS deducted on interest paid to AE on External Commercial Borrowings - procedure followed by the assessee for grossing up of interest is contrary to agreement between the parties and also contrary to provisions of law. Therefore, we are of the considered view that there is no error in the reasons given by the learned TPO/DRP in disallowing grossed up portion of TDS deducted on interest paid to AE on External Commercial Borrowings. - AT
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• Trust's 12A Registration Upheld: IPL Funds Used to Promote Cricket, Supporting Trust's Mission Despite Controversy.

  Case-Laws - AT : Exemption u/s 11 - Registration u/s 12A(1)(ab) r.w.s. 12AA rejected - IPL activities - The purpose for which all the funds at the disposal of the assessee trust, including the additional funds generated by holding the IPL tournament, are employed is certainly for promoting cricket, and that is what really matters. Improvising the rules of the game, adding entertainment value to it and making it economically attractive, may be a purist's nightmare but the same factors can also be viewed as radical and innovative ideas to popularise a game - the very raison d'etre of an institution like this assessee, and that is how we view it. - the assessee was entitled to the continuance of its registration under section 12A - AT
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• Assessment Order u/s 68 Quashed Due to Hasty Issuance and Irrelevant Case Law References.

  Case-Laws - AT : Unexplained cash credit - Addition u/s 68 - Since the assessment was becoming time barred, the AO has passed the impugned Assessment Order in a hurried manner even without pointing out any defect or discrepancy in the evidences and details furnished by the assessee and even without giving reasonable time of appearance to the concerned directors of the share holding companies. Even, we find that the case laws relied upon by the AO in the Assessment Order are also not applicable to the facts and circumstances of the present case as in those cases - Additions deleted - AT
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• Re-assessment under Sec. 148 invalid if based on borrowed satisfaction without independent reasoning; extraneous material can't justify.

  Case-Laws - AT : Validity of re-assessment proceedings initiated u/s.148 - If the reasons recorded are silent or there is no reference of any material, then other extraneous material referred subsequently cannot justify acquiring of jurisdiction for reopening u/s 147. Any annexure or report discussed in the assessment order which is not part of the reasons recorded cannot be construed as material forming belief u/s.147. - The reasons recorded itself goes to show that it is purely based on borrowed satisfaction and without application of mind - AT
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• Interest Expense Disallowance u/s 40(a)(ia) Challenged; Assessing Officer to Verify Payee's Income Recording.

  Case-Laws - AT : Disallowing interest expenses u/s. 40(a)(ia) - tax deducted at source (TDS) was not deposited - No disallowance u/s. 40(a)(ia) is warranted as the payee has accounted for the interest income in its Books of Accounts and filed its return of income u/s. 139(1) of the Act. However, since the information filed by the assessee showing that the payee had accounted for the interest receipts in its Books of Accounts and paid taxes, were never examined by the lower authorities, subject to verification of these evidences by the Assessing Officer, we direct to delete the disallowance made u/s. 40(a)(ia) of the Act. - AT
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Customs

• Court Denies Condonation of 921-Day Delay in Appeal; Stresses Vigilance and Diligence in Pursuing Legal Rights.

  Case-Laws - HC : Condonation of delay of 921 days in preferring the appeal - Parties who are not vigilant and diligent in prosecuting and agitating their rights and act as mere fence sitters, cannot be permitted to take advantage of their lethargy and laxity. It is evident that the Appellants slept over their rights from 25.02.2019 to 25.03.2020 and cannot take advantage of their own wrong and seek condonation of delay. - HC
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• Amendment Denied: Two Bills of Lading Conflict, Goods Remain with Central Government Under Customs Act Section 126.

  Case-Laws - AT : Rejection of the request for amendment in the bills of lading - Existence of two bills of lading - The confiscation of the impugned goods having been, thus, accepted, section 126 of Customs Act, 1962 vests such goods with the Central Government. Therefore, notwithstanding any commercial engagement of the appellant herein with any other person in relation to the goods, this ownership by the Central Government cannot be alienated. - Request cannot be accepted - AT
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• Customs Broker's License Revoked for Lack of Due Diligence; Appeal Dismissed and Penalty Imposed for Over-Invoicing.

  Case-Laws - AT : Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - The appellant or its employee has not conducted any due diligence measures. They claimed to have obtained KYC documents through email but have failed to produce them either before the Inquiry officer or at any stage including before us. The irresistible conclusion can only be that they have no such documents and also no idea of who the exporter was and simply filed a Shipping Bill heavily over-invoicing the goods. - Appeal dismissed - AT
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• Appellant Cleared of Violations in Hazardous Goods Case; No Penalty Under Customs Act or 2009 Regulations.

  Case-Laws - AT : Levy of penalty - Regulation 12(8) of Handling Cargo in Customs Area Regulation, 2009 - it is found that the appellant have evidently issued the Public Notice as well as moved containers containing hazardous goods from ICD, Tuglakabad under the direction of the learned SDM, duly confirmed by the Hon’ble High Court in its interim order. Accordingly, it is held that the appellant have not violated any of the provisions of HCCAR, 2009 and/or of the Customs Act. - No penalty - AT
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• Accused Seeks Bail in Illegal Export Case; Evidence Shows Intent to Cooperate, Contradicting Non-Cooperation Claims.

  Case-Laws - DSC : Seeking grant of Bail - Illegal export - As such, it is obvious that the accused was unable to keep himself present before the Prl. Commissioner of Customs at Bangalore, though he had the intention of co-operating with the I.O, at Bangalore. As such, from the attending circumstances, it goes to show that the allegation made by the complainant that the accused did not cooperate with them for the investigation is totally misleading. - The object of bail is to secure the attendance of the accused at the investigation and also the trial. The bail is not to be withheld as a punishment. - DSC
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Indian Laws

• Cheque Misuse Allegation Rejected; FIR Filed Post Legal Notices; Case Not Quashed u/s 482 CrPC.

  Case-Laws - HC : Dishonor of Cheque - rebuttal of presumption - The stand taken that FIR was got registered alleging misuse of cheque is noted to be rejected at this stage. The FIR was subsequent to issuance of legal notices and the matter is sub-judice in the Court - case does not fall within parameters for quashing of complaints under Section 482 Cr.P.C - HC
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• Cheque Dishonor Case Acquittal: Company Not Properly Represented Due to Invalid Power of Attorney Authorization.

  Case-Laws - HC : Dishonor of Cheque - respondent accused was acquitted principally on the ground that the company was not properly represented - The power of attorney holder representing the company in the proceedings before the court below had failed to establish that he was duly authorised to represent the company. This is because the person who executed the power of attorney himself did not disclose any authority given either by the Articles of Association of the company or by resolution of the company to represent the company - HC
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Central Excise

• Appellants Penalized for Clandestine Manufacture and Clearance Under Central Excise Laws; Evidence Meets Legal Standards.

  Case-Laws - AT : Clandestine Removal - Levy of penalty - If on the basis of the evidences adduced which would be of the nature as enumerated at (ii) of para 40 of the said decision, the conclusions in relation to act of clandestine manufacture and clearance should be arrived at. In the instance case, there are sufficient evidences as enumerated therein have been put forth to establish the case against the appellant within pre-ponderence of probability. - The role of Appellant 3 & 4 has been clearly spelt out in planned activity of clandestine clearance - Levy of penalty confirmed - AT
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• Central Excise Duty Not Applicable to Cotton Waste in EOUs; Customs Act, 1962 Arguments Irrelevant u/s 11A Proceedings.

  Case-Laws - AT : 100% EOU - Levy of Central Excise Duty - cotton waste generated in manufacturing of the finished products and cleared in the domestic tariff area - Once it is held that the cotton waste is not a manufactured goods leviable to excise duty, all the subsequent arguments advanced by the Commissioner vis a vis contravention of the provisions of exemptions issued under Customs Act, 1962 and those of the Foreign Trade Policy, become irrelevant for these proceedings, initiated under provisions of Section 11A of the Central Excise Act, 1944. - AT
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Case Laws:

• GST

• 2021 (11) TMI 689
  Attachment of Bank Account of petitioner - section 83(1) of the CGST Act - HELD THAT:- Mr. Jetly, learned senior advocate for the respondents seeks 6 (six) months time to complete the proceedings. Mr. Mishra informs that the petitioner does not intend to file any further reply. In such circumstances, we expect the office of the Principal Commissionerate to proceed to decide the show-cause notice issued to the petitioner, without wasting any further time. While rejecting the prayer of Mr. Jetly, we direct the adjudicating authority, i.e., the Additional Commissioner, to decide the show-cause notice in accordance with law and upon granting opportunity of hearing to the petitioner, as early as possible, and preferably within two months from date of receipt of a copy of this order. All contentions are left open for being urged by the petitioner before the adjudicating authority. This writ petition shall be listed on 28th January, 2022 for reporting compliance of this order.

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• 2021 (11) TMI 688
  Seeking for impleadment of immediate family members of the petitioner - seized cash amount belongs to the applicants, who now seek to be impleaded - HELD THAT:- Issue notice. Ms.Nidhi Banga and Mr.Harpreet Singh, Advocates accept notice on behalf of the respondent no.1 and respondent nos.2 to 6 respectively. They pray for and are permitted to file their counter affidavits/replies to the application within three weeks. Rejoinder affidavit, if any, be filed before the next date of hearing.

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• 2021 (11) TMI 687
  Filing of Form Tran-1 - vires of sub-rule 1(A) to Rule 117 of CGST Rules - N/N. 48/2018 CT dated 10.09.2018 - restriction on extension of time limit only to those registered persons in respect of whom Council has made recommendation - Circular No.No.39/13/2018 dated 03.04.2018 - HELD THAT:- This Court has categorically came to the conclusion that the CGST provisions more particularly relating to filing and uploading of Forms is a transitory provision and on account of the same, a beneficial treatment has to be extended to the assesse so as to permit the assessee to make his filings and obtain any input credit if so entitled. Though the allegations and counter allegations have been made as regards uploading or non-uploading, ability to upload and inability to upload, the fact remains that, what is sought to be uploaded are relating to transactions which occurred prior to 27.12.2017 which are evidenced by records including transactions carried out through normal banking channels. It is these transactions which have already occurred prior to the introduction of GST regime which are sought to be filed by uploading the Form in Tran- 1. More so because there is a new procedure which has been prescribed and new methodology which has been adopted for the assessment etc., an assessee cannot be deprived of any input credit that he may be entitled to only on account of non-uploading of a particular form - If the assessee is deprived of benefits on such technical grounds, there would be no purpose in having the tax system, which would result in the assessee trying to evade taxes. There would be no requirement for issuance of Certiorari to quash Sub-Rule 1A to Rule 117 of CGST or Rule 17 inserted by notification No.48 or the circulars issued as sought for - A mandamus is issued directing the respondent authorities to open the portal to enable the petitioner to upload the necessary forms, if the portal cannot be opened to permit the assesse to file hard copies of the said form and act thereon.

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• Income Tax

• 2021 (11) TMI 686
  Additional depreciation @20% under Section 32(1)(iia) - assessee which generates electricity from thermal power is entitled for additional depreciation OR not? - HELD THAT:- In the State of Andhra Pradesh vs. National Thermal Power Corporation [ 2002 (4) TMI 694 - SUPREME COURT] held that electric energy can be transmitted, transferred, delivered, stored, possessed etc. in the same state as movable property. The Hon ble Supreme Court followed its earlier decision in Commissioner of Sales Tax, Madhya Pradesh, Indore vs. Madhya Pradesh Electricity Board, Jabalpur [ 1968 (11) TMI 85 - SUPREME COURT] . Therefore, the revenue cannot dispute the fact that the electricity needs to be construed as a movable property as it being capable of being transmitted and transferred etc. Whether the respondent/assessee would be entitled to additional depreciation under Section 32(1)(iia)? - We are guided by the decision of this Court in the case of Commissioner of Income Tax, Kolkata-I vs. Ankit Metal and Power Limited [ 2015 (8) TMI 566 - CALCUTTA HIGH COURT] as followed the decision of Hi-tech Arai Limited [ 2009 (9) TMI 60 - MADRAS HIGH COURT] and CIT vs. VTM Ltd. [ 2009 (9) TMI 35 - MADRAS HIGH COURT] and held that the assessee therein which was also engaged in the activity of manufacturing of power is entitled for additional depreciation under Section 32(1)(iia) of the Act. To the same effect, there are several other decisions of other High Courts and the latest being in the case of PCIT, New Delhi vs. NTPC SAIL Power Co.(P.) Ltd. . [ 2019 (3) TMI 207 - DELHI HIGH COURT] We hold that the respondent/assessee is entitled for additional depreciation under Section 32(1)(iia) - Decided in favour of assessee.

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• 2021 (11) TMI 685
  Nature of receipt - Interest derived from Short Term Deposit Receipts - revenue or capital receipt - HELD THAT:- In the present case, the facts are akin to the decision in Karnal Co-operative Sugar Mills Ltd.[ 1999 (4) TMI 7 - SC ORDER] . Factually it is seen that the interest earned on the STDR was towards reducing the cost of the capital assets and therefore should not have been treated as revenue receipt in the hands of the Assessee. Consequently, the question framed is answered in affirmative, i.e. in favour of the Assessee and against the Department. In other words, it is held, in the facts and circumstances of the case, that the interest earned from STDRs made by the Appellant to enable to open LoC for procuring plant and machineries is incidental to such acquisition and should be treated as receipt of a capital nature and not taxed as income.

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• 2021 (11) TMI 684
  Benefit of exemption u/s 11 - Whether Tribunal erred in treating the assessee as a charitable institution, even when the activities of the assessee fell under the last limb of Section 2(15)? - HELD THAT:- The assessee/society is running a printing press and publishing a newspaper. The profit so generated is used for charitable purposes and apparently there is no profit motive in the activities of the assessee. As such it cannot be said that the assessee is involved in any trade, commerce or business. Consequently, the mischief of Proviso to Section 2(15) of the Act is not attracted. The assessee/society is charitable in nature as the profit, if any, made by the assessee/society is being ploughed back for charitable activities. Further, the appellant itself has granted the assessee registration under Section 12A, recognition under Section 10(23C)(vi) and Exemption under Section 80G of the Act. This Court is in agreement with the findings of the CIT(A) and ITAT that the assessee/society does not carry on any business, trade or commerce with the intent of earning and distributing profit. Appeal dismissed.

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• 2021 (11) TMI 683
  TP Adjustment - Upward adjustment on account of performance fees and investment advisory fees - inclusion of 3 comparables in the TNMM analysis - Whether the Ld. ITAT is right in directing inclusion of the comparable M/s Kinetic Trust Ltd. and directing inclusion of the comparable M/s. IDC India Ltd. and M/s Future Capital Investment Advisors Ltd - HELD THAT:- The entire exercise of making transfer price adjustment on the basis of comparables is nothing but a matter of estimate of a broad and fair guesswork of the authorities based on factual relevant material brought before the authorities, i.e., TPO, DRP and the Tribunal which are the fact finding authorities- ITAT has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that questions as pressed raises any substantial questions of law.

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• 2021 (11) TMI 682
  TDS on the salary made to the petitioner - Benefit of the tax deducted at source by the employer - HELD THAT:- The case is no longer res integra and is covered by the decision of this very Court rendered in case of Devarsh Pravinbhai Patel.[ 2018 (9) TMI 1635 - GUJARAT HIGH COURT] where too, the petitioner was an employee of the Kingfisher Airlines and worked as a pilot. In his case also the TDS on the salary made to the petitioner had not been deposited. It is only when the department raised the tax demand with interest and initiated the actions of the recovery that this Court was approached - Relying on the decision of the Bombay High Court rendered in case of Assistant Commissioner of Income Tax and Others vs. Om Prakash Gattani [ 2000 (1) TMI 43 - GAUHATI HIGH COURT] This Court allowed the same stating Department cannot deny the benefit of tax deducted at source by the employer of the petitioner during the relevant financial years. Credit of such tax would be given to the petitioner for the respective years. If there has been any recovery or adjustment out of the refunds of the later years, the same shall be returned to the petitioner with statutory interest. - Decided in favour of assessee.

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• 2021 (11) TMI 681
  Benefit under the Kar Vivad Samadhan Scheme, 1998, ( KVS Scheme ) denied - reason for denying the benefit was stated as the non-existence of tax liability for the said years on the date of application under the scheme - Appellant claimed in the writ petition that, tax arrears existed on the date of application and the encashments of the seized Indira Vikas Patras (IVP s) of the appellant were without authority and illegally adjusted against the tax liabilities of the appellant. Thus, the application of the appellant was rejected stating that there were no existing tax arrears - Whether the encashments of seized IVP s were carried out by the 1st respondent or the 2nd respondent? - HELD THAT:- It is evident from Ext.P2 series that 2nd respondent had no role at all in the encashment of IVP s. The contention that the 1st respondent sent the letters encashing the IVP s on behalf of the 2nd respondent, is on the face of the record, wholly untenable. Respondents 1 and 2 are independent statutory authorities. They perform functions that are distinct and separate. They can never be regarded as an agent of one another or as acting on behalf of another. Accordingly, the finding of the learned Single Judge that the encashments of IVP s were carried out by the 2nd respondent-assessing officer, while the 1st respondent had only co-ordinated in the collection and encashment of IVP s, is set aside. We, therefore, hold that the encashments of IVP s as per Ext.P2 series and Ext.P3 series were carried out by the 1st respondent. Whether the encashments of the seized IVP s were in accordance with law? - In the instant case, the search and seizure were conducted on 30.12.1994 till 07.01.1995. By 22.01.1995, the 1st respondent had become functus officio and ought to have handed over the documents and assets seized to the 2nd respondent. The fact that the order under section 132(5) was issued on 28.04.1995 presupposes that the 1st respondent had handed over the documents before that date. In the counter affidavits and the additional counter affidavit it is asserted that the seized documents and assets were handed over to the assessing officer on 10-01-1995. It is manifest that, the 1st respondent could not have exercised any power after 22.01.1995. He could also not have been in possession of any of the documents or assets from 22.01.1995 or thereafter. The first letter demanding encashment of IVP s is dated 29.03.1995, which was even before Ext.P1 order under section 132(5). All the remaining encashments were subsequent to 29.03.1995. It fails our comprehension as to how the 1st respondent could have encashed the IVP s when he was not legally entitled to be in possession of the seized documents. Therefore, no further elaboration is required to conclude that all encashments were done by the 1st respondent without authority or jurisdiction and that too after he had become functus officio. In view of our discussion as above, we are of the considered view that the encashments of the IVP s were contrary to law and were void as having been carried out by a person without authority. Whether the encashed amounts under the IVP s were liable to be adjusted. If so, for which assessment years? - Since we have already found that the encashments of IVP s were bad in law, the consequent adjustment of the IVP s were also illegal. Even if it is assumed that the letter confers authority upon the respondents to encash the IVP s, the same has to be done in accordance with law. The officers empowered to act in the exercise of the statutory powers must conform to the statutory prescription in letter and spirit. If the letter Ext.R3(a) is assumed as the authority to encash the IVP s; it is evident that the same being addressed to the 2nd respondent and the encashment having been done by the 1st respondent, the respondents could not have relied upon Ext.R3(a) to justify their actions. In the above circumstances, we are of the view that the respondents could not have acted upon Ext.R3(a) to encash the IVP s or to adjust the same contrary to the statutory prescriptions. Reliance upon section 292B of the Act is also of no avail to the department. The violation of mandatory conditions are not curable by recourse to section 292B. Further, the action complained of was not done in substance or effect, in conformity with the intent and purpose of the Act. What reliefs are the assessee entitled to? - As found the invocation of IVP s as without authority and the consequent adjustment as done contrary to the provisions of the Act, it is necessary that the status quo ante be restored as on the date of application under the KVS Scheme to meet the ends of justice. We set aside the judgment of the learned Single Judge. Ext.P2 series and Ext.P3 series produced in the writ petition are hereby quashed. Ext.P5, insofar as it relates to the assessment years 1991-92, 1992- 93, 1993-94, 1994-95 and 1995-96, is also quashed. Even though the KVS Scheme is not in existence now, the appellant ought not to be prejudiced on account of the long pendency of this writ appeal before this Court. As we have set aside the invocation of the IVP s and the consequent adjustment of the amounts encashed and restored status quo ante, the application for the grant of benefit under the KVS Scheme shall stand revived. The 3rd respondent shall pass fresh orders on the application claiming benefit of the KVS Scheme, in accordance with law.

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• 2021 (11) TMI 680
  Depreciation on the Policy Administration Software ( PAS ) - @ 60% against the rate of 25% allowed by the Assessing Officer treating the same as an intangible assets - DR vehemently argued that Ld. CIT(A) was not justified in allowing the claim of depreciation @ 60% as the software was customized and could be used without the operation of computer - HELD THAT:- The issue is no more res integra. The issue has already been decided in catena of judgments in favour of the assessee by allowing the depreciation @ 60%. See case of CIT vs. Computer Age Management Services (P.) Ltd. [ 2019 (7) TMI 1153 - MADRAS HIGH COURT] decided the issue in favour of the assessee by allowing depreciation @ 60%. Also see AMWAY INDIA ENTERPRISES. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 1(1), NEW DELHI. [ 2008 (2) TMI 454 - ITAT DELHI-C] - Decided against revenue.

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• 2021 (11) TMI 679
  Late remittance of employees contribution of PF and ESI - As contended that assessee has paid the employees contribution prior to the due date of filing of return under section 139(1) - whether the amendment to section 36(1)(va) and 43B of the I.T.Act by the Finance Act, 2021 is prospective or not? - HELD THAT:- As in view of the Hon ble Karnataka High Court judgment in the case of Essae Teraoka Pvt. Ltd v. DCIT[ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] the employees contribution paid before the due date of filing of the return u/s 139(1) of the I.T.Act is to be allowed as deduction u/s 43 - amendment is prospective and not retrospective in operation, the learned Standing Counsel s plea does not have any merit. In the instant case, the assessment year being 2018- 2019, the amendment by Finance Act, 2021 to section 36(1)(va) and 43B of the I.T.Act does not have application. Therefore, the A.O. is directed to delete the disallowance - Decided in favour of assessee.

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• 2021 (11) TMI 678
  TP Adjustment managerial fees paid by the assessee to its AE - selection of MAM - HELD THAT:- No doubt, once aggregate transactions of the assessee with its AEs has been tested by applying TNMM as most appropriate method, then the Assessing Officer/TPO cannot pick few transactions and apply different method to determine arm s length price. We are fully in agreement with said proposition. Whether payment made by the assessee to its AE for managerial services is in fact, incurred wholly and exclusively for the purpose of business and further said expenditure is supported by necessary evidence or not ? - On perusal of facts available on record and on the basis of facts brought out by authorities below, we are of the considered view that the assessee has failed to bring on record any evidences to justify payment of management fees. Therefore, we are of the considered view that case laws relied upon by the assessee on the issue of necessity of availing services and question of cost benefit analysis of said expenditure has no application to present issue on hand. There is no error in reasons given by ld. TPO/DRP in making TP adjustments for payment of managerial services fee to its AE. Therefore, we are inclined to uphold findings of the learned DRP and reject grounds taken by the assessee. TDS deducted on interest paid to AE on External Commercial Borrowings - disallowance of grossed up portion of TDS on payment of interest on external commercial borrowings - HELD THAT:- From the conditions of agreement between parties, it is very clear that tax liability, if any, on interest paid to lender is responsibility of lender. However, the assessee should deduct applicable tax deducted at source as per law, remit the same to Govt. treasury and furnish proof to lender. In this case, the assessee has deducted TDS on interest payment. But, instead of reducing it from payment made to the AE, has grossed up TDS portion to interest paid to AE and claimed as deduction. In our view, procedure followed by the assessee for grossing up of interest is contrary to agreement between the parties and also contrary to provisions of law. Therefore, we are of the considered view that there is no error in the reasons given by the learned TPO/DRP in disallowing grossed up portion of TDS deducted on interest paid to AE on External Commercial Borrowings. Hence, we are inclined to uphold findings of the learned DRP and reject ground taken by the assessee.

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• 2021 (11) TMI 677
  Revision u/s 263 by CIT - lack of enquiry or inadequate enquiry - PCIT revised the assessment order passed by the AO basically on the ground of insufficient enquiry - case was selected for scrutiny and the AO passed assessment order u/s. 143(3) of the Act and accepted the returned income - HELD THAT:- PCIT has revised the assessment order on the ground of lack of enquiry or inadequate enquiry, which is contrary to the evidence on record. Further the Ld. PCIT has referred and relied Explanation 2 to section 263 of the Act, inserted w.e.f. 01.06.2015 to substantiate his action. As in the case of Narayan Tatu Rane [ 2016 (5) TMI 1162 - ITAT MUMBAI] has held that the explanation does not authorize or gives unfettered powers to the commissioner to revise each and every order passed by the AO if in his opinion same has been passed without making enquiries or verification which should have been made. In the present case since the AO has passed the assessment order after due application of mind and after accepting the explanation given by the assessee, the same cannot be termed as erroneous. We are therefore of the considered view that the order passed by the AO is not ex facie erroneous, therefore the Ld. PCIT has wrongly directed the AO to pass assessment order afresh. In our considered view the observation of the Ld. PCIT that AO has passed the order without making proper enquiries is not factually correct. The order passed u/s. 263 is not in accordance with the settled principles of law. - Decided in favour of assessee.

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• 2021 (11) TMI 676
  Levying late fees u/s. 234E - belated submission of TDS statements - Scope of amendment - HELD THAT:- It is only w.e.f. 01.06.2015 an amendment was made u/s. 200A of the Act providing that fee u/s. 234E could be computed at the time of processing of the return of income and intimation could be issued specifying the same payable by the deductor as fee u/s. 234E of the Act. The Hon ble Karnataka High Court in the case of Fatheraj Singhvi [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] held that the provisions of section 234E of the Act are substantive in nature and the mechanism for computing the late fee was provided by the Parliament only w.e.f. 01.06.2015. Therefore, late fees u/s. 234E of the Act can be levied only prospectively w.e.f. 01.06.2015. We delete the levy of penalty u/s. 234E - Decided in favour of assessee.

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• 2021 (11) TMI 675
  Exemption u/s 11 - Registration u/s 12A(1)(ab) r.w.s. 12AA rejected - IPL activities are in the nature of commercial activities and cross the threshold limit specified in exceptions to the proviso to Section 2(15) - object of the assessee institution as the promotion of cricket game - whether the IPL matches can indeed be said to be commercial in nature in the sense that the entire orientation of these matches is aimed at making money in the garb of promotion of cricket? - as per revenue the registration granted under section 12A and the benefits flowing therefrom, cannot be extended to the amended objects of the society unless the DIT examines the same and comes to a conclusion that the registration under section 12A, can be extended to the revised objects, memorandum and by-laws - HELD THAT:- Where a trust or an institution has been granted registration under section 12AA or has obtained registration at any time under section 12A and, subsequently, it has adopted or undertaken modifications of the objects which do not conform to the conditions of registration , such a person has to make an application to the Commissioner or the Principal Commissioner in the prescribed form and manner, within a period of thirty days from the date of said adoption or modification. The true trigger for an application under section 12A(1)(b) has to be the modification of objects which do not conform to the conditions of the registration . In our considered view, therefore, unless such modifications are demonstrated, mere is no occasion for the Principal Commissioner to assume jurisdiction. This aspect of the matter is thus a foundational aspect to the entire proceedings in question. The registration granted vide order dated 12th February 1996, was on the basis of memorandum of association dated 28th November 1940 . Unless, therefore, there are significant variations in the aforesaid memorandum of association and the amended memorandum of association, the provisions of Section 12A(1)(ab) will not come into play inasmuch these provisions come into play only when the assessee has adopted or undertaken modifications of the objects which do not conform to the conditions of registration . As indeed the object clauses in the two sets of memorandum of association, does not show any change in the present MoA which is contrary to the corresponding clause in the earlier MoA. It is not a change simpliciter in the memorandum of association, which was basis of the earlier registration granted to the assessee, that triggers the provisions of Section 12A(1))(ab) being invoked, the change has to be such that it does not conform to the original objects of the trust or institution based on which registration was granted. Any changes to bring out reforms in the functioning of the BCCI and specifically approved by Hon ble Supreme Court to be for that purpose, cannot be termed to be the changes that dilute the fundamental objective of promoting the game of cricket, or said to be not in conformity with the objects of promoting the game of cricket all along espoused by the BCCI and as set out in the pre-amendment MoA. In this view of the matter, the condition precedent for invoking section 12A(1)(ab), in our humble understanding, is not fulfilled on the facts of the present case. It cannot even be in dispute that the object of the assessee institution is the promotion of cricket game, and, at best, the assessee has powers to hold IPL tournament for achieving this object. Whether this power of conducting IPL tournament is exercised with predominantly pecuniary gains in mind or not is a different aspect as of now, but then this is a power not an object . So far as the provisions of Section 12A(1)(ab) are concerned, the Principal Commissioner was only required to examine the objects of the institution and not to extend her considerations to the powers vested in the institution. Unless the bridge of finding variations in objects of pre-amendment or post-amendment objects is crossed, there is no occasion to examine anything else. It is this foundational requirement that triggers the application of Section 12A(1)(ab). That is not satisfied on the facts of the present case. When there are any other reasons for cancellation of registration, such as lack of genuineness of activities or any other factors, it is open to the Principal Commissioner to cancel the registration under section 12AA(3), but then those proceedings, having been initiated by the Principal Commissioner, did not lead to cancellation of registration under section 12AA(3). We are, therefore, not really concerned with that aspect of the matter as on now. Principal Commissioner erred in declining registration under section 12AA on the facts of this case; she ought to have held that the registration under section 12A dated 12 February 1996 not having been withdrawn or cancelled still holds good in law and in force. Entire basis of declining registration is invoking the proviso to Section 2(15) on the ground that the IPL activities are in the nature of commercial activities and cross the threshold limit specified in exceptions to the proviso to Section 2(15). It is, however, well-settled in law that so far as registration under section 12 AA is concerned, Section 2(15) has no application in the matter. No conflict in the cricket becoming more popular and the cricket becoming more entertaining. It results in providing significant economic opportunities to those associated with the holding of the IPL tournament and, in the process, enriching the resources of the assessee trust. As long as the object of promoting cricket remains intact, and that continues to be the predominant object, the assessee cannot be said to be not following the object of promoting cricket, just because the operational model of a cricket tournament, whether IPL or any other tournament, is more entertaining, more economically viable, provides greater economic opportunities to all those associated with that tournament, and mobilizes greater financial resources for popularising cricket. The purpose for which all the funds at the disposal of the assessee trust, including the additional funds generated by holding the IPL tournament, are employed is certainly for promoting cricket, and that is what really matters. Improvising the rules of the game, adding entertainment value to it and making it economically attractive, may be a purist s nightmare but the same factors can also be viewed as radical and innovative ideas to popularise a game - the very raison d etre of an institution like this assessee, and that is how we view it. We hold that the assessee was entitled to the continuance of its registration under section 12A dated 12th February 1996 and that, accordingly, the impugned order passed by the learned Principal Commissioner stands quashed. The assessee gets the relief accordingly.

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• 2021 (11) TMI 674
  Unexplained cash credit - Addition u/s 68 - HELD THAT:- AO himself recording the financial credentials of the share subscribers from which it can be noted that the said share subscribers were having enough finances in the form of reserves and surpluses to make investment in the assessee company. AO has simply noted that the share subscribers have sent a bundle of papers in his office. However, we fail to understand that without examining those documents how could the AO came to a conclusion that the transactions in question were not genuine. AO has not pointed out in the Assessment Order as to what further enquiries he wanted to make from the directors of the subscribers to insist for their personal presence. AO could have taken an adverse inference, only if, he would have pointed out the discrepancies or insufficiency in the evidences and details received in his office and pointed out as to on what account further investigation was needed by way of recording of statement of the directors of the subscriber companies. Even if the directors of the subscriber companies have not come personally in response to the summons issued by the AO, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO. As detailed in the written submissions of the assessee, the assessee had duly submitted details and evidences to prove the identity and creditworthiness of each of the share subscribers separately - AO, in the impugned Assessment Order has not recorded any peculiar facts of circumstance which would suggest that the assessee had routed his own money through the above stated subscribers. AO has not brought any material or evidence on the file to show that these share applicants were fictitious persons. The another relevant factor on the file is that in response to the notices issued u/ s 33(6) by the earlier AO, the requisite details were furnished by the assessee as well as the share subscribers. After receipt of said details, the concerned AO did not proceed to make further enquiries, which implies that he was satisfied with the evidences and explanations received by him. After the transfer of the case on 05.12.2014 the subsequent AO issued summons on 09.02.2015 to the directors of the assessee companies to produce before him the directors of the subscriber companies on 20.02.2015. In our view, it was otherwise not possible for the directors of the assessee company to produce all the directors of the share subscribers within such a short time period. Summons were sent through post to the share subscribers on 25.02.2015 and 02.03.2015 to appear before him. However, the Assessment Order in question was passed by the AO on 28.03.2015 itself. Under the normal circumstances, in case of the summons sent through post, one month s time is required to be given for service of summons upon a person and further a reasonable time was required to be given for personal appearance of the summoned persons. It appears that in this case, the AO has just completed an official formality of issuing summons to subscribers without giving any reasonable opportunity and time to the subscribers to appear. Since the assessment was becoming time barred, the AO has passed the impugned Assessment Order in a hurried manner even without pointing out any defect or discrepancy in the evidences and details furnished by the assessee and even without giving reasonable time of appearance to the concerned directors of the share holding companies. Even, we find that the case laws relied upon by the AO in the Assessment Order are also not applicable to the facts and circumstances of the present case as in those cases, the material fact was that the assessee had not furnished the details and evidences before the AO. However, in this case it is not the case of AO that the assessee has not furnished the relevant details and evidences to prove the identity, creditworthiness and genuineness of the transaction. A perusal of the impugned order of the ld. CIT(A) shows that the ld. CIT(A) has not discussed anything about the material facts of the case. He has not pointed out any defect and discrepancy in the evidences and details furnished by the assessee but simply cited the case laws rendered in the case of M/s. Rajmandir Estate Pvt. Ltd. [ 2016 (5) TMI 801 - CALCUTTA HIGH COURT] and further NRA Iron Steel Pvt. Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] even without pointing out as to how these case laws were applicable to the facts and circumstances of this case. The order of the ld. CIT(A) is a non-speaking order. By simply reproducing the contents of the case laws without discussing about their application on the facts of the case, in our view, would not make the order of the ld. CIT(A) justifiable speaking order and hence, the same is not sustainable as per law. - Decided in favour of assessee.

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• 2021 (11) TMI 673
  Unexplained investment in properties - Additions had been made by the A.O. on the basis of notings on some documents / loose papers in search - HELD THAT:- A search was conducted at the residential premises of the assessee on 18/02/2011, during the course of search no documents in the form of agreement to sell or registered sale deed, evidencing unaccounted purchase / sale of the property by the assessee had been found. However the additions had been made by the A.O. on the basis of notings on some documents / loose papers but in those notings, nowhere name of the assessee was mentioned. In the present case it is noticed that the A.O. in his remand report stated that it is the modus-operandi of the property dealers that generally they do not purchase the property by way of registration deed but only by way of Power of Attorney and the same land is sold on the basis of the said power of attorney, hence their name did not appear in the registered sale deed or in the revenue record. However neither any Power of attorney in the name of the assessee, relating to any property alleged to be mentioned at the location in the seized document was impounded during the course of search proceedings, nor the revenue authority reported any such instance when the enquiries were made by the A.O. from those authorities and no such sale deeds were found where in the name of the assessee was appearing as power of attorney holder. During the course of search no valuable or cash was found or seized except 200 gms of gold and no document in the form of agreement to sell or registered sale deed had been found evidencing any unaccounted purchase / sale by the assessee. This fact has been categorically stated by the Ld. CIT(A) in para 5 at page 37 of the impugned order. Therefore the Ld. CIT(A) was not justified in presuming that certain transactions were carried on by the assessee particularly when he himself admitted that no documents in the form of agreement to sell or registered sale deed had been found evidencing any unaccounted purchase / sale by the assessee. A.O. made the additions only on the basis of certain documents on which there were some notings but neither the possession nor the ownership of any property mentioned in those loose slips could be proved to be belonging to the assessee, therefore keeping in view the ratio laid down in RAVI KUMAR [ 2007 (7) TMI 45 - HIGH COURT, PUNJAB AND HARYANA] no addition could have been made in the hands of the assessee. Neither the dates pertaining and relevant to the year under consideration were mentioned on the loose papers / documents found during the course of search nor the notings were backed by direct or corroborative evidence that the notings have materialized into sale / purchase of property or there was any agreement to sell, which clearly shows that there was no corroborative / demonstrative evidence to justify the additions so made / sustained.- Decided in favour of assessee.

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• 2021 (11) TMI 672
  Disallowance u/s 40(a)(ia) - as per the submissions furnished by the assessee it is clear that the appellant has not deducted tax at source even though the payments made to the sub-contractor were in excess of Rs. 50,000/-, thereby attracting provisions u/s 40(a)(ia) - HELD THAT:- As per CIT-A AO should have taken recourse of the provisions u/s 40(a)(ia) on the amount where no TDS was made. It was held that during the appellate proceeding this issue was discussed with assessee, who was in agreement that sec. 40(a)(ia) is overriding provision and the payment made to sub-contractors attracts this provisions of the Act and that he that the assessee had not deducted tax at source for the payment made to the subcontractors. The expenditure claimed by the assessee towards the payment made to the sub-contractors to the extent of the amount where tax was not deducted at source is confirmed. CIT(A) directed the AO to work out the actual amount to be disallowed by invoking sec. 40(a)(ia) of the Act and partly allowed the appeal of the assessee - CIT(A) has passed the order after considering the overall facts of the case in granting partial relief to the assessee, which we affirm. No contrary facts were brought to our notice to take other view. In the result the ground No 1 of the appeal is dismissed. Estimation of income on bogus purchases - CIT-A Confirmed addition to the extent of 3% - HELD THAT:- AO failed to appreciate that no sale is possible in absence of purchases. The AO made additions of the entire purchases, without appreciating the facts that the assessee has shown sales, which is not disputed by the AO. The ld CIT(A) restricted the addition to the extent of 3% by following the decision in case of Atul Kumar ( assessee in connected appeal), wherein the ld. CIT(A) relied on the order of Anil Amritlal Chahawala. In our view the disallowances restricted by ld CIT(A) is sufficient to prevent the possibility of the revenue leakage, which we affirms.- Decided against revenue.

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• 2021 (11) TMI 671
  Validity of re-assessment proceedings initiated u/s.148 - eligibility of reasons to believe - proof of live link nexus or connection for the formation of believe - Addition u/s 68 - HELD THAT:- There is neither any discussion of any investigation report as referred to by the Assessing Officer in the assessment order or any reference of any material from the reasons recorded. It is not clear from the reasons recorded as to what is nature of the accommodation entry; and secondly, from which entity or companies, the assessee had received alleged accommodation entry. It is also not clear, whether it is on account of share application money or loan or any other kind of credit entry from any such entity. Reasons recorded at least should disclosed the prima facie material which has proximate or live link nexus with such information or material that the income chargeable to tax has escaped assessment. AO can assume jurisdiction for reopening the assessment only on the basis of material referred to in the reasons recorded and reasons recorded alone is the edifice or foundation of jurisdiction u/s.147. If the reasons recorded are silent or there is no reference of any material, then other extraneous material referred subsequently cannot justify acquiring of jurisdiction for reopening u/s 147. Any annexure or report discussed in the assessment order which is not part of the reasons recorded cannot be construed as material forming belief u/s.147. The formation of reasons to believe can only be seen on the reason recorded in writing by the Assessing Officer before issuance of notice u/s.148 Even if the information received from Investigation Wing was a valid information and material available with the Assessing Officer, then at least Assessing Officer after applying his mind should have brought on record at the time of recording the reasons that assessee has received accommodation entry in the nature of share capital or any bogus entry by any entry provider - The reasons recorded itself goes to show that it is purely based on borrowed satisfaction and without application of mind and such an approach has been frowned by the Hon ble Jurisdictional High Court in the cases of PCIT vs. Meenakshi Overseas P. Ltd.. [ 2017 (5) TMI 1428 - DELHI HIGH COURT] and PCIT vs. RMG Polyvinyl (I) Ltd., [ 2017 (7) TMI 371 - DELHI HIGH COURT ] While considering the validity of the reasons recorded, which is an evidentiary fact and basis, nothing can be read or taken into consideration which has not been stated in the reasons recorded - As in the case of Signature Hotels [ 2011 (7) TMI 361 - DELHI HIGH COURT ] has held that even the annexure to the report giving detail of entry did not construe any material. Here in this case there is no whisper of any such material on record in the reasons recorded. Reasons as incorporated above are not only vague but does not have any live link nexus or connection for the formation of believe is a material on record. Such a vague reference that since information has been received from an investigation wing that the assessee has taken accommodation entry without any reference to any material or nature of entry provided or name of entity who has provided such entry is purely vague and such reasons cannot clothe to the Assessing Officer with the jurisdiction to reopen assessment u/s.147 - Decided in favour of assessee.

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• 2021 (11) TMI 670
  Disallowing interest expenses u/s. 40(a)(ia) - tax deducted at source was not deposited within due date of filing of return of income - `as contended by the assessee that provisions of section 40(a)(ia) are not applicable in its case as the interest amount paid by the assessee was already accounted for by the payee in its return filed for the relevant assessment year and also paid the requisite taxes - HELD THAT:- Assessee before the Ld.CIT(A) filed evidences to show that the payee has included the interest income in its return of income and paid taxes. - CIT(A) did not admit the evidences. Before us, assessee filed petition under Rule 29 of ITAT Rules for admission of additional evidences which go to the root of the matter. As these evidences are going to the root of the matter the same are admitted. The evidences furnished before us in the form of Profit and Loss Account, Balance Sheet, copy of return filed by the payees and the certificate issued by the Chartered Accountant clearly suggest that the interest paid by the assessee was accounted for by the payees in its Books of Accounts and returns were filed within the due date certified u/s. 139(1) of the Act and taxes were paid on such interest income. No disallowance u/s. 40(a)(ia) is warranted as the payee has accounted for the interest income in its Books of Accounts and filed its return of income u/s. 139(1) of the Act. However, since the information filed by the assessee showing that the payee had accounted for the interest receipts in its Books of Accounts and paid taxes, were never examined by the lower authorities, subject to verification of these evidences by the Assessing Officer, we direct to delete the disallowance made u/s. 40(a)(ia) of the Act. The assessee shall furnish all these evidences before the Assessing Officer. - Decided in favour of assessee.

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• 2021 (11) TMI 647
  Adjustment on account of AMP expenses - whether there existed an international transaction within the meaning of Section 92B? - HELD THAT:- Reputation of a brand only enhances the sale and profitability and here in this case is only benefitting the assessee company when marketing its products using the trade mark and the brand of AE. Even otherwise also, the value of the brand which has been created in India by the assessee company will only be relevant when at some point of time the foreign AE decides to sell the brand, and then perhaps that would be the time when brand value will have some significance and relevance. But to make any transfer pricing adjustment simply on the ground that assessee has spent advertisement, marketing expenditure which is benefitting the brand/trademark of the AE would not be correct approach. Thus, this line of reasoning given by the TPO is rejected. On the facts of the present case, it cannot be held that there was any kind of understanding or arrangement with the AE which can be lead to inference that AMP expenditure incurred by the assessee is an international transaction nor there is any iota of material that there was any action in concert. Accordingly, we hold that there is no international transaction of incurring any AMP expenditure. If we go by the alternative arguments placed by the ld. Counsel, Mr. Deepak Chopra that if intensity approach is to be applied to determine the assessee s profitability, then assessee has earned a profit margin 15.70% as against PLI of the comparable determination by the TPO 4.36% and therefore, at the entity level profitability assessee s margin was far excess of the comparables and accordingly no adjustment on such transaction can be made. As regards the substantive AMP adjustment of applying residual profits split methods, it is incumbent upon the TPO firstly to combine profit from the so called international transaction of incurring of AMP expenses and then split the combined profit in proportion to the relative contribution made by both the entities. The manner in which RSPM has been applied by the TPO cannot be held as same is consistent with Rule 10B of the Income Tax Rules. Accordingly, this ground raised by the assessee is allowed. Deduction claimed u/s 80- IC - Whether given the actual allocation of expenses done by the assessee could be disturbed by the AO so as to attribute such expenses on the basis of the sales turnovers of the eligible and non-eligible units? - HELD THAT:- From a perusal of Chart A it was shown by the assessee that it has incurred total advertising expenses of Rs. 115,55,70,416/-. Out of these expenses, the expenses of Rs. 4,99,08,629/- were specifically allocable to the eligible unit which left the balance expenses of Rs. 110,56,61,787/-. These balance expenses have been allocated in Chart B on a brand wise basis. What is noteworthy that while allocating these expenses brand wise between the eligible and noneligible units based on the actual manufacture in these units, the advertising expenses have been allocated by the assessee. This methodology was brought to the attention of AO by way of its letter dated 28.11.2019 which is annexed at pages 511 to 520 of the paper book. This has not been disputed by the AO. We find that after these actual allocations only an amount of Rs. 52,55,64,865/- are left to be allocated between the eligible and non-eligible units, which brings us to the second issue. We find no justification in the reduction of the turnover of the ineligible units by the excise duty which has disturbed the overall allocable percentages. We find force in the contention of the assessee that even for the purposes of section 145A of the Act which deals with the method of accounting for income tax purposes specifically provides that the sale of goods should be inclusive of the amount of tax, duty, cess or fees actually paid or incurred by the assessee. The Ld. Counsel also placed reliance on the definition of the term turnover under the Central Sales Tax Act and the Companies Act. We do not find any basis for the change of allocation from the turnover basis to the production basis since the production basis does not reflect all the costs relating to the manufacturing. In our view, the basis of allocation done by the assessee by taking the actual turnover of the eligible and noneligible units was a reasonable basis since the non-eligible units were subjected to excise duty and there was no reason to reduce the element of excise duty while taking the turnover of the noneligible units for allocation of common expenses. Having allocated the common expenses if there resulted in any consequential allocation of expenses to the eligible unit then the reduction of the 80IC claim would be limited to 30% of such expenses - We find force in this contention of the assessee given that this was the ninth year of such claim by the assessee in respect of such unit. As per the applicable provision of Section 80IC the deduction is 100% of the eligible profits for the first five years and 30% of the eligible profits for the balance five years. Thus if at all any reduction of the claim had to be made by the AO it has to be limited to 30% of such allocable expenses and no more. Seeking allowability of the education cess paid - HELD THAT:- Ergo, if cess is considered as part of surcharge, i.e., the additional surcharge on tax, then if income tax payable under the Act is not reckoned as allowable expenditure u/s.37. Ostensibly by this logic, the cess also cannot be held to be allowable business expenditure, because the cess is always calculated and paid on percentage of income tax payable and not actually incurred for the business or profession of assessee. In the context of 115JB Hon ble Calcutta High Court in the case of Srei Infrastructure Finance Ltd. [ 2016 (8) TMI 967 - CALCUTTA HIGH COURT] held that both surcharge and education cess are part of the income tax, though payable in addition to the income tax. The Hon ble Court after quoting provision of the Finance Act observed that income tax being increased by the amount of surcharge and cess. Accordingly, it was held that surcharge and education cess is nothing other than income tax. The above CBDT Circular of 1967 has been referred and relied upon by the Hon ble Rajasthan High Court in the case of Chambal Fertilizers and Chemicals Ltd. . [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] and held that in view of the said CBDT circular, the cess is not disallowable u/s. 40(a)(ii) and hence the assessee s claim that education cess is an allowable expenditure was upheld - Decided in favour of assessee.

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• Customs

• 2021 (11) TMI 669
  Smuggling - Raw Silver Bars weighting in the form of small balls/granules - cross-examination of the concerned Investigating Officer - HELD THAT:- The petitioners have stated that since the respondents have failed to prove the fact that the seized silver bars have been smuggled into India, the petitioners should not be harassed and those silver items seized in the case should be returned to them. Issue notice, returnable by 08.12.2021.

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• 2021 (11) TMI 668
  Condonation of delay of 921 days in preferring the appeal - delay on the ground that similar matter related to Annual IEIS Scheme, the issue was already under litigation with regard to correct interpretation of Notification dated 25.09.2013 whereby amendments were made in the Foreign Trade Policy 2009-2014 - sufficient cause for delay present or not - HELD THAT:- There are merit in the contention of the Respondent that there is no explanation which can be called as a sufficient cause for the delay between 25.02.2019 when the impugned judgment was pronounced and 25.03.2020 when the Nationwide lockdown was imposed. The timelines mentioned in the application are primarily focussed on explaining the delay between 25.03.2020 till the filing of the appeal, for the period prior thereto the only explanation is the filing of the SLP in the case of DIRECTOR GENERAL OF FOREIGN TRADE VERSUS M/S WELLDONE EXIM PVT. LTD. ANR. [ 2019 (9) TMI 1611 - SC ORDER] . Even if this Court was to exclude the period of lockdown, the benefit cannot inure to the advantage of the Appellants inasmuch as there is a delay of nearly one year prior to the imposition of lockdown. This Court also fails to understand how the filing or pendency of an SLP in another matter prevented the Appellants from filing an appeal against the judgment impugned in the present case. It is a settled law that an Appellant must make out a sufficient cause for delay, to enable the Court to condone the same. Parties who are not vigilant and diligent in prosecuting and agitating their rights and act as mere fence sitters, cannot be permitted to take advantage of their lethargy and laxity. It is evident that the Appellants slept over their rights from 25.02.2019 to 25.03.2020 and cannot take advantage of their own wrong and seek condonation of delay. The Appellants have not made out a sufficient cause for condonation of delay of 921 days and, therefore, the application deserves to be dismissed. Since we are not inclined to condone the enormous delay of 921 days, we do not intend to enter into the merits of the appeal - Application dismissed.

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• 2021 (11) TMI 667
  Rejection of the request for amendment in the bills of lading - Existence of two bills of lading, differing in description of goods and in notify party - HELD THAT:- Proceedings for wrong declarations in the manifest are initiated against the person-in-charge of conveyance, or the authorized agent, even before an importer or importers may seek acknowledgement of status by filing bill of entry mandated by section 46 of Customs Act, 1962. In such proceedings, the importer faces no detriment. A careful perusal of the decision of the Tribunal in M/S VALLABH WOOL INDUSTRIES VERSUS COMMISSIONER OF CUSTOMS (EXPORT) , NHAVA SHEVA [ 2019 (12) TMI 19 - CESTAT MUMBAI] would elicit this distinguishment but for which that bench of the Tribunal would have lacked jurisdiction to decide the appeal. It was the lack of evidence of any linkage of the purported importer with the findings of the original authority that were detrimental to the agent of the person-in-charge of the conveyance that led to setting aside the penalty. At the stage of custodianship before an importer, upon conclusion of assessment and clearance thereof, is the recipient of the imported goods, it is the person-in-charge of conveyance, or the agent, who is responsible for the imported goods. Consequently any finding qua the import manifest, including confiscation under section 111(f) of Customs Act, 1962, can be cause of grievance to the person-incharge of conveyance, or agent, and none other. Whatsoever may be the claim of the appellant herein to the impugned goods, that lies entirely within the commercial engagement of theirs with the shipper and the person-in-charge of the conveyance without intruding upon the statutory relationship of the person-in-charge of the conveyance, or the agent, and the customs authorities - The appellant cannot claim a relief that has the consequence of erasing the liability of M/s Oasis Shipping Pvt Ltd which, by failure to challenge the order of the original authority or by overcoming the confiscation under section 111(f) of Customs Act, 1962 upon compliance with the terms of redemption set out therein, has attained finality. The confiscation of the impugned goods having been, thus, accepted, section 126 of Customs Act, 1962 vests such goods with the Central Government. Therefore, notwithstanding any commercial engagement of the appellant herein with any other person in relation to the goods, this ownership by the Central Government cannot be alienated. Consequently, the claim of the appellant herein for acknowledgement of its claim to be entitled to file bill of entry for clearance thereafter by making alterations in the particular line of the import general manifest cannot be entertained. Appeal dismissed.

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• 2021 (11) TMI 666
  Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - overvaluation of the goods between 8 to 20 times of the market value in the name of an exporter - violation of Regulations 10(b), 10 (d), 10(k) and 10(n) of CBLR, 2018 - HELD THAT:- Under consideration was whether the suspension of the licence of the Custom House Agent was warranted or otherwise. It was not a case of final decision on the licence after inquiry. The G-Card holders of Ashiana were involved in a different business of smuggling narcotics abroad on their own account. This was not the activity of Ashiana. If any serious crime is committed by one of the employees (say, theft, assault, murder, etc.) of a Customs Broker, the Customs Broker cannot be held responsible. The vicarious liability of the Customs Broker extends only to such activities as are done by the employees as such employees. In the case on hand, the export documents were filed by Shri Kadam on behalf of the appellant and therefore, vicarious liability applies. This case does not advance the case of the appellant any further. Reliance was placed in the case of M/S. JAI AMBE LOGISTICS VERSUS COMMISSIONER OF CUSTOMS (GENERAL) , NCH, MUMBAI [ 2015 (12) TMI 313 - CESTAT MUMBAI] - In this case, we find that the appellant had no idea who the exporter was. Its employee, Shri Kadam, also had no contact with the exporter. The appellant or its employee has not conducted any due diligence measures. They claimed to have obtained KYC documents through email but have failed to produce them either before the Inquiry officer or at any stage including before us. The irresistible conclusion can only be that they have no such documents and also no idea of who the exporter was and simply filed a Shipping Bill heavily over-invoicing the goods. In this factual matrix, Jai Ambe does not advance the case of the appellant. There are no reason to interfere with the impugned order except to the extent it records that the appellant has violated Regulation 10(d) - appeal dismissed.

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• 2021 (11) TMI 665
  Demand of differential customs duty - Confiscation - penalty - Jurisdiction - power of Additional Director General, DRI to issue the notice - HELD THAT:- This precise issue was examined by the Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] . The Supreme Court observed that the nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import is a power that has been conferred to review the earlier decision for assessment. This power which has been conferred under section 28 of the Customs Act on the proper officer, must necessarily mean the proper officer who, in the first instance, assessed and cleared the goods. Thus, the Additional Director General, DRI did not have the jurisdiction to issue the show cause notice - It would thus be seen that the Supreme Court in Canon India held that the entire proceedings initiated by the Additional Director General, DRI by issuance of a show cause notice was without any authority of law and was, therefore, liable to be set aside. Confiscation - penalty - HELD THAT:- In BAKEMAN S HOME PRODUCTS PVT. LTD. VERSUS COLLECTOR OF CUS., BOMBAY [ 1997 (6) TMI 178 - CEGAT, NEW DELHI] , the Tribunal held that the proposal for confiscation and penalty cannot be segregated from duty demand and, therefore, the proceedings for confiscation and imposition of penalty cannot be sustained. The order dated 29.03.2019 passed by the Commissioner of Customs (Import) cannot be sustained and is set aside - Appeal allowed.

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• 2021 (11) TMI 664
  Levy of penalty - Regulation 12(8) of Handling Cargo in Customs Area Regulation, 2009 - Section 117 of the Customs Act - proper appreciation of the submissions, averments or not - non-application of mind - violation by the appellant of Regulations or Regulation 12(8) of HCCAR, 2009, or of any of the provisions of the Customs Act - principles of natural justice - HELD THAT:- The appellant have bonafide issued Public Notice dated 16.05.2017, which is also in due compliance of law, as the learned SDM of the State Government is empowered to maintain law and order, which also includes safety of the people living under his jurisdiction. Further, it is found that the appellant have evidently issued the Public Notice as well as moved containers containing hazardous goods from ICD, Tuglakabad under the direction of the learned SDM, duly confirmed by the Hon ble High Court in its interim order. Accordingly, it is held that the appellant have not violated any of the provisions of HCCAR, 2009 and/or of the Customs Act. Accordingly, this appeal is allowed and the impugned order is set aside. Appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 663
  Seeking grant of Bail - Illegal export - allegation against the accused is that he was illegally exporting the antique which is said to be the idol of Lord Vishnu - antique as alleged by the complainant or not - only ground urged for rejection of bail is that the accused did not co-operate through the investigation by not appearing before them - section 437 of Cr.P.C. - HELD THAT:- There is no whisper in the remand application or in the objection filed for the bail application that the investigation is still in progress. From the records produced before this court on behalf of the accused, it goes to show that the issuance of notice dated:28-07-2021 and 05-08-2021 is not disputed by the accused. On the other hand, the documents produced by the accused goes to show that he has issued reply in response to the summons referred above and in the said reply he has sought to providing with some documents by the department in connection with the allegations made against him. The complainant is silent about this reply in the remand application or in the objections filed by them for the bail application - From the endorsement made in the summons referred, it appears that the accused was served with the summons and was arrested. As such, it is obvious that the accused was unable to keep himself present before the Prl. Commissioner of Customs at Bangalore, though he had the intention of co-operating with the I.O, at Bangalore. As such, from the attending circumstances, it goes to show that the allegation made by the complainant that the accused did not cooperate with them for the investigation is totally misleading. The object of bail is to secure the attendance of the accused at the investigation and also the trial. The bail is not to be withheld as a punishment. Granting of bail in a non-bailable case is the discretion of the court which is to be exercised judiciously. There is no hard and fast rule and no inflexible principle governing the exercise of such discretion by the court. The facts and circumstances of each case will govern the exercise of judicial discretion in granting or refusing bail. Here, in the case on hand, it is not the case of the I.O that investigation is pending - In the case on hand, the complainant instead of filing the complaint, has issued summons to the accused and got his arrested at Delhi only to see that he is behind bars for the best reasons known to the officers of the department. Hence, only the considerations which should normally weigh with the Court in the case of other non-bailable offences should also apply to this case though the offence alleged is Economic Offence. There is no hard and fast rule that the bail must be refused invariably in Economic offences. The contention of the prosecution during the course of arguments, that accused may tamper the evidences and will cause obstruction to the investigation is not acceptable for the reasons discussed supra. Thus, taking into consideration the facts and circumstances of the case on hand with is discussed in detail, the accused is entitled for bail with conditions - the accused is released on bail, subject to executing the personal bond for Rs. 1,00,000/- (Rs. One Lakh only) and furnishing one solvent surety for like sum or cash security of Rs. 50,000/- on the conditions imposed. Bail application allowed.

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• Corporate Laws

• 2021 (11) TMI 662
  Validity of Look-Out Circular - petitioner was prevented from travelling abroad because LOC was issued against him by the Respondent No.3 - Petitioner is seeking declaration that the action on the part of the Respondent No.2 in issuing an endorsement of cancelled without prejudice on the passport of the Petitioner be declared as arbitrary, illegal and without authority and violating the same Articles of the Constitution of India - HELD THAT:- In the present case the SFIO is investigating into the affairs of the aforementioned companies and its investigation overrides the investigations by other investigating agencies. Therefore recourse to LOC was not unfounded as the Petitioner has definite connection with the investigation as discussed hereinabove. From the facts of the case it is clear that Clause (L) of these Guidelines clearly covers the Petitioner s case as it is detrimental to the economic interests of India and that his departure ought not be permitted in the larger public interest. The words economic interests of India and larger public interest are not empty words in the context of the present case because as mentioned earlier the Petitioner is directly involved and was concerned with considerable share-holding of M/s. Gitanjali Gems Limited. It involves huge amount of almost Rs.Fifty Crores which requires serious explanation from the Petitioner in the background of the allegations that the money belonged to Mr. Mehul Choksi, who has left India and has not returned back. This transaction is an important part of the entire fraud involving huge amount. Sheer magnitude of the offence and its spread through various banking operations and transfer of money through different modes and different countries shows that it has definitely affected the economic interests of India and the larger public interest is definitely involved and affected. Whether the original LOC issued against the Petitioner stands continued beyond its life of one year? - HELD THAT:- Since we were called upon to decide the competing interest, i.e. the right of the Petitioner and the power and duties of the authorities, our order is in respect of the legality, validity and justifiability of the impugned LOC and its extension for one year. The LOC is properly issued, it is extended through proper procedure and the appropriate authority has approved its extension. The Petitioner s presence is necessary for effective investigation into the affairs of Gitanjali Gems Limited and other concerns - There is a strong flight risk as far as the Petitioner is concerned and, therefore, the relief sought for in this Petition cannot be granted. Petition dismissed.

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• Insolvency & Bankruptcy

• 2021 (11) TMI 661
  Maintainability of Joint CIRP - whether the corporate debtor M/s. Premia Projects Limited and Respondent No.2 M/s. Solitaire Infomedia Limited should either be considered for joint CIRP so that the land can be considered as an asset in the joint CIRP of the Corporate Debtor and Respondent No. 2? - HELD THAT:- The Insolvency and Bankruptcy Code, 2016 provides for the resolution of insolvent companies for the revival of those companies and for the benefit of financial and operational creditors. The preamble of the IBC states that the reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons is the prime objective of this legislation. Taking a cue from such an objective and the detailed framework provided under IBC, there is no gainsaying the fact that the interests of creditors which doing an effective resolution of an insolvent company are the primary objectives of the IBC. The shareholding of the Corporate debtor in the Respondent No. 2 Company, is over 97% in the asset of the Corporate Debtor and should therefore be part of Information Memorandum. Thus there exists a cogent case of undertaking joint CIRP. The cost of the project includes cost of land and cost of development. This total cost of the project forms the basis of the cost of each flat. Each home buyer pays for the proportionate share of land alongwith the cost of development and construction. Therefore, in considering their rightful interest in the resolution of the corporate debtor company, it is reasonable and logical to factor in the connected land parcel in the total assets base - it is considered just, fair and proper that the land held by Respondent No.2 M/s. Solitaire Infomedia Pvt. Ltd., is an integral part of the housing development project, and should be considered as a part of the total asset base for the insolvency resolution of the Corporate Debtor M/s. Premia Projects Limited. The inter-woven nature of the assets of the two companies is amply clear from the provisions of the Collaboration Agreement and the MOU respectively. The Corporate Debtor has provided valuable consideration to Respondent No.2 and also taken possession of the land in question for developing the housing project through the Corporate Debtor. Hence, the asset of land is effectively transferred to the Corporate Debtor, on whose strength it has entered into Memoranda of Understanding with various homebuyers. In the instant matter the CIRP of the corporate debtor M/s Premia Projects Ltd. is under consideration. The landowning company M/s Solitaire Infomedia Pvt. Ltd. is not under CIRP, hence it would not be possible to include in the CIRP of the Corporate Debtor the asset of land on which the Corporate Debtor is developing the housing project but which is owned by the Respondent No. 2 company without following the due procedure as enumerated in law - the matter be remanded to the Adjudicating Authority with further direction that an admission application for the landowning company M/s. Solitaire Infomedia Pvt. Ltd. be considered by the Adjudicating Authority, and a consolidation of CIRP be thereafter considered so that the combined assets of land and flats may be considered together to provide fair, just and proper relief to the creditors of the Corporate Debtor Premia Projects Limited. Appeal allowed by way of remand.

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• Service Tax

• 2021 (11) TMI 660
  Valuation - Business Auxiliary Service - inclusion of Electricity Charges reimbursed to the appellant by the Service Recipient M/s. Gujarat Gas Company Limited for providing the service Namely Business Auxiliary Service in the gross value of output service, or not - HELD THAT:- This issue involving identically placed service provider and the same service recipient M/s. Gujarat Gas Company Limited under the identical contract has been decided by this Tribunal in the case of VV BROTHERS VERSUS C.C.E. S.T. - SURAT-I [ 2020 (1) TMI 986 - CESTAT AHMEDABAD] wherein this Tribunal has held that electricity charges reimbursed to the service provider by the service recipient are not includable in gross value of renting of immovable property service. Thus, the electricity charges which is reimbursed on actual basis in terms of the contract is not includible in the gross value of service provided by the appellant to Gujarat Gas Company Limited - appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 659
  Works Contract Composition scheme - demand of differential Service Tax - suppression of value of services, by not including value of Transformers and other equipment - price variation clause - extended period of limitation - HELD THAT:- The impugned order is erroneous and mis-conceived as service tax has been demanded on the apparent gross value, as per contract/ agreement, of Rs. 25,71,96,000/-. The same is also in contrast to the findings of the ld. Commissioner. All the three contracts are independent contracts , there being no artificial bifurcation and supply of goods and supply of services. Ld. Commissioner has also observed in the impugned order that in relation to the works contract service, the value of transformers cannot be included. The appellant is not liable to pay service tax on the transportation charges paid by them, as they are neither a GTA and have admittedly arranged transportation for the service receiver viz. PGCIL, as a pure agent. No service tax is payable towards projected training as per contract, as admittedly the appellant has not provided any training nor they have raised any invoice towards the training charges. So far the service tax on installation/erection charges( including civil work) is concerned, it is held that the turnover of Rs. 15,79,05,395/- has to be adjusted for the amount of VAT and service tax included in the gross value, and after deduction of these, the appellant shall be further entitled to deduction for the material component as per Service Tax (Determination of Value) Rules 2006. The impugned order is set aside and matter remanded for the limited purpose of calculation of service tax payable on the gross value towards erection/installation charges of Rs. 15,25,05,395/-. The appellant is directed to prepare the calculation of admitted tax and appear before the Original Adjudicating Authority for verification and/or adjustment, if any. This appeal is allowed in part and part by way of remand.

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• Central Excise

• 2021 (11) TMI 658
  Recovery of amount deposited in the Escrow account - forfeiture for the alleged violation of the conditions of the exemption notification availed by the appellant - manufacture of Pan Masala and Pan Masala containing tobacco - exemption under Notification No. 8/2004-CE dated 21.01.2004, as amended by Notification No. 28/2004-CE dated 09.07.2004 - Period from March 2004 to March 2005 - monetary amount involved in the appeal. Maintainability of appeal - monetary involvement is below Rs. 1 Crore as notified by the Central Board of Indirect Taxes Customs (CBIT C) circular dated 22.08.2019 - HELD THAT:- In so far as the High Court is concerned, the Monetary Limit prescribed is 1(one) Crore below which no Appeals can be filed before the High Court. However, Clause 4 of the said instructions prescribes that where substantial questions of law are involved, the matters will be contested irrespective of Monetary Limit prescribed - In matters where a common principle may be involved, the High Court can entertain appeal subject of course to the provisions of Section 35G of the Central Excise Act. A reference to Section 35G of the Central Excise Act, 1944 shows that an appeal shall lie to the High Court from every order passed by an appellate Tribunal provided that the High Court is satisfied that the matter involves substantial questions of law. The appeal under Section 35G is a qualified appeal and not an absolute and/or unqualified and/or unrestricted appeal - The High Court has no jurisdiction to go behind or question the facts found by the Tribunal unless on the ground of perversity. A perusal of the order dated 31.03.2017 passed by the Commissioner, will reveal that the show-cause Notices which were issued against the assessee for wrong utilization of credit during the period of March, 2004 to March, 2005 has already been dropped by the Additional Commissioner, Central Excise, Dibrugarh vide order dated 30.01.2009 and there is no pending show cause Notice issued to the assessee in relation to admissibility of CENVAT credit - Tribunal had correctly rendered a finding that the benefit of exemption has been denied to the assessee. Since, as discussed above, the findings arrived at by the Addl. Commissioner, Central Excise, Dibrugarh in its Order- in-Original dated 30.01.2009 were not challenged by the Department before any higher forum, the same had therefore attained finality. The issue of wrong utilization of credit by the assessee during the period of March, 2004 to March, 2005 having been already dropped by the Additional Commissioner, Central Excise, Dibrugarh vide order dated 30.01.2009 and no appeal having been preferred by the Department against such finding, the matter has attained finality. The said finding of fact is also accepted by the Commissioner, Central Excise as is seen in the order dated 31.03.2017 - no substantial question of law arises in this appeal and we are therefore, not persuaded to accept this appeal in view of the mandate of Section 35G of the Central Excise Act, 1985. The provisions of Section 35G mandates that an appeal under Section 35G of the Central Excise Act can only be admitted/heard by the High Court only on the substantial question of law framed. However, in the present proceedings, there was no substantial question of law framed by the appellant with regard to the perversity as raised by the appellant - The Apex Court in S.R. TEWARI VERSUS UNION OF INDIA (UOI) AND ANR. [ 2013 (5) TMI 970 - SUPREME COURT] held that if the decision is arrived at on the basis of no evidence or thoroughly unreliable evidence and no reasonable person would act upon it, the order would be perverse. The Apex Court held that if there is some evidence on record which is acceptable and which could be relied upon, the conclusions would not be treated as perverse and the finding would not be interfered with. Appeal dismissed.

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• 2021 (11) TMI 657
  CENVAT Credit - not following the procedure prescribed under Rule 9A of Cenvat Credit Rules and not filing proper declaration for availing the said credit - transitional credit as prescribed under N/N. 25/03-CE (NT) dated 25.03.2003 and N/N. 4/03- CE(NT) dated 30.04.2003 - HELD THAT:- The appellant have filed declaration of stock to the department which was verified by the Range Superintendent - As per the above report it can be seen that after proper verification some discrepancy was found for Rs. 1, 50,250/- which was reversed by the appellant. As per the procedure the proper stock verification was conducted by the Superintendent thereafter the Adjudicating Authority seeking further verification of all the records is unwarranted. We are of the view that the aforesaid verification report is conclusive one therefore; no further material is required for establishing the stock lying in the factory of the appellant as on 31.03.2004. Therefore, we are of the view that the Commissioner (Appeals) has gone beyond the direction given by the Tribunal in the earlier order dated 19.11.2010. The appellant have complied with the procedure prescribed for availing transitional credit in respect of the stock lying as on 31.03.2004. Therefore, there is no reason to deny the Cenvat Credit. Appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 656
  Demand of duty on Sulphur purchased - N/N. 12/2012-CE dated 17 March 2012 - use of Sulphur for manufacture of Sulphuric Acid/Oleum which in turn is used in the Urea Plant for manufacture of Molten Urea - Revenue s objection is that the some quantity of Molten Urea is used as input for the manufacture of Malamine and therefore, the appellants are not entitled to benefit of notification - HELD THAT:- The issue involved is identical to the issue decided in the appellant s own case GUJARAT STATE FERTILIZERS AND CHEMICALS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VADODARA [ 2020 (2) TMI 1253 - CESTAT AHMEDABAD] where it was held that There are no merit in the Revenue s arguments that benefit of Notification No. 12/2012-CE dated 17 March 2012 can be denied on the ground that during manufacture of Phosphoric Acid which in turn used in the manufacture of fertilizer and Phospho-gypsum is manufactured. Appeal allowed on the terms of aforesaid decision.

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• 2021 (11) TMI 655
  Clandestine Removal - M. S. Ingots - alleged involvement in abetting / planning such surreptitious illegal activity - retraction of statements - opportunity of cross examination of witnesses - Rule 26 of the Central Excise Rules, 2002 - HELD THAT:- It is fundamental principle of judicial precedence that the decisions rendered by the courts and tribunal are not the law, legislated by the Parliament, and hence cannot be applied universally, but should be applied after establishing the relevance and significant similarity with the facts of case under consideration and the decision sought to be relied upon. The facts in case of clandestine clearance do not render themselves to such similarity and hence the decision sought to be relied upon need to be examined with caution. It is established principle, that clandestine activities are undertaken with secrecy, under cover of darkness and would not leave the complete trail of evidence for the investigating authorities to detect and discover the said activities - If on the basis of the evidences adduced which would be of the nature as enumerated at (ii) of para 40 of the said decision, the conclusions in relation to act of clandestine manufacture and clearance should be arrived at. In the instance case, there are sufficient evidences as enumerated therein have been put forth to establish the case against the appellant within pre-ponderence of probability. Nothing has been brought on record to show that the demand made in present case based on the evidences and admissions/ confessions by the Director of Appellant 1, was covered under the earlier show cause notice. The earlier demand was based on certain studies conducted, and on the basis of electricity consumption was made. The demand was in nature of presumptive demand, and as per the submissions made by the appellant the appeal against the said order was dismissed not after consideration on merits but for the reason of non compliance with provisions of Section 35 F of the Central Excise Act, 1944. Appellants have also not placed on records any document evidencing such dismissal of the appeal filed by them. There are no reason for not dismissing the appeals filed by these appellants under Rule 20 of CESTAT Procedure Rule, 1982, and also on merits ex- parte, for the reason that they were part of the entire activity of clandestine clearance undertaken by Appellant 1 - role of Appellant 3 4 has been clearly spelt out in planned activity of clandestine clearance, the fact admitted by them in their statements recorded under Section 14 of Central Excise Act, 1944. In view of the above admission of their involvement in activities of clandestine production and clearance by Appellant 1, the penalties imposed on them is upheld. Appeal dismissed.

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• 2021 (11) TMI 654
  100% EOU - Levy of Central Excise Duty - cotton waste generated in manufacturing of the finished products and cleared in the domestic tariff area - period 08.03.1999 to January 2011 - proviso to Section 3 (1) of Central Excise Act, 1944 - HELD THAT:- Bare reading of proviso indicates that it is applicable, only in respect of the excisable goods which are produced or manufactured in India. In our view if the goods fail to qualify the test of manufacture as per Section 2 (f) and the law as laid down by various courts, then the proviso to section 3 cannot be pressed in to service for the purpose of levy of duty of excise as equivalent to the Customs duty. Further by the amendment made in proviso, to section 3(1), whereby the phrase allowed to be sold in India was replaced by the phrase brought to any other place in India , very clear that in case of manufactured goods by an EOU, the proviso shall apply in all situations. Section 11A of the Central Excise Act, 1944 can be pressed into service for recovery of duty of excise and not for the recovery of any other tax or duty including the Customs Duty leviable under Customs Act, 1962. Hence there are no merits in the observations made by the Commissioner while distinguishing the decision of C T Cotton. The issue for consideration in the present case is demand of duty on the cotton waste arising during the course of manufacture of finished product exported by the appellants. Once it is held that the cotton waste is not a manufactured goods leviable to excise duty, all the subsequent arguments advanced by the Commissioner vis a vis contravention of the provisions of exemptions issued under Customs Act, 1962 and those of the Foreign Trade Policy, become irrelevant for these proceedings, initiated under provisions of Section 11A of the Central Excise Act, 1944. Commissioner have referred to the first two show cause notices, where in the demand has been made in respect of the Cotton Waste cleared clandestinely by the appellant, treating it as the goods produced by the EOU. In view of the decision of the tribunal in case of M/S CT. COTTON YARN LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, INDORE [ 2013 (1) TMI 249 - CESTAT NEW DELHI] , we are not in position to agree with the said observations. Distinction made by the Commissioner, by stating that C T Cotton was a case in which the Cotton Waste aroused from the indigenous raw material, also lack merits as the source of raw material do not determine whether a process amounts to manufacture or not in terms of Section 2 (f) of the Central Excise Act, 1944. The demand of duty cannot survive in view of the decision in case of C T Cotton, for consideration of which the matter was earlier remanded back by the tribunal to original authority, we do not discuss the issue of limitation - Since we hold against the demand of duty, the demand for interest and penalty to is set aside. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (11) TMI 653
  Rejection of books of accounts - stock discrepancy - corroborative evidence to establish the suppression of sales or not - HELD THAT:- On a careful reading of the orders of the assessing authority, the appellate authority the Court finds that there is no reference therein to any additional material other then the fraud report which was common to both the years i.e. 1991-92 and 1992-93. Moreover, in the impugned order of the Tribunal relating to the year 1992-93, the Tribunal does not refer to any such additional material other than the fraud report. The Tribunal proceeded to accept the fraud report only on the ground that the earlier order of the Tribunal pertained to the year 1991-92 whereas the year in question was 1992- 93. A co-ordinate Bench of the same Tribunal had in its order dated 14th May, 2002 already disbelieved the same fraud report and concluded that there was no basis for raising the demand. In terms of the decision of the Supreme Court in COLLECTOR OF CENTRAL EXCISE, KANPUR VERSUS MATADOR FOAM [ 2005 (1) TMI 107 - SUPREME COURT] the Tribunal was bound by the earlier order of the co-ordinate Bench involving the very same Assessee. The question framed by the Court is answered in negative i.e. in favour of the Assessee and against the Department - the revision petition disposed of.

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• Indian Laws

• 2021 (11) TMI 652
  Dishonor of Cheque - misuse and misutilization of the cheque for filing the complaint - denial of legal right of appellant - legally enforceable debt or not - rebuttal of presumption or not - HELD THAT:- The learned Trial Court rightly appreciated the fact that if the complainant has not returned the amount of Rs. 4 lakh of the accused and has not even given the finance that was required, no prudent person would have waited without taking any action. It is admitted fact that he neither responded to the notice nor filed any complaint or taken any action against the complainant herein. The accused failed to substantiate wherefrom he brought the amount of Rs. 4 lakhs. As against this, the complainant through his passbook substantiated withdrawal of amount from the bank for such payment. The learned Trial Court also rightly appreciated the fact that accused admitted signature on the disputed cheque as well as on the receipt. As per opinion of handwriting expert, the contents written in the body of cheque or receipt is not in the handwriting of the complainant. As far as the finding recorded by the Appellate Court that complainant is an unregistered moneylender is concerned, the same is totally erroneous. None of the witnesses examined by the accused has deposed that they obtained loan on interest or complainant advanced money on interest. On the contrary, DW- 1 is silent about moneylending business by the complainant - it appears that as conviction is there under NI Act, the said amount advanced by the complainant is held as legally enforceable debt. If the complainant is not earning any additional amount toward interest over the amount advanced to these witnesses, this finding of learned Appellate Court that he is unregistered moneylender is totally erroneous. The presumption under section 139 is a rebuttable presumption and the onus is on the accused who raised the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. Where the learned Appellate court disbelieved the defence, no question of rebuttal by the accused would arise. So far as showing the said amount in income tax returns is concerned, as the amount is duly reflecting in bank account, the same will be taken care of by the Income Tax Department and consequences/procedure will follow as per provisions of law. For that reason accused cannot be absolved, specifically when both the learned lower courts disbelieved his defence. The order passed by the learned JMFC is well founded and the conclusions arrived at are on proper appreciation of evidence. As such, the order passed by the learned Appellate Court is liable to be set aside - appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 651
  Dishonor of Cheque - insufficiency of funds - Rebuttal of evidence or not - transfer of property in respect of sale of land, for which cheque was issued and was subsequently dishonored - HELD THAT:- There is no dispute that no payment was made in respect of the dishonoured cheque within the statutory period of time as contemplated under the provisions of Section 138 of the Negotiable Instruments Act. The defence in this case has failed to rebut the prosecution evidence, so far as the quantum of the money which was required to be paid in respect of the two properties which were purchased by him. The plea of the defence that the sum of Rs. 10,00,000/- was subsequently paid, falls short of the contention of the prosecution wherein for two of the properties Rs. 20,00,000/- (Rs. 10,00,000/- each) were to be p aid by the accused. It would have been proper if the defence could have shown that the complainant has received a sum of Rs. 20,00,000/- in total and thereafter taken up the plea in the instant case. The belated plea which has been taken (which is subsequent to the reply to the demand notice) is insufficient to overcome the prosecution evidence, as such it is held that the prosecution has proved its case by adhering to the provisions and principles of Negotiable Instruments Act. The petitioner have failed to make out any case for interference - Application dismissed.

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• 2021 (11) TMI 650
  Dishonor of Cheque - cheques are signed by the petitioner or not - rebuttal of presumption - respondent submits that matrimonial litigation of the petitioner is being used as a shield for non-payment of the amount due - contention of petitioner is that two ingredients for invoking Section 138 of the Act are missing. Firstly that the account was not maintained by her and secondly that cheques were not issued for discharging any debt or liability , rather it is a case of misuse of blank cheques signed by her - scope of complaints under Section 482 Cr.P.C. HELD THAT:- The presumption raised under Section 118 of the Act is that negotiable instrument drawn is for consideration . As per Section 139 of the Act, unless contrary is proved, it shall be presumed that the cheque received was in the nature of discharge of debt or liability - It is settled law that complaint under Section 482 Cr.P.C. is to be quashed in rarest of rare cases, though the meaning of rarest of rare cases is not similar as of Section 302 of IPC. The power of quashing is to be exercised sparingly. Quashing is not to be done mechanically or in a routine manner. The contention raised by learned counsel for the petitioner that account was not maintained by the petitioner is raised on the foundation that account was opened at the behest of respondent No.2. She handed over blank signed cheques to him which were misused. The account was being operated in her absence by the respondent No.2. Expounding on the issue raised would affect the trial in complaint. Suffice to say that account is in the name of the petitioner. There is no dispute that signatures on the cheques are of the petitioner, the account is of the petitioner and that on relevant date she could operate the account. The argument that petitioner had not borrowed any amount from the complainants is a defence available to the petitioner for which an opportunity would be there before the trial Court. Section 139 of the Act raises presumption in favour of the holder of the cheque that cheque was issued for discharge of debt or liability, albeit presumption is rebuttable. The veracity of defence would be subject matter of the trial. It is not for this Court in the quashing petition to elucidate on the factual defence raised by the petitioner. The stand taken that FIR was got registered alleging misuse of cheque is noted to be rejected at this stage. The FIR was subsequent to issuance of legal notices and the matter is sub-judice in the Court - case does not fall within parameters for quashing of complaints under Section 482 Cr.P.C., the petitions are dismissed.

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• 2021 (11) TMI 649
  Dishonor of Cheque - liability of the natural persons mentioned in Section 141 of the NI Act, 1881 - continuation of proceedings under Sections 138/141 of the NI Act, 1881 - HELD THAT:- Though, at this stage, the Court is not taking into account the aspect of the trial Court having discharged the accused persons after having taking cognizance in proceedings under Section 138 of the NI Act, 1881, in as much as, it is considered appropriate that the matter is dealt with in its entirety, this Court nevertheless considers it essential that in view of the verdict of the Hon ble Supreme Court in P.Mohanraj and others [ 2021 (3) TMI 94 - SUPREME COURT] , with submissions made on behalf of the petitioners that the verdict of this Court in M.L Gupta and Anr. (supra) to the extent of liabilities of natural persons in terms of the verdict of the Hon ble Supreme Court in P.Mohanraj and others (supra) cannot relate to the natural persons qua whom the proceedings under Section 138 of the NI Act, 1881 cannot thus, be held to be interdicted, the Court considers it appropriate that the matter be placed before the Hon ble the Chief Justice to refer the matter to a larger bench in relation to the aspect of adjudication whether the verdict in M.L Gupta and Anr. [ 2006 (11) TMI 346 - HIGH COURT OF DELHI] to the extent that it set asides the summoning order in toto inclusive of the summoning of the Directors of the corporate debtor qua liability under Section 138 of the NI Act, 1881 in view of the verdict of the Hon ble Supreme Court in P.Mohanraj and others [ 2021 (3) TMI 94 - SUPREME COURT] to the extent that it lays down clearly that the moratorium provision contained in Section 14 of the IBC would apply only to the corporate debtor and thus, in pari materia in view of the winding up the proceedings of the corporate debtor in the instant case, the culpability of the natural persons mentioned in Section 141 of the N.I.Act, 1881 would be a continuing liability continuing to be statutorily liable under Chapter 17 of the NI Act, 1881. The matter be thus placed before the Hon ble the Chief Justice for the date 29.11.2021.

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• 2021 (11) TMI 648
  Dishonor of Cheque - respondent accused was acquitted principally on the ground that the company was not properly represented before the court and also on the ground that the complaint could not have been maintained at Kayamkulam - HELD THAT:- It is settled law that in so far as a company is concerned, it is a distinct juristic personality and it can be represented by persons who may be authorised terms of provisions contained in the Articles of Association of the company or in terms of a resolution duly passed by the Board of Directors of the Company. It is clear from a reading of the impugned judgment that the person who executed the power of attorney was not described in any manner to be the person authorised either by the Articles of Association of the company or by a valid resolution to represent the company. The judgment of this Court in BASHEER M.K. VERSUS STATE OF KERALA AND ORS. [ 2015 (11) TMI 1853 - KERALA HIGH COURT] also takes the view (though in slightly facts and circumstances) that the power of attorney holder has to clearly establish the delegation of authority to represent the company. The power of attorney holder representing the company in the proceedings before the court below had failed to establish that he was duly authorised to represent the company. This is because the person who executed the power of attorney himself did not disclose any authority given either by the Articles of Association of the company or by resolution of the company to represent the company - Appeal dismissed.

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