TMI Tax Updates - e-Newsletter
November 27, 2020

Case Laws in this Newsletter:

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

Articles

• APPELLATE ADVANCE RULING ON CLASSIFICATION OF GOODS (DIABETIC FOOD)

News

• Shri Piyush Goyal stresses upon the need to re-think, re-orient & re-design practices and processes for the further progress of the Gems & Jewellery industry;

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• CBDT to validate Unique Document Identification Number (UDIN) generated from ICAI portal at the time of upload of Tax Audit Reports

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• Accelerating Financial Market Reforms in India (Address by Shri Shaktikanta Das, Governor, Reserve Bank of India - November 26, 2020 - at the 4th Annual Day of Foreign Exchange Dealers’ Association of India (FEDAI))

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• APEDA holds Virtual Buyer Seller Meet with Germany

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• UNDP and Invest India launch the SDG Investor Map for India

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Notifications

Customs

• 39/2020 - dated 26-11-2020 - ADD
  Seeks to amend notification No. 51/2015-Customs (ADD), dated 21st October, 2015 to extend the levy of ADD on imports of "Fully Drawn or Fully Oriented Yarn/Spin Drawn Yarn/Flat Yarn of Polyester " originating in or exported from China PR & Thailand , for a further period upto and inclusive of 31st December, 2020

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• 43/2020 - dated 26-11-2020 - Cus
  Seeks to further amend notification No. 50/2017-Customs dated 30th June, 2017 so as to prescribe BCD rate of 27.5% on Crude Palm Oil

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GST - States

• (45/2020)-FD 03 CSL 2020 - dated 19-11-2020 - Karnataka SGST
  Seeks to notify special procedure for making payment of 35% as tax liability in first two month.

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• (44/2020)-FD 03 CSL 2020 - dated 19-11-2020 - Karnataka SGST
  Seeks to notify class of persons under proviso to section 39(1)

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• F.12(46)FD/Tax/2017-III-254 - dated 13-11-2020 - Rajasthan SGST
  Seeks to notify the date on which the provisions of section 7 of the Rajasthan Goods and Services (Amendment) Act, 2020 shall come into force.

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• GST/2020-21/F.No-509/58/Commercial Tax - dated 24-11-2020 - Uttar Pradesh SGST
  Extends the time limit for furnishing the declaration in FORM GST ITC-04

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• GST/2020-21/F.No-509/57/Commercial Tax - dated 24-11-2020 - Uttar Pradesh SGST
  Extends the time limit for furnishing the details of outward supplies in FORM GSTR-1

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• 1285 /XI-2-20-9(42)/17-U.P. GST Rules-2017-Order-(160)-2020 - dated 2-11-2020 - Uttar Pradesh SGST
  Uttar Pradesh Goods and Services Tax (Forty Sixth Amendment) Rules, 2020

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• 1282/XI-2-20-9(47)/17- U.P. Act-1- 2017-Order-(157)-2020 - dated 2-11-2020 - Uttar Pradesh SGST
  Amendment in Notification No. KA.NI.-2-843/XI-9(47)/17-U.P. Act-1-2017-Order-(10)-2017 dated June 30, 2017

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• 1246/XI-2-20-9(47)/17- U.P. Act-1- 2017-Order-(156)-2020 - dated 2-11-2020 - Uttar Pradesh SGST
  Amendment in Notification No. 429/XI-2-9(47)/17- U.P. Act-1- 2017-Order-(107)-2020 Dated 30 April, 2020.

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• 1248/XI-2-20-9-(47)/17-U.P. Act-1-2017-Order-(153)-2020 - dated 26-10-2020 - Uttar Pradesh SGST
  Seeks to notify a special procedure for taxpayers for issuance of e-Invoices in the period 01.10.2020 - 31.10.2020

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• 1247/XI-2-20-9-(47)/17-U.P. Act-1-2017-Order-(152)-2020 - dated 26-10-2020 - Uttar Pradesh SGST
  Amendment in Notification No. 428/XI-2-9(47)/17-U.P.Act.-1-2017-Order-(106)-2020 Dated 30 April, 2020

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• GST-2020-21/F.No-509/55/Commercial Tax - dated 21-10-2020 - Uttar Pradesh SGST
  Prescribe return in FORM GSTR-3B of UPGST Rules, 2017 along with due dates of furnishing the said form for October, 2020 to March, 2021

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• GST-2020-21/F.No-509/54/Commercial Tax - dated 21-10-2020 - Uttar Pradesh SGST
  Extends the time limit for furnishing the details of outward supplies in FORM GSTR-1

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• 1183/XI-2-20-9-(47)/17-U.P. Act-1-2017-Order-(151)-2020 - dated 15-10-2020 - Uttar Pradesh SGST
  Seeks to amend Notification No. KA.NI.-2-843/Xl-9(47)/17-U.P. Act-1-2017-Order-(10)-2017 Dated June 30, 2017

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Circulars / Instructions / Orders

DGFT

• 30/2015-20 - dated 26-11-2020
  Revision of SION A1827 of Export Products- Ossein

Highlights / Catch Notes

GST

• Release of detained goods alongwith vehicle - expired E-way bill - If the shipment could be cleared only just before or after the period of expiry of the e-way bill, then there could be an extension made by an updation and the transport commenced with such e-way bill accompanying the goods. - The contention of the appellant rejected - HC
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• Grant of Bail - GST evasion - In the instant case, the investigation is at a nascent stage and granting bail to accused at this stage would certainly undermine the rights of the prosecuting agency as tempering of evidence by accused which in this case would be documentary cannot be ruled out. - Bail application is dismissed. - DSC
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Income Tax

• Addition u/s 68 / 69C - unverified/non-existent /bogus sundry creditors - Assessee also cannot get scot free by not producing the sundry creditors and making purchases from parties who are not maintaining proper records or who have made adverse statements and, therefore, the assessee cannot be equated with another assessee who is maintaining records meticulously and not making purchase from grey market. - adoption of GP rate of 16% on such unsubstantiated purchases from the six creditors will meet the ends of justice. - AT
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• Reopening of assessment - legality of issuance of notice u/s. 148 - Merely on a study by Investigation Wing ,as in this case explaining the general modus operandi carried out by un-scrupulous persons in suspected transactions to convert the unaccounted cash of beneficiaries which were transferred to the bank accounts of the beneficiaries through the dubious bank accounts of fake entities can only raise suspicion in the mind of the AO (which fact we have pointed out earlier) which is not sufficient/requirement of law for unscrupulous persons in suspected transactions to convert the unaccounted cash of beneficiaries which were transferred to the bank accounts of the beneficiaries through the dubious bank accounts of fake entities can only raise suspicion in the mind of the AO (which fact we have pointed out earlier) which is not sufficient/requirement of law for reopening of assessment. - AT
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• TP Adjustment - goods sold to Associated Enterprises (AEs) - NP Determination - The TPO has not given any reason as to why he did not consider above said two expenses while working out net profit margin of “Domestic-Personal care division”. - it has to be held that the international transactions of making exports to AEs are at arms length and hence no T.P adjustment is called for. - AT
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• Procedure prescribed u/s 144C - validity of draft assessment order where the AO did not attach the notice of demand - a document, which is held to be a legal nullity, cannot vitiate the assessment proceeding and the assessment order. - Decided against assessee. - AT
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• Short term capital gain arising on transfer of premises - appellant transferred the building premises used for business - the sale consideration can only be treated as transfer of lease hold rights in the land and building. Therefore, it will be assessed under the head ‘Income from capital gains’ and AO has assessed the same by following the provisions of capital gains - Not to be taxed as business income - AT
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• Disallowing excess purchase price - Whether effect of such excess pricing had already been neutralized in the Profit & Loss A/c by way of enhancing the closing stock value of almost same value as observed in the assessment order also? - CIT-A deleted the addition - The method of valuation and its impact has been properly appreciated by ld CIT(A) - AT
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IBC

• Maintainability of application u/s 7 of IBC - Assignment of Debt - The Application under Section 7 of IBC filed is not confined to debt as arising in the arrangement due to Consortium Lending which was a term loan, but was also towards independent overdraft facility and amounts due in that context. As such, even if one was to stretch the Order of High Court dated 04.12.2015 to say that it affects SIB, still the South Indian Bank was competent to maintain Section 7 Application on the basis of overdraft facility which was provided outside the Consortium. Thus, the Order passed by the Adjudicating Authority is not at all justified and deserves to be set aside. - AT
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• Initiation of CIRP - claim against Corporate Debtor second time on the same set of claims, initially made on principal borrower - The object of the Code is not to allow such guarantors to escape from an independent and coextensive liability to pay off the entire outstanding debt, which is why Section 14 is not applied to them.- AT
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Service Tax

• Works Contract Services - business of construction of buildings and civil structures for last several decades - The contention raised on behalf of the respondents that as the petitioner had voluntarily registered under the head of ‘commercial /industrial construction services’, the petitioner is liable to pay service tax, is not tenable as the petitioner cannot be held to be liable to pay service tax prior to 01.06.2007, where, it is not in dispute that the petitioner was rendering ‘works contract service’. - HC
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• Recovery of Refund of service tax already granted - service tax paid under a mistake of law? - The respondent-Revenue are restrained from recovering the amounts refunded since as of now the levy of service tax on the payment in lieu of foreign agency commission will not be leviable as 'Business Auxiliary service' prior to 18.04.2006 - HC
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Case Laws:

• GST

• 2020 (11) TMI 834
  Detention of goods alongwith vehicle - goods were not accompanied by the relevant E-way bills - Section 129(3) of the U.P. GST Act - HELD THAT:- A perusal of the appellate order shows that the Appellate Authority has decided the appeal in the absence of the counsel for the appellant. There is no reasons not to believe the version of the counsel for the petitioner to the extent that the counsel for the appellant could not appear on account of his suffering from high fever and no useful purpose would be served in keeping the present writ petition pending. The matter is remanded to the Appellate Authority to decide the appeal afresh, after affording an opportunity of hearing to the counsel for the appellant - Petition allowed by way of remand.

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• 2020 (11) TMI 833
  Grant of Bail - allegation of fraudulent availment of input tax credit - passing of forged GST - HELD THAT:- Taking into consideration the nature of allegations against the petitioner, his length of custody, the pendency of investigation, the offence being compoundable and the severity of punishment under Section 132 of the CGST Act; but, without expressing any opinion on the merits of the case, this Court deems it just and proper to enlarge the petitioner on bail. The bail application is allowed and it is directed that accused-petitioner Subhash Chandra Tyagi S/o Late Shri Chiranji Lal shall be released on bail under Section 439 Cr.P.C. in connection with afore-mentioned FIR registered at concerned Police Station, provided he furnishes a personal bond in the sum of ₹ 1,00,000/- together with two sureties in the sum of ₹ 50,000/- each to the satisfaction of the trial Court with the stipulation that he shall comply with all the conditions laid down under Section 437(3) Cr.P.C.

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• 2020 (11) TMI 832
  Provisional attachment of petitioner's Bank Account - Section 83 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Respondent No.1 states that if directions are issued by the Court for time-bound disposal of the above representation, it will be abided by promptly. It is directed that the aforementioned representation of the Petitioner be decided by a reasoned order not later than 4th December, 2020 and the decision thereon be communicated to the Petitioner not later than 8th December, 2020. The submissions of the Petitioner in the present petition and any additional submissions the Petitioner wishes to make in writing within the next two days, shall also be taken into account while passing such order. Petition disposed off.

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• 2020 (11) TMI 831
  Release of detained goods alongwith vehicle - expired E-way bill - HELD THAT:- It is clear from Rule 138(10) that the specific period for which an e-way bill is valid is evident from the table under that rule. Serial Nos.1 and 2 deals with cargo other than Over Dimensional Cargo [hereinafter 'ODC'] and serial Nos.3 and 4 with ODC. ODC is cargo having dimensions in excess of the vehicle in which it is carried. The contention of the appellant is that the amendment by which an insertion was made in 2019 takes in multimodal shipment in which at least one leg involves transport by ship and whether it be an ODC or goods other than ODC. Enabling proviso under Rule 138(10) - HELD THAT:- We perfectly agree with the submission of the learned Senior Government Pleader that this would only enable the consignee to update the e-way bill extending the period provided under the Table; within eight hours from the time of its expiry - If the shipment could be cleared only just before or after the period of expiry of the e-way bill, then there could be an extension made by an updation and the transport commenced with such e-way bill accompanying the goods. The contentions of the appellant is rejected - appeal dismissed.

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• 2020 (11) TMI 830
  Grant of Bail - input tax credit - fake firms - Offence under Section 132(1)(f) of the C.G.S.T. Act - HELD THAT:- It is directed that accused petitioners shall be released on bail provided each of them furnish a personal bond in the sum of ₹ 5,00,000/- together with two sureties in the sum of ₹ 2,50,000/- each to the satisfaction of the learned trial court with the stipulation that they shall appear before that Court and any court to which the matter is transferred, on all subsequent dates of hearing and as and when called upon to do so.

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• 2020 (11) TMI 829
  Grant of Bail - allegation of availment of inadmissible input tax credit - bail is sought on the ground that arrest of the accused was arbitrary and illegal as there is no adjudication of any tax liability outstanding or contravening of GST Act - HELD THAT:- The grant of bail requires striking a delicate balance between two conflicting interests, namely, on one hand. the liberty of an individual and on the other hand, the investigative rights of the prosecuting agency for the interest of the society. Although personal liberty and freedom of a person cannot be undermined, but at the same time, the legitimate rights of the investigative agency has to be taken due consideration of. The liberty of the individual is not absolute and same can be withdrawn if it is found to be creating an impediment in the rights of the prosecuting agency, The bifocal interests of justice to the individual and the rights of prosecution requires a fine balance to be maintained. In the instant case, the investigation is at a nascent stage and granting bail to accused at this stage would certainly undermine the rights of the prosecuting agency as tempering of evidence by accused which in this case would be documentary cannot be ruled out. Bail application is dismissed.

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• 2020 (11) TMI 828
  Permission for withdrawal of appeal - Revocation of cancellation of GST registration - non filing of returns for a continuous period of six months - non submission of reply to the show cause notice dated 20.12.2019 within the time specified therein - HELD THAT:- During the personal hearing appellant has stated that their CSTIN has been restored. The adjudicating authority has also submitted their report that the present status of GSTIN is active. Further, the appellant has also withdrawn their appeal vide mail dated 15.10.2020. Since, the jurisdictional authority has restored the said registration and the appellant has also withdrawn their appeal, Appeal is allowed to be withdrawn - appeal dismissed as withdrawn.

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• Income Tax

• 2020 (11) TMI 827
  Stay petition - grievance of the petitioner is that though Ext.P3 application for stay was heard on 31.10.2019, based on Ext.P4 notice dated 18.10.2019, the 2nd respondent is yet to pass orders on that application.HELD THAT:- This Court deem it appropriate to dispose of this writ petition by directing the 2nd respondent to conduct a re-hearing on Ext.P3 application for stay, with notice to the petitioner, within a period of two weeks from the date of receipt of a certified copy of this judgment, and pass orders on that application, within a further period of two weeks. The 2nd respondent shall also consider the request of the petitioner for early disposal of Ext.P2 appeal, considering the fact that he is a senior citizen aged 80 years.

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• 2020 (11) TMI 826
  Reopening of assessment u/s 147 - eligibility of reasons to believe - HELD THAT:- There is no infirmity in action u/s 148 of the Act wherein, there was a requisite information and the ld AO has applied his mind and found that there is reason to believe for the reopening of the assessment as according to AIR information assessee has deposited ₹ 1049000/- in his bank account with Laxmi Vilas Bank Ltd - There is no infirmity in the reopening of the assessment. Accordingly, ground No. 1 and 2 of the appeal are dismissed. Addition u/s 69 - unexplained source of cash deposit - HELD THAT:- Out of the above ₹ 2 lakhs the source of ₹ 26,000/- has been explained by the assessee whereas the balance of ₹ 174,000/- remains unexplained. In view of the above analysis, we direct the ld AO to delete the addition of ₹ 340,000/- out of the addition of ₹ 514000/- sustained by the ld CIT (A) as the source to the above deposit is explained by the assessee out of the withdrawal of cash from the same bank account which was not found to have been utilized by the assessee for any other purposes. Merely some time lag between the withdrawal and deposit without any contrary evidence that such withdrawal has been used by assessee for some other purposes, cannot go against the assessee. Ld CIT (A) has used this proposition to confirm the above addition. Accordingly, we direct ld AO to delete the addition of ₹ 340000/- out of ₹ 514000/- sustained by CIT (A). Thus, This ground of appeal of the assessee is partly allowed.

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• 2020 (11) TMI 825
  Allowable business expenses OR capital expenditure - payment of forfeited amount earlier received by the assessee - HELD THAT:- The above claim of the assessee on account of repayment of forfeited amount earlier received by the assessee, taxed duly in AY 15-16, subsequently, those persons received forfeited amount from assessee, booked the real estate during the year and therefore, forfeited amount was returned by the assessee is definitely an expenditure which springs from the business of the assessee of the real estate. The above expenditure has been incurred by the assessee wholly and exclusively for the purpose of booking of a real estate, cannot be held to be a capital expenditure. Same forfeited amount received from the same person has already been taxed for AY 2015-16, when the same is returned during the current year on booking of the flat, cannot be held to be capital expenditure. When the said sum was received, the revenue taxed as revenue receipt and when the same sum is refunded the revenue treated it as a capital expenditure. Thus blowing hot and cold in the same breath by revenue is not acceptable. Accordingly, reversing the order of the lower authorities the ld AO is directed to delete the disallowance expenditure incurred by the assessee is wholly and exclusively incurred for the purpose of the business and it is not a capital expenditure.

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• 2020 (11) TMI 824
  Direct Tax Vivad Se Vishwas Scheme - assessee has opted to settle the dispute relating to the tax arrears for the assessment year under consideration- HELD THAT:- We have seen the letter dated 17.11.2020 along with Form 1 and 2 filed with income tax department. Considering the aforesaid situation, the present appeal is dismissed. However, this dismissal of appeal is subject to a caveat that in case the dispute relating to tax arrears for the present assessment year is not ultimately resolved in terms of the aforesaid Scheme, the assessee shall be at liberty to approach the Tribunal for reinstitution of the appeal and the Tribunal shall consider such application as per law. The Revenue has no objection with regard to the aforesaid caveat. Appeal of the assessee is dismissed.

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• 2020 (11) TMI 823
  Reopening of assessment u/s 147 - No proper recording of satisfaction by Principal CIT - eligibility of reasons to believe - HELD THAT:- It is difficult to make out as to what were the reasons for belief that income has escaped assessment with the AO on the basis of which Principal CIT has accorded sanction by merely writing I am satisfied. From the approval recorded and words used that Yes. I am satisfied. , it is proved on record that the sanction is accorded in mechanical manner and Pr.CIT has not applied independent mind while according sanction as there is not an iota of material on record as to what documents he had perused and what were the reasons for his being satisfied to accord the sanction to initiate the reopening of assessment u/ss 147/148 of the Act. Even the AO has not applied his judicial mind independently while recording the reasons for initiating proceedings u/s 147/148 - Bare perusal of the reasons recorded shows that the entire emphasis is placed on the report of the Investigation Wing, which has otherwise been based upon the statements of Pradeep Kumar Jindal, Shri Subodh Kumar Khandelwal, Ms. Seema Khandelwal Ms. Meera Mishra who have furnished the list of companies stated to be not doing any business but engaged in providing accommodation entries. Before issuing the notice, the AO has not examined the profile of the said companies to arrive at the logical conclusion so as to issue notice u/s 148 Neither any reason has been recorded which is sufficient to believe that income to the tune of ₹ 15,00,000/- received from M/s. Hajima Resorts Ltd. has escaped assessment nor any such notice has been given to the assessee. All these facts goes to prove that the AO has not applied his judicial mind before recording the reasons to believe that such and such income has escaped assessment rather proceeded to initiate the proceedings u/s 147/148 of the Act by blindly following the report of the Investigation Wing. Coordinate Bench of the Tribunal in case cited as ITO, Ward 17 (4), New Delhi vs. M/s. Virat Credit Holdings Pvt. Ltd. [ 2018 (2) TMI 871 - ITAT DELHI ] dealt with the identical issue arising out of the search and seizure operation conducted by the Investigation Wing on 18.11.2015 on Pradeep Kumar Jindal Group of companies who were allegedly engaged into providing accommodation entries, quashed the reassessment on the ground that AO has not applied his judicial mind independently and that ld. Principal CIT has accorded mechanical approval by merely writing words that Yes, I am satisfied. without applying his judicial mind. According sanction is not a supervisory role rather it is a quasi-judicial function to be performed by the Principal CIT/CIT, as the case may be, as required u/s 151 of the Act. - Decided in favour of assessee.

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• 2020 (11) TMI 822
  Revision u/s 263 - transaction of cash deposit in the saving bank account by the respective assessee(s) - transaction arising out of family partition - CIT while initiating proceedings u/s 263 of the Act mentioned that no details and documents are found on record which could establish that the dates on which the amount was received by the assessee from his father and also the Ld. A.O did not examined the assessee on oath in connection with the veracity of the transaction - HELD THAT:- A.O vide his notice dated 3.10.2016 issued u/s 143(2) of the Act enclosed a Annexure and through point No.13, the assessee was required to explain the source of cash deposit in his saving bank account. Along with this reply the assessee enclosed copy of bank pass book, copy of agreement of sale of agriculture land, copy of memorandum of family settlement and copy of death certificate of father Ramcharan Das. On the basis of above details the explanation of the assessee were accepted by the Ld. A.O and the alleged amount being the amount received on family partition, the transaction was treated as explained by the Ld. A.O. All necessary evidences which could explain the source of cash deposits in the bank account by the respective assessee(s) is established and in the family partition deed the name of three assessee(s) named S/Shri Ram Swarrop Bairagi, Sriram Vaishnav and Shailendra Vashav who are in appeal before us are appearing. The nexus of cash deposit is proved with copy of sale deed, partition deed and bank pass book. We therefore in the given facts and circumstances of the case are of the considered view that specific information was called by Ld. A.O about the alleged cash deposits and the assessee has satisfied the Ld. A.O with complete details giving the source of cash deposit in the bank account. Therefore it is neither a case of no enquiry or inadequate enquiry - PCIT has wrongly assumed jurisdiction u/s 263 of the Act and the impugned order deserves to be quashed - Decided in favour of assessee.

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• 2020 (11) TMI 821
  Levying late fees u/s 234E - Late filing of TDS returns / statement - statement processed u/s 200A - delay in filing return for the period before 01.06.2015 - HELD THAT:- As decided in case of Executive Engineer others [ 2019 (7) TMI 1678 - ITAT INDORE ] Assessee is eligible for relief for deletion of fee levied u/s 234E of the Act as the returns are processed before 1.6.2015. - Appeal of assessee allowed.

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• 2020 (11) TMI 820
  Revision u/s 263 - addition on account of suppression of GP on accommodation entries - AO T axing only profit by estimating GP on alleged bogus purchase - Reopening of assessment on the basis of information received by Investigation Wing after search on Bhanwarlal Jain group - HELD THAT:- The Hon'ble Jurisdictional High court in the case of Mohommad Haji Adam Co. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] and Paramshakti Distributors Pvt. Ltd. [ 2019 (7) TMI 838 - BOMBAY HIGH COURT] has held that in case of bogus purchases, purchases cannot be rejected without distrusting the sales in case of a trader. The addition can be restricted to the extent of GP rate on such purchases to bring it at par with genuine purchases. In other words, it is only the profit element embedded in the bogus purchase bills that is to be brought to tax and the entire bogus purchases cannot be added. AO was right in taxing only profit by estimating GP on alleged bogus purchases. As regards invoking of jurisdiction under section 263 by PCIT, we are of considered view that the PCIT has over stepped while exercising his revisional powers - AO has passed the order by estimating GP after examining the documents on record and considering various judicial pronouncements - AO has taken one of the possible views by making reasonable assumption that the assessee might have procured the goods from grey market. This assumption has been accepted by the Tribunal in various decisions where the revenue has accepted the sales/ turnover corresponding to alleged bogus purchases. The Hon ble Supreme Court of India in the case of Malabar Industrial Co. Ltd. v. Commissioner of Income-tax [ 2000 (2) TMI 10 - SUPREME COURT] in an unambiguous manner has held that where two views are possible and the Assessing Officer has taken one of the possible views to which CIT does not agree, this would not make the assessment order erroneous. In the instant case the assessment order may be prejudicial to the interest of revenue but it cannot be said to be erroneous. Since, both the conditions to trigger Sec 263 are not satisfied, the PCIT has erred in invoking his revisional power. - Decided in favour of assessee.

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• 2020 (11) TMI 819
  Denial of claim of deduction u/s 10AA on transfer pricing adjustment made by the assessee voluntarily - HELD THAT:- We notice that an identical issue has been examined by the Bengaluru bench of Tribunal in the assessee s own case in assessment year 2010-11 [ 2020 (5) TMI 548 - ITAT BANGALORE ] and it has been decided in favour of the assessee by following the decision rendered by the Pune Bench of Tribunal in the case of Apoorva Systems Pvt. Ltd. [ 2018 (3) TMI 1031 - ITAT PUNE ] - Decided against revenue.

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• 2020 (11) TMI 818
  Grant of recognition u/s. 80G rejected - assessee trust obtained registration under section 12AA - HELD THAT:- Impugned order of ld. CIT(E) is a non-speaking order. As rightly contended by the ld. counsel for the assessee, the generation of surplus and the fact that majority of receipts are by way of fees collection cannot be a ground to refuse recognition u/s. 80G - The assessee is admittedly existing for a charitable purpose of providing education. As rightly contended by the ld. DR, the impugned order is a non-speaking order and therefore it would be in the fitness of things to set aside the order of CIT(E) and remand back to him the issue of grant of recognition u/s. 80G of the Act to the assessee for fresh consideration. The CIT(E) will afford opportunity of being heard to the assessee before deciding the issue. Appeal of the assessee is treated as allowed.

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• 2020 (11) TMI 817
  Income from other sources u/s 56(2)(vii)(b)(ii) - difference between the market value and purchase consideration on the date of registration of sale - HELD THAT:- In the instant case the Proviso to sub clause (b) of section 56(2)(vii) of the Act gets attracted and the Stamp Duty value as on the date of booking the flat wherein the consideration was mutually agreed between the parties was fixed shall be taken for the purpose of sub clause (b). The assessee has also filed a report from the registered valuer, according to which the stamp duty value of the flat in August, 2012 has been determined at ₹ 98,68,000/. We find merit in the contentions raised by the assessee.The provision of Section 56(2)(vii)(b) of the Act does not envisage transfer of ownership for determination of stamp duty value. The determination of stamp duty value hinges on the date of agreement fixing the amount of consideration for transfer of immovable property. In the present case, the date is August 2, 2012. i.e. the date of booking the flat. At the time of booking flat the total amount of consideration was fixed between the parties. The date of transfer of title in immovable property has no significance under the provisions of Section 56(2)(vii)(b). - Appeal of assessee allowed.

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• 2020 (11) TMI 816
  Addition u/s 68 - unverified/non-existent /bogus sundry creditors in respect of six creditors on the ground that the assessee could not substantiate the identity and credit worthiness of the creditors and the genuineness of the transaction - HELD THAT:- Payments have been made by the assessee to the creditors in subsequent years and there is nothing on record to show that such payments made to the above parties have come back to the assessee in some form or the other. Books of account of the assessee has not been rejected and the addition u/s 68 of the Act has been made in respect of six creditors from whom the assessee has purchased goods, but, no payments have been made to those parties during the impugned assessment year and the assessee was unable to produce the above six parties before the AO during remand proceedings although three of them were produced before the AO during assessment proceedings. Under these circumstances, it is to be seen as to whether addition can be made of the whole of the amount or profit embedded in these purchases can be added to the total income of the assessee. In the instant case, the sales made by the assessee has been accepted and the books of account have not been rejected and the assessee has made the payments to the sundry creditors in the subsequent years and there is nothing on record to suggest that the money so paid has come back to the assessee directly or indirectly in any form, therefore, making addition of the entire amount payable to the six sundry creditors in the instant case in our opinion is highly unjustified. Assessee also cannot get scot free by not producing the sundry creditors and making purchases from parties who are not maintaining proper records or who have made adverse statements and, therefore, the assessee cannot be equated with another assessee who is maintaining records meticulously and not making purchase from grey market. Since the assessee in the instant case is showing GP rate of less than 4%, therefore, considering the totality of the facts of the case, we are of the considered opinion that adoption of GP rate of 16% on such unsubstantiated purchases from the six creditors will meet the ends of justice. We, therefore, direct the AO to adopt GP rate of 16% on such purchases of ₹ 3,05,34,283/- from the six creditors which comes to ₹ 48,85,485/- as against the addition of the entire amount payable to the six parties u/s 68 - we direct the AO to restrict the addition - Decided partly in favour of assessee.

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• 2020 (11) TMI 815
  Addition under the head Railways Punitive charges - Whether compensatory in nature and allowable u/s 37 - observation of the A.O that punitive charges for overloading was penal in nature - HELD THAT:- Since the identical issue has been decided by the Coordinate bench in favour of the assessee by allowing the claim of damages in own case [ 2018 (10) TMI 672 - ITAT KOLKATA ], respectfully relying upon the same we find no infirmity in the order passed by the Ld CIT(A) so as to warrant interference. Hence in the absence of any merit found in the appeal preferred by the revenue, the same is hereby dismissed. Addition u/s 14A r.w.r 8D - HELD THAT:- As in own case [ 2018 (10) TMI 672 - ITAT KOLKATA ] not all investments become the subject-matter of consideration when computing disallowance under section 14A read with rule 8D. The disallowance under section 14A read with rule 8D is to be in relation to the income which does not form part of the total income and this can be done only by taking into consideration the investment which has given rise to this income which does not form part of the total income. Under the circumstances, the computation of the disallowance under section 14A read with rule 8D(2)(iii), which is issue in the assessee's appeal, is restored to the file of the AO for recomputation in line with the direction given above. No disallowance under section 14A read with rule 8D(2)(i) and (ii) can be made in this case. Hon ble Jurisdictional High Court in CIT vs. M/s Ashika Global Securities Ltd [ 2018 (7) TMI 1425 - CALCUTTA HIGH COURT ] and also the judgement passed by the Coordinate Bench and respectfully relying upon the same we find no infirmity in the order passed by the Ld CIT(A) in deleting the addition made under section 14A r.w.r.8D so as to warrant interference. Appeal of the Revenue is dismissed.

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• 2020 (11) TMI 814
  Reopening of assessment - legality of issuance of notice u/s. 148 - Period of limitation - CIT(A) was of the opinion that issuance / serving of notice for reopening u/s 148 of the Act and subsequent framing of re-assessment order was not as per Section 149 and 153 - Time limit prescribed for completion of assessment / re-assessment / re-computation after re-opening - HELD THAT:- in the present case, we note that the limitation period for issuing notice of reopening u/s. 148 of the Act as prescribed in Section149 of the Act gives the outer limit of six years from the end of the relevant assessment year which in this case for AY 2009-10 is admittedly on 31.03.2016. So by issuing notice even though on the last day as prescribed by Section 149 of the Act, the AO gets the jurisdiction to reopen the assessment of the assessee for AY 2009-10. Further, it can be noted that section 153 prescribes the Time Limit for completion of assessment, re-assessment and re-computation . Therefore, in the case of reopening of assessment u/s 147 of the Act, the time limit to frame the assessment or reassessment starts only after serving of notice u/s 148 of the Act i.e. nine (9) months from the end of financial year in which the notice u/s 148 of the Act was served upon the assessee. Therefore, admittedly in this case, the notice u/s. 148 of the Act was served upon the assessee by e-mail on 22.09.2016, so the limitation time of nine months starts from the end of financial year, so in this case the end of financial year after serving notice is 31.03.2017, so as per Section 153 of the Act, the Assessing Officer should frame the assessment before the expiry of nine months from the end of the financial year in which the notice u/s. 148 of the Act was served, therefore, in this case, the Assessing Officer has time to frame the assessment till 31.12.2017 and the Assessing Officer in the instant case has framed the assessment on 11.12.2017 that is well within the time prescribed by section 153(2) of the Act and, therefore, his framing of assessment after reopening is legal as per the statute. We reverse the order of ld. CIT(A) and we hold that Assessing Officer after issuing the notice u/s 148 for AY 2009-10 within the limitation period on 31.03.2016, had got jurisdiction to re-open the assessment for AY 2009-10 and after having served the assessee notice u/s 148 on 22.09.2016 has passed the assessment order within the prescribed time u/s. 153(2) of the Act on 11.12.2017, so these actions of Assessing Officer are legal and valid in the eyes of law. Validity of reopening of assessment - reason to believe - information given by Investigation Wing - whether on the basis of the reasons recorded by the AO, he could have validly reopened the assessment? - unaccounted cash - HELD THAT:- Reasons recorded by AO it is evident that other than the general information given by Investigation Wing there is no other material the AO collected himself after preliminary enquiry which could have enabled him at the time of recording reasons to come to a conscious independent conclusion that income of the assessee has escaped assessment . According to us, the information given by the Investigation Wing can only be at the best be a basis to ignite/trigger [ though we have our reservation on it ] and be the starting point to enquire; and at that stage the information of Investigation Wing can be termed as a foundation only to form reason to suspect and not reason to believe escapement of income which is the jurisdictional fact law required to enable the AO to successfully assume jurisdiction to reopen as envisaged u/s. 147. And the reason to suspect cannot be the basis for usurping jurisdiction to reopen u/s. 147 of the Act, for conducting roving/further examination cannot be resorted by him in order to strengthen the suspicion to an extent which can later transform the suspicion to create the belief in his mind that income chargeable to tax has escaped assessment. Merely on a study by Investigation Wing ,as in this case explaining the general modus operandi carried out by un-scrupulous persons in suspected transactions to convert the unaccounted cash of beneficiaries which were transferred to the bank accounts of the beneficiaries through the dubious bank accounts of fake entities can only raise suspicion in the mind of the AO (which fact we have pointed out earlier) which is not sufficient/requirement of law for unscrupulous persons in suspected transactions to convert the unaccounted cash of beneficiaries which were transferred to the bank accounts of the beneficiaries through the dubious bank accounts of fake entities can only raise suspicion in the mind of the AO (which fact we have pointed out earlier) which is not sufficient/requirement of law for reopening of assessment. We find that the reasons recorded by the AO to justify reopening the assessment u/s. 147 fails and, therefore, the very assumption of jurisdiction to reassess the assessee falls. - Decided in favour of assessee.

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• 2020 (11) TMI 813
  Revision u/s 263 - Bogus LTCG - Suspicious sale transaction in shares and exempt long term capital gains shown in return (Penny Stock Tab in ITS) - HELD THAT:- We find that the coordinate Bench of this Tribunal in the case of ITO vs. Shri Narayan Tatu Rane [ 2016 (5) TMI 1162 - ITAT MUMBAI] , M/s. Arun Kumar Garg, HUF, [ 2019 (4) TMI 400 - ITAT DELHI] have ruled that the Pr. CIT can not pass the order u/s 263 of the Act on the ground that thorough enquiry should have been made by the Assessing Officer. See DG HOUSING PROJECTS LTD [ 2012 (3) TMI 227 - DELHI HIGH COURT] In the present case AO had given a specific notice regarding the disputed transactions and the assesseee also gave specific reply to the show cause notice issued by the assessing officer. Therefore, it is not a case where the assessing officer has not made any enquiry regarding impugned transactions but the Ld. Pr. CIT invoked the provisions of section 263 of the Act on the ground that the enquiry was not made in the manner, it ought to have been done. Ld. Pr. CIT himself ought to have made some enquiry regarding the impugned transactions before setting aside to the file of the assessing officer. Hence, the action of the Ld. Pr. CIT is contrary to the ratio laid down by the binding precedence. We, therefore, hold accordingly, impugned order is quashed. - Decided in favour of assessee.

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• 2020 (11) TMI 812
  Reopening of assessment u/s 147 - whether there was prima facie some material on the basis of which the department could reopen the case? - HELD THAT:- The reasons to believe would mean cause or justification - at the stage of initiating the proceedings for reopening of assessment by issuing notice, the only question which should bear in mind is as to whether there was relevant material on which a reasonable person could have formed a requisite believe and in our view, the A.O. was well within his right to reopen the assessment on the basis of information received from I CI Wing of the department that the assessee had purchased property in the year under consideration and during the course of enquiries made by I CI Wing of the department, the assessee could not explain the source of investment. In view of the above facts and circumstances, we find no reason to interfere in the order of the ld. CIT(A) qua this issue, accordingly, we uphold the same. Addition u/s 68 - treating the loan taken by the assessee from Smt. Kamla Tahaliyani as bogus - HELD THAT:- Cash deposited in the bank account is totally sourced by the cash withdrawals made earlier. Hence, adverse inference drawn by the revenue authorities under these peculiar facts and circumstances is unwarranted. Therefore, in our view, the CIT(A) erred in sustaining the addition without considering this fact that the cash deposited in the bank account was fully sourced from the earlier cash withdrawals from the same bank account, therefore, the findings of the ld. CIT(A) that immediate source of advancing money is unverifiable, are factually incorrect and are perverse. Therefore, keeping in view our above discussion, we direct the A.O. to delete the addition made u/s 68. Addition of advance payment by the assessee against the sale of property from Shri Ram Swaroop Mali - admission of additional evidence - HELD THAT:- During the course of argument, the assessee had also placed on record an application dated 21/09/2020 to accept an affidavit as additional evidence under the provisions of Income Tax Appellate Rules, 1963 (in short, the Rules). In the said application, the assessee wants to place on record an affidavit of Shri Chhitar Mali, S/o- Shri Ramswaroop Mali as additional evidence, however, the ld AR has failed to demonstrate as to how the present application filed by the assessee is meeting with the ingredients contained in Rule 29 of the Rules. Therefore, in our view, the present application for accepting the affidavit as additional evidence moved by the assessee deserves to be dismissed and the same is accordingly dismissed. A.O. had believed the source of ₹ 4,89,000/- from the agricultural income of Shri Ramswaroop Mali but in respect of the amount of ₹ 5.11 lacs, the assessee has not placed on record any document in respect of purchase and sale of truck by son of Shri Ramswaroop Mali. The assessee has not placed on record any corroborative evidence, such as, Registration, transfer certificate or any other documents to demonstrate for acquiring and sale of truck by son of Shri Ramswaroop Mali and absolutely no evidence to prove that the said son had given amount to Shri Ramswaroop Mali. In view of the above facts and circumstances, we find no reason to interfere in the order of the ld. CIT(A) qua this issue, accordingly, we uphold the same.

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• 2020 (11) TMI 811
  Procedure prescribed u/s 144C - validity of draft assessment order where AO did not attach the notice of demand - Whether the whole assessment proceedings is liable to be quashed as illegal - whether the action of the AO in issuing Notice of Demand along with the draft assessment order would vitiate the assessment proceedings - HELD THAT:- In the instant case, there is no dispute that the assessing officer has consciously passed the draft assessment order by correctly mentioning that the same is passed u/s 143(3) r.w.s 144C of the Act. The assessee has also understood the same as draft assessment order and accordingly filed its objections before Ld DRP. The Ld DRP has also passed its directions in pursuance of objections filed by the assessee. In our view, the question of applicability of sec.292B of the Act does not require consideration in the instant case. Earlier that the assessing officer, in the instant case, has passed the draft assessment order u/s 143(3) r.w.s. 144C of the Act. The assessee has also, in terms of sec.144C of the Act, filed its objections before the Ld DRP. After the receipt of the directions from Ld. DRP, the assessing officer has passed the final assessment order. Except for attaching a notice of demand along with the draft assessment order, everything has been done in accordance with the law. Whether the notice of demand attached with the draft assessment order would make the said draft assessment order as final order and consequently, the whole assessment proceedings is liable to be quashed as illegal. In our view, the answer should be negative. As rightly pointed by Ld D.R, the notice of demand issued along with the draft assessment order is a legal nullity and does not exist in the eyes of law, since no valid demand could be raised under the draft assessment order. In our considered view, a document, which is held to be a legal nullity, cannot vitiate the assessment proceeding and the assessment order. - Decided against assessee. TP Adjustment - goods sold to Associated Enterprises (AEs) - NP Determination - HELD THAT:-There should not be any dispute that the methodology consistently followed to work out net profit year after year should be followed in this year also. It should not be tinkered with, unless proper reasons are given. The TPO has not given any reason as to why he did not consider above said two expenses while working out net profit margin of Domestic Personal care division . Hence the workings made by TPO is liable to rejected. We have noticed that the net profit margin worked out by the assessee in Domestic Personal care division was 10.70%. The net profit margin worked out for Exports to AEs was 12.01%. Hence the net profit margin earned in the exports to AEs division is higher than its comparable Domestic Personal care division . Hence it has to be held that the international transactions of making exports to AEs are at arms length and hence no T.P adjustment is called for. Accordingly, we direct deletion of Transfer pricing adjustment made in respect of Exports to AEs. TP adjustment made in respect of Advertisement and Marketing expenses - TPO took the view that the assessee is incurring huge amount towards Selling and Marketing Expenditure with a view that these expenses go to increase the brand name owned by the Parent company - HELD THAT:- It is admitted that the legal ownership was transferred to HGH due to business necessity/compulsion. Hence the transfer of legal ownership is an internal arrangement between related parties, which was made on account of business necessities. The right to exploit the brand name, logo, trademarks etc., continue with the assessee only. Hence, the assessee is also beneficiary of AMP expenses or the promotion of brand. In this view of the matter also, the question of making T.P adjustment in respect of AMP expenses on account of brand promotion does not arise. Hence, on this reasoning also, the impugned TP adjustment on AMP expenses is liable to be quashed Following the decision rendered by the Tribunal in AY 2013-14 and 2011-12, [ 2018 (7) TMI 1964 - ITAT BANGALORE] we direct the AO to delete the transfer pricing adjustment made in respect of Selling and Marketing expenses. Transfer pricing adjustment made in respect of royalty - TPO noticed that the assessee has got Research and Development unit - assessee has obtained product registration in foreign countries - HELD THAT:- As relying on own case it cannot be taken that the AEs have exploited the product registration/license obtained by the assessee from various Governments. Hence the question of payment of royalty does not arise. Accordingly, we set aside the order passed by AO/TPO on this issue and direct the AO to delete this T.P adjustment

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• 2020 (11) TMI 810
  Interest disallowance u/s 36(1)(iii) - assessee did not file any fund flow statements in support of the submissions that own funds were used to make the investments in certain premises, against which the disallowance has been computed by lower authorities - HELD THAT:- The perusal of assessee s financial statements would show that the assessee has own funds in the shape of share capital reserves aggregating to ₹ 225.28 Crores at year end as against opening funds of ₹ 153.15 Crores. Besides the above funds, the assessee has interest free unsecured loans of ₹ 58.72 Crores at its disposal at year end. As against this, the capital advances at year end stood at ₹ 20.23 Crores as against opening balance of ₹ 19.83 Crores which would show that there was only a marginal increase of ₹ 40 Lacs during the year. Further, the interest-bearing secured loans obtained by the assessee were meant only for specific purposes i.e. packing credit or post-shipment credit. It could very well be concluded that there was no nexus of borrowed funds with the capital advances made by the assessee and the assessee had sufficient own funds to make the aforesaid investments. Without establishing any direct nexus of borrowed funds vis- -vis capital advances, no such disallowance could have been made by revenue authorities. Thus interest disallowance is not sustainable in law. By deleting the same, we allow the appeal of assessee.

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• 2020 (11) TMI 809
  Disallowance of depreciation on intangible assets i.e. non-compete fees - HELD THAT:- As decided in own case [ 2018 (8) TMI 1999 - ITAT MUMBAI] assessee acquired 78% of the interest in the partnership firm, we are of the firm view that any payment which is made for not competing with the firm for the period of five years is evidently falls within the ambit of non compete fee as the payment was made to protect the business interest of the assessee as the assessee s cost of investment in the said firm was ₹ 91.51 crores which was made by way of capital contribution to the tune of ₹ 3.9 crores and ₹ 87.61 for acquiring the rights in the said partnership. Thus finding of the Ld. CIT(A) is fallacious and wrong and can not be sustained. In this case, the assessee has made payment of non compete fee and rightly treated and classified under intangible assets and claimed depreciation thereon @25%. We set aside the order of Ld. CIT(A) and direct the AO to allow the depreciation - Decided in favour of assessee. Disallowance made u/s. 14A - AO rejected the working of the assessee and by invoking provisions of Rule 8D worked out disallowance - HELD THAT:- Since the revenue accepted the decision of the Ld.CIT(A) that the working of the assessee is more scientific than the adhoc estimation made by the Assessing Officer and such working of the assessee since made on scientific basis we do not see any reason to reject the computation of disallowance made by the assessee for the year under appeal. Thus, we direct the Assessing Officer to accept the working made for disallowance u/s. 14A by the assessee and restrict the disallowance u/s. 14A to the amount as adopted by the assessee. However, since the assessee had already made suomoto disallowance we direct the Assessing Officer to delete the disallowance made u/s. 14A r.w. Rule 8D of I.T. Rules. This ground is allowed. Disallowance u/s. 35D - expenses towards issue of shares to promoters and also for conversion of warrants and the expenses incurred for issue of shares/warrants - HELD THAT:- In the facts and circumstances of the assessee s case which is engaged in the business of retailing of readymade garments, other accessories and household items through a chain of retail stores across the country and part of the garments sold are manufactured on job-work basis indicates that the assessee is doing business through all these departmental stores can be held to be an industry where a systematic economic activity is being carried on by the assessee - we direct the Assessing Officer to allow the claim for deduction u/s. 35D of the Act to the assessee. The decision relied by the Assessing Officer in the case of Vita (P.) Ltd. [ 1994 (11) TMI 117 - BOMBAY HIGH COURT] is not applicable to the facts of the assessee s case as the same is not dealing with the provisions of section 35D of the Act and distinguishable even on facts. Disallowance towards Employees Stock Option Scheme [ESOP] expenses u/s. 37(1) - HELD THAT:- In this case the assessee has amortized the expenses in connection with Employee Stock Options Scheme as per SEBI guidelines and claimed the same as revenue expenditure which according to the AO was not correct and he disallowed the same by holding that same is of capital in nature which was also affirmed by the CIT(A). We are not in agreement with the conclusion drawn by the Ld. CIT(A) on this issue that the amortization of expenditure claimed by the assessee is not admissible as revenue in nature and the issue is settled by the various judicial forums. As decided in own case [ 2018 (8) TMI 1999 - ITAT MUMBAI] we allow the claim of the assessee for the year under appeal. This ground is allowed. Determination of Annual Letting Value (ALV) of the premises at Taj Building u/s. 23(1)(a) - HELD THAT:- As decided in own case [ 2018 (8) TMI 1999 - ITAT MUMBAI] we not in agreement with the conclusion drawn by the Ld. CIT(A) holding that the ALV determined on the basis of so called comparable cases which are not at all comparable due to the fact that there is no comparability between the two buildings at all and the locations and also in view of the fact that annual let out value is much lower than the actual rate received. The order of Ld. CIT(A) is set aside and AO is directed to accept the rent as shown by the assessee from the said property. Disallowance of expenditure incurred towards earning exempt income while computing its book profit taxable under section 115JB - HELD THAT:- This issue has been decided by the Hon'ble Special Bench of Delhi in the case of Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] wherein it has been held that computation under clause (f) of explanation 1 to section 115JB(2) is to be made without resorting to computation as contemplated u/s. 14A r.w. Rule 8D of the Act. In view of the decision above the claim of disallowance as computed under Rule 8D cannot be made while computing the book profits - assessee himself disallowed an amount of ₹.37,07,020/- as expenditure incurred towards earning exempt income while computing its book profits u/s. 115JB(2) - the assessee while computing the income under normal provisions of the Act had made suomoto disallowance u/s. 14A at ₹.37,66,085/-, as this computation of suomoto disallowance was made on a scientific basis we feel it appropriated to adopt the same even while computing the book profits u/s. 115JB. Disallowance made u/s. 36(1)(ii) - commission paid to the Directors on the ground that they hold equity shares of the company - HELD THAT:- We noticed that Assessing Officer completely ignoring and without going into the submissions of the assessee made disallowance simply relying on the decision in the case of Loyal Motor Service Co. Ltd [ 1946 (3) TMI 17 - BOMBAY HIGH COURT] . The decision in the case of New Silk Route Advisors Pvt. Ltd., [ 2018 (8) TMI 384 - BOMBAY HIGH COURT] the Hon'ble Bombay High Court had also considered the decision in the case of CIT v. Shahzada Nand and Sons [ 1977 (4) TMI 4 - SUPREME COURT] held that the payment made in the form of bonus to the employee Directors of the company is not a payment made in view of the dividend. Thus, following the decision of the Hon'ble Bombay High Court we direct the Assessing Officer to delete the disallowance made u/s. 36(1)(ii).

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• 2020 (11) TMI 808
  Profit chargeable to tax under section 41 - case was selected for scrutiny under CASS - Reading of the comments of the auditor at clause no. 20 of form no.3CD, being tax audit report, with regards to computation of miscellaneous income - HELD THAT:- We notice from the record that the tax auditor has disclosed certain details of information in Clause 20 of tax audit report, but he did not elaborate what those information are.When analyzing those information, it says other deduction (income) and other information rebates and settlement. When we deduct the income and settlement amount, the difference which matches with the Miscellenous income declared by the assessee in its financial statement. When the assessee tries to explain the tax authorities they did not believe and also not verified the same by calling for explanation from the tax auditors. In our considered view that tax authorities should have called for clarification from the tax auditor and completed assessment based on the clarification.The information matches with the submissions of the assessee therefore we are inclined to accept the submissions of the assessee therefore the addition made by the assessing officer is accordingly deleted. Hence, the ground No. 1 raised by the assessee is allowed. Income received from letting out of property - Income from house property and not under the head Income from business - HELD THAT:- Even though one of the object of the assessee to give the property developed by them as on lease. But as per the above facts, it is clear that it is only an arrangement between NRPL and assessee to explore the option of finding a large multinational company and construct the commercial property and then transfer the same to NRPL as per the MOU entered with them. By the time, assessee completed the total project and received a considerable sale consideration from NRPL, which clearly indicates that assessee has carried on its main object of construction and giving the IT Park on lease, is only an arrangement and not the main objective of the assessee company. Therefore, relying on the decision of Hon ble Supreme Court in the case of Chennai Properties and Investment Ltd Vrs. CIT [ 2015 (5) TMI 46 - SUPREME COURT] is farfetched and as per this, the income received from letting out of property is the main objective of the above company of which the main objective as per the MOU of the company is to earn the rental income and maintaining the same is the main objective. In the present case, the main objective of the assessee company is only to construct and complete the turnkey projects and letting out the commercial property is only an arrangement with that party(assignor) based on the MOU. Therefore, the rental income earned by the assessee can only be taxed under the head Income from house property and not under the head Income from business . Accordingly, ground no. 2 raised by the assessee is dismissed. Addition u/s 40(a)(ia) - HELD THAT:- By relying on the decision of Hon ble Delhi High Court in the case of CIT vs. Rajinder Kumar [ 2013 (7) TMI 454 - DELHI HIGH COURT] , CIT vrs. Ansal Land Mark Township (P) Ltd, [ 2015 (9) TMI 79 - DELHI HIGH COURT] and various case law in this respect and also as per the confirmation received from the company that bank has already declared the income in the return of income, we are of the considered view that section 40(a)(ia) of the Act cannot be invoked in this regard. Accordingly, ground no. 4 raised by the assessee is allowed. Short term capital gain arising on transfer of premises - appellant having transferred the building premises used for business, the consideration for sale would have to be reduced from the block of assets, as provided u/s 43(6) and computation of short term capital gams separately was not correct by law - HELD THAT:- Assessee is in the business of construction and it has constructed IT park based on the MOU with NRPL and accordingly, developed the IT park and gave the building on rent to LIPL, therefore we cannot accept the contention of the assessee and moreover, we notice that assessee has completed the construction of building during this assessment year and assessee has collected all the sale consideration based on the stages of completion of milestones of the construction from NRPL, therefore the transfer of right on the land of building is not part of the fixed assets, but it is a commercial transaction of the assessee company. Hence, the sale consideration can only be treated as transfer of lease hold rights in the land and building. Therefore, it will be assessed under the head Income from capital gains and AO has assessed the same by following the provisions of capital gains. Accordingly, ground no. 1 raised by the assessee is dismissed. Applicability of section 50C to the transfer of leasehold rights in a plot of land with structure constructed thereon - AO rejected the contention of the assessee by invoking the provision of section 50C and brought to tax the difference between stamp duty valuation and sale consideration. - assessee was asked as to why the stamp duty valuation cannot be assessed - HELD THAT:- Coordinate Bench of ITAT in the case of ACIT vs. Greenfield Hotels and Estates Pvt. Ltd [ 2013 (10) TMI 1544 - ITAT MUMBAI] has passed its order in favour of the assessee by determining that the provision of section 50C are not attracted to transfer of leasehold rights. - Decided in favour of assessee. Non-deduction of TDS on interest paid to Kotak Mahindra Prime - addition u/s 36(1)(va) r.w.s. 2(24)(x) of the I.T Act 1961 towards delayed deposit of ESIC contribution of employees - HELD THAT:- Coordinate Bench of ITAT in the case of CIT vs. Rajinder Kumar [ 2013 (7) TMI 454 - DELHI HIGH COURT] and CIT vs. Ghatge Patil Transport Ltd. [ 2014 (10) TMI 402 - BOMBAY HIGH COURT] respectively, has passed its order in favour of the assessee. Therefore, respectfully following the decision of Coordinate Bench of ITAT, which is applicable mutatis mutandis to the present case - Decided in favour of assessee. Allowable deduction during this assessment year - HELD THAT:- Since assessee has not claimed deduction in the AY 2014-15 as prior to that extent and assessee has made the above claim only in the assessment proceedings and as per the judicial proceedings we know that AO cannot allow the above said claim, however the appellate authority can only allow the said claim as per the decision of High Court in the case of CIT vs Pruthvi Brokers Shareholders Pvt. Ltd.[ 2012 (7) TMI 158 - BOMBAY HIGH COURT]

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• 2020 (11) TMI 807
  Disallowing excess purchase price - Whether effect of such excess pricing had already been neutralized in the Profit Loss A/c by way of enhancing the closing stock value of almost same value as observed in the assessment order also? - CIT-A deleted the addition - HELD THAT:- Fact which should not be lost sight of is that the quantity of purchases was tallying with the parties accounts vis- -vis the appellant's books in this regard. The appellant made high sea purchases of raw cashews from Kerala Port and as per the Departmental of Commercial taxes, Kerala under the Kerala VAT Rules the price was of such import was fixed at ₹ 70/- per kg. This was also mentioned in the Circular No.28/11 dated 3.12.2011 issued by the Departmental of Commercial taxes, Kerala. The appellant irrespective of the prices of actual purchases as per the high seas agreement valued the raw cashews at 70/- per kg. under the State Rules, VAT and the Income Tax Rules and laws. It is in this manner that the appellant reflected the value of purchases of raw cashews in the audited accounts which resulted in excess value to the extent and the said fact has been properly appreciated by ld CIT(A). That being so, we decline to interfere with the order of ld. C.I T.(A) in deleting the aforesaid additions. Addition on account of two outstanding creditors as on the last day of financial year - HELD THAT:- In view of the fact that the purchases is not disturbed and tallying and the amount is receivable by the appellant from the party which the party has passed a journal entry and nullified the same in their books would not justify additions in the books of the appellant and therefore, the AO is directed to delete the additions on account of difference of sundry creditor balance - As carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We have heard and gone through the above noted findings of ld CIT(A). We did not find any infirmity in the order of ld CIT(A). That being so, we decline to interfere with the order of Id. C.I T.(A) in deleting the aforesaid addition. Income being the peak balance with HDFC Bank - undisclosed closing bank balance - HELD THAT:- We note that ld CIT(A) has confirmed the addition made by assessing officer, which is in favour of Revenue. The Department should not have raised this ground. It seems to us that ground No.6 raised by the Revenue is wrong and therefore does not require adjudication.

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• 2020 (11) TMI 806
  Unexplained cash credit u/s. 68 - Bogus purchases - estimation of income - HELD THAT:- AO has not rejected the books of account of the assessee, but has made the addition towards the bogus purchase. The assessee has also made the payment to the party in the subsequent year which is evident from the payment which fact has been noted by the AO. This is not the case where books of account maintained by the assessee has been rejected and the profit has been estimated - assessee has failed to produce documentary evidences in the form of lorry receipts, way bill receipts, octroi receipts etc. The assessee has failed to substantiate the movement of rice from the rice mill to the assessee. So assessee has not been able to show with the support of evidence that it has purchased the rice from M/s. Standard Rice Mills. However, it is significant to note that sales has been accepted by the AO/ department. Without purchases, there cannot be sales. Possibility of the assessee purchasing/trading of rice from other sources and procuring bills from the accommodation entry provider cannot be ruled out. Therefore, entire alleged bogus purchase made from M/s. Satadal Rice Mill cannot be added in the hands of the assessee - estimation of profit from the sale of rice could be justified. In the rice trading G.P of 3 to 5 % is there during the AY under consideration. Therefore, GP addition of 4% would be sufficient to meet the ends of justice .Four percentage of GP would be just and proper. Therefore, direct the AO to make the GP addition of 4 % in place of the addition of ₹ 25,11,404/-. Appeal of assessee is partly allowed.

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• Corporate Laws

• 2020 (11) TMI 805
  Direction to respondents to permit the petitioners to get reappointed as Directors of any Company or appointed in any other Company without any hindrance - Section 164(2)(a) of the Companies Act, 2013 - HELD THAT:- The Hon'ble Division Bench in MEETHELAVEETIL KAITHERI MURALIDHARAN, KAMAL ANEESMOHAMED, SATHISH KUMAR GOPAL, GOVINDASAMY BALASUBRAMANIAM, PAARI SENTHIL KUMAR, PAARI DHANALAKSHMI, VERSUS UNION OF INDIA, THE REGISTRAR OF COMPANIES TAMIL NADU, CHENNAI, [ 2020 (10) TMI 595 - MADRAS HIGH COURT] dealt with the powers of the RoC in the light of Sections 164 and 167(1) of the Companies Act, 2013 and Rule 14 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 and also has elaborately considered as to whether the RoC is entitled to deactivate the Director Identification Number (DIN) by referring to the Rules 19, 10 and 11 of the said 2014 Rules and held that the publication of the list of disqualified directors by the ROC and the deactivation of the DIN of the Appellants is hereby quashed. Petition allowed.

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• 2020 (11) TMI 804
  Approval of Scheme of Arrangement by way of Demerger - section 230-232 of Companies Act, 2013, and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Directions issued for convening of various meetings - directions regarding issuance of various notices issued. Application allowed.

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• 2020 (11) TMI 803
  Approval for composite scheme of arrangement and amalgamation - Section 230-232 of Companies Act, 2013 - HELD THAT:- This Tribunal is of the considered view that the scheme as contemplated amongst the petitioner companies seems to be prima facie beneficial to the company and will not be in any way detrimental to the interest of the shareholders of the company. In view of absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal sanctions the scheme of arrangement appended as annexure A1 with the company petition as well as the prayer made therein. Learned senior counsel for the petitioner-companies submitted that no investigation proceedings are pending against the transferor or transferee companies under the provisions of the Companies Act, 1956 or the Companies Act, 2013 and no proceedings against the petitioner-companies for oppression or mismanagement have been filed before this hon'ble Tribunal or erstwhile Company Law Board - Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Tribunal will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the petitioners. While approving the scheme as above, it is clarified that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges, if any, payment is due or required in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law - Application allowed.

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• Insolvency & Bankruptcy

• 2020 (11) TMI 802
  Maintainability of application - Assignment of Debt - It is argued that the Notice issued by SBI as Consortium Leader was already withdrawn and subsequent individual action of State Bank of India and Order passed in view of that action under SARFAESI cannot be reason for Adjudicating Authority to dismiss the Application under Section 7 as not maintainable - Argument is that action under Section 7 of IBC is not adversarial but to save the Corporate Debtor by bringing about resolution so that the debts can be fairly paid - time limitation - HELD THAT:- It is apparent that the Adjudicating Authority did not apply itself to the Orders which were being relied on by the Corporate Debtor and simply recorded that it is not empowered to pass any Order over jurisdiction of Hon ble High Court or to clarify interim orders passed by the Hon ble High Court. It appears to us that the Adjudicating Authority avoided to decide the issues raised and without going into the Record, it has thrown out the Application under Section 7 without justifiable reasons. Adjudicating Authority accepted individual Bank can maintain application beyond consortium and there is no bar to invoke provisions of Code but without even showing how the Orders in Writ Petition in which SIB was not even party, it should wait. In the Writ Petition filed against State Bank of India and the I.A. referred above, the Appellant or SIB were not made parties. State Bank of India initially purported to act for the consortium but after filing of the Writ Petition, withdrew the Notice dated 17th October, 2015 which was the basis to file Writ Petition 52886 52887 of 2015. The prayers in the Writ Petition were in context of such Notice and that Corporate Debtor should be heard regarding declaration of N.P.A. Subsequently, State Bank of India acted on its own when it raised demand vide Annexure A-13 on 9th March, 2017 and Possession Notice (Annexure A-14) on 19th August, 2017. Directions given were to the Authorized Officer of SBI and State Bank of India which were the Respondents in Writ Petition. Present the Corporate Debtor is aware that both the Orders were against SBI as portions reproduced from its Statement of Objections (Diary No.18701) and highlighted supra show. We find it difficult to accept that there was restraint Order against SIB. The Application under Section 7 of IBC filed is not confined to debt as arising in the arrangement due to Consortium Lending which was a term loan, but was also towards independent overdraft facility and amounts due in that context. As such, even if one was to stretch the Order of High Court dated 04.12.2015 to say that it affects SIB, still the South Indian Bank was competent to maintain Section 7 Application on the basis of overdraft facility which was provided outside the Consortium. Thus, the Order passed by the Adjudicating Authority is not at all justified and deserves to be set aside. Time Limitation - HELD THAT:- Under the Limitation Act, 1963, as per Section 3, it is the duty of the Court/Authority to consider whether or not the matter brought before it is within limitation. It is the duty of the authority to apply its mind to the question of limitation although limitation has not been taken as the defence. The authority under law as appearing from Section 3 of Limitation Act, is bound to raise the question of limitation suo moto - Entry - 19A shows that after the Application under Section 7 of IBC was filed in the present matter, Section 238A of IBC extending provisions of the Limitation Act was inserted in IBC with effect from 6th June, 2018. When this is so, in fairness, it would be appropriate to give opportunity to the Financial Creditor to rectify defect in the Application before the Adjudicating Authority. It is necessary for us under Rule 11 of National Company Law Appellate Tribunal Rules, 2016, to exercise inherent powers to do Justice to pass such Orders. The matter needs to be remanded back to the Adjudicating Authority so that the Appellant is given opportunity to rectify defects in the format - Appeal allowed by way of remand.

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• 2020 (11) TMI 801
  Time Limitation - Deed of Guarantee - failure to prove default or not - legally enforceable debt or not - Whether dismissal of such reference in the given circumstances would attract Regulation 19(7) of BIFR Regulations to hold that such reference was never made for having been declined to be registered? - HELD THAT:- The answer lies in Regulation 19 itself. Regulation 19(3) provides that a reference may be filed either by delivering it at the office of the Board or by sending it by registered post. Regulation 19(4) provides that on receipt of a reference the Secretary/ Registrar shall cause to be endorsed on each reference the date on which it is filed or received in the office of the Board. Regulation 19(5) provides that if on scrutiny, the reference is found to be in order, it shall be registered, assigned a serial number and submitted to the Chairman for assigning it to a Bench. Regulation 19(6) provides that if on scrutiny, the reference is not found to be in order, the Secretary/Registrar may by order decline to register the reference. In the instant case the first reference was, after its receipt, registered and assigned case number 160/2001. It was placed before the Bench, which took up the reference on 25th June, 2002 for consideration so as to determine the status of company s sickness. However, the reference came to be dismissed as being time barred. It is therefore manifestly clear that the reference was registered and came to be dismissed on consideration. Therefore, Regulation 19(7) would not come into play and the period from filing of reference with BIFR under Section 15(1) of SICA on 2nd March, 2001 till its dismissal on 25th June, 2002 will have to be excluded within the purview of Section 22 of SICA providing for suspension of legal proceedings including institution of suits for recovery of money or for enforcement of security against the industrial company or any guarantee in respect of any loans or advances granted to the industrial company. Admittedly, the second reference case was filed on 21st February, 2003 before BIFR, therefore period from 25th June, 2002 till 21st February, 2003 (calculated at 241 days) has to be counted towards the limitation period. From 21st February, 2003 till 1st December, 2016 second reference case of the Corporate Debtor was pending consideration before BIFR and on 1st December, 2016, with enforcement of I B Code, the SICA, 1985 was repealed. Thus, the period of limitation for triggering of CIRP at the instance of Assignee SASF against the Corporate Debtor would commence from 1st December, 2016 till application under Section 7 was filed on 12th March, 2019. This is rightly calculated by Responded at 831 days - the period counting for limitation will be 241 days + 831 days = 1072 days i.e. 35 months and 12 days. It is abundantly clear that the application under Section 7 at the instance of SASF against the Corporate Debtor came to be filed well within three years from the date of invocation of corporate guarantee on 3rd December, 2001. It is also settled law of the land that the period of limitation does not commence until the account is live i.e. not duly settled by payment of outstanding dues and/or there is no refusal from the Guarantor towards its obligations. The liability of the Guarantor being coextensive to the liability of the Principal Borrower and the acknowledgment of liability by the Principal Borrower, in terms of letter dated 20th December, 2016 forming Annexure R-7 to the Reply affidavit (page 64), is binding on the Guarantor and he cannot wriggle out of its liability to discharge its obligations towards SASF. It goes without saying that in terms of Clause 11 of the Corporate Guarantee dated 16th July, 1997, the Corporate Guarantor is liable to be proceeded against by the lender or its assignee in the same manner as if it was the Principal Borrower/ Debtor. The application filed by the Respondent under Section 7 of I B Code for triggering CIRP against Respondent Corporate Guarantor on 12th March, 2019 was not barred by limitation - Contention raised by the Appellant as regards plea of limitation and other contention in regard to discharge of obligation of Appellant Corporate Guarantor towards SASF are accordingly repelled. Appeal dismissed.

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• 2020 (11) TMI 800
  Maintainability of application - initiation of CIRP - claim against Corporate Debtor second time on the same set of claims, initially made on principal borrower - Respondent stood Guarantor for the Principal Borrower - Borrower committed default in repayment of loan - when Application under Section 7 had been admitted against the Principal Borrower whether the present Application by the same Financial Creditor could be admitted against Corporate Guarantor on same set of claims and default. HELD THAT:- It is clear that in the matter of guarantee, CIRP can proceed against Principal Borrower as well as Guarantor. We are unable to agree with the arguments of Learned Counsel for Respondent that when for same debt claim is made in CIRP against Borrower, in the CIRP against Guarantor the amount must be said to be not due or not payable in law. Under the Contract of Guarantee, it is only when the Creditor would receive amount, the question of no more due or adjustment would arise. It would be a matter of adjustment when the Creditor receives debt due from the Borrower/Guarantor in the respective CIRP that the same should be taken note of and adjusted in the other CIRP. This can be conveniently done, more so when IRP/RP in both the CIRP is same. Insolvency and Bankruptcy Board of India may have to lay down regulations to guide IRP/RPs in this regard. The law as laid down by the Hon ble High Courts for the respective jurisdictions, and law as laid down by the Hon ble Supreme Court for the whole country is binding - reliance can be placed in the case of STATE BANK OF INDIA VERSUS V. RAMAKRISHNAN AND ANR. [ 2018 (8) TMI 837 - SUPREME COURT] where it was held that The object of the Code is not to allow such guarantors to escape from an independent and coextensive liability to pay off the entire outstanding debt, which is why Section 14 is not applied to them. Appeal allowed - decided in favor of appellant.

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• 2020 (11) TMI 799
  Validity of CIRP initiated - fraudulent or malicious intent or purpose other than Resolution of Insolvency and Liquidation of the Corporate Debtor or otherwise? - time limitation u/s 7 - HELD THAT:- Although the suit was filed in time the Winding up Petition was beyond three years of the default and when such Winding up Petition was transferred in view of the Rules to the NCLT to convert the same into a proceeding under Section 7 of IBC, it was found that as the Winding up Petition itself was time-barred from the date of default, the same could not be proceeded further as Application under Section 7. When developments in the present matter are seen, if IBHL classified the Borrower Entities as NPA in November, 1997, even if the suits were filed in 1998 and 1999, that would not be relevant or helpful to extend time of Limitation for the purpose of filing of Application under Section 7 of IBC which is independent proceeding required to be filed as per Article 137 of the Limitation Act within three years of default. When time begins to run it can only be extended in the manner provided in the Limitation Act, has been held. Proceedings under the IBC are not execution proceedings either for the decree which was obtained or for execution of the Certificates of Recovery which have been issued by DRT. The Learned Counsel for the Financial Creditor has not shown under which provision of Limitation Act, time which had started running in November, 2007, could be extended. If filing of Suit or O.A. does not extend time, or give right to exclude period for a Winding up Proceeding, it can not extend period for an independent right under IBC. Consequently passing of Decree or issue of Recovery Certificate will not give fresh right to trigger IBC. There is substance in the submissions made by the Learned Counsel for the Appellant that the Application in the present matter was hopelessly time-barred. The Adjudicating Authority failed to see that the Financial Creditor had not indicated date of default in the format. The Adjudicating Authority was duty bound under Section 3 of the Limitation Act, 1963 to suo motu consider if or not the Application under Section 7 of IBC was within Limitation by considering if or not the debt said to be in default was within Limitation. The Impugned Order is quashed and set aside - Appeal allowed.

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• Service Tax

• 2020 (11) TMI 798
  Works Contract Services - business of construction of buildings and civil structures for last several decades - It is the case of the petitioner that, services rendered by the petitioner were actually in the nature of Works Contract because petitioner entered into a contract with its client, wherein, transfer of property in goods involved in execution of such contract was leviable to tax - period from October, 2005 to March, 2006 - HELD THAT:- It emerges on record that the petitioner no.1 was rendering services classifiable as works contract . This fact has neither been disputed by the Commissioner nor by the Tribunal. That only because the petitioner no.1 registered itself for the service tax under the head of commercial / industrial construction services , the petitioner cannot be fasten its liability to pay service tax on the services rendered by it as work contract services. W.e.f. 01.06.2007 by entering (zzzza) in subsection 105 of Section 65 of the Act,1994 was introduced for the first time by the Finance Act, 2007 to cover the person as taxable person in relation to the execution of the works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. The Apex Court in GANNON DUNKERLEY CO. VERSUS STATE OF RAJASTHAN LARSEN TOUBRO LTD. UNION OF INDIA [ 1992 (11) TMI 254 - SUPREME COURT ] was of the opinion that the service tax charging Section itself must lay down with specificity that the levy of the service tax can only be on works contracts, and the measure of tax only be on that portion of works contracts which contain a service element which is to be derived from the gross amount charged for the works contract less the value of the property in goods transferred in the execution of the works contract. In such circumstances, the Apex Court held that when the legislature has introduced the concept of service tax on indivisible works contracts then such contracts were never intended to the subject matter of the service tax, and therefore, such contracts, not being exempt under the Finance Act, 1994, cannot be said to fall within its tentacles, as which was never the intention of Parliament. The Apex Court, therefore, held that the levy of service tax on works contract was non-existent prior to 01.06.2007. The contention raised on behalf of the respondents that as the petitioner had voluntarily registered under the head of commercial /industrial construction services , the petitioner is liable to pay service tax, is not tenable as the petitioner cannot be held to be liable to pay service tax prior to 01.06.2007, where, it is not in dispute that the petitioner was rendering works contract service . Petition allowed.

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• 2020 (11) TMI 797
  Rectification of Mistake - error apparent on the record - typographical error or not - the foreign exchange in respect of appeal has been realised on 27.04.2016, 27.05.2016 28.06.2016 but the claim was filed only on 28.07.2017 - HELD THAT:- There was indeed a typographical error in mentioning the date of receipt of foreign exchange as 27.04.2016 instead of 27.07.2016. However, since this is not a case pertaining to the transitional period where the exports were made prior to 01.03.2016 and refund claim filed after the date, the ratio of the judgment of the Hon ble Larger Bench in the case of CCE CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. [ 2018 (2) TMI 946 - CESTAT BANGALORE] does not apply. It does not come to the rescue of the appellant since the application for refund was filed after one year from the date of receipt of the foreign exchange even after rectifying the mistake. Accordingly, the application for rectification of mistake is disposed of as follows: The date 27.04.2016 mentioned in paragraph 10 of the final order may be read as 27.07.2016.

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• 2020 (11) TMI 796
  Recovery of Refund of service tax already granted - service tax paid under a mistake of law? - relevant date - Section 11B of the Central Excise Act - Business Auxiliary Service - HELD THAT:- When a payment is made erroneously, the relevant date is the date of payment. However, when an order in original is passed imposing the liability and a payment is made in consequence of that, the relevant date is the date on which an appeal or revision from the order is allowed. In the present case, as is discernible from Annexure-B, a show cause notice was issued 06.11.2007, prior to which the assessee had made payments on 31.03.2007 and 23.05.2007. Hence the payments now sought for refund were made even prior to the show cause notice issued. The show cause notice culminated in, the order-in-original dated 02.03.2012, which obviously is with respect to the liability after 18.04.2006. This does not even indicate the assessee having paid the tax under protest earlier to the show cause notice; in which event, the second proviso to Section 11B makes inapplicable the limitation of one year from the relevant date, for filing an application for refund. The respondent-Revenue are restrained from recovering the amounts refunded since as of now the levy of service tax on the payment in lieu of foreign agency commission will not be leviable as 'Business Auxiliary service' prior to 18.04.2006 - appeal allowed in part.

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• Central Excise

• 2020 (11) TMI 795
  Rectification of Mistake - Refund of CENVAT Credit - Appellant Company has submitted that they have not received the refund order in question and the Revenue sought time but no proof has been provided by the Revenue with regard to service of communication of adjustment of refund amount and the same has been recorded by this Tribunal in the order itself - HELD THAT:- The appellant has claimed that the amount of ₹ 18,28,984/- has been debited on various dates and also intimated to the department through various letters with regard to adjustment of the amount of ₹ 18,28,984/-. The said fact has not been controverted by the Revenue during the course of argument. Moreover, it has been recorded by the Tribunal that no show cause notice has not been issued to the appellant for appropriation of the said amount paid by the appellant. Further, in final order dated 29.01.2020, this Tribunal has taken on record the letter dated 10.08.2007 which is a reply to the letter dated 12.06.2007 demanding interest on the amount of ₹ 36,57,968/- for delayed/reversal or debited of the amount. The said fact clearly indicate that the appellant has reversed/deducted or adjusted a sum of ₹ 36,57,968/- which is the subject matter of the refund claim in hand. Further, it has been recorded by this Tribunal that no proof has been produced by the Revenue that the adjustment/rejection of amount in refund claim has been communicated to the appellant. In fact, the Revenue claimed that it is rejection of refund claim in question while entertaining the refund claim in 2005. The Refund claim in question was not the subject matter of the said refund claim which was entertained by the adjudicating authority while sanctioning the refund claim for the month of February, March and September, 2005. There is no mistake apparent on record while passing the order by this Tribunal on 29.01.2020, the Revenue seeks to review of the order passed by this Tribunal which is not permissible in law - the application for rectification of mistake deserves no merit - Application dismissed.

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• CST, VAT & Sales Tax

• 2020 (11) TMI 794
  Input Tax Credit - illegal transaction - reopening of assessment - reasons to believe - Section 29(1) of the VAT Act - HELD THAT:- There is no contention as to why and how the proceedings could be initiated without even recording any reasons to believe merely relying upon the Tax Audit report. Even otherwise the findings recorded in the Tax Audit report had to be controverted by the assessee, which the assessee did by filing the relevant affidavits and documents before the first Appellate Authority and thus no fault could be found with the said procedure. Even otherwise as the Tribunal has recorded that entire exercise was revenue neutral and there is no ground to suggest that the said finding is any way perverse or erroneous, no question of law, much less a substantial question of law arises for consideration by this Court. Revision dismissed.

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• 2020 (11) TMI 793
  Principles of Natural Justice - proper service of SCN - Issue was not proceeded to be decided on merits - HELD THAT:- A bare perusal of the order impugned in the present revision reveals that the revisionist has not been heard by the Tribunal while passing the order dated 3.3.2020 and in view of the fact that the service was not effected properly on the revisionist, the order dated 3.3.2020 is set aside. The revisions are allowed in favour of the Assessee and against the Department.

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• 2020 (11) TMI 792
  Stay of only 90% of the disputed tax, till the disposal of first appeal, instead of 100% stay - applicant has good case on the merit of the case, and financial condition is not good - HELD THAT:- Perusal of the orders impugned in the revision, make it clear that the appellate court as well as the Tribunal have neither considered prima facie case nor the financial hardship as pleaded by the revisionist before directing the deposit of 10% of the disputed tax. Thus, there are no hesitation in holding that the order passed by the Tribunal deserves to be set aside and is accordingly set aside to the extent that it directs to deposit 10% of the amount as the revisionist has placed on record the financial hardship. Tax revision is allowed.

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• 2020 (11) TMI 791
  Maintainability of (second) appeal - first appeal had been numbered and heard on merits - fact that as per Sec.55(4) of the TNGST Act, an appeal would lie against an order passed u/s.55 of the Act is overlooked - in respect of the very same transaction, tax under the CST Act, 1956, had been paid in the State of Andhra Pradesh and the levy under the TNGST Act, 1959 - double taxation or not. HELD THAT:- The Original Assessment order does not merge with the Rectification Order passed by the Assessing Authority. In the present case, the Rectification as prayed by the Assessee only was allowed by the Assessing Authority himself and therefore, there are no reason for the Assessee to to file further Appeal against such Rectification Order in his own favour. It is difficult to understand what prevented the Assessee from assailing the Original Assessment Order dated 31.3.1995 itself. The submission made by the learned counsel for the Assessee that the Original Assessment Order stood merged with the Rectification Order is misconceived and is liable to be rejected. It is only if the Appellate Order is passed on the merits of the case, then the Original Assessment Order can merge with the Appellate Order and not in a case like this where the Rectification Order is passed at the instance of the Assessee itself and as requested by it. In the absence of any challenge to the Original Assessment Order, the Assessee cannot, obviously, be allowed to assail the original Assessment Order by laying a tangent challenge to the Rectification order. Whether the local Sales Tax was rightly imposed by the Assessing Authority or not can be seen only if the Original Assessment Order is challenged by the Assessee before the Appellate Authority. Since the Rectification Order does not discuss anything about the legality of the imposition of the local Sales Tax or otherwise, it cannot be permitted to the Assessee to assail the Original Assessment Order in the aforesaid manner. The present Tax Revision filed by the Assessee is without any merit and the same is liable to be dismissed - Revision dismissed.

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• Indian Laws

• 2020 (11) TMI 790
  Refund of contract consideration/earnest money - payment of interest for the period from 08.11.1994 to 19.05.1998 - rate of interest @ 10% p.a. or 12% p.a. - HELD THAT:- In this case, conduct of the Board betrays a callous and indifferent attitude, which in effect is that if Asiatic Steel wished for its money to be returned, it had to approach the court. This was despite its knowledge that at least three other identically placed entities had asked for return of money and, upon approaching the court, were refunded the amounts given by them promptly. In view of these facts, nothing prevented the Board from deciding to refund the amount, without forcing Asiatic Steel to approach the court. This court notes that the High Court directed payment of interest for the entire period (i.e. starting from 08.11.1994 and ending on 19.05.1998). However, it is evident that Asiatic Steel had not paid the entire amount on 08.11.1994; in fact the sum of $1,153,000 /- i.e. the principal consideration, excluding the earnest money deposit, was deposited on 24.03.1995. Therefore, the impugned judgment erred in directing payment of interest on the entire amount from 08.11.1994; instead, the direction to pay interest on ₹ 3,61,20,000/- shall operate with effect from 22.03.1995 to 19.05.1998. The appeal allowed in part.

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