TMI Tax Updates - e-Newsletter
November 29, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax

Articles

1. GST: Transfer of Business in the case of Death of Proprietor

   By: Altamush Zafar

2. COMPETITION COMMISSION OF INDIA TO DEAL ANTI PROFITEERING MEASURES UNDER GST LAWS

   By: DR.MARIAPPAN GOVINDARAJAN

3. No Power Lies at the Behest of CBEC to Modify the Scope of Exemption Notification issued by the Central Government

   By: Bimal jain

News

1. Union Finance Minister Smt. Nirmala Sitharaman concludes pre-Budget meetings for forthcoming Union Budget 2023-24

2. Workshop on Urban Infra, Urban Transport, Roads & Logistics, Power, and Industrial Infrastructure in the run-up to the 2 nd Conference of Chief Secretaries

Notifications

GST - States

1. 9/2022-State Tax - dated 25-10-2022 - Mizoram SGST

Seeks to notify the provisions of clause (3) of section 12 and section 13 of the Mizoram Goods and Services Tax (Amendment) Act, 2022

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/ MIRSD-PoD-2/P/CIR/2022/163 - dated 28-11-2022

Procedure for seeking prior approval for change in control

Customs

2. Instruction No. 32/2022 - dated 28-11-2022

Amendment to Instruction No 18/2022-Customs dated 12.08.2022 and 26/2022-Customs dated 06.10.2022 regarding extension of Requirement of Health Certificate accompanied with the import of food consignments

Highlights / Catch Notes

GST

• Dispute Over GST Reimbursement: Are Services Under GTA or Mining Support? Potential 18% GST Rate Impact on Claims.

  Case-Laws - HC : Seeking reimbursement of GST from the service recipient - GTA service or Support Services relating to mining - taxable @12% or 18% - BPCL have been made for reimbursement of amount of GST in the said work order only to the extent of 12% - if in future the revenue holds that the tax for the work done by the respective petitioners comes under Chapter Heading No. 9986 of “Tariff Rule” being ‘Support Services to Mining’ which is leviable to tax @ 18%, then the petitioners would be entitled to raise their claim for the differential tax from the Respondent-Coal Companies. - HC
  Visit to Get Source

  ---

Income Tax

• High Court Upholds Section 194N: Informational Circulars on Tax Deduction for Cash Withdrawals by Agricultural Co-ops Valid.

  Case-Laws - HC : TDS u/s 194N - deduction of tax on cash withdrawal - Agricultural Co-operative Credit Society - The challenge to the impugned Circulars cannot be entertained as the District Central Cooperative Banks have, therein, merely sought to bring to the notice of the petitioner societies the statutory provisions in regard to deduction of tax, enjoining that they adhere to, and comply with the same, scrupulously - HC
  Visit to Get Source

  ---

• Court Deems Assessment Order Based on Retracted Statements and Seized Materials as Perverse After Police Complaint Triggered Statement.

  Case-Laws - HC : Undisclosed income - on-money - retracted statement - One of the purchasers has stated on oath that a Police complaint was given against him and therefore, he had given statement before the Income Tax Authorities and subsequently retraced the same. In the circumstances, the assessment order passed based on seized material and the statements, which have been redressed, is perverse. - HC
  Visit to Get Source

  ---

• Section 12A Registration Benefits Apply to Pending Prior Years; Denial of Section 11 Exemption Unjustified.

  Case-Laws - AT : Exemption u/s 11 - benefit of registration granted u/s.12A of the Act from AY 2019-20, would be available for earlier years also that are pending as on the date of grant of registration as per the 1st proviso to Sec.12A(2) the denial of benefit of exemption u/s.11 on the ground of absence of registration u/s.12A of the Act, cannot be sustained. - AT
  Visit to Get Source

  ---

• Court Confirms Income Additions After Taxpayer Fails to Clarify Unexplained Cash Deposits and Spousal Gift Validity.

  Case-Laws - AT : Unexplained cash deposit and gift received from assessee’s wife - genuineness - Despite giving several opportunities to the Ld. AR, the Ld. AR was adamant to concise the grounds of appeal on the jurisdiction point as well as on merit point - Additions confirmed - AT
  Visit to Get Source

  ---

• Court Orders AO to Segregate and Disallow Expenses Related to Rental Income from Shared Expenses Pool.

  Case-Laws - AT : House property income - disallowance of expenses debited on account of earning of such rental income - the issue is restored to the file of the AO with a direction to identify the expenses pertaining to hotel and rental activity from common pool as per table 21, 22 and 25 of accounts and to make proportionate and appropriate disallowance on rental area/portion maintenance. - AT
  Visit to Get Source

  ---

• Taxpayer Misses Concessional 22% Rate Due to Late Form 10-IC Filing; Appeal Dismissed, No Error Found by Authority.

  Case-Laws - AT : Levy of income tax - Applying the concessional rate of tax @ 22% u/s 115BAA - assessee did not file Form 10–IC before the due date of filing the return of income - no infirmity in the impugned order passed by the learned CIT(A) on this issue - AT
  Visit to Get Source

  ---

• Income Tax Act Section 115JB: Ad-hoc 1% Disallowance on Exempted Income Due to Lack of Independent Mechanism.

  Case-Laws - AT : MAT - Exempted income - adjustment to book profit u/s 115JB - there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. - we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act. - AT
  Visit to Get Source

  ---

• Section 68 and Section 36(1)(vii) Updates: Unexplained Cash Credits and Bad Debts Adjustments. Assessee Claims Deductions.

  Case-Laws - AT : Additions of unexplained cash credit u/s 68 - Adjustment of Bad debts under the provision of section 36(1)(vii) - assessee has made its debtors at NIL value and accordingly the assessee is entitled to claim the deduction by way of writing off bad debts of these sundry debtors within the meaning of the provision of section 36(1)(vii) - AT
  Visit to Get Source

  ---

• Dissimilar Items Can't Be Compared: DVO's Scientifically Analyzed Valuation at Rs. 50/sq.m Upheld Over Imaginary Rs. 235/sq.m Rate.

  Case-Laws - AT : Capital gain computation - Valuation - It is settled law that orange and apple cannot be compared which has been done by the Registered Valuers to arrive at an imaginary rate @ 235 per. Sq. mtr. The DVO has taken the rate @ Rs.50 per sq. mtr., which is based on some scientific analysis and as per the guidelines as the comparable sales instances has been taken. - CIT(A) has rightly upheld the order of AO - AT
  Visit to Get Source

  ---

• Income Tax Act Sections 68 & 41: Revenue lacks grounds to sustain addition; no evidence of liability cessation found.

  Case-Laws - AT : Addition u/s 68/41 - old sundry creditors - opening balance of advances for booking and another sundry creditor - there is no ground of appeal raised by the revenue for making/ sustaining addition under section 41(1), yet we may observe that the assessing officer has not brought any evidence to show that it was a cessation or remission of trading liability. - AT
  Visit to Get Source

  ---

• Section 263 Revision Overturned: PCIT Fails to Prove 8% Commission Rate on Accommodation Entry Firm's Income Unjustifiable.

  Case-Laws - AT : Revision u/s 263 - undisclosed income of the firm - Having arrived at the true nature of assessee's activities of that of an accommodation entry provider, the AO has applied commission rate of 8% on total receipts/transaction value of entries - PCIT has not pointed out how rate of 8% being the commission income so determined by the AO is unsustainable in the eyes of law - Revision order set aside - AT
  Visit to Get Source

  ---

• Tax Authority Validates Percentage Completion Method for Revenue Recognition in Survey Case, Following Judicial Precedents.

  Case-Laws - AT : Revenue recognition - Profit offered during the survey proceeding - profit determined on the project undertaken by the assessee - Method of accounting - CIT has rightly approved the percentage completion method of Revenue recognition following the judicial precedents - AT
  Visit to Get Source

  ---

Customs

• Rule 3(5): Imported Goods Over 10 Years Get 2.5% Depreciation Per Quarter, Resulting in NIL Value After a Decade.

  Case-Laws - AT : Valuation of imported goods - the goods are admittedly more than ten years old, and under Rule 3(5) of the Cenvat Credit Rules, depreciation of 2.5% is available for each quarter on straight line basis on the capital goods. Thus, the value becomes NIL after ten years of user of capital goods. - The rejection of transaction value is bad. Thus, the declared value is accepted. - no differential duty is payable- AT
  Visit to Get Source

  ---

IBC

• Tribunal Confirms Adjudicating Authority's Power to Extend Payment Timelines in Resolution Plans Under Insolvency Cases.

  Case-Laws - AT : Jurisdiction - power of Adjudicating Authority to extend the time lines for making payments as per approved Resolution Plan - This Appellate Tribunal do not find any error in the impugned order on this aspect. - AT
  Visit to Get Source

  ---

• Workers Seek Inclusion in Stakeholders Committee During Corporate Debtor Insolvency; Gratuity Claims to Follow Insolvency Code Provisions.

  Case-Laws - AT : Claim of the workmen and employees - inclusion in the Stakeholders Consultation Committee (‘SCC’) - the ‘Corporate Debtor’ is ‘a Going Concern’ and an assurance as has been given by the Respondent that their Claims of gratuity as and when they arise would be paid as per the provisions of the Code, there are no illegality or infirmity in the Order of the Adjudicating Authority - AT
  Visit to Get Source

  ---

Service Tax

• Appellants Granted Refund of Unutilized Cenvat Credit; Evidence Sufficient to Establish Nexus for Refund Claim.

  Case-Laws - AT : Refund of accumulated/unutilized Cenvat Credit of Service tax - Nexus - The mails and invoices, which have been produced here also, are sufficient to establish the nexus. Law does not require one to one correlation unless the availment of Cenvat credit itself - the appellants are entitle for the refund- AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2022 (11) TMI 1216
  Seeking reimbursement of GST from the service recipient - GTA service or Support Services relating to mining - taxable @12% or 18% - BPCL have been made for reimbursement of amount of GST in the said work order only to the extent of 12% - to be classified under Chapter Heading No. 9965 of Tariff Rules or under Chapter Heading No. 9986 of Tariff Rules? - HELD THAT:- After going through the documents annexed with the respective affidavits and the averments made therein and also the alternative argument of learned counsel for the respective petitioners, at this stage any determination on the issue of leviablity of tax; whether @ of 12% or whether @ 18 % will certainly hamper the entire investigation as well as the same is not warranted also, inasmuch as, one service which is leviable to 12% comes under Chapter Heading No. 9965 of the Tariff Rules and one service which is leviable @ 18% comes under Chapter Heading No. 9986 of the Tariff Rules. Thus, we are not inclined to interfere in declaring the services of the petitioners in either of the heading at this stage. However from record, it appears that as per the work orders issued to the respective petitioners the tax which are given by the petitioners are to be reimbursed by the Coal-Company; as such, if in future the revenue holds that the tax for the work done by the respective petitioners comes under Chapter Heading No. 9986 of Tariff Rule being Support Services to Mining which is leviable to tax @ 18%, then the petitioners would be entitled to raise their claim for the differential tax from the Respondent-Coal Companies. Application disposed off.

  ---

• Income Tax

• 2022 (11) TMI 1220
  Stay of demand - petitioner had averred a categorical case of financial hardship - AO rejected the petitioner s application of a stay on the demand, without assigning any reasons - Principal Commissioner praying for stay of the demand, reiterating the specific grounds in that regard contending that the Assessing Officer has not applied his mind to the aspect of financial stringency and therefore the demand needs to be stayed - HELD THAT:- On perusal of the orders by which the stay of the demand has been rejected by the Assessing Officer as also by the Principal Commissioner of Income tax, we may observe that in the petitioner s application the petitioner had averred a categorical case of financial hardship. AO rejected the petitioner s application of a stay on the demand, without assigning any reasons. The petitioner accordingly approached the Principal Commissioner praying for stay of the demand, reiterating the specific grounds in that regard contending that the Assessing Officer has not applied his mind to the aspect of financial stringency and therefore the demand needs to be stayed. The fate of the petitioner before the Principal Commissioner was not different. Although other issues on merits are considered by the Principal Commissioner, we find that there are no reasons in the context of financial hardship, in both the orders passed by the Principal Commissioner being orders dated 11.08.2021 and order dated 29.12.2021. The case of the petitioner on financial stringency is not at at all considered in the perspective it ought to have been considered by the Principal Commissioner, after applying his mind to the specific plea as taken by the petitioners in that regard. Such plea was required to be decided by considering the facts and figures from the materials as placed on record, so as to determine by giving reasons as to whether the plea was at all genuine and acceptable. As clearly seen from the decision cited by Mr. Pardiwala in the case of Mumbai Metropolitan Region Development Authority v/s. Deputy Director of Income -tax (Exemption- 1) [ 2014 (12) TMI 15 - BOMBAY HIGH COURT] that this Court considering the earlier decisions on such issue as noted by us, has held that the aspect of financial hardship is one of the grounds which is required to be considered by the authority concerned and the authority concerned should briefly indicate whether the assessee is financially sound and viable to deposit the amount or the apprehension of the revenue of nonrecovery later is correct warranting deposit. We find that at this stage such test is not applied in passing of the impugned orders by the Principal Commissioner who has simplicitor referred to the Assessing Officer s report in rejecting stay on deposit of the tax. Principal Commissioner of Income Tax is directed to hear the petitioner(s) on the stay application on the specific plea of the petitioner in regard to financial stringency and after granting an opportunity of a hearing to the petitioner(s), pass an appropriate order on such issue. Let such exercise be undertaken as expeditiously as possible and in any case within 2 months from today.

  ---

• 2022 (11) TMI 1219
  Unexplained Purchases - non compliance of notices u/s 133(6) to various parties for verification of purchases - AO made addition of the total purchases made by the assessee holding that the purchases were unverifiable - HELD THAT:- As the fact of production of the parties by the ld. CIT(A) in the presence of the AO has not been in dispute. The fact that the parties supplied milk to the assessee company could not be disputed. AO has also held that milk purchases were made not from farmers but through the intermediaries of the milk traders, thus contradicted the fact that the purchases remain unverifiable. AO resorting to disallowance of entire purchases is bad in law. Since, the identity, genuineness and supply-worthiness of all the parties has been proved by the way of statement recorded u/s 131 of the Act and all the suppliers were duly paid, we refrain from interfering with the order of the ld. CIT(A) on this issue. Accordingly, Ground No. 1 2 of the Revenue s Appeal are dismissed. Disallowance Section 40A(3) - cash payments made to milk suppliers - AO held that the provisions of Rule 6DD(e) were not applicable to the facts of the assessee s case - HELD THAT:- CIT(A) has gone to the root cause of the disallowance u/s 40A(3) and owing to the genuineness of the purchase, provisions of the rules and dates/days on which the payments have been made and the purpose thereof, has cogently held that the provisions of Section 40A(3) are not attracted in this case, the decision of which, we decline to interfere with the order of the ld. CIT(A). As a consequence, the adhoc estimation @ 0.23% of the sales made by the ld. CIT(A) is also liable to be deleted. Ad-hoc estimated disallowances - AO made ad-hoc disallowance of 30% on the power fuel, packing material and repairs maintenance and on administrative distribution expenses and also on finance charges - CIT (A) restricted it to 10% on adhoc basis and deleted the disallowance made on financial charges - HELD THAT:- We hold that no disallowance is called for on financial charges owing to submission of complete documentary evidences. Hence, the order of the ld. CIT(A) deleting the financial expenses is affirmed. With regard to the ad-hoc disallowances on account of transport and administrative expenses, since they are ad-hoc in nature and indistinct rather than a generalized solution adaptable to collateral instances, we restrict to disallowance to 5% on ad-hoc basis. Accordingly, the Revenue s Ground are partly allowed. Deemed Dividend u/s 2(22)(e) - Common shareholders in company advancing loans - on perusal of annexure 12 of the balance sheet, assessee company has to pay amount as advance taken from said concern and Shri Malook Nagar was having 84.11% share holding in M/s AIMS Promoters Private Limited and 66.81% in the assessee company - CIT-A deleted the addition - HELD THAT:- The assessee company did not hold any shares in the AIMS Promoters Pvt. Ltd. Therefore, the assessee Company neither the registered nor the beneficial share holders of M/s AIMS Promoters Pvt. Ltd. Thus we do not find any infirmity or error committed by Ld. CIT(A) in deleting the addition on account of deemed dividend u/s 2(22)(e) of the Act.

  ---

• 2022 (11) TMI 1218
  Bogus purchases u/s 69C - receipt of information from DGIT(Inv.), Mumbai that the assessee company had received bogus entry in the form of purchases from three shell companies - CIT- A deleted the addition - HELD THAT:- CIT(A) has categorically discussed the evidences furnished by the assessee in respect of each of the party and has recorded that the assessee was maintaining proper books of accounts including all details such as stock register, bills and vouchers in respect of manufactured and traded goods and further that the assessee had furnished details of purchases together with quantity rate and value. The payments were made through banking channel. It is not the case of the Revenue that the assessee had made purchase out of his unaccounted money as the purchases were made through account payee cheque/banks. The sales also have not been doubted by the AO. Even, as observed above, the diamond being of very particular quality, weight, clarity etc. and in the facts and circumstances of the case have also not been doubted to be the purchase from grey market. In view of this, we do not find any infirmity in the order of the ld. CIT(A) Addition of unsecured loans and advances u/s 68 - CIT- A deleted the addition - HELD THAT:- We note that the ld. CIT(A) has given details of the documents furnished by the assessee in respect of each of the party and thereby has arrived at a conclusion that the assessee has duly established the identity and creditworthiness of the parties and genuineness of the transaction. Even the ld. CIT(A) has noted that subsequently the said loan has repaid by the assessee to the concerned parties. Since the CIT(A) has not only discussed in details the various evidences proving the identity, creditworthiness of the parties and genuineness of the transaction but also the fact that assessee has subsequently repaid the loan amount to the concerned parties and TDS was also deducted on the interest paid to the parties on such loan amount. In view of this, we do not find any reason to interfere with the order of the CIT(A) on the above issue also. This ground of the Revenue is also dismissed. Disallowance u/s 14A - Purpose of investment made - CIT- A deleted the addition - HELD THAT:- Investments were made by the assessee not for the purpose of earning of exempt income, rather the investment, in question, was made in immovable property, therefore, the provisions of section 14A were not attracted. CIT(A), therefore, rightly deleted the addition in respect of disallowance made by the AO in relation to the investment in immovable property. Therefore, there is no merit in this ground of the Revenue and the same is accordingly dismissed.

  ---

• 2022 (11) TMI 1217
  Addition u/s 68 - unexplained cash credit received during the year - creditors did not respond at all to the notices issued u/s 133(6) - HELD THAT:- Liabilities were incurred as trading liabilities with corresponding purchases and therefore can not be subject matter of addition u/s 68 of the Act as the provisions of section 68 of the Act are applicable to the credits in the books of accounts of the assesse which could not be explained with respect to identity , creditworthiness and genuineness. The case of the assesse finds support from several decisions of the coordinate benches namely i) Nallam Manium textiles P Ltd [ 2012 (7) TMI 390 - ITAT, CHENNAI] , ii)Sugam Construction (p) Ltd [ 2013 (2) TMI 71 - ITAT AHMEDABAD] and iii) Sharda commercial Co. Ltd. Vs ITO [ 2014 (1) TMI 1924 - ITAT KOLKATA] .Considering these facts and circumstances and the ratio of law laid down by various Courts of law as discussed hereinabove , we dismiss Ground Nos. 1 2 of the revenue. Addition u/s 41(1) - Validity of order of the ld. CIT(A) on the ground that the ld. CIT(A) has co-terminus powers with the Assessing Officer and could have enquired the matter himself instead of deleting the addition - HELD THAT:- We find that the revenue has accepted that the provisions of Section 68 are not applicable. The ld. A/R submitted that at most Section 41 of the Act could have been resorted to, but in the present case the same is also not applicable as there was no cessation of liability. Thus we do not find any merit in the contentions of the ld DR that the ld CIT(A) have the co-terminus power and could have enquired the issue himself for the reason that these liabilities have not ceased to exist and even the ld CIT(A) could not have invoked section 41(1) to these liabilities. Accordingly this ground of the revenue is dismissed as devoid of merit and is dismissed. Addition u/s 56(2)(vii) in consonance with the provisions of Section 43CA - assessee had purchased immovable properties for a consideration the stamp value whereof is much higher and thus, there was difference - purchase of property by the assessee the value whereof is less than the market value - HELD THAT:- We observe that the assessee has purchased a land for consideration of Rs.2,05,00,000/- whose stamp value as per the stamp valuation authority was Rs.2,21,97,688/- and thus there is a difference of Rs.16,97,688/- which was added by the AO to the income of the assesse u/s 43CA of the Act. We note that this transaction of purchase done by the assessee has much higher stamp value. We have also perused the provisions of Section 43CA of the Act and considered the rival contentions on this issue and are of the considered view that provisions of Section 43CA of the Act are not applicable to the purchase of property but section 43CA of the Act deals with the case where the sale value of property held as stock-in-trade is sold during the year at a price lesser than stamp value. Accordingly, we uphold the order of the ld. CIT(A) on this issue by dismissing the ground raised by the revenue.

  ---

• 2022 (11) TMI 1215
  Addition u/s 41(1) - assessee s liability to the tune to be a case of cessation of liability - HELD THAT:- Undisputed factual position which was rightly taken note of by the learned tribunal and in particular, noting that there is no dispute about the assessee to have been carrying forward the impugned liability in its books for a time span of almost three decades and the department did not raise any issue in all the intervening assessment years in question. Tribunal also noted that the assessing officer after the matter was remanded to him had issued summons to six directors of the concerned entities on test check basis, and four out of the six directors had appeared in response to the summons. The statements were recorded. Tribunal also notes that the creditors have given written reply in response to the summons reiterating their liability as also the fact that the assessee had settled some of the creditors even after 31.03.2001. Thus the assessee has fulfilled the duty cast upon them to provide evidence that the liability exist at the end of the year. The duty on AO is to prove that the liability has ceased to exist which in our considered view has been miserably failed to be established. We find that the learned tribunal rightly declined to interfere with the orders passed by the CIT(A) by dismissing the appeal filed by the revenue.

  ---

• 2022 (11) TMI 1214
  Assessment u/s 143(3) r.w.s. 144B - violation principles of natural justice as AO failed to issue notice as required to be issued under Section 144B (1)(xii) (b) - whether existence of an alternate remedy under the relevant statute will be a total bar for the exercise of jurisdiction under Article 226 of the Constitution of India? - HELD THAT:- This Court has discretion to entertain or not to entertain a writ petition and one of the exceptions to the rule of alternate remedy is in cases where there has been violation of principles of natural justice. See Radha Krishan Industries Vs. State of Himachal Pradesh Ors. [ 2021 (4) TMI 837 - SUPREME COURT] What are the statutory requirements? - The assessment unit shall, after taking into account all the relevant material available on record, has two options, namely, (a) to prepare in writing an income or loss determination proposal, where no variation prejudicial to the assessee is proposed and send a copy of such income or loss determination proposal to the National Faceless Assessment Centre (for short, NFAC ). The second alternative is as mentioned in clause (b) is to issue a show cause notice stating variations prejudicial to the interest of the assessee proposed to be made to the income of the assessee and calling upon him to submit as to why the proposed variation should not be made and serve such show cause notice on the assessee through NFAC. Admittedly, clause (b) of Section 144B (1)(xii) has not been followed in the case on hand. In Sardar Co-op. Credit Society Ltd. Vs. Additional/Joint/Deputy/Assistant Commissioner of Income-tax [ 2022 (4) TMI 1184 - GUJARAT HIGH COURT] it was held that the obligation is on the assessing officer to serve a show cause notice calling upon him to show cause as to why the proposed variation should not be made failing which the assessement would be non-est. Thus in the absence of such a show cause notice, the assessment order has to be held in violation of principles of natural justice and in violation of the statutory provision and therefore, non-est. Consequently, the writ petition is allowed and the assessment order dated 8th September, 2022 is set aside and the matter is remanded to the assessing officer for a fresh decision.

  ---

• 2022 (11) TMI 1213
  TDS u/s 194N - deduction of tax on cash withdrawal - Primary Agricultural Co-operative Credit Society - case of the petitioners that there should be no deduction at all, that could be effected from the withdrawals made by them from the banks - HELD THAT:- An avenue provided for a recipient falling outside the scope of the exceptions, to seek exemption from the application of Section 194N and hence, if at all the petitioners believe that they qualify for the exemption, they may seek redressal under the in-built statutory mechanism provided as above, if they so choose. To a query from the Court, as to who would constitute the specific authority before whom such prayer was to be made, the respondents have reported written instructions from the Commissioner of Income Tax (TDS), Coimbatore stating thus: As per business allocation rule, Central Government for tax purposes is Finance Minister of India. Hence, any request may be in the name of the Finance Minister with copy to CIT ITA CBDT North Block who would process such requests. The petitioners may thus approach the competent authority in the Government seeking relief from the application of Section 194N of the Act. The submissions in relation to the grant of deduction under Section 80P are premature as is reliance upon the judgement in the matter of Eli Lilly [ 2009 (3) TMI 33 - SUPREME COURT] . Eligibility to deduction must be tested by the authorities in the course of assessment as it involves the determination of several questions of fact. The society is always entitled to, in the return of income filed by it, seek credit of the taxes attributable to the income returned by it and any excess deduction, if the stand of the societies is accepted in assessment, would have to be refunded to them. Ld. Judge also proceeds to state that it was open to the banks to establish before the assessing officers that the sums withdrawn by the member societies did not represent income in their hands, after considering the evidence available in that regard. In my considered view, the aforesaid examination can be carried out only in the instance of the societies and not at the instance of the banks, who are payers, with statutory responsibility to deduct. The challenge to the impugned Circulars cannot be entertained as the District Central Cooperative Banks have, therein, merely sought to bring to the notice of the petitioner societies the statutory provisions in regard to deduction of tax, enjoining that they adhere to, and comply with the same, scrupulously. There could be no fault attributed to R2 Banks in this regard. The challenge to the Circulars fail and these Writ Petitions are dismissed both on the ground of maintainability as well as merits.

  ---

• 2022 (11) TMI 1212
  Stay of demand - direction for deposit of 20% of the disputed amount of tax - HELD THAT:- In the instant case, the Deputy Commissioner of Income Tax while passing the order dated 30.08.2022 had solely relied upon the circular of 2016, which was partially modified in the year 2017 and directed for deposit of 20% of the disputed amount of tax and rejected the stay application while the Principal Commissioner of Income Tax proceeded to consider the audit report and balance sheet partially and considering the assets while ignoring the liability part had rejected the stay application holding the financial position of the petitioner to be strong enough and directed for depositing 20% of the disputed amount of tax. This Court finds that while considering the stay application, neither the Deputy Commissioner of Income Tax nor Principal Commissioner of Income Tax had considered three basic principles i.e. prima facie case, balance of convenience and irreparable loss, as held by Delhi High Court in Tata Teleservices Limited [ 2022 (3) TMI 1403 - DELHI HIGH COURT] In the result, the writ petition is partly allowed. The orders impugned are hereby set aside and the matter is remitted back to the Deputy Commissioner of Income Tax, Circle 3(1)(1), Muzaffarnagar for consideration of stay application of the petitioner afresh.

  ---

• 2022 (11) TMI 1211
  Undisclosed income - on-money - retracted statement - Addition based on seized material documents - as in respect of the lands purchased in bits and pieces, the cost of acquisition of land under different heads has been described which includes cost of land, brokerage, legal expenses, etc. - HELD THAT:- As assessment orders of the purchasers prima facie show that the purchasers had offered the income which they had earned by transferring the lands to the Company for formation of Golf Club and Villas and declared their capital gains and paid taxes. Though it is recorded by Assessing Officer that the order is passed without prejudice to the assessment proceedings of assessee herein, the orders are passed u/s143(3) which is a substantive assessment. Even if said orders are duly considered as without prejudice to the assessment proceedings in respect of the assessee herein, we have noted that, there was no incriminating material seized, which could suggest that assessee had paid any on-money . In substance AO has relied upon only two circumstances, firstly, the seized documents, which do not bear any signature, secondly, on the statement of the original owners, wherein the original owners have confirmed on oath the actual value of the land. One of the purchasers has stated on oath that a Police complaint was given against him and therefore, he had given statement before the Income Tax Authorities and subsequently retraced the same. In the circumstances, the assessment order passed based on seized material and the statements, which have been redressed, is perverse. We are of the considered view that AO had no material to hold that the assessee had paid any on-money . Hence, order passed by the AO, CIT(A) and ITAT are not sustainable. Since the assessment order is not sustainable, it is needless to mention that the current proceedings are not tenable. Decided in favour of assessee.

  ---

• 2022 (11) TMI 1210
  Exemption u/s 11 - Claiming of benefit of exemption for the assessment years which were pending on the date of registration u/s 12A - intimation u/s.143(1) denying benefit of deduction under section 11 - scope of powers of CPC - HELD THAT:- Where the registration has been granted to the Trust under Section 12AA, then, the provisions of Sections 11 and 12 shall apply in respect of any income derived from property held under Trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the AO as on the date of such registration. The objects and activities of such Trust remain the same for such preceding assessment year. The intimation u/s.143(1) does not spell out the reason as to why the benefit of Sec.11 of the Act was not given to the Assessee for AY 2018-19. The submissions of the parties were made on the premise that it is only for want of registration u/s.12A of the Act, that the benefit of exemption u/s.11 was not given to the Assessee. In terms of the 1st proviso to Sec.12A (2) of the Act, the action of the revenue authorities cannot be sustained. DR made reference to CBDT Circular No.1/2015 dated 21.1.2015 wherein the purpose of the first proviso has been explained as a measure to remove hardship in genuine cases, where the application for registration u/s.12A is unduly delayed by the revenue authority and such facts do not exist in the present case.On a plain reading of the proviso, such condition for claiming the benefits of the proviso has not been laid down therein. Hence, the argument advanced by the learned DR cannot be accepted. In the light of the fact that benefit of registration granted u/s.12A of the Act from AY 2019-20, would be available for earlier years also that are pending as on the date of grant of registration as per the 1st proviso to Sec.12A(2) the denial of benefit of exemption u/s.11 on the ground of absence of registration u/s.12A of the Act, cannot be sustained. We therefore hold that the adjustment made in the intimation u/s.143(1)(a) of the Act, cannot be sustained as it is beyond the scope of powers u/s.143(1)(a) of the Act and the adjustment so made is directed to be deleted. The appeal of the Assessee is accordingly allowed.

  ---

• 2022 (11) TMI 1209
  Reopening of assessment u/s 147 - reasons to believe - Whether reopening was made based on incorrect assumption of fact as is evident from the reasons recorded? - HELD THAT:- From the perusal of the entire reasons recorded by the ld.AO for reopening the assessment, we have absolutely no hesitation to hold that the entire reopening had been triggered by AO based on complete incorrect assumption of fact that no return of income was filed by the assessee for the A.Y. 2011-12, wherein a financial transaction of purchase of property was made. The letter to assessee by the AO calling for income tax return based on report received in the non-filers list was never issued by the AO for A.Y. 2011-12 i.e. the year under consideration before us. Factually it was issued only for A.Y.2010-11 as stated supra. Hence, we hold that the reasons recorded for reopening has been made without application of mind by the ld. AO. Now the moot question that arises for our consideration is as to whether the reopening which is made based on incorrect assumption of fact and non-application of mind by the ld. AO could be held to be valid. No infirmity in ld. CIT(A) quashing the re-assessment proceedings. Hence, the ground raised by the Revenue challenging the validity of quashing the re-assessment is dismissed.

  ---

• 2022 (11) TMI 1208
  Rectification of mistake u/s 154 - Credit for TDS deducted on sale of property - short TDS relates to sale of a property by the Assessee, being residential apartment - Correct AY - assessee claimed the TDS in the AY 2016-17 relevant to FY 2015-16 in which the transaction took place - HELD THAT:- TDS has been deducted and deposited, however, the credit originally appeared in the AY 2016-17 and later shifted to AY 2014-15. The Deductor has not corrected the TDS returns submitted by him, which could have been done and should have been done by the AO or the matter should have been referred to Jurisdictional AO to call the Deductor and direct him to correct the TDS return. CIT(A) has not considered the detailed submissions of the Assessee wherein it was clearly established that amount of TDS has been deducted, wrongly shifted to AY 2014-15, when the transaction related to sale of property made in FY 2015-16 (AY 2016-17). The entire payment was received in the FY 201516 and the TDS was deducted as well in FY 2015- 16, and the Deductor deposited the TDS in that year. Challan counterfoil dated 14.12.2015 issued by the bank also shows that the TDS deposited is for AY 2016-17. TDS return in Form 26QB as downloaded also shows that the return is for the AY 2016-17 (FY 2015-16) however the date of payment and date of deduction are erroneously and wrongly mentioned as 01.06.2013 instead of 10.12.2015, the date of transaction on which the payments were made by the Deductor through RTGS on the same day i.e. 10.12.2015 and the sale deed also registered on the said same date that is 10.12.2015. Assessee continued to follow up with the deductor of tax to submit correction statement for correcting the year of the TDS for due appearing in the relevant and applicable Assessment Year, i.e. 2016-17. Due to continuous persuasion the deductor, Shri Umesh Khaturia, the rectification was done and the same now appears for the AY 2016-17. Copy of the Form 26AS showing the above TDS of Rs. 231500/- for the year 2016-17 is attached in the Paper Book. In the meanwhile pending hearing in the present appeal, the Assessee submitted an application dated 15.02.2022 as per the Ack. No. 213052110255 dated 16.02.2022 to the Jurisdictional Assessing Officer. Till now, no action has been taken for giving credit by Assessing Officer. Form 26AS downloaded on 14.02.2022 that the due credit for Rs. 2,31,500/- is appearing therein. The application for rectification as mention above in this para is dated 12.03.2022 and the order of rejection is also same i.e. on 12.03.2022, when the credit was available on the said date as evidenced from the Form 26AS downloaded on 14.02.2022. A Grievance was lodged in regard to the above rejection of rectification as per Ack. No. 7674856 on 22.08.2022 which has not been resolved and is pending. From the entire sequence of events mentioned above, it is clear that the assessee is eligible for credit and refund - Hence, the AO is hereby directed to give credit of the TDS deducted and issue the refund of same to the assessee within 90 days from the receipt of this order. The ld. Jurisdictional PCIT shall monitor the issue of refund and see that the grievance of the assessee is redressed. Appeal of the assessee is allowed.

  ---

• 2022 (11) TMI 1207
  AO jurisdiction for conducting assessment proceedings as well as passing assessment order - change in the Assessing Officer of the similar rank - HELD THAT:- It can be seen that the assessee has filed return of income on 15.08.2015 with AO, Ward 7(1)(5), Ahmedabad, PAN No. of the assessee is AGKPT6559M and the notice which was issued by the respective ITO was also that of Ward 7(1)(5). Merely change in the Assessing Officer of the similar rank cannot be stated as not having jurisdiction for conducting assessment proceedings as well as passing assessment order. Therefore, all the contentions taken by the assessee which were incorporated in the original grounds of appeal as well in the revised grounds of appeal as well as the submissions before us does not stand at all in the eyes of law. Hence, all the contentions of the Ld. AR are rejected. Unexplained cash deposit and gift received from assessee s wife as well as failed to prove genuineness of the other cash gifts - Documents produced during the assessment proceedings are not reflecting the source of cash deposits whether the gifts are genuine or not. At the time of hearing, the ld. AR has also not produced any additional evidence to that extent and also not demonstrated from whom the gifts were received and whether the gifts are genuine or not. Therefore, on merits the assessee s case does not stand and, therefore, ground no.nil to the extent of merits in Column Nos.7, 8 9 stand dismissed Other grounds mentioned in original Form No.36 and in the revised grounds both are alleging the authorities in personal capacity which is uncalled act of the professional who is guiding his respective client i.e. assessee. Despite giving several opportunities to the Ld. AR, the Ld. AR was adamant to concise the grounds of appeal on the jurisdiction point as well as on merit point. The observation made hereinabove related to the jurisdiction point and merits should be taken into account as entirely deciding the appeal on merit as well as law. Appeal of the assessee is dismissed.

  ---

• 2022 (11) TMI 1206
  Assessment order passed u/s. 143(3) - Merging of order - Disallowance made in the assessment completed u/s. 143(3) of the Act and is pending for disposal - Assessee is in appeal before the Ld. CIT(A) against the disallowance made in the assessment completed u/s. 143(3) of the Act and is pending for disposal - HELD THAT:- From the perusal of the assessment order passed u/s. 143(3) of the Act, we note that Ld. AO has proceeded to compute the assessed income by making an addition to the returned income of the assessee and not the income processed u/s. 143(1) - As noted that in the said order u/s. 143(3) of the Act, there is no addition made in respect of dividend income received from investment in units of mutual funds u/s. 115BBDA of the Act. We note that since the assessment order u/s. 143(3) of the Act has already been passed in the present case before us, the intimation u/s. 143(1) of the Act against which the assessee is in appeal before us got merged with the aforesaid assessment order. Once the present intimation u/s. 143(1) of the Act having got merged in the assessment order passed u/s. 143(3) of the Act, the cause of action for the present appeal itself has vanquished, rendering the instant appeal as infructuous. We have not expressed any views in respect of the matter raised in the assessment order passed u/s. 143(3) of the Act for which appeal by the assessee before the Ld. CIT(A) is pending for adjudication. That is a separate proceeding and the outcome of the same may be take n up in separate appellate proceedings under the relevant provisions of the Act at the discretion of the concerning parties. Considering the above observation and finding, we dismiss the appeal of the assessee as infructuous. Appeal of the assessee is dismissed.

  ---

• 2022 (11) TMI 1205
  Addition u/s 14A r.w. Rule 8D - assessee had earned substantial dividend income - AO has made the addition by observing that where investment has been made in shares which did not yield any dividend income in the year under consideration, the expenditure incurred for earning income was deductible notwithstanding the fact that no such income has been earned - DR submitted that the assessee has capitalized substantial amount of interest paid by him on the amount invested, therefore, the amount of disallowance has to be calculated accordingly - HELD THAT:- Hon ble ITAT, Delhi has taken a similar view in the cases of Mitsubishi Corporation India Pvt. Ltd. vs. DCIT [ 2015 (1) TMI 48 - ITAT DELHI] and LG- Chemical India Pvt. Ltd. [ 2014 (12) TMI 294 - ITAT DELHI] whereby the ITAT has deleted the additions made u/s 14A on the ground that no exempt income has been earned by the appellant. When the entire amount of dividend income of Rs.1,22,16,840/- has been offered for taxation by the assessee in its return of income and no exempt income has been claimed for AY 2015-16, then, the disallowance u/s 14A of the Act r.w.r. 8D of the Rules cannot be held as sustainable in view of the judgement of Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] and in view of the judgement of CIT vs. Chettinad Logistics Pvt. Ltd. [ 2018 (7) TMI 567 - SC ORDER] Contention of DR that the assessee has capitalized huge amount of interest paid by him is concerned, this also show that the assessee has incurred expenditure of interest paid towards amounts used for investments in shares, but, has not claimed interest amount as revenue expenditure and has capitalized the same - instead of claiming expenditure on interest payment, the assessee has capitalized the same by enhancing the value of investment, therefore, no addition is called for u/s 14A of the Act r.w.r. 8D of the Rules in this regard. In view of the above, we are unable to see any ambiguity, perversity or any other valid reasons to interfere with the findings of the ld.CIT(A). The ground raised by the Revenue is dismissed.

  ---

• 2022 (11) TMI 1204
  Addition u/s 40A - addition on account of payment of management fee paid to M/s ATS Infrastructure Ltd - HELD THAT:- CBDT in its Circular No.6P dated 06.07.1968 clarified on the issue stating that the provisions of Section 40A(2) are meant to check evasion of tax through excessive or unreasonable payments to relatives and associate concerns and should not be applied in a manner which will cause hardship in bonafide cases. The assessee company had filed all the requisite documents before A.O. as called for, but, however, the A.O. without considering the fact that there is no loss to the revenue since assessee company as well as ATS are not claiming any exemption, disallowed the impugned expenditure and added back the same to the returned loss of assessee company in an arbitrary manner without considering the judicial precedence on this issue as well as the Circular of CBDT No.6P Dated 06.07.1968. A.O. flouted the CBDT Circular as well as judicial precedence on the matter in issue. We may note that in the instant case the A.O. judged the merits or otherwise of a commercial transaction by sitting in the chair of assessee which is not sustainable under law as per Judgment of Hon ble Delhi High Court in the case of Pr. CIT vs., M/s. Second Leasing Pvt. Ltd. [ 2017 (11) TMI 269 - DELHI HIGH COURT ] We find that the A.O. failed to bring any cogent material on record to suggest that the entire expense is excessive without bringing any comparable that the expenditure claimed by the assessee company is much higher than that of prevailing market rate. We, therefore, find no force in the arguments of Ld. D.R. on this issue. D.R. also did not brought anything on record to sustain the addition made by the A.O. In this view of the matter and the settled position of law on this issue by the Hon ble Supreme Court in the case of S.A. Builders Limited [ 2006 (12) TMI 82 - SUPREME COURT ] and the Judgment of Hon ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. [ 1954 (10) TMI 12 - SUPREME COURT ] relied upon by the CIT(A), we find no reason to interfere with the order of the Ld. CIT(A) in deleting the disallowance made by the A.O.- Thus, we dismiss the ground of Revenue.

  ---

• 2022 (11) TMI 1203
  House property income - assessee has already claimed deduction u/s 24 on the rental income earned by it and it had voluntarily made disallowance of expenses debited on account of earning of such rental income - AO has made disallowance of 10% of operating expenses, employee benefit expenses and administrative general expenses, keeping in view that the total rental income is approximately 10% of total revenue/income including rental and hotel business - CIT-A deleted the addition - HELD THAT:- The principle of res judicata does not apply to the income-tax proceedings, but, rule of consistency is always respected by the tax authorities In the present case, the assessee had shown and included in the other income an amount received as maintenance charges, but, the expenditure towards maintenance of rental area has been incurred from the common pool of expenses which provoked the AO to make the impugned disallowance. We observe that the AO has not made any allegation regarding proportionate lease rent and municipal taxes related to rental portion, but, the disallowance of 10% of total expenses incurred by the assessee on other operating expenses, employee benefit expenses and administrative general expenses has been made. Therefore, the argument of double disallowance has no legs to stand and, thus, we dismiss the same. Obviously, when the assessee is claiming deduction u/s 24 of the Act on the rental income earned by it, then, it is not entitled for claiming any depreciation on the commercial block from which rental income has been earned. From the assessment order, we also observe that it is not the case of the AO that the assessee has claimed depreciation on the rental commercial block and, therefore, he is making disallowance of proportionate expenditure. Therefore, this contention of the ld. Counsel of the assessee is also not acceptable. CIT(A) was not correct and justified in deleting the disallowance by observing that the AO, without identifying any expenses attributable to rental income, assumption of the AO without identifying any expenses attributable to rental income and such disallowance without identifying any expenses cannot be sustained. As the ld. CIT(A) has ignored some factual position as noted above from the audited accounts of the assessee and has completely ignored the audited financial statements and accounts of the assessee especially table 21, 22 and 25 wherein some expenses are clearly identifiable and attributable to hotel business as well as rental activity and which has been incurred from the common pool and the assessee has not made any sustainable and acceptable apportionment to establish that the actual maintenance charges received by it are equal or less than the actual expenses incurred from common pool on the rental operation towards other expenses, employee benefit expenses and other administrative general expenses. Therefore, the issue is restored to the file of the AO with a direction to identify the expenses pertaining to hotel and rental activity from common pool as per table 21, 22 and 25 of accounts and to make proportionate and appropriate disallowance on rental area/portion maintenance. Appeal filed by the Revenue is allowed for statistical purposes only.

  ---

• 2022 (11) TMI 1202
  Levy of income tax - Applying the concessional rate of tax @ 22% u/s 115BAA - assessee did not file Form 10 IC before the due date of filing the return of income, i.e. 15/02/2021, in the present case, which is mandatory condition for claiming the option available under section 115BAA - HELD THAT:- The coordinate bench of the Tribunal in Suminter India Organics Private Ltd [ 2022 (7) TMI 1219 - ITAT MUMBAI] held that the time permitted for filing Form 10-IC by virtue of section 3(1)(b) of Taxation and Other Laws (Relaxations and Amendment of Certain Provisions) Act, 2020, must be treated as 31/03/2021, even as the time permitted for filing the income tax return under aforesaid section, in light of the 3rd proviso to section 3(1) of said Act and read with subsequent notification, was only up to 15/02/2021. AR, during the hearing, fairly submitted that in the present case Form 10-IC has not been filed by the assessee till date. Thus, in view of the above, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. We may, however, clarify that our findings on this issue shall not affect any other alternative remedy available/pursued by the assessee. Accordingly, ground No.1 raised in the assessee s appeal is dismissed. Applying the rate of tax @25% since the total turnover of the company in financial year 2018 19 is less than Rs. 400 crore - AR by referring to the profit and loss account for the year ending 31/03/2017 submitted that the gross revenue from operations of the assessee was Rs. 10.82 crore and thus in view of the aforesaid provision the rate of tax applicable in case of assessee should be 25% - HELD THAT:- We deem it appropriate to remand this issue to the file of AO for necessary verification. We further direct that the tax liability of the assessee be computed by applying the rate of tax as per the applicable provisions of law. Needless to mention that no order shall be passed without affording reasonable opportunity of being heard to the assessee. Accordingly, ground No. 2 raised in the assessee s appeal is allowed for statistical purposes.

  ---

• 2022 (11) TMI 1201
  Interest income received u/s 28 of the Land Acquisition Act, 1894 - Taxabilty u/s 56(2)(viii) r.w.s. 57(iv) - HELD THAT:- We thus adopt the foregoing discussion in Basweshwar Mallikarjun Bidwe [ 2020 (10) TMI 356 - ITAT PUNE] mutatis mutandis to affirm the CIT(A) s action upholding the impugned assessment findings regarding taxability of both sec.28 and sec.34 interests. The assessee s sole substantive grievance raised in the instant appeal fails.

  ---

• 2022 (11) TMI 1200
  Disallowances u/s 14A - Expenditure on exempt income - HELD THAT:- No infirmity in the finding of learned CIT(A) as limiting the disallowances u/s 14A of the Act to the extent of exempted income. MAT - Exempted income - adjustment to book profit u/s 115JB - provision of clause (f) of the explanation 1 to section 115JB - HELD THAT:- We note that the Special Bench in the case of ACIT vs. Vireet Investment Pvt. Ltd. . [ 2017 (6) TMI 1124 - ITAT DELHI] has held that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of addition while determining the net profit u/s 115JB. We hold that the disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB of the Act as per the direction in the case of CIT Vs. Jayshree Tea Industries Ltd. [ 2014 (11) TMI 1169 - CALCUTTA HIGH COURT] . How to determine the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently - There is no mechanism/ manner given under the clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/ determine the expenses with respect to the exempted income. Therefore in the given facts circumstances, we feel that adhoc disallowance will serve the justice to the Revenue and assessee to avoid the multiplicity of the proceedings and unnecessary litigation. Thus we direct the AO to make the disallowance of 1% of the exempted income as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act. We also feel to bring this fact on record that we have restored other cases involving identical issues to the file of AO for making the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. But now we note that there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act. Thus in view of the above the ground of appeal of the Revenue is partly allowed. Bogus purchases - whether the purchase shown by the assessee is bogus in nature? - HELD THAT:- We note that the assesse has shown export sales which was duly supported based on form H, bill of lading, shipping bill etc. Likewise, there was received money against such export sales. Thus, all these cumulative informations suggest that the assessee without making the purchase, cannot export the goods. There were various documents filed by the assessee in his form of confirmation, sales bills of the parties. Besides, the authorized representative appeared on behalf of M/s Uma Cotton Industries, all these documents cannot be neglected merely on the reasoning that there was some mismatch in the transport bills as discussed above. Thus, in view of the above, and after considering the facts in totality we do not find any reason to interfere in the order of the Ld. CIT(A), hence the ground of appeal of the revenue is hereby dismissed. Addition of commission expenses - HELD THAT:- All documentary evidences are not sufficient enough until and unless it is clear based on the evidences that the commission agents have rendered services to the assessee. It is the onus upon the assessee to bring such services based on the cogent materials but we note that there was no evidence brought on record about the services rendered by the commission agent, therefore, we are not inclined to uphold the order of the Ld. CIT(A), on the reasoning that the commission expenses have not been incurred by the assessee wholly and exclusively for the purpose of business. On perusal of the agreement, we note that there were executed on 01/04/2011 and the same were not notarized. Furthermore, most of the payment for the commission was made at the fag end of the Assessment Year though the assessee was carrying out business throughout the year. All these facts strongly suggest that the assessee has manipulated it profit by claiming commission expenses. Hence the ground of Revenue is allowed.

  ---

• 2022 (11) TMI 1199
  Additions of unexplained cash credit u/s 68 - Adjustment of Bad debts under the provision of section 36(1)(vii) - Addition made by the authorities below to the extent under the provisions of section 68 - HELD THAT:- The amount of unexplained cash credit was adjusted by the assessee against the debtors meaning thereby the debtors in the books of accounts of the assessee were written off on account of such adjustment. The authorities below treated the sum as unexplained cash credit u/s 68. Thus, there remains no ambiguity to the fact that assessee has made its debtors at NIL value and accordingly the assessee is entitled to claim the deduction by way of writing off bad debts of these sundry debtors within the meaning of the provision of section 36(1)(vii) - Thus, we set aside the order of the CIT(A) and direct the AO to allow the deduction for the bad debts only. Thus, ground of appeal of the assessee is partly allowed.

  ---

• 2022 (11) TMI 1198
  Capital gain computation - Commissioner has considered valuation given by DVO - Whether Commissioner has not referred the valuation method provided by the approved valuer? - HELD THAT:- The Registered Valuer had not based his Valuation Report on any scientific or logical basis but had made general observations to work out the FMV. The Registered Valuer is required to follow the provisions of the Urban Land Ceiling Land Act, Town and Country Planning Act, Chapter XXC of the I.T. Act, Capital Gains under the Income Tax Act and Guidelines referred by the Institute of Valuers and Guidelines from the sub-Registrar s Office (Col. No.38) wherein the Valuer has to report whether any comparable instances/cases of the sales relied upon to arrive at the value of the land. As per the Central Public Works Department s Manual, comparable sale instances, are only method for valuation. It is settled law that orange and apple cannot be compared which has been done by the Registered Valuers to arrive at an imaginary rate @ 235 per. Sq. mtr. The DVO has taken the rate @ Rs.50 per sq. mtr., which is based on some scientific analysis and as per the guidelines as the comparable sales instances has been taken. As correct computation of capital gains on the basis of the valuation report of the DVO has been made by the Assessing Officer. The AO is being directed to taken the estimated value as per DVO Report instead of the value of the Stamp Authorities to work out the correct computation of capital gains. Hence, the action of the AO is upheld. We find that there is no infirmity in the order passed by the ld. CIT(A) above. The ld. CIT(A) has considered all the facts and legal position applicable to the facts and delivered a reasoned order, therefore we decline to interfere in the order passed by the ld. CIT(A). Hence, the appeal of the assessee is hereby dismissed.

  ---

• 2022 (11) TMI 1197
  Addition u/s 68/41 - opening balance of advances for booking and another sundry creditor - old sundry creditors appearing in the balance sheet - assessee has not filed any confirmation of creditors, copy of ITRs of so-called advances given, were furnished - taxability of sundry creditor u/s 41(1) - HELD THAT:- As held that advances for booking and sundry creditor added are carried forward from earlier year and cannot be added under section 68. For creditor assessee furnished copy of sale deed, wherein the details of cheque given to the seller and bank statements established that seller has not deposited cheques or encashed the said amount. CIT(A) recorded that assessing officer had given categorical findings that the above amounts of both the additions are opening balance. On such observation, CIT(A) was of the view that there is no dispute that amounts added are actually opening balance, which was carried forward from assessment year 2014-15. On the observation of AO for taxing the sundry creditor u/s 41(1) being ceased trading liability to assessee who is a builder, we find that the AO was given liberty to examine such facts in relevant assessment year. Once the AO is given liberty, the Ld. CIT(A) found no reason to wait for her remand report as no prejudice is caused to either party on adjudication the matter. We are conscious of the fact that there is no ground of appeal raised by the revenue for making/ sustaining addition under section 41(1), yet we may observe that the assessing officer has not brought any evidence to show that it was a cessation or remission of trading liability. Asin PCIT Vs Matruprasad C Pandey [ 2015 (4) TMI 830 - GUJARAT HIGH COURT] held that amount of old sundry creditors appearing in the balance sheet cannot be added under section 41(1) unless and until it is found that there is remissions/ cessation of liability and that too during the relevant assessment year. Thus, on the basis of the aforesaid factual and legal position, we do not find any infirmity in the order of ld CIT(A) in deleting the addition of advance bookings and sundry creditors, which we affirms with these additional observation.

  ---

• 2022 (11) TMI 1196
  Revision u/s 263 - undisclosed income of the firm - PCIT went on to hold that neither the assessee firm was covered under the provisions of section 44AD and nor was the calculation made by the AO @ 8% justified as the AO was required to treat the entire gross receipts as undisclosed income of the firm - PCIT concluded that the assessment order was passed without making inquires or verification and, therefore, the order of the AO was erroneous - HELD THAT:- AO had made necessary inquiries regarding assessee s claim of having earned income from sub-contract work and, thereafter, after considering the reply submitted by the assessee, the AO has rejected such claim of the assessee regarding its working as a subcontractor. AO proceeded to hold that the assessee s work was in the nature of providing accommodation entries and based on this conclusion, the AO held that a rate of 8% should be applied being percentage of commission earned on providing the accommodation entries. Thus, in view of the questionnaires issued by the AO and the replies submitted by the assessee, the conclusion reached by the AO of rejecting the assessee s claim apparently proves that the AO had made proper inquiries and had also duly applied his mind to the facts of the case. Contention of the Ld. PCIT that no enquiry was made by the AO is factually incorrect. Having said that, in the present case, PCIT has not specifically pointed out as to what further inquires or verification should have been carried out by the AO in this regard. Merely because the Ld. PCIT felt that further inquiry should have been made does not make the order of the AO erroneous and prejudicial to the interest of the Revenue. It is not a case where the AO has upheld the applicability of section 44AD as alleged by the Ld. PCIT. Rather, the AO has rejected the assessee s claim of business income under section 44AD of the Act and has determined the true nature of assessee s activities as that of an accommodation entry provider rather than provider of sub-contractor services as so claimed by the assessee. Having arrived at the true nature of assessee s activities of that of an accommodation entry provider, the AO has applied commission rate of 8% on total receipts/transaction value of entries - PCIT has not pointed out how rate of 8% being the commission income so determined by the AO is unsustainable in the eyes of law and whether there are other benchmark of estimating commission income which the AO should have applied and which he has failed to apply. There is thus no incorrect application of law by the AO in the present case and further, the AO, after making inquiries and examining the records, has taken a view which is one of the possible views, and since this view is not unsustainable in law, it cannot be said that the order passed by the AO was erroneous in so far as being prejudicial to the interest of Revenue. Thus following the decision of the Coordinate Benches in case of Shiv Shakti Constructions [ 2022 (10) TMI 972 - ITAT CHANDIGARH] the order so passed by the Ld. PCIT u/s. 263 is set-aside and the order of the AO is sustained. Assessee appeals stands allowed.

  ---

• 2022 (11) TMI 1195
  Revenue recognition - Profit offered during the survey proceeding - profit determined on the project undertaken by the assessee - Method of accounting - assessee was following percentage completion method of accounting - assessee has not honored the income of Rs. 5 crore, which the assessee declared during the course of survey action - HELD THAT:- A.O. ignored the percentage completion method of revenue recognition consistently followed by the assessee in assessment years prior to the assessment year under consideration i.e. A.Y. 2009-10 and opined that project of the assessee was completed therefore entire profit should have been declared in the year under consideration. In our opinion, the Ld. FAA after considering the submission of the assessee and analyzing facts of the case, correctly upheld the percentage completion method of Revenue recognition following the judicial precedents, and therefore we do not find any error in the order of the Ld.FAA on the issue in dispute, accordingly we uphold the same. - Decided against revenue. Addition on account of income from house property - ALV of the flats held by the assessee as stock in trade - Addition determined by the Ld. A.O. on the closing stock of the flats held by the assessee - whether, from the flats held by an assessee as a stock in trade, the deemed rental income under the head income from house property should be assessed or not? - HELD THAT:- The coordinate bench of the Tribunal in the case of Bangal Shapoorji housing development Private Limited [ 2021 (5) TMI 636 - ITAT MUMBAI] after considering various decisions directed the Ld. Assessing Officer to delete the addition made towards the ALV of the flats held by the assessee as stock in trade of its business as that of a builder and developer. In our opinion, there is no error in the order of the Ld. FAA on the issue in dispute, which has been passed after following binding precedent on the issue in dispute. We accordingly uphold the same. The ground No.3 of the appeal of the Revenue is accordingly dismissed.

  ---

• 2022 (11) TMI 1189
  Assessment u/s 153C - Whether separate satisfaction has been recorded by the A.O. of the searched person by complying the provisions of Section 153C? - HELD THAT:- As per Apex Court in the case of Super Malls Pvt. Ltd. [ 2020 (3) TMI 361 - SUPREME COURT] and the satisfaction recorded by the ACIT, Central Circle- 21 who is the common AO of the searched person and the other person, the ground raised by the assessee are liable to be dismissed. Search and seizure operation - Satisfaction though recorded was not based on the material relevant to the year in question and also the additions made were not based on the incriminating material found and seized during the course of search u/s 132. Disallowance of purchases u/s 40A(3) - addition on account of purchases of milk made by the AO - HELD THAT:- CIT(A) has cogently brought on record about the fact of genuineness of the payment and applicability of Rule 6DD along with the relevant case laws. Under the above mentioned facts and circumstances, the CIT(A) held that action of AO u/s 40A(3) is not upheld. Since, no addition has been made by the AO under this section holding that the addition has been made on account of unexplained purchases, any adjudication by the Tribunal would be only academic in nature. Addition on account of unexplained purchases - CIT(A) has recorded the detailed statement of all the purchase parties on oath and came to a conclusion that the identity, genuineness and creditworthiness of the parties has been proved beyond doubt. Hence, the identity, genuineness and creditworthiness of all the parties from whom purchases were made were proved beyond doubt. Hence, no addition is called for on this account. Ad-hoc estimation of GP @ 0.20% on sales by the CIT(A) - We find that the ld. CIT(A) himself held that there is no reason for doubting the purchases made and payment made in cash being the parties are identified and accepted that they have made sale to the appellant in cash and there is no doubt as regard to genuineness of corresponding sales effected by the appellant and rightly deleted the addition on account of unexplained purchases. CIT(A) has verified the purchases by recording statement of suppliers of milk during the appellate proceedings in presence of AO and it is not the case of any inflation in price of the milk purchased by appellant as nothing incriminating was brought on record. Therefore, the action of the CIT(A) to resort to ad-hoc estimation of GP @ 0.20% of total sales is arbitrarily and mechanical. Hence, the action of the ld. CIT(A) cannot be supported and is liable to be deleted.

  ---

• Customs

• 2022 (11) TMI 1194
  Valuation of imported goods - rejection of declared value - restricted goods/prohibited goods - It appeared to Revenue that the goods involved is old hospital accessories are restricted in nature in terms of Sl. No. II (2.1) FTP 2015-20, which stipulates that import of Second Hand Goods other than capital goods are restricted in nature and can only be allowed subject to production of valid authorisation certificate issued by DGFT - appeal dismissed on the ground that the appeal has been filed on the 91st day, counted from 16.02.2018 being the service of the impugned order - Confiscation - redemption fine - penalty - HELD THAT:- The appellant has definitely imported the restricted goods for use as capital goods to be installed in their Hospital/ Nursing Home. Further, it is found that the goods are not prohibited goods and as the goods are admittedly second hand goods, this falls under restricted goods under the FTP. It is further found that as the goods are admittedly more than ten years old, and under Rule 3(5) of the Cenvat Credit Rules, depreciation of 2.5% is available for each quarter on straight line basis on the capital goods. Thus, the value becomes NIL after ten years of user of capital goods. The rejection of transaction value is bad. Thus, the declared value is accepted. Thus, no differential duty is payable. However, the goods have been rightly held confiscable as the appellant did not have license to import. The order of confiscation under Section 111(d) is upheld. However, redemption fine is reduced to Rs. 50,000/-. Further, penalty under Section 112(a)(i) is reduced to Rs. 10,000/-. Appeal allowed.

  ---

• Insolvency & Bankruptcy

• 2022 (11) TMI 1193
  Jurisdiction - power of Adjudicating Authority to extend the time lines for making payments as per approved Resolution Plan - violation of principles of natural justice or not - validity of order for fresh Corporate Insolvency Resolution Process when the Successful Resolution Applicant has claimed to be in position to implement the Resolution Plan, albeit, beyond the schedule as stipulated in the Resolution Plan - failure to comply extended time lines permitted vide order dated 13.04.2022 as well as after dismissal of appeal filed by one Operational Creditor before the Hon ble Supreme Court of India. Whether the Adjudicating Authority has got the sufficient power to extend the time lines for making payments as per approved Resolution Plan and if so, whether in the present case this power was exercised or otherwise by the Adjudicating Authority correctly? - HELD THAT:- This Appellate Tribunal consciously notes that powers of the Adjudicating Authority has been clearly defined in Section 31 of the I B Code, 2016 (discussed earlier) and there is no specific provision authorising the Adjudicating Authority to consider such extensions of time lines. This Appellate Tribunal again observes that the objective of I B Code, 2016 is Resolution as well as Maximisation the value of the assets of the Corporate Debtor and take care of interest of all stake holders and not limited to one stake holder or one set of stake holders. In view of the provisions as stipulated in the I B Code, 2016. Specific provisions of time lines of 90 days from the effective dates and subsequent additional 60 days as the outer limit provided in Resolution Plan. Specific proviso in Resolution Plan that after 90 + 60 days if settlement payment is not made money already been paid is liable to be forfeited. Failure to comply even extended time lines of three months given by this Appellate Tribunal. This Appellate Tribunal do not find any error in the impugned order on this aspect. While observing this, this Appellate Tribunal has also factored into the ratio provided by the Hon ble Supreme Court of India that commercial wisdom of Committee of Creditor is supreme and there is limited scope for judicial intervention by the Adjudicating Authority or the Appellate Tribunal. Hence, this Appellate Tribunal upholds the decision of the Adjudicating Authority on this issue. Whether the Adjudicating Authority violated the principals of natural justice in the present case? - HELD THAT:- The Adjudicating Authority seems to be right in observing that there was no application for initiation of liquidation and the application of Appellant in I.A. No. 655 of 2022 is incorrect and accordingly was dismissed by the Adjudicating Authority - Taking into account the averments made by the both the parties and the reasons accorded by the Adjudicating Authority while disposing relevant I.A. No. 654 655 of 2022, this Appellate Tribunal do not find any reason to intervene the impugned order on this account. Whether the Adjudicating Authority could have ordered for fresh Corporate Insolvency Resolution Process when the Successful Resolution Applicant has claimed to be in position to implement the Resolution Plan, albeit, beyond the schedule as stipulated in the Resolution Plan? - HELD THAT:- It is a fact that the timely resolution is very important in case the value of the Corporate Debtor is required to be preserved and in order to ensure maximisation of value of assets of the Corporate Debtor. This Appellate Tribunal has also noted that pursuant to the Adjudicating Authority order for fresh Corporate Insolvency Resolution Process, the 1st Respondent has already issued fresh Form-G on 19.09.2022 inviting fresh Expression of Interest from prospective Resolution Applicants and any interference at this stage will hamper the entire process and perhaps may lead to liquidation which is practically death knell of the Corporate Debtor. In view of all above, this Appellate Tribunal do not find any error in the impugned order on this account. Whether, the Appellant exhausted legal remedies in view of failure to comply extended time lines permitted vide order dated 13.04.2022 as well as after dismissal of appeal filed by one Operational Creditor before the Hon ble Supreme Court of India challenging this Appellate Tribunal s order? - HELD THAT:- Prima-facie, it looks that the Appellant had taken all the legal remedies available to it including various Interlocutory Applications filed before the Adjudicating Authority, appeal made to this Appellate Tribunal and upholding this Appellate Tribunal order by the Hon ble Supreme Court of India filed by one of the Operational Creditor (and not the Appellant). As such, no further scope is available to this Appellate Tribunal to invoke any of the provisions available under I B Code, 2016, to give any further relief to the Appellant, at this juncture. This Appellate Tribunal is of the considered opinion that there is no error, in the impugned order dated 05.09.2022, passed by the Adjudicating Authority - Appeal dismissed.

  ---

• 2022 (11) TMI 1192
  Claim of the workmen and employees - inclusion in the Stakeholders Consultation Committee ( SCC ) - Direction to Liquidator to immediately refund the fees of 11.5 crore (approx) taken by the Liquidator for or on account of illegal distribution of funds among the creditors of the corporate debtor to the bank account of the corporate debtor along with interest HELD THAT:- A coordinate Bench of this Tribunal in UP Awas Evam Vikas Parishad (UP Housing and Development Board) Vs. JNC Construction Pvt. Ltd. Ors. [ 2022 (4) TMI 261 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] , has observed that there is no subsisting Claims of the Employees and all the Employees are getting their salaries on a regular basis. Based on the submissions of the Liquidator it is also recorded that the gratuity claim of the Employee is also not existing and has partially allowed the Appeal - it is clear that the Corporate Debtor is being conducted as a Going Concern and that the Banks would return the money if they are not entitled in accordance with Regulation 43 of the IBBI (Liquidation Process) Regulations, 2016. Inclusion as a representative in the SCC or not - HELD THAT:- Regulation 31 clearly specifies that the Liquidator shall prepare a list of Stakeholders, category wise, on the basis of proves of Claims submitted and accepted under these Regulations . In the instant case, the Claims made by the 16 Employees with respect to the one-month Notice Period was rejected and the same was not challenged vide an Appeal. Regulation 31-A(2), speaks of one representative of Workmen and Employees. Regulation 31-A flows from 31 and has to be read together and interpreted in its truest sense keeping the objective of the Code - Regulations 31 31-A specify that when the Employees have no subsisting Claim, they cannot be included in the list of Stakeholders, thereby meaning that if the Workers are not specifically includes in the list of Stakeholders, under Regulation 31, they cannot be made a part of the SCC under Regulation 31-A(1). Therefore, the contention of the Learned Counsel for the Appellant that one representative to be included whether the Claim is subsisting or not, is untenable. The Corporate Debtor is a Going Concern and an assurance as has been given by the Respondent that their Claims of gratuity as and when they arise would be paid as per the provisions of the Code, there are no illegality or infirmity in the Order of the Adjudicating Authority - appeal dismissed.

  ---

• PMLA

• 2022 (11) TMI 1191
  Smuggling - proceeds of crime - mere presence can be termed as participation or not? - summon under Section 4 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- The scope of the jurisdiction under Section 482 of the Code of Criminal Procedure, 1973 is quite wide but much restricted by the principles of law as laid down by the Hon ble Supreme Court in umpteen judgments. In case prima facie case is made out, generally interference is not warranted in this jurisdiction. What is being argued is that the role of the petitioners does not make out any case. The witnesses have categorically told about it. Not only Dr. Tarun Rao but other witnesses have also stated about the role of the petitioners. It is not a case of mere presence of the petitioners, which is the basis of their implication. It is the case of assisting someone to acquire proceeds of crime. The role assigned to the petitioners is that they assisted someone to acquire and conceal the proceeds of crime. It definitely makes out a prima facie case under Section 4 of the Act against the petitioners. A detailed examination or mini-trial at this stage, is not expected of. This Court is of the view that prima facie offence is made out against the petitioners. There is no reason to make any interference in the petitions. Accordingly, both the petitions deserve to be dismissed. Petition dismissed.

  ---

• Service Tax

• 2022 (11) TMI 1190
  Refund of accumulated/unutilized Cenvat Credit of Service tax - input services - Business Travel Service - Membership of club or Association service - Event Management Service - Business Support Services - nexus with the output services or not - October, 2016 to June, 2017 - HELD THAT:- There is no doubt that Rule 5 ibid provides for refund of accumulated Cenvat credit subject to compliance of the procedure/ guideline laid down in the notifications issued thereunder. The refund of Cenvat credit on the services in issue was mainly denied to the Appellant on the ground of no nexus between the input services and the export services. But the question herein is whether the department can deny refund of Cenvat credit under Rule 5 ibid alleging that there was no nexus between the output and input services. It is settled legal position that denial of Cenvat credit can be done only by issuing notice under Rule 14 ibid and the department cannot reject refund of Cenvat credit solely under Rule 5. It is well settled principle that availment of Cenvat credit, its utilization and refund are different aspects dealt with under CCR, 2004 - Admittedly since the availment of credit has not been questioned by the department herein by issuing show cause notice in terms of Rule 14 ibid, the refund benefit cannot be denied on the ground of non-establishment of nexus between input and the output services. In the matter of M/S BNP PARIBAS INDIA SOLUTION PVT LTD VERSUS COMMISSIONER OF CGST, MUMBAI EAST [ 2021 (12) TMI 676 - CESTAT MUMBAI] this Tribunal while allowing the appeal of the assessee therein allowed the refund claim u/s. 5 ibid by holding that since the provisions of Rule 14 ibid have not been invoked, the refund of Cenvat credit as claimed by the Appellant under Rule 5 ibid cannot be denied. Although, as submitted by learned counsel, the mails and sample copy of invoices were produced by them before the learned commissioner in support of their submissions but simply the claim has been rejected by merely recording that no tangible evidence has been produced. The aforesaid mails and invoices, which have been produced here also, are sufficient to establish the nexus. Law does not require one to one correlation unless the availment of Cenvat credit itself - the appellants are entitle for the refund as claimed by them and the authority below is not justified in rejecting the same. Appeal allowed.

  ---

• 2022 (11) TMI 1188
  Denial of refund of service tax - export of services - organizing of cricket match for employees - input services or not - denial on the ground of lack of nexus with output services - HELD THAT:- Both the lower authorities have held that organizing of cricket match for employees was not relevant to the export of service. Any sporting activity has the effect of rejuvenating the minds and rendering them more fit for efficient working. Therefore, it was incorrect to consider the organizing of cricket tournament to be unrelated to the activities of the appellant. As far as the evidence of credit availed on transportation of employees, the records do not indicate any bills issued by service provider; supply of fuel is not supply of input service and the returns do not indicate credit having been taken on inputs for the relevant period. The impugned order is set aside except to the extent of Rs. 1,735/- pertaining to fuel bills and directing that the refund claim for remaining amount be allowed. Appeal disposed off.

  ---