TMI Tax Updates - e-Newsletter
November 6, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax

TMI SMS

• Power to conduct audit/verification of documents, records under erstwhile service tax law - repealed act - Jurisdiction, post GST Law, is saved - HC

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• The mesne profits + interest received for unauthorised occupation of the immovable property by the erstwhile tenant is taxable as Rental income - HC

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Articles

1. GST ON CONTRIBUTION RECEIVED FROM RWA MEMBERS – ADVANCE RULING

   By: Dr. Sanjiv Agarwal

2. Exempted Supply in the light of composite supply

   By: Chandani Nawalkha

News

1. Rajasthan decides to go for Option-1 to meet the GST implementation shortfall

2. Arbitration and Conciliation (Amendment) Ordinance, 2020.

Notifications

Customs

1. 105/2020 - dated 5-11-2020 - Cus (NT)

Exchange rate Notification No.105/2020-Cus (NT) dated 05.11.2020

GST - States

2. 71/2019-STATE TAX - dated 4-11-2020 - Delhi SGST

Seeks to give effect to the provisions of rule 46 of the DGST Rules, 2017

3. 68/2020 - dated 4-11-2020 - Delhi SGST

Seeks to grant waiver / reduction in late fee for not furnishing FORM GSTR-10, subject to the condition that the returns are filled between 22.09.2020 to 31.12.2020

4. 14/2020-STATE TAX - dated 4-11-2020 - Delhi SGST

Supersession Notification No. 72/2019 – State Tax, dated the 16th July, 2020

5. G.O. Ms. No. 63 - dated 28-10-2020 - Puducherry SGST

Puducherry Goods and Services Tax (Twelfth Amendment) Rules, 2020

6. G.O. Ms. No. 62 - dated 28-10-2020 - Puducherry SGST

Seeks to amend Notification No. 13/A1/CT/2017 dated the 29th June, 2017,

7. G.O. Ms. No. 61 - dated 28-10-2020 - Puducherry SGST

Amendment in Notification GO. Ms. No. 53 dated the 25th October, 2019

8. G.O. Ms. No. 60 - dated 28-10-2020 - Puducherry SGST

Seeks to prescribe the due date for furnishing FORM GSTR-1 for the quarters October, 2020 to December, 2020 and January, 2021 to March, 2021 for registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year

9. G.O. Ms. No. 05/2020-Puducherry GST (Rate) - dated 28-10-2020 - Puducherry SGST

Amendment in Notification G.O. Ms. No. 12/2017-Puducherry GST (Rate), dated the 29th June, 2017

Circulars / Instructions / Orders

SEZ

1. Instruction No.104 - dated 2-11-2020

Consolidated list of default authorized operations which can be undertaken by the developer/approved co-developer by default from the date of notification

SEBI

2. SEBI/HO/IMD/DF3/CIR/P/2020/225 - dated 5-11-2020

Enhancement of Overseas Investment limits for Mutual Funds

Income Tax

3. 19/2020 - dated 3-11-2020

Condonation of delay under section 119(2)(b) of the Income-tax Act, 1961 in filing of Form No. 10BB for Assessment Year 2016-17 and subsequent years

FEMA

4. 04 - dated 5-11-2020

Exim Bank's Government of India supported Line of Credit (LoC) of USD 20.10 million to the Government of the Republic of Nicaragua

Highlights / Catch Notes

GST

• Court Affirms Audit Powers Under CGST Act; Rule 5A of Service Tax Rules Still Valid Post-Law Repeal.

  Case-Laws - HC : Power to conduct audit/verification of documents and records under erstwhile service tax law - Jurisdiction, post GST Law - Having regard to the language used in the saving clause of the CGST Act as well as Sections 6 and 24 of the General Clauses Act, along with the legislative intent behind the repeal and enactment, we hold that Rule 5A of Service Tax Rules, 1944 framed under the repealed/omitted chapter V of the Finance Act, 1994, is saved. - HC
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Income Tax

• Mesne profits and interest from unauthorized occupation are taxable u/s 23(1), says Tax Appellate Tribunal.

  Case-Laws - HC : Rental income or otherwise - mesne profit - TAT was right in holding that mesne profits and interest on mesne profits received under the direction of the Civil Court for unauthorised occupation of the immovable property of the assessee by Indian Overseas Bank-the erstwhile tenant of the appellant, was liable to tax u/s 23(1) of the Act, since mesne profits, and interest on mesne profits, in the facts of the present case constitute revenue receipt. - HC
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• Lump Sum for Infrastructure Deemed Revenue Expenditure u/s 37(1) of Income Tax Act: Tribunal's Decision Explained.

  Case-Laws - HC : Lump sum payment for development of infrastructure for uninterrupted power supply - revenue expenditure u/s 37(1) - The instant case, though the assessee has parted with substantial funds to M/s.Ford India Private Limited, the capital asset continued to remain the property of M/s.Ford India Private Limited. - Tribunal rightly examined the nature of transaction and held that expenditure to be in the Revenue field - HC
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• Charitable Organization's Crossbreeding Program Upheld as Exempt u/s 11 Despite Exceeding Income Limit in Section 2(15.

  Case-Laws - AT : Exemption u/s 11 - proof of charitable activities - receipts from the business of upgrading the local indigenous low milk yielding cattle by cross breeding them with the use of frozen semen of high pedigree exotic bull through technique of artificial insemination to get resulting better milk yielder exceeded the limit provided in proviso to section 2(15) - All these were the objects of the general public utility and would squarely fall u/s 2(15) - Benefit of exemption cannot be denied - AT
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• Court Rules in Favor of Assessee: Job Charges Disallowance Overturned Due to Sufficient Evidence and TDS Documentation.

  Case-Laws - AT : Disallowance of job charges paid - sufficient evidences have been filed by the assessee before the revenue authorities for substantiating the claim of the assessee especially on the expenditure in dispute and the TDS deducted which has not been disputed by the revenue authorities, hence, the addition in dispute has wrongly been made - additions deleted - AT
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• CIT Correctly Invokes Section 263 to Overturn AO's Assessment on Work-in-Progress Valuation and Unsold Flats' ALV Issue.

  Case-Laws - AT : Revision u/s 263 - The inquiry made by the AO pertained to the issue as regards the valuation of opening and closing WIP of the assessee’s project and determination of the cost of sale of the same. - We are unable to comprehend as to on what basis it is canvassed by the ld. A.R that the A.O while framing the assessment, had queried, on the issue as to whether or not the ALV of the unsold flats was to be assessed under the head ‘house property’. - CIT had rightly invoked his jurisdiction under Sec. 263 of the Act and ‘set aside’ the assessment order with a direction to the A.O to pass a fresh order - AT
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• Safe Harbour Notification of 2013 is Prospective, Not Applicable for Current Year; Lower Authority Orders Reversed.

  Case-Laws - AT : TP Adjustment - Safe Harbour Notification dated 18th September 2013 relied upon by the Revenue is prospective. Since, Safe Harbour Rules are not operative for the year under consideration; hence, the orders of authorities below are reversed on this ground. - AT
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Corporate Law

• Petition Dismissed: Invalid Consents Block Application for Relief u/s 241 in Oppression and Mismanagement Case.

  Case-Laws - Tri : Oppression and Mismanagement - prayer to waive the requirements prescribed under Section 244 of the Act to enable the Petitioners to apply under Section 241 seeking the reliefs contemplated thereunder - Whether the 35 consents submitted by the Petitioners are valid? - Petition dismissed. - Tri
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IBC

• Creditors Committee Seeks 90-Day Extension for CIRP to Attract More Bidders for Debtor's Revival.

  Case-Laws - Tri : Extension of CIRP period for a further period of 90 day - the intention of the Committee of Creditors to invite fresh Expression of Interest to enable more bonafide resolution applicants to bid for the revival of the Corporate Debtor seems to be reasonable, the request of Resolution Professional to extend the CIRP period for a further period of 90 days is justifiable. - Tri
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• Appeal Dismissed: Resolution Plan Approval Upheld, No Discrimination Against Dissenting Financial Creditor Found by Adjudicating Authority.

  Case-Laws - AT : Approval of the Resolution Plan - distribution mechanism - It is not the Appellant’s grievance that he has been discriminated against as a dissenting Financial Creditor or that his admitted claim has not been taken into consideration while allocating the amount in terms of the distribution mechanism found perfectly in order by the Adjudicating Authority. - Appeal dismissed - AT
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Service Tax

• Court Rules Theater Rental Not "Renting of Immovable Property" Service; Principal Commissioner's Finding Overturned.

  Case-Laws - AT : Renting of immovable property service - Appellant is providing service to the film Distributors by way of renting its theatre for screening the films - It is not possible to sustain the finding recorded by the Principal Commissioner that ‘renting of immovable property’ service had been rendered by the Appellant to the film distributors. - AT
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• CENVAT Credit Approved for Insurance Services Received by Banks Under Deposit Insurance and Credit Guarantee Corporation.

  Case-Laws - AT : CENVAT Credit - insurance service received by the banks from the Deposit Insurance and Credit Guarantee Corporation - initially there was Difference of Opinion - credit allowed - AT
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Case Laws:

• GST

• 2020 (11) TMI 150
  Power to conduct audit/verification of documents and records under erstwhile service tax law - Jurisdiction, authority and legality of the action of the Respondents initiated in terms of Rule 5A of the Service Tax Rules, 1994, read with Section 174(2)(e) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- This Court has rejected the argument that Rule 5A of the Service Tax Rules does not survive the enactment of CGST Act, 2017. The Court has extensively examined Section 173 and Section 174 of the CGST Act and come to the conclusion that the intention of the Parliament was clearly to save not only the ongoing but also the initiation of fresh investigation, enquiry, verification etc. in respect of the acts and omission relating to inter alia the erstwhile service tax regime. This Court has also held that Service Tax Rules, 1994, being subordinate legislation would fall within the range of the parent Act that has been specifically saved, and, it s non-inclusion by title, in the saving clause, would not have a bearing on the applicability of the saving statute. The Court has come to the conclusion that Section 174 of the CGST Act, 2017 expressly seeks to preserve the powers of the central authority to, inter alia, institute or continue an investigation, inquiry etc. and no contrary intention is exhibited from the said provision. The Court purposely delved into the effect of Section 6 of the General Clauses Act and held that the power of the competent authority stood preserved also by virtue of the said provision. JUDGMENTS OF KOLHAPUR CANESUGAR AND AIR INDIA [2000 (2) TMI 823 - SUPREME COURT] - HELD THAT:- The Air Corporation Act was revoked by way of a repealing Act. Further, the Section 8 of the 1994 Act, which was the subject matter of the controversy in the said case, did not contain a repeal and saving provision, as observed in para 10: Section 8 of the 1994 Act does not in express terms save the said Regulations, nor does it mention them. The limited saving enacted in Section 8 does not, in our opinion, extent to the said Regulations. The observation in para 9 are being read completely out of context. There was no contention raised that the Parent Act is saved by the repeal. The argument was that subordinate legislation is saved despite the repeal of the parent statute. In this background the Supreme Court correctly interpreted that because of a lack of any legislative intent to the contrary, the new statue envisaged a complete repeal of the prior statute along with all regulations thereunder. They were correct in holding that the old law does not survive, as Section 8 of the new Act neither mentions the regulation nor saves it in express terms, it is deemed to be repealed in full. However, the factual situation in the present case before us is entirely different, as Section 174 of the CGST Act is very widely worded, which we shall shortly deal with. EFFECT OF SECTION 24 OF THE GENERAL CLAUSES ACT - HELD THAT:- The purpose of Section 24 is to uninterruptedly continue the subordinate legislation that may be made under the Central Act which is repealed and re-enacted, with or without modification. The repealing Act often comes with saving clauses to preserve certain provisions, which if allowed to be obliterated with the repealed Act, would not only destroy the continuity of the object and purpose of the repealing Act, but wreck great hardship and injustice. Thus, general saving statutes such as the General Clauses Act take care of this situation. Section 24 has to be read along with the re-enacted Act in order to comprehend whether the rules framed under the old Act are kept alive even after the repeal of the old Act. If we interpret that the Rules are not saved and kept operative, the saving clause, as well as applicability of Section 6 of the General Clauses Act, would be rendered meaningless. In fact the entire purpose of section 24 is to redress the present situation - the CGST Rules stand on a different footing, separate and distinct from the Service Tax Rules, 1994. They do not impinge on the same subject matter. Thus, for the reasons discussed, coupled with absence of a clear legislative intent to supersede then same, the mere bringing into force of the CGST Rules, 2017 does not mean that the Service Tax Rules, 1994 are not saved. JUDICIAL PRECEDENTS ON SAVING OF SUBORDINATE LEGISLATION - HELD THAT:- In the instant case, the repeal of the old Act and re-enactment of the new Act is simultaneous. According to the legislature, the repeal alongwith reenactment was necessary to update the law to make it most suitable to the contemporary concept of indirect taxation. Overnight, the nation switched over to the GST system, which of course required massive calibrations of the entire accounting system, both at the end of the Government as well as the taxpayers. However it did not mean that all investigations, enquiries, audits, assessment proceedings, adjudications and other legal proceedings which form the subject matter of the Service Tax Rules stood abrogated the moment the new law was enacted, or that the officers carrying out the above exercise were stripped of their power to continue with the same because the Service Tax Rules were purportedly not saved - the CGST Rules, 2017 cannot be understood to have superseded the Service Tax Rules, 1994. The service tax rules will continue to govern and apply for the purpose of Chapter V of the Finance Act, 1994. Any interpretation to the contrary would do violence to the repeal and saving clause and section 6 of the General Clauses Act. AUTHORITY OF CENTRAL EXCISE OFFICERS - HELD THAT:- Nothing has been shown by the Petitioner to establish that the officers carrying out the verification and audit are not the Proper Officers, except for citing the Notification No. 2/2017-Central Tax. By reading this notification, we cannot draw an inference to the contrary, in the manner that the Petitioner has conceived. Thus, we are of the view that the Petitioner s contention is without substance and if the officer carrying out scrutiny and audit is also vested with the powers under the Central Excise Act, he would be well within his powers to do so. SCOPE OF THE AUDIT/VERIFICATION PROCEEDINGS WHETHER SECTION 6 OF GCA OR SECTION 174 OF THE CGST ACT PROHIBITS INVOCATION OF RULE 5A AFTER 01.07.2017? - HELD THAT:- The Petitioner may be right to the extent of saying that the audit under Rule 5A is qualitatively and materially different from an audit under section 72A of the Finance Act, 1994. However, we are not concerned with the scope of the audit. Before us, the material question is whether the audit/verification contemplated under Rule 5A is saved despite the repeal of Chapter V. The Petitioner is wrong in contending that no obligation or liability has been accrued or incurred by it. The obligation to pay service tax arose at the time of rendering taxable service, which fell during the disputed period, at which time Chapter V was very much in force. The service tax is levied on providing of taxable service and is paid by the assessee on self-assessment basis. Therefore, the liability and obligation to pay tax accrued in terms of the provisions of the Finance Act whenever a taxable event occurred. If service tax has not been paid or short paid, the Service Tax Department would acquire the right to recover the said tax. This is done inter alia on the basis of the best judgment assessment under section 72, and by initiating recovery proceedings under section 73 of the Finance Act, 1994. Therefore, such duty cannot be construed to mean only that which forms the subject matter of proceedings under section 72 and 73 of the Finance Act. Having regard to the language used in the saving clause of the CGST Act as well as Sections 6 and 24 of the General Clauses Act, along with the legislative intent behind the repeal and enactment, we hold that Rule 5A of Service Tax Rules, 1944 framed under the repealed/omitted chapter V of the Finance Act, 1994, is saved. Petition dismissed.

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• 2020 (11) TMI 149
  Jurisdiction - appealable order or not - petitioner submits that though the impugned order is appellable under Section 112 of the Uttar Pradesh Goods and Services Tax Act, 2017 before the Appellate Tribunal but as at present, no Appellate Tribunal is functioning in the State of U.P. - HELD THAT:- Learned counsel for the petitioner submits that the petitioner is ready to deposit the amount of tax, interest, fine fee and penalty, as per the impugned order and as required under the provisions of Section 112 of the Uttar Pradesh Goods and Services Tax Act, 2017, which is a pre-condition for filing the appeal. He prays for two days time to comply the terms and conditions as provided under Section 112 of the Uttar Pradesh Goods and Service Tax, 2017 and submit a receipt of the same List on 10.11.2020.

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• 2020 (11) TMI 148
  Review/recall of Order - contention advanced by learned counsel for the petitioner is that once the order has been passed by the appellate authority on merit, then in the garb of exercise of power of rectification under Section 161 of Uttar Pradesh Goods and Services Tax Act, 2017, the entire order could not have been recalled and appeal could not have been restored for hearing afresh - HELD THAT:- From a perusal of the appellate authority order earlier passed and subsequently impugned order, the argument advanced by learned counsel for the petitioner prima facie appears to have substance and matter requires consideration. Let all respondents file response within period of four weeks. Reply, if any, may be filed within a week thereafter - List thereafter.

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• 2020 (11) TMI 147
  Validity of SCN - effective right to prefer an objection - HELD THAT:- Since Ext.P10 is only a show cause notice, against which the petitioner has an effective right to prefer an objection and get the matter adjudicated before the adjudicating authority, an interference with the show cause notice at this stage, even assuming that the contention is one regarding absence of jurisdiction, is not warranted in these proceedings under Article 226 of the Constitution of India. Taking note of the said submission of the learned counsel for the petitioner, while dismissing the Writ Petition in its challenge against Ext.P10 show cause notice, I make it clear that the 1st respondent shall, while passing orders in the proceedings initiated by Ext.P10 show cause notice, consider the objections raised by the petitioner in Ext.P12, as also other objections raised at the time of hearing, and the order to be passed by him shall reflect a consideration of those objections. Petition dismissed.

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• 2020 (11) TMI 146
  Detention order - penalty - release of the goods against furnishing of the bank guarantee and simple bond - Section 129 of the State Goods and Service Tax Act - HELD THAT:- Writ petition is disposed of by directing the 1st respondent to release the goods on furnishing the requirements of law as noticed above i.e., furnishing the bank guarantee and simple bond, and adjudication be also done in accordance with law, as expeditiously as possible.

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• Income Tax

• 2020 (11) TMI 145
  Rental income or otherwise - Taxing mesne profit and interest on mesne profit received at the discretion/ directions of Hon ble Civil Court - unauthorized occupation of immovable property by Indian Overseas Bank, under Section 23(1) - Revenue OR capital receipt - HELD THAT:- Mesne profits, and interest on mesne profits, received by the appellant in pursuance of the court decree, in the facts of the present case, constitute revenue receipt. The tenant, namely, Indian Overseas Bank, did not surrender the tenancy premises despite termination of the tenancy. It is not the Indian Overseas Bank, which received any consideration for surrender of its tenancy. On the contrary, Indian Overseas Bank suffered a decree for its continued use and occupation of the premises of the appellant/assessee, even after the termination of the contractual tenancy. The Indian Overseas Bank was saddled with mesne profits and interest thereon under the courts decree. The income was generated in the hands of the landlord/assessee, and not in the hands of the tenant/ Indian Overseas Bank. The capital asset of the appellant i.e. the property in question was earning revenue for the appellant by way of rent till so long as the lease subsisted. After the termination of the lease, the erstwhile tenant continued to occupy the premises unauthorisedly. It is in lieu of the rent which the appellant would have otherwise derived from the tenant, that the mesne profits and interest thereon have been awarded. So far as the capital asset of the assesse is concerned, the same has remained intact. It is not the appellants case that there was any damage to the property/ capital asset inasmuch, as, the building structure was damaged by the bank, and that damages have been awarded by the Court on account of such physical damage. Even the title of the appellant in respect of the capital asset remained intact. Had it been a case where the capital asset would have been subjected to physical damage, or of diminution of the title to the capital asset, and damages would have been awarded under the head, there would have been merit in the appellant s claim that damages received for harm and injury to the capital asset, or on account of its diminution, would be a capital receipt. We hold that the ITAT was right in holding that mesne profits and interest on mesne profits received under the direction of the Civil Court for unauthorised occupation of the immovable property of the assessee by Indian Overseas Bank the erstwhile tenant of the appellant, was liable to tax under Section 23(1) of the Act, since mesne profits, and interest on mesne profits, in the facts of the present case constitute revenue receipt. - Decided in favour of revenue.

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• 2020 (11) TMI 144
  Lump sum payment for development of infrastructure for uninterrupted power supply - revenue expenditure u/s 37(1) - Whether Tribunal was right in holding that the lump sum expenditure incurred for obtaining uninterrupted power supply for 14 years is allowable in one year though the same will result in distorted profit of the assessee? - HELD THAT:- The instant case, though the assessee has parted with substantial funds to M/s.Ford India Private Limited, the capital asset continued to remain the property of M/s.Ford India Private Limited. Issue as to whether for the same asset, M/s.Ford India Private Limited claimed depreciation and the assessee is claiming exemption under Section 37 of the Act, cannot be a relevant factor. As rightly submitted by Ms.N.V.Lakshmi, learned counsel for the respondent/assessee that this was never the case of the Revenue before the authorities or before the Tribunal. Thus, we are of the considered view that the Tribunal rightly examined the nature of transaction and held that expenditure to be in the Revenue field. - Decided against revenue.

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• 2020 (11) TMI 143
  Benefit of Vivad Se Vishwas Scheme ( VVS Scheme ) - Substantial Questions of Law framed for consideration on account of certain subsequent developments - assessee has been given an option to put an end to the tax disputes, which may be pending at different levels either before the First Appellate Authority or before the Tribunal or before the High Court or before the Hon ble Supreme Court of India - HELD THAT:- It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. In terms of the said Act, the assessee has been given an option to put an end to the tax disputes, which may be pending at different levels either before the First Appellate Authority or before the Tribunal or before the High Court or before the Hon ble Supreme Court of India. The assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration to be filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders. We direct the appellant / assessee to file the Form No.I on or before 09.11.2020 and the competent authority shall process the application / declaration in accordance with the Act and pass appropriate orders as expeditiously as possible preferably within a period of six (6) weeks from the date on which the declaration is filed in the proper form.

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• 2020 (11) TMI 142
  Benefit of Vivad Se Vishwas Scheme ( VVS Scheme ) - Substantial Questions of Law framed for consideration on account of certain subsequent developments - Option to appeal in case application for settlement is rejected - HELD THAT:- It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. In terms of the said Act, the assessee has been given an option to put an end to the tax disputes, which may be pending at different levels either before the First Appellate Authority or before the Tribunal or before the High Court or before the Hon ble Supreme Court of India. The assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration to be filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders. We direct the appellant / assessee to file the Form No.I on or before 09.11.2020 and the competent authority shall process the application / declaration in accordance with the Act and pass appropriate orders as expeditiously as possible preferably within a period of six (6) weeks from the date on which the declaration is filed in the proper form.

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• 2020 (11) TMI 141
  Grants received from the Government of Tamil Nadu - Tribunal treating the receipt in question as interest free loans and allowing depreciation claimed against the assets acquired from the said receipts - HELD THAT:- The wordings of the Government Order clearly show that the amount, which was transferred to the assessee, was the financial assistance given by the ADB, which would obviously show that it was a loan. Since it is an interest component, it appears that the assessee addressed to the Government and the Government, in turn, accepted the same and treated it as an interest free loan from the Government. Therefore, in all probabilities, the assessee s liability will be only to the Government and not to the ADB. The Assessing Officer was of the opinion that at best, the Government Order could be given prospective effect and doubted the bona fides of G.O.Ms.No.22 dated 03.2.2016 by observing that it is of recent origin to get over the issue regarding the claim for depreciation. We find from G.O.Ms.No.22 dated 03.2.2016 that the assessee has been addressing the Government from 30.1.2014 much prior to the assessments being taken up for consideration. Admittedly, funds were sanctioned by a bank namely the ADB and there was no record to show that the same was a grant to the assessee. In the Government Order in G.O.Ms.No.581 dated 19.10.2005, it has been clearly stated that it is a loan from the ADB. Therefore, we are convinced to hold that all along, the financial assistance rendered to the assessee was treated as a loan at the instance of the bank and subsequently, pursuant to G.O.Ms.No.22 dated 03.2.2016, the amount expended was treated as an interest free loan to the assessee. Thus, we find that the CIT(A) and the Tribunal rightly granted relief to the assessee and the Revenue has not made out a case to interfere with the common impugned order. - Decided against the Revenue.

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• 2020 (11) TMI 140
  Exemption u/s 11 - proof of charitable activities - receipts from the business of upgrading the local indigenous low milk yielding cattle by cross breeding them with the use of frozen semen of high pedigree exotic bull through technique of artificial insemination to get resulting better milk yielder exceeded the limit provided in proviso to section 2(15) - HELD THAT:- We find that similar issue arose in assessee s own case for AY 2009-10 as held that objects of the Trust clearly establish that the same was for general public utility and where for charitable purposes. The main objectives of the trust are - to breed the cattle and endeavour to improve the quality of the cows and oxen in view of the need of good oxen as India is prominent agricultural country; to produce and sale the cow milk; to hold and cultivate agricultural lands; to keep grazing lands for cattle keeping and breeding; to rehabilitate and assist Rabaris and Bharwads; to make necessary arrangements for getting informatics and scientific knowledge and to do scientific research with regard to keeping and breeding of the cattle, agriculture, use of milk and its various preparations, etc.; to establish other allied institutions like leather work and to recognize and help them in order to make the cow keeping economically viable; to publish study materials, books, periodicals, monthlies etc., in order to publicize the objects of the trust as also to open schools and hostels for imparting education in cow keeping and agriculture having regard to the trust objects. All these were the objects of the general public utility and would squarely fall under section 2 (15) of the Act. Profit making was neither the aim nor object of the Trust. It was not the principal activity. Merely because while carrying out the activities for the purpose of achieving the objects of the Trust, certain incidental surpluses were generated, would not render the activity in the nature of trade, commerce or business. As clarified by the CBDT in its Circular No. 11/2008 dated 19th December 2008 the proviso aims to attract those activities which are truly in the nature of trade, commerce or business but are carried out under the guise of activities in the nature of public utility . Delhi High Court in case of Institute of Chartered Accountants of India v. DGIT [ 2011 (9) TMI 77 - DELHI HIGH COURT ] considered these very provisions in the context of activities of the Institute of Chartered Accountants holding that the fundamental or dominant function of the Institute was to exercise overall control and regulate the activities of the members/enrolled chartered accountants and merely because the Institute was holding coaching classes which also generate income, the Court held that proviso to Section 2 (15) of the Act would not be applicable. Appeal filed by the Revenue is dismissed.

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• 2020 (11) TMI 139
  Addition on account of professional and consultation fees - CIT-A deleted addition - HELD THAT:- CIT (Appeals) has given a categorical finding that the issue had come up in the assessment proceedings for Assessment Year 2007-08 which was decided by the Tribunal [ 2013 (12) TMI 1353 - ITAT DELHI ] and there is no deviation of any facts in the present assessment year as well. The CIT (Appeals) has rightly observed that the assessee availed services to control this group SCHI in order to carry out the due diligence and risk analysis with the target hotels. Thus, these expenses are Revenue in nature. Thus, ground No. 1 of the Revenue s appeal is dismissed. Advertisement and sale promotion expenses - Revenue or capital expenses - HELD THAT:- advertisement and sale promotion expenses are Revenue expenses as held in Assessment Year 2007-08 [ 2013 (12) TMI 1353 - ITAT DELHI ] in assessee s own case and there is no different facts emerging in present assessment year which are identical to the said assessment year 2007-08. Therefore, ground No. 2 of the Revenue s appeal is dismissed. Addition on account of loss on waiver of loans - CIT-A deleted addition - HELD THAT:- As evident that in order to safe-guard its financial interest the assessee closed the credit facility for which settlement took place between the assessee and the borrower M/s. GLH. As a result of such a settlement the assessee was able to recover its dues including interest receivable which were discounted at 9.5% to arrive at a NCB and in the said process the assessee incurred a net loss of Rs. 1,33,40,751/-. This loss has been already offered for taxation in the relevant assessment years. CIT (Appeals) has rightly deleted the said addition and there is no need to interfere with the findings of the CIT (Appeals). Ground No. 3 of the Revenue s appeal is dismissed.

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• 2020 (11) TMI 138
  Interest attributable to advance made - AO has disallowed the interest as interest attributable at 12% which was advanced to Sh. Arun Kumar out of interest bearing funds, of the company - HELD THAT:- CIT (Appeals) has given a clear finding that this sum was advanced interest-free as Mr. Arun Kapur is the son of founder of the company and besides that in the past assessment years also the same has been allowed by the Revenue. Therefore, ground No. 1 of the Revenue s appeal is dismissed. Addition under the sub-head marriage gift, subscription expenses for various clubs, consultancy expenses and expenses incurred in advertisement in Hindustan Times on the anniversary of Late Shri Jai Dev Kapur - business or personal in nature - HELD THAT:- These expenses have been claimed in the past and there is no fresh finding given by the Revenue during the assessment proceedings as well as the appellate proceedings as to why these expenses should not be allowed. The assessee has produced the evidences before the Revenue authorities and established the claim for these expenses. Hence, ground No. 2 of Revenue s appeal is dismissed. Addition under the head glow shine board expenses - Since the normal life of three years and expenses incurred are debited during the year under consideration are not allowable - HELD THAT:- Regarding capitalization of glow shine boards expenses, the assessee has given all the details before the Assessing Officer. There was a clear finding by the CIT (Appeals) that the glow shine boards were not owned by the assessee as the company had charged some amount from dealers against supply of these glow shine boards. Besides this, in the earlier assessments also these expenses were allowed by the Revenue. Hence ground No. 3 of the Revenue s appeal is dismissed. Addition under the head entertainment Beer expenses, prize and rewards, sale promotion and staff welfare - All these expenses are un-vouched and for which no bills were furnished - HELD THAT:- The assessee company has given the details of these business expediency related to these expenses and demonstrated before the Assessing Officer as well as CIT (Appeals) about the genuinity of these expenses. In the past also these expenses were allowed by the Revenue. Hence, ground No. 4 of the Revenue s appeal is dismissed. Addition of foreign travel expenses - DR submitted that as most of the foreign expenses are in connection of Kapur family, who are the top management and not related to the company, therefore, the CIT (Appeals) did not establish that these expenses were for business purposes - HELD THAT:- These expenses were demonstrated before the Assessing Officer as well as CIT (Appeals) by the assessee in detail by submitting supporting evidences. And after going through the said evidences, the CIT (Appeals) has given a categorical finding that these foreign trips were for the business purpose only. Hence ground No. 5 of the Revenue s appeal is dismissed.

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• 2020 (11) TMI 136
  Disallowance of job charges paid - TDS deducted on such payment - HELD THAT:- Evidences filed by the assessee are very much important on the addition in dispute which have not been properly appreciated by the revenue authorities below. Assessee has furnished all the complete evidences of expenses and the list of names with amount of payment, mode of payment and detail of TDS deducted for which CIT(A) has given the benefit of credit of TDS and we also observe that major payments have been made by cheques and TDS has been deducted. Proper appreciation of evidences has not been done by the revenue authorities which is very much important and in our view the AO and the Ld. CIT(A) has not contradict the same - sufficient evidences have been filed by the assessee before the revenue authorities for substantiating the claim of the assessee especially on the expenditure in dispute and the TDS deducted which has not been disputed by the revenue authorities, hence, the addition in dispute has wrongly been made in the case of the assessee which deserve to be deleted. - Decided in favour of assessee.

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• 2020 (11) TMI 135
  Condonation of delay - delay of 2625 days - According to the Assessee, it was on the basis of professional opinion, under the belief that the issues that were sought to be agitated before the CIT(A) against the order of assessment dated 30.12.2008 could be agitated before the AO in the proceedings pursuant to the order u/s.263. HELD THAT:- We find that it is only on the receipt of Tribunal s order in the appeal arising out of proceeding subsequent to the order passed by the CIT u/s. 263 of the Act that the assessee came to know that the issues, which were not subject matter of 263 proceedings and which arose out of additions made in the original order of assessment, had to be challenged by way of filing appeals against the order of CIT(Appeals) dated 15.2.2010 for AY 2005-06. The date on which the assessee received the order of Tribunal was on 12.7.2016 for AY 2005-06. The appeal before the Tribunal has been filed only on 14.7.2017. As far as delay from the date of the impugned order passed in the year 2009 till 12.7.2016 is concerned, the belief entertained by the Assessee based on legal advice that the additions made in the original order of assessment can still be challenged in the proceedings pursuant to order passed u/s.263 of the Act, cannot be said to be not bonafide. As far as the delay from the date of Tribunal s order in the year 2016 till filing of the appeal only in the year 2017, is concerned, it has been submitted in the affidavit that after prolonged discussion and legal advice, it was suggested that the appeals should be filed against the orders of CIT(Appeals) dated 15.2.2010 for AY 2005-06. We are of the view that given the factual scenario and nature of disputes, the plea of assessee that delay in fling of the appeals before the Tribunal was due to bona fide reasons has to be accepted. Keeping in mind the principle that substantive rights should not be denied by technicalities, we condone the delay in filing the appeals before the Tribunal. Revision u/s 263 - TP Adjustment - addition on account of determination of ALP/transfer price - HELD THAT:- It is not in dispute before us that the issues which were sought to be raised in the appeal before the CIT(A) were not at all subject matter of original proceedings u/s. 263 of the Act and therefore in terms of Explanation (1)(c) to section 263(1) issues raised in the appeals before the CIT(A) ought to have been adjudicated by the CIT(Appeals) and his conclusion that the entire assessment order has been set aside in the proceedings u/s. 263 is erroneous. The issue with regard to expenditure on computer software, method of computation of deduction u/s.10A of the Act have been considered from a different facet in the order u/s.10A of the Act and that facet had nothing to do with the issues that were raised by the Assessee in the appeal before the CIT(A). TPA issue was not at all an issue that was considered in the order u/s.263 of the Act. Therefore the CIT(A) ought to have adjudicated the issues raised by the Assessee before it. Since the issues sought to be now raised in the present appeals have not been adjudicated by the CIT(Appeals), we deem it fit and proper to set aside the order of CIT(A) and restore the issues raised in the appeals before the CIT(A) for adjudication by the CIT(Appeals) on merits. We hold and direct accordingly. Revision u/s 263 - AY 2004-05 - HELD THAT:- CIT(A) passed an order dated 17.7.2012, wherein he held that the scope of proceedings before the AO pursuant to the order u/s.263 of the Act was only restricted to issues considered in the order u/s.263 of the Act and did not extend to other issues arising from the order of assessment dated 30.8.2008 passed u/s.143(3) of the Act that remain undisturbed. CIT(A) therefore did not adjudicate those issues. The Assessee filed appeal before the ITAT against the order of CIT(A) holding that he has no authority to adjudicate issues that did not emanate from the order u/s.263 . Tribunal by an order dated 17.10.2016 dismissed the appeal of the Assessee upholding the aforesaid order of the CIT(A) in so far as it relates to jurisdiction of the CIT(A) to consider issues other than the issues that were directed to be considered by the AO in the order u/s.263 of the Act. It was stated by the learned counsel for the Assessee that the Assessee has preferred appeal against the order of the Tribunal dated 17.10.2016 before the Hon ble High Court and the same is pending. Thus issues dealt with by the CIT in the order passed u/s.263 of the Act in AY 2004-05 had nothing to do with the issues that the Assessee sought to raise in its appeal against the original order of assessment dated 29.12.2006 passed u/s.143(3) of the Act. Therefore the CIT(A) ought to have adjudicated the issues raised by the Assessee before it. Since the issues sought to be now raised in the present appeals have not been adjudicated by the CIT(Appeals), we deem it fit and proper to set aside the order of CIT(A) and restore the issues raised in the appeals before the CIT(A) for adjudication by the CIT(Appeals) on merits. We hold and direct accordingly.

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• 2020 (11) TMI 134
  Penalty u/s. 271(1)(c) - Validity of notice - TP adjustment - Non specification of charge - As contended that the addition was made on account of MAP resolution and that there was no wilful concealment - whether the charge against the Assessee is concealing particulars of income or furnishing of inaccurate particulars of income ? - HELD THAT:- As the show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. See MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] - Decided in favour of assessee.

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• 2020 (11) TMI 133
  Revision u/s 263 - ALV of the unsold flats held by the assessee as closing stock of its business as that of a builder and developer was not offered by it for tax under the head house property - HELD THAT:- Admittedly, the assessee firm which is engaged in the business of a builder and developer was holding unsold flats as part of its inventory of stock-in-trade during the year under consideration. CIT was of the view that the failure on the part of the A.O in not taking cognizance of the fact that the ALV of the unsold flats held by the assessee as closing stock of its business as that of a builder and developer was not offered by it for tax under the head house property , had thus, rendered his order erroneous insofar it was prejudicial to the interest of the revenue in terms of Explanation 2 to Sec.263. On the basis of his aforesaid observation the Pr. CIT by relying on the judgment in the case of Ansal Housing Finance Leasing Co. Ltd. [ 2012 (11) TMI 323 - DELHI HIGH COURT] had concluded, that incidence of charge of ALV of a property was backed by the factum of ownership, and the aspect, that as to whether the assessee carried on a business or held the property as a landlord would have no bearing on determination of the ALV. A.R had tried to support the order of the A.O, on the ground, that the view of the A.O that the ALV of the property held by the assessee as stock-in-trade was not liable to be brought to tax under the head house property was supported by certain orders of the coordinate benches of the Tribunal. Claim of the ld. A.R, that the A.O while framing the assessment had deliberated upon the aforesaid aspect and had arrived at a possible view is concerned, we are afraid that the same does not find favour with us. Perusal of the respective queries that were raised by the A.O vide his letter dated 03.05.2016 and the reply filed by the assessee vide his letter dated 12.09.2016, reveals beyond any scope of doubt that the same pertained to the issue as regards the valuation of opening and closing WIP of the assessee s project and determination of the cost of sale of the same. We are unable to comprehend as to on what basis it is canvassed by the ld. A.R that the A.O while framing the assessment, had queried, on the issue as to whether or not the ALV of the unsold flats was to be assessed under the head house property . Neither the aforesaid claim of the A.R is discernible from the query letters issued by the A.O or the reply filed by the assessee in the course of the assessment proceedings, nor the assessment order inspires any confidence as regards the same. A perusal of the assessment order/records reveals that the A.O had at no stage raised any query on the aspect of assessing the ALV of the unsold flats held by the assessee as part of its inventory of stock-in-trade, under the head house property . In the backdrop of the aforesaid facts, we are of a strong conviction that as the issue as to whether the ALV of the unsold flats held by the assessee as closing stock of its business as that of a builder and developer was liable to be assessed under the head house property , had not been inquired into by the A.O while framing the assessment, the same, thus, would clearly bring the assessment order passed by him u/s 143(3), dated 07.12.2016 within the realm of the Explanation 2(a) to Sub-section (1) of Sec.263 of the Act. CIT had rightly invoked his jurisdiction under Sec. 263 of the Act and set aside the assessment order with a direction to the A.O to pass a fresh order after considering the aforesaid aspect and allowing of an opportunity of being heard to the assessee - Appeal filed by the assessee is dismissed.

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• 2020 (11) TMI 132
  TP Adjustment made in the segment of business support services - selection of comparables in order to benchmark the international transactions undertaken by the assessee with its AE - applicability of safe harbor rules or not to the year under consideration - HELD THAT:- Accentia Technologies Ltd. - In view of the services provided by the assessee, which are back office services, the concern cannot be held to be comparable to the assessee on the ground of it being not functionally comparable. Another aspect to be kept in mind is the extraordinary event of amalgamation, which has occurred during the year and such concern with extraordinary event cannot be held to be comparable in the year of the amalgamation. Accordingly, we hold so. Infosys BPO Limited - In the first instance, it has large scale of operations totalling Rs. 1126 Crores against the total turnover of the assessee as Rs. 1.17 Crores. Further, the said concern is engaged in wide set of services and the margins of the said concern cannot be compared with the margins of the assessee. We find support from the ratio laid down by the Tribunal in the case of sister concern itself. Similar is the proposition for the TCS E-serve Ltd. and TCS E-serve International Ltd. eClerx Services Limited - Since, the assessee is engaged in providing BPO services and eClerx Services Limited is engaged in KPO services, we find no merit in the inclusion of said concern in final set of comparables. M/s. R Systems International Limited (segmental) and M/s. Caliber Point Business Solutions Limited - In case from the available data on record, the results for the financial year as that of the tested party can be made available by the assessee, the AO/TPO may verify the same and include the said concerns i.e. M/s. R Systems International Limited (segmental) and M/s. Caliber Point Business Solutions Limited in the final list of comparables. We direct the Assessing Officer to afford reasonable opportunity of hearing to the assessee in order to decide the same and accordingly re-compute the Arm s length price of ITeS Segment. Safe Harbor Rules - Hon ble Delhi High Court in Pr. CIT vs Fiserv India Pvt. Ltd. [ 2016 (1) TMI 1276 - DELHI HIGH COURT] has held that Safe Harbour Notification dated 18th September 2013 relied upon by the Revenue is prospective. Since, Safe Harbour Rules are not operative for the year under consideration; hence, the orders of authorities below are reversed on this ground. Interest chargeable on receivables - HELD THAT:- The issue arising in the present appeal before us is similar in Pr. CIT vs Kusum Health Care Pvt. Ltd. [ 2017 (4) TMI 1254 - DELHI HIGH COURT] wherein it was held that if working capital adjustment is allowed to the assessee, then no further adjustment is to be made on account of interest on receivables - we find no merit in the adjustment made by the AO/TPO in this regard as working capital adjustment has been allowed in the hands of the assessee. Disallowance of depreciation on such database - HELD THAT:- Following the same parity of reasoning as in assessee s own case for earlier assessment year, we find no merit in restriction of cost of acquired database and the consequent disallowance of depreciation on such database by the Assessing Officer/TPO. Thus, the Assessing Officer is directed to allow depreciation on entire payment of Rs. 12 Crores towards acquired Business database. Order of the AO in restricting the cost of goodwill to nil and not allowing depreciation on it - The issue of depreciation on goodwill stands covered in favour of the assessee in line with the order of the Tribunal in assessee s own case in Assessment Year 2002-03 (supra). Following the same parity of reasoning, we allow the claim of depreciation on goodwill.

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• 2020 (11) TMI 131
  Estimation of income - bogus purchases - Purchases from grey market - CIT(A) sustaining 12.5% disallowance - HELD THAT:- In this case the sales have not been doubted. It is settled law that when sales are not doubted, hundred percent disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. In the present case the facts of the case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expense of the exchequer. As regards the quantification of the profit element embedded in making of such bogus/unsubstantiated purchases by the assessee it is the submission of the learned counsel of the assessee that it will be doubled prejudice if the gross profit already declared is not reduced from the standard 12.5% being disallowed on account of bogus purchases. Accordingly direct that disallowance in this case be restricted to 12.5% of the bogus purchase as reduced by the gross profit already declared by the assessee.

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• 2020 (11) TMI 130
  Rectification u/s 254 - non-consideration of Circular and the special order so passed by the CBDT - monetary limits for not filing/pursuing appeals in terms of any circular already issued under section 268A - HELD THAT:- In the instant case, the issue is regarding carving out an exception from such low tax effect limits and that too, not just by a general order but by way of a special order where such appeals can be filed, therefore, unless the special order has been passed by the CBDT and an appeal is filed pursuant to such a special order, the exception cannot be read and understood to apply to existing appeals which have already been filed prior to issuance of the special order. Therefore, we are of the considered view that the CBDT Circular no. 23 of 2019 should be read along with special order of the CBDT dated 16.09.2019 in respect of appeals filed pursuant to such special order and shall thus apply to all appeals filed on or after 16.09.2019 by the Revenue where the tax effect may be low but the appeal can still be filed by the Revenue on merits. Appeal of the Revenue was filed on 22.05.2019 and therefore, the present appeal was not filed pursuant to such a special order of the CBDT dated 16.09.2019 and thus, the matter doesn t fall in any exception as so prescribed by the CBDT in its earlier circular dated 8.8.2019 and the special order doesn t apply in the instant case and the appeal has thus rightly been dismissed by the Bench on account of low tax effect in light of CBDT s circular dated 8.8.2019. Both CBDT Circular no. 23 of 2019 and special order dated 16.09.2019 were not in existence and thus not part of the record at the time when the matter was heard on 20.08.2019 or at the time of passing of order by the Tribunal on 21.08.2019 and therefore, non-consideration of such Circular and the special order so passed by the CBDT is not a mistake apparent from record which can be rectified within the narrow compass of section 254(2) of the Act.Miscellaneous application filed by the Revenue is dismissed.

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• Customs

• 2020 (11) TMI 128
  Prohibited goods or not - old and used tires which are reuseable - HELD THAT:- Let Notice be issued for final disposal to the respondents returnable on 14.12.2020. The situation being identical in the matter, similar interim directions are issued subject to similar conditions as referred to above. It is provided that the respondents would ensure compliance of the interim directions by the returnable date.

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• Corporate Laws

• 2020 (11) TMI 127
  Refusal to to grant permission for installation of new electricity connection sought by the petitioner / Company - permission has been refused on account of the fact of non- payment of electricity dues of Dhar Cement Limited - stand of the respondent is that the petitioner is having an alternative remedy, however, the forum, where the alternative remedy is available, has not been mentioned in the reply - HELD THAT:- This Court, in the present case, is witnessing objectionable stand of the respondent. In case, an application was preferred before the learned Company Judge for claiming electricity charges, the same should have been defended and claim should not have been relinquished only on account of an assurance given by the promoter. It requires a fact finding inquiry as to why nothing was done after an order was passed on 31.01.2014 when the application of the respondent / Company was disposed of on the basis of assurance given by the promoter. The Managing Director of the Company shall conduct a fact finding inquiry and shall also be free to fix responsibility and to take action in accordance with law against the persons who are held responsible in the matter. The exercise of taking appropriate steps in accordance with law and recovering the outstanding dues form the promoters be concluded within a period of six months from the date of receipt of certified copy of this order. The exercise of holding an inquiry, as directed by this Court, be completed within a period of three months from the date of receipt of certified copy of this order. The respondent is restrained from demanding / recovering the dues of Dhar Cement Limited (a Company in liquidation) from the present petitioner - Petition allowed.

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• 2020 (11) TMI 126
  Transfer of the captioned company petition under the substituted Section 434 in Companies Act, 2013 - According to the learned Counsel for the opponent, the cases which have not been transferred from the High Court as contemplated in (ii) of third proviso to Section 434 (1)(c) cannot be transferred. - HELD THAT:- Initially only those matters where the petition was not served upon the company, could be transferred; by subsequent amendment, all the petitions pending with the High Court irrespective of the stages, could be transferred. On plain reading of third proviso to Section 434 (1)(c) with fifth proviso which commences with provided further persuades this Court to say that the proviso 3(ii) to Section 434 (1)(c) is subject to fifth proviso; and thus on application under the fifth proviso, pending case can be transferred - In the instant case, concededly the financial creditors i.e. bank(secured creditor) has moved the application under Section 7 of the code and the party who would otherwise be treated as operational creditor (unsecured creditors) has invoked the jurisdiction of this Court. In the opinion of this Court, transfer would be in alignment with the object of the amendment and therefore, the application is required to be accepted and the petition being Company Petition No.353 of 2016 is ordered to be transferred to the Tribunal under the Insolvency bankruptcy Code, 2016. The transfer shall be effected. Oral application by the learned Counsel for the original petitioner to stay this order cannot be accepted having regard to the reasons already assigned by this Court.

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• 2020 (11) TMI 125
  Oppression and Mismanagement - prayer to waive the requirements prescribed under Section 244 of the Act to enable the Petitioners to apply under Section 241 seeking the reliefs contemplated thereunder - Whether the 35 consents submitted by the Petitioners are valid? - HELD THAT:- Based on paragraphs 5 and 6, it is seen that the number of double counts is 2 thereby the total number of consents is reduced to 66. The place of execution of authorizations provided by the members were outside India and were not authenticated by a notary public of the respective country or by the Indian consulate, hence they are not valid authorizations. This Tribunal therefore, cannot accept the argument advanced by the Petitioners in this regard. Whether the members authorized the Petitioners to file this Company Petition? - HELD THAT:- In the instant case none of the members (apart from the three Petitioners) have authorized (which authorization itself is not proper) the Petitioners to file the instant Petition under proviso to Section 244. It is seen that the consents submitted by the Petitioners clearly read as Consent Under Section 241 of the Companies Act, 2013 to make a Petition under Section 241 of the Companies Act, 2013 .Hence, this Tribunal cannot agree with the submissions made by the Petitioners in this regard. Whether (proposed) application under Section 241 pertains to oppression and mismanagement ? - HELD THAT:- In my view the allegation made against the Respondent Company in the instant petition will not amount to Oppression and Mismanagement. As shareholders of the respondent company, the petitioners were entitled to highlight the alleged acts. The petitioners have not produced any documents to prove that they raised/highlighted the issues and demanded explanation from the Board. In the letter dated 07.02.2020, the Petitioners have stated that a large number of shareholders have sentiments and apprehension of gross mismanagement of the 1st Respondent Company - this Tribunal cannot agree with the submissions made by the Petitioners in this Company Petition. This Bench found that the Petition filed by the Petitioners is not maintainable under the Companies Act, 2013. Whether there is an exceptional circumstance made out to grant waiver , so as to enable members to file application under Section 241 etc.? - HELD THAT:- It is settled law that the Tribunal is not required to decide merit of (proposed) application under Section 241, but required to record grounds to suggest that the applicants have made out some exceptional case for waiver of all or of any of the requirements specified in clauses (a) and (b) of Sub-Section (1) of Section 244 as decided by the Hon ble NCLAT in its judgement in Cyrus Investments Ltd. And Anr. Vs. Tata Sons Ltd. Ors. [ 2017 (9) TMI 1500 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] - Paragraph 150 of the Judgment in Cyrus (supra) clearly lays down that merits of the case cannot be decided at the stage of waiver. The Hon ble Appellate Tribunal has arrived at this conclusion on the ground that if the merits are decided at this juncture, then the Tribunal would be adjudicating a Petition under Section 241 which is still in the proposed application stage at the juncture of grant of waiver. The petitioners have also agreed in the rejoinder filed by them that the merits of the case cannot be discussed at this juncture, stating that there are no issues to be decided in this Application - The burden of establishing exceptional circumstances is on the Petitioners. However, the Petitioners clearly stated that exceptional circumstances are not a sine qua non to seek waiver under the proviso to Section 244(1). Leaving aside exceptional circumstances, the Petitioners have not cited any fact which entitled them to get the benefit of waiver. As such the answer to the fourth point is also negative. Petition dismissed.

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• Insolvency & Bankruptcy

• 2020 (11) TMI 129
  Extension of 30 days beyond 270 days from Corporate Insolvency Resolution Process - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The very Objective of the IB Code is to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the priority of payment of government dues and to establish an Insolvency and Bankruptcy Fund, and matters connected herewith or incidental thereto. An effective legal framework for timely resolution of insolvency and bankruptcy would support development of credit markets and encourage entrepreneurship. It would also improve ease of doing business, and facilitate more investments leading to higher economic growth and development. Looking to the very object of IB Code, CoC desires to get extension of 30 days as there is every likelihood that some Resolution Plan will be accepted and/or approved by the CoC. In that event, a Corporate Debtor - However, the Supreme Court has observed that 330 days is the outer limit within which resolution of the stressed assets of the Corporate Debtor must take place. The application so filed by RP is allowed by extending 30 days from 13.08.2020 - Application disposed off.

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• 2020 (11) TMI 124
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- In view of the averment made at page 11 of Reply Affidavit of the Respondent, despite the Appellant acknowledged receipt of such notes through email and shows that the credit note issued by the Appellant has not booked in QEL ledger. Operational Creditor wanted to discuss why Credit Note was issued. Through email dated 28.11.2018 at page 301 of the Appeal Paper Book the Appellant resisted to accept Debit Note, agreed to send ledger statement for reconciliation. E-mail dated 28.11.2018 (Page 304) sent by Corporate Debtor to Operational Creditor on 28.11.2018 (i.e. before Notice under Section 8 of IBC dated 20.04.2019) clearly complained of deficiency in service by frequent trippings causing Corporate Debtor to consume power from E.B. at a higher cost. It shows that there was a pre-existing dispute between the parties - Ld. Adjudicating Authority has rightly relied on the judgment of Hon ble Supreme Court in Mobilox Innovations Private Ltd. Vs Kirusa Software Private Ltd., [ 2017 (9) TMI 1270 - SUPREME COURT] have held that there was a pre-existing dispute between the parties and rightly dismissed the Application under Section 9 of the IBC. The Appellant has failed to demonstrate that the impugned order suffers from any legal infirmity - Appeal dismissed.

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• 2020 (11) TMI 123
  Extension of CIRP period for a further period of 90 days in order to complete CIRP process - Regulation 36A of IBBI (Insolvency Resolution of Corporate Persons) Regulations, 2016 - HELD THAT:- In view of the fact that there is only one Prospective Resolution Applicant before the Committee of Creditors as on date and the time to examine the resolution plan under the Code and verification of the contents of the resolution plan is limited, and also the intention of the Committee of Creditors to invite fresh Expression of Interest to enable more bonafide resolution applicants to bid for the revival of the Corporate Debtor seems to be reasonable, the request of Resolution Professional to extend the CIRP period for a further period of 90 days is justifiable. Application allowed.

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• 2020 (11) TMI 122
  Liquidation order - during the period of CIRP , no Resolution Plan was received - Section 60 (5) of IBC - HELD THAT:- When it is an admitted fact that during the Time limit provided under Section 12 of IBC, no Resolution Plan was received, the necessary consequence of liquidation order could not be avoided. For this, the Application was moved. Subsequently, the Appellant started claiming that there is a settlement and paid some amount. However, even that is now reported to have failed. The Appellant has not placed on record material as to who were the other claimants other than the 100% Financial Creditor namely Respondent/ARCIL during CIRP. During CIRP , once CoC has been formed, Procedure under Section 12 A of IBC would be required to be followed. This does not appear to have been followed before the liquidation order was passed. Appeal dismissed.

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• 2020 (11) TMI 121
  Approval of the Resolution Plan - distribution mechanism - revision of share proportion of the resolution fund amongst the Secured Financial Creditors equally - HELD THAT:- The Adjudicating Authority was of the view that the same was not in conflict with the provisions of Section 30(2) of the I B Code. Thus, the resolution plan in question came to be approved. As noticed elsewhere in this judgment, the claim of the Appellant as Financial Creditor has been admitted by the Resolution Professional during the Corporate Insolvency Resolution Process and the Appellant, as a constituent of the Committee of Creditors having voting right of 3.94%, has assented to the approval of the resolution plan of the Successful Resolution Applicant. After admission of Appellant s claim by the Resolution Professional he can hardly have a grievance against the Resolution Professional. Though, the Appellant appears to have raised an objection in regard to inclusion of uninvoked Bank Guarantees in the admitted claim, its approval of the resolution plan as an assenting Financial Creditor would estop it from questioning the same resolution plan, though only in regard to distribution mechanism, which admittedly rests upon commercial wisdom of the Committee of Creditors, who set apart amount of Rs. 135 Crores as contingency fund to take care of certain eventualities which in itself was a business decision based on commercial wisdom of Committee of Creditors binding all constituents of Committee of Creditors including the Appellant. The scope of judicial review under Section 61(3) of I B Code being limited to grounds enumerated therein and no material irregularity having been shown to have occurred during the Corporate Insolvency Resolution Process before approval of the Resolution Plan by the Committee of Creditors, the Appellant has no case. It is not the Appellant s grievance that he has been discriminated against as a dissenting Financial Creditor or that his admitted claim has not been taken into consideration while allocating the amount in terms of the distribution mechanism found perfectly in order by the Adjudicating Authority. No case for judicial interference is made out - Appeal dismissed.

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• Service Tax

• 2020 (11) TMI 137
  Renting of immovable property service - Appellant is providing service to the film Distributors by way of renting its theatre for screening the films - demand for the period October 2008 to March 2014 - HELD THAT:- This issue also came up for consideration before a Division Bench of the Tribunal in - M/S. MOTI TALKIES VERSUS COMMISSIONER OF SERVICE TAX, DELHI I [ 2020 (6) TMI 87 - CESTAT NEW DELHI] . It was held that the demand of service tax under renting of immovable property service was not justified for the reason that the Appellant had not provided any service to the Distributor, nor the Distributor had made any payment to the Appellant as a consideration for the alleged service - It is, therefore, not possible to sustain the finding recorded by the Principal Commissioner that renting of immovable property service had been rendered by the Appellant to the film distributors. Car Parking Hire - Rentals from office space - INR Charges; news reel charges; show tax collection; etc. - Advertisements exhibited between movies - period 2008-09 and 2009-10 - HELD THAT:- No service tax leviable as aggregate turnover was below Rs. 10 lakhs by virtue of Notification No.8/2008-ST dated 01.03.2008 and amending Notification No. 06/2005-ST dated 01.03.2005 for the period 2008-09 and 2009-10. Car Parking Hire - period 2010-11 - period 2011-12 - period 2012-13 (30.06.2012) - HELD THAT:- Not taxable by virtue of exclusion provided for renting of land for parking purposes under Section 65 (105) (zzzz) of the Finance Act. Car Parking Hire - period 2012-13 (from 01.07.2012) - HELD THAT:- Exempted as per Sl. No. 24 of Notification No. 25/2012-ST dated 20.06.2012 Car parking Hire - period 2013-14 - HELD THAT:- Service Tax paid. Rent Received - Miscellaneous Receipt - Shorts Slides - Period 2010-11 - HELD THAT:- No service tax leviable as aggregate turnover was below Rs. 10 lakhs by virtue of Notification No.06/2005-ST dated 01.03.2005 (Rs. 4,84,814/-, after reducing car parking charge). Rent Received - Miscellaneous Receipt - Shorts Slides - Period 2011-12 - HELD THAT:- No service tax leviable as aggregate turnover was below Rs. 10 lakhs by virtue of Notification No.06/2005-ST dated 01.03.2005 (Rs. 9,48,502/-, after reducing car parking charge). Rent received - period 2012-13 (30.06.2012) - 2012-13 (from 01.07.2012 ) - 2013-14 - HELD THAT:- Service Tax Paid. Miscellaneous Receipt - period 2012-13 (30.06.2012) - period 2012-13 (from 01.07.2012 ) - HELD THAT:- Not Taxable under renting of immovable property service. Shorts and Slides - Period 2012-13 (30.06.2012) - period 2012-13 (from 01.07.2012) - HELD THAT:- Not taxable under renting of immovable property service, as it amounts to sale of space or time for advertisement. Shorts and Slides - period 2013-14 - HELD THAT:- Not taxable by virtue of Section 66D(g) of the Finance Act i.e. selling of space or time slots for advertisement, other than advertisements broadcast by radio or television . Appeal allowed - decided in favor of appellant.

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• 2020 (11) TMI 120
  CENVAT Credit - insurance service received by the banks from the Deposit Insurance and Credit Guarantee Corporation - initially there was Difference of Opinion - After the decision of the Larger Bench, these appeals have been listed before this Bench for final disposal - HELD THAT:- This issue has been answered in favour of the banks by the Larger Bench decision of the Tribunal in the assessee-banks own case vide order dt. 20/03/2020. [ 2020 (6) TMI 278 - CESTAT BANGALORE - LB ]. By respectfully following the ratio of the Larger Bench decision of this Tribunal, the appeals of the banks are allowed - decided in favor of Banks and against Revenue.

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