TMI Tax Updates - e-Newsletter
November 9, 2020

Case Laws in this Newsletter:

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

Articles

1. ARBITRATION AND CONCILIATION (AMENDMENT) ORDINANCE, 2020

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Income Tax Department conducts searches in Tamil Nadu

2. Sovereign Gold Bond Scheme 2020-21 (Series VIII) – Issue Price

Notifications

GST - States

1. 63/2020 - State Tax - dated 15-9-2020 - Chhattisgarh SGST

State Government appoints the 1st day of September, 2020, as the date on which the provisions of section 10 of the Chhattisgarh Goods and Services Tax (Amendment ) Act, 2020 shall be deemed to have come in to force

2. CCT/26-2/2018-19/63/1691 - dated 6-11-2020 - Goa SGST

Seeks to amend Notification No. CCT/26-2/2018-19/59/1505 dated 17th October, 2020

3. 38/1/2017-Fin(R&C)(180) - dated 28-10-2020 - Goa SGST

Goa Goods and Services Tax (Twelveth Amendment) Rules, 2020

4. 38/1/2017-Fin(R&C)(179) - dated 28-10-2020 - Goa SGST

Amendment in Notification No. 38/1/2017-Fin(R&C)(114), dated 21st October, 2019

5. 38/1/2017-Fin(R&C)(178) - dated 28-10-2020 - Goa 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

6. 58/2020-State Tax - dated 3-11-2020 - Himachal Pradesh SGST

Himachal Pradesh Goods and Services Tax (Eighth Amendment) Rules, 2020

Highlights / Catch Notes

GST

• Court Rules Transitional Credit on TRAN-1 Form Valid; Technicalities Shouldn't Block Justice, Says ITGRC.

  Case-Laws - HC : Transitioinal credit - TRAN-1 form - As admittedly in this case the Respondents have found the Petitioner to be eligible for input credit amount in question, in our view the finding of the ITGRC would in the face of the admission by the Respondents to the amount of credit, would be a mere technicality which cannot come in the way of substantial justice - HC
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Income Tax

• High Court Upholds AO's Decision on Loss Carry Forward u/s 72A Despite Factual Errors, Citing Supreme Court Precedent.

  Case-Laws - HC : Revision u/s 263 - AO allowed the claim of carried forward of losses u/s 72A based on an incorrect assumption of facts - The action of the assessing officer, though prejudicial, can hardly be termed as ‘erroneous’ in so far as the officer has followed the dictum laid down by the Supreme Court - HC
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• Petitioner Faces Charges u/s 276C(1) of Income Tax Act for Unusual Bank Transactions and Stock Market Investments.

  Case-Laws - HC : Cognizance for the offence u/s 276C(1) - enquiry by the investigation wing - unusual credit of large amount through RTGS in bank account maintained by the petitioner and funds were debited for investment in the stock market - There is no requirement under the Act that the assessment proceedings should be completed before lunching prosecution. Respondent has rightly lodged the complaint as against the petitioner for the offences u/s 276C(1) of the Income Tax Act, 1961. - HC
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• Court Remands Case to Determine Tax Payment Order u/s 244A(1) and Explanation in Section 140A(1) of Income Tax Act.

  Case-Laws - HC : Interest payable u/s 244A(1) - the matter is remanded to the CIT(A) to consider whether under explanation to Section 140A(1), it is stipulated where the amount paid by an assessee under self-assessment falls short of the aggregate amount of tax and interest aforesaid, the amount paid shall first be adjusted towards the interest payable and the balance, if any, shall be adjusted towards the tax payable. - HC
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• Section 68 Loans: Director's Unsecured Loans Justified with ITR and Bank Statements, Penalty Deleted by CIT(A).

  Case-Laws - AT : Unsecured loan received from the directors - Additions u/s 68 - The explanation offered by the assessee that the bank account and the capacity of the creditor who have given the loan amount was proved through ITR details of the said parties along with bank statements and confirmations which clearly shows the proper balance in their respective bank accounts and their capacity to loan the amount to any other party as well. - CIT(A) rightly deleted the penalty - AT
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• Penalty Imposed for Non-Deduction of TDS on Interest Payments Over Rs. 10,000 Under Income Tax Act Section 272A(2)(c.

  Case-Laws - AT : Penalty u/s 272A(2)(c) - interest payment exceeding ₹ 10,000 - non deduction of TDS u/s 194A - Other than filing appeals and not representing the same, nor giving explanation in respect of the grounds raised only delay tactics are being adopted. No reasonable cause has also been shown. - such contumacious conduct on the part of the assessee is liable to be dealt with harshly - AT
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• Film Profits Include Audio and TV Rights Income; Deduct Production Expenses from Receipts as Business Gains.

  Case-Laws - AT : Computing the profits and gains of the business of production of feature films - the amount realised by the assessee on sale of audio rights and TV rights of the film would fall under the category of “exhibition of films on a commercial basis”. Accordingly, we direct the AO to allow deduction of expenditure incurred on production against the above said receipts also. - AT
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• Assessing TDS Applicability on Software Purchases: Analyzing Section 195 in Transactions with Associated Enterprises.

  Case-Laws - AT : TDS u/s 195 - software expenses - the arrangement of the assessee company with its AE is of purchase of computer software at agreed price i.e. sale price to the Indian customers minus margin of the assessee company equal to 15% of cost as specified in letter dated 03.01.2009 although we have seen that actually, it is 15% of the purchase price paid by the assessee company to its AE. - this fact that the assessee company is a distributor does not change the nature of the transaction - AT
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• Re-opening Tax Assessments: Section 147 and Non-Resident Entities' Permanent Establishment Status in India Analyzed.

  Case-Laws - AT : Re-opening of assessment u/s 147 - whether the non-resident entities had Permanent Establishment (“PE”) in India and if the PE existed what would be the income attributable to such alleged PE - in any case, transaction has been found to arm’s length then the entire question of PE becomes academic and there is no merit in the re-assessment proceedings initiated u/s 147 of the Act. - AT
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• Court Upholds Notice u/s 153A; "HM" Label on Seized Record Doesn't Invalidate Assessment Proceedings.

  Case-Laws - AT : Validity of notice issued u/s 153A - merely because the seized record has been numbered as “HM” does not necessarily mean that the same was seized from a different person. - contention of the assessee that non-striking of inapplicable portion in the expression “assess/reassess” would vitiate the assessment proceedings is liable to be rejected, as it does not go to the root of the matter. - AT
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• British Airline's ARS Payment in India Classified as Royalty; Section 9(1)(vi) Amendment and Finance Act, 2012 Unaffected by DTAA.

  Case-Laws - AT : Income from royalty - bookings arising from India, the payment for Altea Reservation System (ARS) is made by the British Airways for the use of system for the purpose of business in India and for the purpose of earning income from India - Mere amendment to Section 9(1)(vi) cannot result in a change. - the Finance Act, 2012 will not affect Article 12 of the DTAAs - AT
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• AO to Verify Capital Gains Share in Joint Property Sale Under Hindu Succession Act; Claimants Seek 1/6th Share.

  Case-Laws - AT : Capital gain computation - sale of joint property - assessee’s claimed that, they are entitled to 1/6th share, in the total property under Hindu succession Act - AO directed to call for these people to enquire upon amount disbursed to them and accordingly compute share received by assessee’s before us for purposes of capital gains. - AT
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• Assessee Entitled to Deduction u/s 80P(2) for Interest from Cooperative Banks Despite Souharda Sahakari Status.

  Case-Laws - AT : Deduction u/s 80P(2) on interest income received from co-operative banks - Assessee’s claim regarding deduction u/s. 80P(2)(a)(i) cannot be rejected on this basis that assessee is a Souharda Sahakari and therefore, cannot be regarded as a co-operative society. - AT
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Customs

• Dispute Over Footwear Machinery Classification: Prior Case Inapplicable Due to Unraised Argument on Clamping Force.

  Case-Laws - SC : Classification of goods - machinery used for making footwear and footwear sole/strap/heel - The fact that in some other case benefit has been given to the importer on the basis of clamping force being less than 40 tons, also, will be of no avail to the appellant as that contention was not specifically taken by the appellant before the authorities concerned, being question of fact. - SC
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• Court Urges Quick Decision on Import General Manifest Amendment Due to Prolonged Delay and Hardship for Petitioners.

  Case-Laws - HC : Amendment of IGM - Import General Manifest - The claim of the petitioners, as put forth by them, for amendment of the IGM, needs to be considered by the Competent Officer, who is respondent no.3 and a decision needs to be taken at an early date keeping in view the fact that the matter is pending since long and the petitioners are suffering on day to day basis. - HC
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• Statutory Right of Appeal is Substantive, Not Limited by Regulation 14(2); Offers an Additional Remedy Option.

  Case-Laws - HC : The right of appeal is a substantive right of an aggrieved person. It is not a matter of procedure but is a vested right conferred by the statute. Being a statutory right, it can only be circumscribed by the conditions of the statute granting it. On the other hand, an additional remedy of making representation to the higher authority is provided under Regulation 14(2) of the Regulations, which as we have noted is a subordinate legislation. Such a remedy cannot supplant or curtail the remedy of appeal granted by the empowering statute; at best it can be construed as a supplementary remedy. - HC
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Indian Laws

• Supreme Court Confirms Consumer Forum Jurisdiction for Flat Buyers; Actions Upheld Under RERA Act Framework.

  Case-Laws - SC : Jurisdiction of the Consumer Forum / Commission - Buyers of Flat - consumer or not - applicability and effect of the RERA Act - the proceedings initiated by the complainants in the present cases and the resultant actions including the orders passed by the Commission are fully saved. - SC
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IBC

• Bank's Fund Adjustment During CIRP Violates Section 14 IBC; Refund of Adjusted Amount Required.

  Case-Laws - AT : Refund of amount which had been adjusted during CIRP by the Appellant Bank from Fixed Deposits - Once CIRP was initiated and Section 14 of IBC applied such adjustment by Appellant cannot be maintained. Lack of knowledge of initiation of CIRP would not be relevant. When CIRP was initiated, the Appellant Bank could not have adjusted the amounts as has been done in this matter. - AT
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Central Excise

• Interest Automatically Granted on Delayed Refunds u/s 11BB; No Separate Application Needed for Interest Claims.

  Case-Laws - AT : Interest on delayed refund claim - Period of limitation - There is requirement of claiming interest along with refund of duty, no separate application u/s 11B is required - Section 11BB prescribes that interest is to be granted suo-moto along with refund. - AT
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Case Laws:

• GST

• 2020 (11) TMI 236
  Filing of TRAN-1 - Transitional Credit - vires of Rules 117 and 118 of the Central Goods Services Tax Rules, 2017 - HELD THAT:- The Respondents are directed to accept the TRAN-1 filed by the Petitioner and to give due credit of the input tax credit of Rs. 10, 11, 913/- in electronic credit ledger/ input tax credit of the Petitioner within two weeks from the date of this order. It is not considered necessary to examine Petitioner s challenge to the vires of Rules 117 and 118 of the Central Goods Services Tax Rules, 2017 - petition allowed

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• 2020 (11) TMI 235
  Vires of Rule 117 and Rule 118 of the Central Goods and Service Tax Rules, 2017 - Input Tax Credit - Petitioner submits that since the Petitioner has not received any clarity from the Respondents with regard to the carry forward of the CENVAT credit in respect of its application, it has been left with no option but to file the present Petition as a result of the hardship caused to the Petitioner - HELD THAT:- This is a case, where admittedly Petitioner could not file GST TRAN-1 on or before 27.12.2017 but had manually applied for GST TRAN-1 on 7.5.2018 as per Circular dated 03.04.2018 within the timeline as per the date extended by this Court. Also admittedly the Respondents have found the Petitioner to be eligible for credit amounting to Rs. 78, 62, 466/-. But the credit for the same has been denied as the ITGRC found that the Petitioner has not tried to save or submit or file TRAN-1 before 27.12.2017 - We are informed by the learned counsel for the Petitioner which is not controverted by the learned Sr. counsel for the Respondents that this information of rejection of the Petitioner s application for manual GST TRAN-1 has not been communicated to the Petitioner despite several reminders/ communications from the Petitioner and it is only by way of the affidavit in reply filed to this Petition that the Petitioner has become aware of the rejection. As admittedly in this case the Respondents have found the Petitioner to be eligible for input credit amounting to Rs. 78, 62, 466/-, in our view the finding of the ITGRC would in the face of the admission by the Respondents to the amount of credit, would be a mere technicality which cannot come in the way of substantial justice - Respondents are directed to accept the TRAN-1 filed by the Petitioner and to give the due of input tax credit of Rs. 78, 62, 466/- in the electronic credit ledger/input tax credit of the Petitioner within two weeks from the date of this order. It is not considered necessary to examine the Petitioner s challenge to the vires of Rules 117 and 118 of the Central Goods and Services Tax Rules, 2017 - petition allowed - decided in favor of petitioner.

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• 2020 (11) TMI 234
  Carry forward in its electronic credit ledger the transitional tax credit - Vires of Rule 117 of the Central Goods and Services Tax Rules, 2017 as ultra vires of Sections 140 and 174 of Central Goods and Services Tax Act, 2017 - validity of retrospective amendment made in Section 140(1) w.e.f. 01st July, 2017 - HELD THAT:- Issue notice.

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• 2020 (11) TMI 233
  Profiteering - petitioner contends that the calculation done by the Director General of Anti-profiteering (DGAP) is factually incorrect as he has calculated the profiteered amount twice - HELD THAT:- Issue Notice. The impugned order dated 11th May, 2020 is set aside and the matter is remanded back to NAPA for fresh adjudication in accordance with law. List the matter before NAPA on 18th November, 2020. All the rights and contentions of the parties are left open.

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• 2020 (11) TMI 232
  Vires of Sections 69 and 132 of the CGST Act, 2017 - cancellation of petitioner s Bail - HELD THAT:- No coercive action be taken against the petitioner in Crl.M.C. No.5853/2019 as well as Crl M.C. No.1916/2019 till further orders and bail of the petitioner shall not be cancelled in the aforesaid cases. List along with WP(C) 5454/2020 on 18th November, 2020.

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• 2020 (11) TMI 231
  Profiteering - purchase of Flat - allegation that Respondent had not passed on the benefit of additional Input tax Credit b y way of commensurate reduction in price - contravention of provisions of Section 171 (1) of of CGST Act - Penalty - HELD THAT:- It has been revealed that the Respondent had not passed on the benefit of additional Input tax Credit (ITC) to the Applicants as well as other home buyers who had purchased them in his Project Nirala Greenshire for the period from 01.07.2017 to 31.12.2018 and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017. Penalty - HELD THAT:- Since, no penalty provisions were in existence between the period w.e.f. 01.07.2017 to 31.12.2018 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, the notice dated 04.02.2020 issued to the Respondent for imposition of penalty under Section 177 (3A) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped.

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• Income Tax

• 2020 (11) TMI 230
  Effect of an Order in appeal - Rectification of mistake u/s 154 - refund of Rs. 2 Crores for the Assessment Year 2006-07 along with interest under Section 244A - ITAT stayed the demand subject to deposit of Rupees two Crores by the petitioner - TPO reduced the addition to Rupees Thirty Six Lakhs Three Thousand Four Hundred Ninety One AND upon the petitioner filing an application under Section 154 TPO reduced the demand to Nil BUT such order was not given effect to, the petitioner filed the present writ petition. HELD THAT:- It is strange that the Appeal Effect Order was not passed for more than a year. The fact that an assessee after succeeding in a protracted litigation has to file another legal proceeding i.e. a writ petition to implement and execute the said order, does not reflect well on the functioning of the Tax Department. This Court is of the view that the respondents should have given effect to the Appeal Effect Order as well as issued the refund immediately and there should have been no occasion for the petitioner to file the present writ petition. Request for adjournment, once again, is declined and the respondents are directed to pass the Appeal Effect Order in pursuance to Transfer Pricing Officer s order dated 11th September, 2019 and to grant refund along with interest under Section 244A of the Act as well as to pass rectification orders on the petitioner s applications dated 25th July, 2019 and 12th September, 2019 within four weeks in accordance with law.

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• 2020 (11) TMI 229
  Revision u/s 263 - AO allowed the claim of carried forward of losses u/s 72A based on an incorrect assumption of facts - Whether Income-tax Appellate Tribunal was right in law in dismissing the revenue s appeal on the ground, the assessing officer can not go beyond the directions of the Commissioner of Income tax, even though during the course of fresh assessment proceedings, it is open to the assessing officer to examine any items other than specific item examine to have the proper income assessed as prospective? - HELD THAT:-We need not labour much to decide the Substantial Question of Law raised by the appellant / Revenue in this appeal on account of the fact that the order, which is impugned before us passed by the Tribunal is as a result an order passed by the Commissioner of Income Tax u/s 263 of the Act. This order was on the subject matter of consideration in the assessee s own case for the earlier Assessment Year, which travelled up to the Hon ble Division Bench of this Court [ 2019 (2) TMI 1780 - MADRAS HIGH COURT ] and the appeal filed by the Revenue was dismissed. This judgment was followed by the Hon ble Division Bench of this Court in the assessee s own case for the Assessment Year 2005-06 [ 2020 (2) TMI 96 - MADRAS HIGH COURT ] wherein held the view taken by the Assessing Authority to the effect that the claim of the assessee is liable to be allowed in the light of the provisions of section 32(2) of the SICA and its interpretation by the Supreme Court is thus, the correct one. Jurisdiction exercised by the CIT to correct the alleged error in assessment was in terms of section 263 of the Act. Section 263 empowers the Commissioner of Income tax to revise an order of assessment if the order in question is erroneous and prejudicial to the interests of the revenue, both conditions to be satisfied concurrently. The jurisdiction exercised by the CIT to correct the alleged error in assessment was in terms of section 263 of the Act. Section 263 empowers the Commissioner of Income tax to revise an order of assessment if the order in question is erroneous and prejudicial to the interests of the revenue, both conditions to be satisfied concurrently. The action of the assessing officer, though prejudicial, can hardly be termed as erroneous in so far as the officer has followed the dictum laid down by the Supreme Court in the case of Indian Shaving products ( 1996 (1) TMI 375 - SUPREME COURT ) . Thus, in the absence of concurrent satisfaction of the two conditions under section 263 of the Act, the action of the CIT was contrary to statute and liable to be set aside. - Decided against revenue

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• 2020 (11) TMI 228
  Cognizance for the offence u/s 276C(1) - enquiry by the investigation wing - unusual credit of large amount through RTGS in bank account maintained by the petitioner and funds were debited for investment in the stock market - HELD THAT:- Adjudication proceedings and the criminal prosecution can be launched simultaneously and the decision in adjudication proceeding is not necessary before initiating criminal prosecution. In the case on hand, the assessment order passed by the AO has been set aside by the Income Tax Appellate Authority - Even when the appeal was pending, the authorized representative of the petitioner submitted before the sanctioning authority and it was duly considered and accorded sanction for the reason that the prosecution proceedings are separate and distinct from the assessment or reassessment proceedings. There is no requirement under the Act that the assessment proceedings should be completed before lunching prosecution. Respondent is rightly lodged the complaint as against the petitioner for the offences under Section 276C(1) of the Income Tax Act, 1961. After the order passed by the Income Tax Appellate Authority, the Assessing Officer completed the assessment proceedings, where the total demand was reworded for Rs. 40,36,84,241/- and the net amount payable was determined at Rs. 4,21,31,164/-. After adjusting the TDS amount the tax liability and the penalty stood at Rs. 1,45,23,900/- and Rs. 4,56,94,344/- respectively by an assessment order dated 28.06.2019. It is categorically established that there was a concealment of income with a view to evade the payment of taxes. Therefore, the grounds raised by the learned Senior Counsel appearing for the petitioner are not helpful to the case on hand. This Court is not inclined to quash the proceedings in E.O.C.C.No.401 of 2018 on the file of the Court of the Additional Chief Metropolitan Magistrate, Economic Offences-II, Egmore, Chennai. The petitioner is at liberty to raise all the grounds before the trial Court.

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• 2020 (11) TMI 227
  Rectification application u/s 154 - petitioner has prayed for deletion of addition made to the returned income u/s 143(1) by Centralized Processing Centre on account of alleged delay in deposit of Provident Fund, Employees State Insurance and Tax Deducted at Source as well as to grant refund as claimed in the return of income along with interest under Section 244A - HELD THAT:- The present writ petition is disposed of with a direction to the respondent to decide the petitioner s rectification applications in accordance with law by way of a reasoned order within four weeks after giving an opportunity of hearing to the petitioner. All the rights and contentions of the parties are left open.

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• 2020 (11) TMI 226
  Interest payable u/s 244A(1) - Whether Tribunal was right in law in holding that the interest u/s 244A is not payable on the amount determined as refundable (inclusive of interest up to that date) for the period for which there was a delay in payment of the amount to be refunded? - Tribunal held there is no inordinate delay in the grant of refunds - HELD THAT:- We find that this issue regarding the adjustment of interest was not specifically considered by the CIT(A) and the Tribunal. Therefore, we are of the considered view that the matter should be remanded. Appeal is allowed, the orders passed by the CIT-A and the Tribunal are set aside only on the aspect indicated above and the matter is remanded to the CIT(A) to consider whether under explanation to Section 140A(1), it is stipulated where the amount paid by an assessee under self-assessment falls short of the aggregate amount of tax and interest aforesaid, the amount paid shall first be adjusted towards the interest payable and the balance, if any, shall be adjusted towards the tax payable.

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• 2020 (11) TMI 225
  Interest payable on income tax refund - Whilst the petitioner states that it is entitled to interest from the date of the order dated 13.11.2019, till the date of actual payment, it is the department s assertion that the petitioner would be entitled to the same, only upto the date of the order allowing income tax refund - HELD THAT:- Whilst keeping the question of law stated hereinabove open for determination in an appropriate proceeding, the present writ petition is disposed of since the principal relief seeking income tax refund has been satisfied, whilst reserving the liberty to the petitioner to take appropriate steps, if any, in accordance with law.

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• 2020 (11) TMI 224
  Disallowance u/s 14A r.w.r. 8D on interest expenditure - assessee company is a partner in partnership firm and share of profit has been claimed as exempt u/s 10(2A) - HELD THAT:- Situation in the present case amply display that institution of legal proceedings would be useless and AO has failed to understand the situation and failed to appreciate the settlement reached by the assessee. AO also not brought on record whether assessee is likely to receive the rent in near future rather he accepted the fact that it is irrecoverable. The rental income can be brought to tax only when the assessee has actually received or likely to receive or certainty of receiving in the near future. In the given case, the assessee has no certainty of receipt of any rent and as and when assessee reaches an agreement to settle the dispute, it is equal to satisfying the forth conditions in the Rule 4 of the I. T. Rules, 1962. Therefore, in our considered view, the addition of rent is unjustified. Accordingly, we direct AO to delete the addition. Resultantly, Ground no. 1(i) is allowed. TDS on unrealised rent - licensee has deducted TDS and declared the same in the TDS return - HELD THAT:- Assessee has not received rental income for the previous assessment year and any Security/ Rental deposit available is to be adjusted first for old outstanding and if there is any amount remaining unadjusted, the extra rental advance will be adjusted in the current assessment year outstanding. It is undisputed that the rental advance was adjusted for previous assessment year dues and nothing was available for outstanding rent of current assessment year. Therefore, there is no reason for Ld. CIT(A) to give such direction. Therefore, we are inclined to accept the submission of the assessee. Accordingly, this ground of assessee also allowed. Common administrative expenses for the purpose of disallowance u/s 14A - HELD THAT:- We are partly in agreement with Ld. CIT(A) that sometimes, the determination of disallowance under rule 8D is absurd. We may have to go by practical or depending on the facts of the case. The Ld. CIT(A) has accepted that the common other administrative expenses are Rs. 78,52,422/-. Assessee has incurred these other administrative expenses for the whole business and Ld. CIT(A) has missed this point and the other administrative expenses incurred for the remaining activities. We do not agree with him on this aspect. The right way of calculating this share of other administrative expenses are to calculate the portion of exempt income to the total income earned by the assessee. In this case, assessee has earned total income of Rs. 71,53,93,800/- and earned exempt income of Rs. 243,71,741/-. The ratio of exempt income to total income is Rs. 3.41%. Therefore, we direct AO to disallow 3.41% of the other common administrative expenses for the purpose of disallowance u/s 14A.

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• 2020 (11) TMI 223
  Unsecured loan received from the directors - Additions u/s 68 - HELD THAT:- In respect of the loans taken from the Directors of the Company, the assessee has submitted the relevant documentary evidences to establish the genuineness, creditworthiness and capacity of these loanee. Section 68 is applicable in the case where the assessee offers no explanation about the nature and source therewith or the explanation offered by him is not in the opinion of the AO satisfactory in respect of the sum so credited which may be charged to income tax. In the present case, the AO failed to record his opinion and satisfaction as to why the sum credited in the books of account of the assessee is coming under the purview of Section 68. The explanation offered by the assessee that the bank account and the capacity of the creditor who have given the loan amount was proved through ITR details of the said parties along with bank statements and confirmations which clearly shows the proper balance in their respective bank accounts and their capacity to loan the amount to any other party as well. Thus, all these factor were ignored by the CIT(A) as well as the AO - CIT (A) was not right in dismissing the plea of the assessee and sustaining the addition. Hence, appeal of the assessee is allowed.

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• 2020 (11) TMI 222
  Reassessment proceeding u/s 148 - accommodation entries received - Notice on the basis of the information of ADIT (Inv.)-Unit- 2(1), New Delh i - as argued mechanical approval granted by the Pr. CIT u/s 151 - HELD THAT:- There is no whisper in the recorded reason that there was any omission or failure on the part of the assessee in disclosing fully and truly material facts in the return of income. The contentions of the Ld. AR that the information received by the AO nowhere in reasons recorded mentioned the name of the bank, cheque number through which assessee have received the amount from the parties, appears to be correct in our opinion. In reasons recorded, AO has merely mentioned that the assessee received Rs. 45,00,000/- as share capital but from whom the same has been received is not mentioned in the said reasons. In reasons recorded, it is mentioned that the AO has the information that the assessee received Rs. 65,00,000/- from Focus Industrial Resources Ltd. while addition to share capital share premium shows that the assessee company has received the accommodation entry of at least Rs. 45,00,000/- from various entities as bogus share capital share premium during the year. But the Assessing Officer has not made out any case from the transaction specific valid material which can justify the reopening action u/s 148 - Reassessment cannot be merely based on the basis of the information of ADIT (Inv.)-Unit-2(1), New Delhi. Such reassessment shall not be valid as the Assessing Officer held no belief on his own at any point of time, that income of assessee has escaped assessment on account of non disclosure of the relevant income. The reasons recorded must be based on evidence. The reasons recorded by the Assessing Officer cannot be supplemented by assessment order, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of assessment order - reasons of the Assessing Officer for reopening should be based on direct and circumstantial evidence. All these aspects are missing in the reasons recorded in the present assessee s case - Decided in favour of assessee.

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• 2020 (11) TMI 221
  Penalty u/s 272A(2)(c) - interest payment exceeding Rs. 10,000 - non deduction of TDS u/s 194A on interest paid to the depositors - ITO power to issue notice u/s 133(6) to determine through general enquiry for the purpose of identifying persons who are likely to have taxable income - claim of the assessee that they did not have to deduct TDS as they are exempt as appellant being a Primary Agricultural Credit Society - relevancy of information called for u/s 133(6) - HELD THAT:- The assessee has not given any reply to the submissions of the learned D.R. The assessee has also not been able to substantiate any of the grounds which has been raised by it. In fact a perusal of the ground as raised by the assessee in Ground No. D shows that the assessee is well informed of the proceedings before the AO and their powers and office procedures. Admittedly the assessee has been absolutely non-cooperative in any of the proceedings. The assessee has not shown as to whether even after the present proceedings have been initiated the information has been submitted or whether TDS has been deducted subsequently. Other than filing appeals and not representing the same, nor giving explanation in respect of the grounds raised only delay tactics are being adopted. No reasonable cause has also been shown. By no stretch of imagination can it be even presumed that the assessee did not know of the decision of Kathiroor Service Co-Operative Bank Ltd. [ 2013 (11) TMI 728 - SUPREME COURT] nor is it a plausible explanation that the assessee is exempt from deducting TDS in the absence of any order thereto - such contumacious conduct on the part of the assessee is liable to be dealt with harshly - orders of the learned CIT(A) and that of the AO are liable to be upheld and penalty levied under Section 272A(2)(c) of the Act is liable to be confirmed. - Decided in favour of revenue.

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• 2020 (11) TMI 220
  Disallowance of pre commencement expenditure u/s 35D - Revenue or Capital Expenditure - claim of the assessee that its business was to be taken to have been set up when the infrastructure was set up (i.e technical staff was appointed etc), and initially contacts were made with the prospective customers - HELD THAT:- In the case before us, as the assessee company which is engaged in the business of providing software development services exclusively to its parent company, had purchased the computers and recruited the staff, it could, thus, in the backdrop of the nature of the business of the assessee, be safely concluded, that its business was though set up but was yet to commence. Accordingly, expenses which were incurred during the interregnum i.e between the setting up of the business and commencement of the same, was rightly claimed as an allowable deduction by the assessee. Accordingly we set aside the order of the CIT(A) in context of the aforesaid issue under consideration and vacate the disallowance made by the A.O while framing the assessment. TP adjustment u/s 92C - Comparable selection - A.O excluded one of the comparable company viz. M/s Cather Consultancy Services Pvt. ltd.a persistent loss making company by treating bad debts as a non-operational expenditure - HELD THAT:- The writing back of bad debts being a normal incident of a business operation which is carried everywhere in accounts to have a true picture of profits of the relevant party, thus, cannot be held to be a non-operational expenditure. Accordingly, we do not find any justification for exclusion of the bad debts written off by the aforesaid comparable company in its accounts, for the purpose of computing its margins for the aforesaid three years. To sum up, the margins of the aforesaid comparable viz. M/s Cather Consultancy Services Pvt. Ltd. after excluding the bad debts as a non-operating expenditure by the assessee cannot be accepted. As the aforesaid comparable company, viz. M/s Cather Consultancy Services Pvt. Ltd. can safely be held to be a persistent loss making company for three years, therefore, the A.O had rightly excluded it from the final list of comparables for the purpose of benchmarking the international transactions of the assessee for the year under consideration. Exclusion of M/s En Pointe Technologies India Pvt. Ltd. for the reason, that it had a high profit margin of 31.18% - Admittedly, in case the assessee is able to demonstrate that the higher margin of a company was backed by certain extraordinary events, then, there would be a basis for rejecting the same as a comparable for the purpose of benchmarking the international transactions of the assessee. However, as it is not the case of the assessee that the higher margin of the aforementioned company was due to certain extraordinary circumstances prevailing in its case, therefore, we are unable to concur with the seeking of the exclusion of the said company from the final list of comparables. The Ground of appeal No. 4 is dismissed. Not making risk adjustment of 2% while computing the ALP under Sec. 92C - HELD THAT:- Admittedly, the assessee being captive unit of its parent company viz. Global Conference Organizers, B.V, Netherland, therein operates in an environment which is free of risk, and resultantly, its margin of profit for the said reason is on the lower side - claim of the assessee for the risk adjustment while benchmarking its international transactions in the backdrop of the financial of the comparables companies merits acceptance. Accordingly, we herein restore the issue to the file of the A.O, with a direction to consider the assessee s claim for risk adjustment for benchmarking its international transactions. The Ground of appeal No. 5 is allowed for statistical purposes. Adjustment u/s 92C at 13.15% of the sale turnover instead of 13.15% of cost - HELD THAT:- Admittedly, the ALP of the international transactions of the assessee had been worked out by the A.O at 13.15%. In our considered view, the arm s length profit in the hands of the assessee was to be worked out on its cost and not on its sale turnover of Rs. 94,87,509/-. Accordingly we herein restore the matter to the file of the A.O, who is directed to rework out the adjustment by applying the average PLI of the comparables to the cost of the international transactions carried out by the assessee during the year under consideration, and not on its sale turnover - Ground of appeal No. 6 is allowed for statistical purpose.

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• 2020 (11) TMI 219
  Exemption u/s 11 - computation of the quantum of 15% of the income derived - HELD THAT:- Assessee has duly exercised the said option which is also accepted by the department and the amount which was set apart as per Explanation-I was reduced from the income derived from property held under trust. That once the income of trust is considered as the income received as well as accrued, then, at the time of allowing the relaxation of application of the said income u/s.11(1)(a) of the Act, a different parameter cannot be applied. DR has given much stress on the term receipt as appearing in Section 11(1) of the Act, however, the said term receipt of income is only in the context of the person who is in receipt and not in the context of income derived from the property held under the trust. The income derived from the property held under the trust remains the same for computing the benefits as provided u/s.11. Computation of the quantum of 15% of the income derived should be on the basis of the income as declared by the assessee, which is considered for all other purposes. A different meaning of income derived from property can be given for the purpose of calculating the relaxation of accumulation or set apart equivalent to 15% of such income. Hence, the adjustment made while processing the return of income is not in accordance with the provisions of Section 11(1) of the Act and the same is liable to be deleted. Appeal of assessee is allowed.

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• 2020 (11) TMI 218
  Income from house property - ALV Determination - Addition on notional basis as deemed rental income applying 8% of value of the unsold flats - unsold flats held as stock in trade - HELD THAT:- Preferring the view taken in CIT vs. Neha Builders Pvt. Ltd. [ 2006 (8) TMI 105 - GUJARAT HIGH COURT ] as per which the ALV of the unsold property held by an assessee as stock-in-trade could not be determined and brought to tax under the head house property , we herein conclude that the ALV of flats held by the assessee as part of the stock-in-trade of its business as that of a builder and developer could not have been determined and therein brought to tax under the head house property . As the said statutory provision i.e Sec. 23(5) is applicable prospectively i.e w.e.f A.Y 2018-19, the same, thus, would have no bearing on the year under consideration in the case of the present assessee before us - We direct the A.O to delete the addition made by him towards the ALV of the flats held by the assessee as stock-in-trade of its business as that of a builder and developer. - Decided in favour of assessee

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• 2020 (11) TMI 217
  Computing the profits and gains of the business of production of feature films - amount received on sale of TV rights and audio rights of a feature film separately, instead of treating the same as part of receipt on exhibition of film on commercial basis - assessee is engaged in the business of production of feature films - A.O. held that the receipt by way of sale of audio rights and TV rights does not fall under the category of receipts from exhibition of films prescribed under Rule 9A of IT Rules - AO did not allow set off of expenditure on production against the amount relating to sale of audio rights and TV rights - HELD THAT:- Due to technical advancement, it is now possible to sell audio rights separately apart from exhibition of feature films. Audio matter is part of feature film and is part of production of feature film. Nowadays, both audio video form integral part of a feature film. In fact, a feature film without audio is rarest of rare feature. The cost of production of feature film includes expenditure on audio recording. Hence, we are of the view that the audio matter cannot be viewed separately distinct from the feature film, since it is intricately connected with the feature film. There should not be any dispute that, in the Indian film scenario, songs form integral part of the feature film and many a times, many films turned out to be successful due to songs. Public at large could visualise the film scenes on hearing the songs. Hence, it was made possible to assign the audio rights of films/songs separately. Hence, we are of the view that sale of audio rights should form part of amount realised on exhibition of films on commercial basis. Accordingly, we are of the view that the amount realised on sale of audio rights and TV rights would fall under the category of exhibition of film on a commercial basis - See VIESHESH FILMS (P.) LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 29, MUMBAI [ 2008 (8) TMI 600 - ITAT MUMBAI] We hold that the amount realised by the assessee on sale of audio rights and TV rights of the film would fall under the category of exhibition of films on a commercial basis . Accordingly, we direct the AO to allow deduction of expenditure incurred on production against the above said receipts also. The order passed by Ld CIT(A) is accordingly set aside. - Decided in favour of assessee.

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• 2020 (11) TMI 216
  Unexplained cash credit u/s 68 - initial burden to prove the cash - prove of three main ingredients, viz., identity of the creditor, creditworthiness of the creditor and genuineness of the transactions - HELD THAT:- The assessee has introduced a sum of Rs. 1.60 crores in his capital account. The source of the above said amount was the withdrawal made by the assessee from a firm named M/s Shri Banadeshwar Constructions , wherein the assessee is a partner. There is no dispute with regard to the fact that a partnership firm by the above said name was formed by nine persons including the assessee. The remaining eight partners are farmers and they have introduced capital in the partnership firm. Hence the partnership firm was having enough funds and the assessee has withdrawn money from the above said partnership firm.We notice that the assessee has furnished details relating to receipt of compensation, bank account details of other partners etc. The AO also did not find fault with those documents, meaning thereby, the assessee has also proved source of sources. The assessee has proved the sources of funds, i.e., it was withdrawal from the partnership firm. The partnership deed, the books of accounts of the firm, its fund position examined by the AO would show that the assessee has proved identity, credit worthiness and genuineness of the transactions. Though the AO has expressed the view that the partnership firm is a colourable entity, yet we notice that the AO has observed so on surmises only. The capital contribution made by the other partners has not been established to be not genuine. In fact, the AO was satisfied with the capacity of the other partners to make the capital contribution. Though he has expressed that there is time gap of six months etc., yet it was again a surmise only not supported by any material to show that the amount introduced as capital was not the amount withdrawn from the banks. In fact, the decision rendered in the cases of P. Padmavathi [ 2010 (10) TMI 1154 - KARNATAKA HIGH COURT ] and S.R Venkata Ratnam [ 1980 (8) TMI 73 - KARNATAKA HIGH COURT ] would reject the apprehension of the AO. Thus, we notice that the assessee has not only proved the source, but also source of sources. Hence we are of the view that the Ld CIT(A) was justified in deleting the addition - Decided in favour of assessee.

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• 2020 (11) TMI 215
  Revision u/s 263 - computation of capital gains and the exemption claimed u/s 54 - PCIT has opined that the perusal of the assessment records shows that the AO has not carried out any verification of the details filed by the assessee - HELD THAT:- On perusal of the revision order passed u/s 263 we find that the ld. PCIT has not given any specific findings as to what is erroneous in the assessment order and what is required to be verified by the AO. On perusal of the assessment order, we find that after examining the working of the capital gain/loss, the AO has observed that the assessee has wrongly computed the indexed cost of improvement with respect to the property and accordingly, after revision of the computation, the long term capital loss was reduced to NIL. In the revision order, after considering the explanations of the assessee, PCIT has not disputed the computation of indexed cost of improvement as well as investment in bond and claiming exemption under section 54 of the Act or given any findings as to what is required to be verified by the Assessing Officer and what way the assessment order is prejudicial to the interest of Revenue. Revision order passed under section 263 of the Act stands quashed and sustains the assessment order. - Decided in favour of assessee.

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• 2020 (11) TMI 214
  Disallowance u/s 80JJAA - assessee is not engaged in manufacture or production of an article or thing as per the conditions laid down under section 80JJAA and the condition of 300 days to be fulfilled by the regular workmen as per the provisions does not stand fulfilled - AR submitted that, this is the 3rd year of claim by assessee - HELD THAT:- AO regarding nonsatisfaction with respect to additional wages paid to new employees in the 1st year of employment is concerned, this Tribunal has expressed following view in case of Texas Instruments (India) Pvt.Ltd [ 2020 (3) TMI 1195 - ITAT BANGALORE ] - There is no doubt that assessee cannot be denied deduction under section 80JJAA of the Act, provided that, such employees fulfils the condition of being employed for 300 days for year under consideration , even though such employees do not fulfil the condition of being employed for 300 days in the immediately preceding assessment year. Details fulfilment of number of days of such employees, on whose salary deduction has been claimed by assessee, are not available on record. Therefore, we are unable to verify, whether necessary condition of 300 days stands fulfilled. We also agree with Ld.CIT.DR that nothing on record placed before us reveals that this is the 3rd year of claim by assessee as has been submitted - issue needs to be remanded to Ld.AO to verify these details in terms of new employees having satisfied the 300 days criteria during the year. We direct assessee to provide all details regarding number of regular workmen/employees, number of new workmen/employees added for each of the immediately three preceding assessment years to Ld.AO. Ld.AO is then directed to analyse fulfilment of the condition in respect of new employees/workmen against whom the claim has been made by assessee under section 80JJAA of the Act. Ld.AO is then directed to allow deduction under section 80 JJAA Foreign Tax credit - HELD THAT:- AO rejected the claim as assessee had made the additional FTC, by way of written submission without any evidences. In our view this issue needs to be remanded to Ld.AO to consider the claim of assessee in light of evidences/documents filed by assessee. Accordingly, the issue too is remanded to Ld.AO. Assessee is directed to file all requisite details in support of its claim in accordance with law which shall be considered by Ld.AO upon verification. Appeal filed by assessee stands allowed for statistical purposes.

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• 2020 (11) TMI 213
  Accrual of income - Receipt of interest from the sundry debtors - Accrual of income - HELD THAT:- In view of block assessment order dated 28.02.2007, various investments were added as undisclosed income and since the assessee has not redeemed those investments, the AO considered the interest on those investments as accrued income. By reiterating the submissions as made before the ld. CIT(A), assessee has contended that the assessee has not received any interest from the sundry debtors and the assessee follows cash system of accounting due to uncertainty in the line of business. We find force in the arguments of Department has not placed on record any evidence of receipt of interest from the sundry debtors, as the burden lies on the Department. However, the AO estimated the accrued interest and treated it as income and brought to tax. Respectfully following the above findings of the Tribunal, CIT(A) directed the AO to follow the directions given by the ITAT in the case of Smt. Renu Sarin, wife of the Kartha of the assessee [2019 (4) TMI 1054 - ITAT CHENNAI ]. We find no infirmity in the order passed by the ld. CIT(A). Accordingly, the common ground raised by the Revenue for both the assessment years stands dismissed. Disallowance u/s 14A - assessee has submitted that the assessee has not claimed any expenditure as deduction - HELD THAT:- The assessee is an individual and it appears that she has made the investment based on her own decision without any external or internal aid and from her own interest free funds. In such situation no expenditure could be attributed for making such investment. Moreover there is nothing on record to suggest that the assessee have claimed any expenditure as deduction. When the assessee has not claimed any expenditure there could not have be any expenditure that is attributable towards earning exempt income. Therefore we are of the considered view that no disallowance can be made U/s. 14A of the Act or by invoking Rule 8D of the Rules in the case of the assessee. Hence we hereby direct the Ld. AO to delete the addition made in the hands of the assessee invoking the provisions of Section 14A. - Decided against revenue.

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• 2020 (11) TMI 212
  Interest on loans taken from director and inter corporate deposit - Whether loan is wholly and exclusively for the purpose of business activities - HELD THAT:- The issue has duly been covered by the assessee s own case for the A.Y. 2012-13 in [ 2019 (7) TMI 1708 - ITAT MUMBAI] , therefore, by honoring the decision of the Hon ble ITAT, we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee. - Decided in favour of assessee. Disallowance of interest paid oil TDS - HELD THAT:- As admitted by Ld. Representative of the assessee that the issue has been decided against the assessee in the case of Ferro Alloys Corporation Ltd. Vs. CIT [ 1991 (12) TMI 39 - BOMBAY HIGH COURT] - Decided in favour of the revenue.

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• 2020 (11) TMI 211
  Reopening of assessment u/s 147 - Disallowance of claim u/s. 54EC - HELD THAT:- The admitted fact is that the assessee has declared long term capital gains and claimed deduction u/s. 54EC of the Act in AY 2009-10. The AO, in the reasons for reopening, has taken the view that the capital gains is assessable in AY 2008-09. Hence, the correct course of action as per the reasons for reopening was that the AO should have assessed long term capital gains in AY 2008-09. AO has not assessed the capital gains in assessment year 2008-09. Instead, he has disallowed claim of deduction made u/s. 54EC in assessment year 2008-09, while the assessee has actually claimed the said deduction in AY 2009-10. Hence the question of disallowing claim made u/s. 54EC of the Act shall arise only in assessment year 2009-10 and not in AY 2008-09. Since the assessee has not claimed any deduction u/s. 54EC of the Act in AY 2008-09, the question of making any disallowance of the said claim does not arise in AY 2008-09. Hence the AO was not justified in making disallowance of any amount, which was not claimed at all in AY 2008-09. CIT(A) was not justified in confirming the said disallowance. Direct the AO to delete the disallowance - Decided in favour of assessee.

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• 2020 (11) TMI 210
  TDS u/s 195 - software expenses - whether this amount debited by the assessee company to its P L Account as Software expenses is purchase of software by the assessee company or it is mere reimbursement by the assessee company to its AE being the cost incurred by the AE after retaining 15% of cost incurred by the AE - HELD THAT:- Price realised may differ on day to day basis and customer to customer basis in view of difference in timing or payment terms and hence, we have to accept that cost of the same product is different. Hence, it is not established that the letter dated 03.01.2009 is being acted upon by the assessee company and its AE. About reimbursement of various expenses as per this letter also, no detail is brought on record that this condition of this letter is being acted upon by the assessee company and its AE. As per this letter dated 03.01.2009, the assessee company is authorised by its AE to sell Kaseya VSA within the geographical territory of India and no one can sell any thing if it is not purchased or produced by that person. This product is produced by the AE of the assessee company and not by the assessee company and therefore, the amount payable by the assessee company to its AE in this regard is nothing but purchase price of the computer software and various judgments followed by the lower authorities are applicable and simply because specific detailed Distribution Agreement is not executed between the assessee company and its AE, it cannot be said that these judgments are not applicable when the understanding between the assessee company and its AE is similar. Assessee company obtains the purchase order from the Indian Customers in respect of certain IT Monitoring Software Products of Kaseya International Limited, Jersey as per agreed price for which the assessee company is acting as a distributor for distributing keys of such software. Under these facts, in our considered opinion, the arrangement of the assessee company with its AE is of purchase of computer software at agreed price i.e. sale price to the Indian customers minus margin of the assessee company equal to 15% of cost as specified in letter dated 03.01.2009 although we have seen that actually, it is 15% of the purchase price paid by the assessee company to its AE.. No hesitation in holding that this fact that the assessee company is a distributor does not change the nature of the transaction and it is still a purchase as accounted for by the assessee company and issue is covered against the assessee we decline to interfere in the order of CIT (A). - Decided against assessee.

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• 2020 (11) TMI 209
  Re-opening of assessment u/s 147 - whether the non-resident entities had Permanent Establishment ( PE ) in India and if the PE existed what would be the income attributable to such alleged PE - case of the assessee is that where the transactions between the assessee and LGIEL has been found to be at arm s length by the TPO then there cannot be further profit attribution to a person even if it has PE in India - As per AO there was real and intimate business connection as per section 9(1)(i) of the Act as there was continuity of business between Indian business and its AEs - non-resident companies were doing business in India through the employees of the parent company, who were heading various divisions in the Indian Companies and also through employees visiting India regularly - HELD THAT:- Consequent fall out is the case of the assessee, which in turn were re-opened u/s 147 of the Act consequent to survey u/s 133A of the Act on LGEIL. The basis for initiation of re-assessment proceedings falls as in the hands of LGEIL by the order dated 04.09.2018, the CIT(A) has given a finding that none of the AEs apart from L.G.Korea had PE in India for Assessment Years 2005-06 to 2010-11. Copy of the said order is placed at pages 39 to 105 of the Convenience Paperbook. In these circumstances and applying the ratio laid down by the Hon ble Supreme Court in L.G.Group of companies . [ 2018 (1) TMI 1611 - SUPREME COURT] AND Honda Motors Co.Ltd. [ 2019 (7) TMI 1146 - SC ORDER] wherein it has been held that since, the DRP has given the finding that the AEs of LGEIL i.e. assessee before us do not have PE in India; the basis for initiating the re-assessment proceedings fail and the same are held to be infructuous. Profit attribution - Transaction between the assessee and LGEIL has been found at arm s length by the TPO and hence, no merit in any profit attribution to a person even if there was PE in India. The Hon ble Supreme Court in Honda Motors Co. Ltd. [ 2019 (7) TMI 1146 - SC ORDER] had held that once the international transactions were held to be at arm s length price, even if there was PE in India, no profit could be attributed to it. It has been laid down by the Hon ble Supreme Court (supra) that where once the arm s length principle has been satisfied then there could be no further profit attributable to a person, even if it had PE in India. Therefore, it was further held that where notice was issued to the assessee for re-assessment based only on allegation that it had PE in India, said notice could not be sustained, once arm s length procedure has been followed. Accordingly we hold that in any case, transaction has been found to arm s length then the entire question of PE becomes academic and there is no merit in the re-assessment proceedings initiated u/s 147 of the Act. As far as the objections of the Ld.DR for the Revenue is concerned, existence of PE of the assessee in India under Article 5(1)(i) of the DTAA i.e. fixed place of business or place of management is available to the assessee in India, then also the consequent reassessment proceedings initiated against the assessee u/s 147 of the Act do not survive. Thus, the preliminary issue raised by the assessee is allowed. The issue raised in Assessment Years 2005-06 and 2006- 07 in the case of PT. LP. Display Indonesia is similar and following the same parity of reasoning, the said issue is allowed.

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• 2020 (11) TMI 208
  Validity of notice issued u/s 153A - validity of search action - With regard to the validity of search proceedings, the Ld CIT(A) has held that he does not have jurisdiction to examine the said issue - HELD THAT:- Revenue has carried out search and seizure operations in the hands of M/s H.M. Constructions and in the hands of the assessee herein - both the assessee herein are partners of M/s H M Constructions - not shown to us that the assessee herein have different business premises distinct and separate from the premises of M/s H M Constructions. Hence it cannot be conclusively said that the incriminating documents were seized from a person other than the assessee herein. The details of seized record are given in the table - A perusal of the same would show that one seized record is numbered as A-1/HM/1 and the remaining records are numbered as M J Shivani/Scanned files 1/Doc. It is a known fact that the numbering of seized documents is done by search officials in order to identify the seized materials. Hence merely because the seized record has been numbered as HM does not necessarily mean that the same was seized from a different person. Though the assessee has raised this legal plea, no document was produced to substantiate this claim. Accordingly, for the reasons discussed above, we do not find any merit in the legal contentions raised by the assessee. Accordingly, we reject the same. AO has issued notice u/s 153A wherein the expression assessee/reassess is mentioned - Non-striking of inapplicable portion would result in non-application of mind by the AO and since it goes to the root of the matter, the penalty proceedings would get vitiated. In our view, the assessee cannot take support of this decision M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] and hence the contention of the assessee that non-striking of inapplicable portion in the expression assess/reassess would vitiate the assessment proceedings is liable to be rejected, as it does not go to the root of the matter. The provisions of sec.153A of the Act states that the assessment of six assessment years preceding the year of search would get reopened. Out of the six assessment years, assessment of some of the years would have been completed, while some of the years might not. Hence the provisions of sec.153A uses the expression assess/reassess and the very same expression has been used in the notice issued u/s 153A of the Act. In both the cases, the total income shall be determined by the assessing officer. Hence the assessee would be knowing that the assessment of a particular year is a case of new assessment or reassessment, as it depends upon facts of each assessment year. - contention of the assessee that non-striking of inapplicable portion in the expression assess/reassess would vitiate the assessment proceedings is liable to be rejected, as it does not go to the root of the matter. Addition relating to Vitsandra (das flowers) property, Ramagondanhalli property AND While field land - above said additions represent 50% of the undisclosed amount - HELD THAT:- It is an undisputed fact that the agreement was not signed by the buyers, meaning thereby, it is only an incomplete agreement. If the additional amount was really agreed to be Rs. 40.00 lakhs and only Rs. 20.00 lakhs was accounted in the books of account, any prudent business man would not show the same in the agreement at all. Hence, there is merit in the submission of the assessee that a sum of Rs. 20.00 lakhs only was paid as additional amount to the sellers. Assessee have rebutted the presumption with regard to this evidence. It is also pertinent to note that the assessing officer did not examine the sellers to find out the truth - no other material was brought on record to prove that the sum of Rs. 20.00 lakhs was paid by way of cash and the same has not been accounted in the books of accounts - explanations given by the assessee have to be accepted. Accordingly, we hold that the addition of Rs. 5.00 lakhs each sustained by Ld CIT(A) in the hands of the assessee herein are liable to be deleted. Accordingly, we set aside the orders passed by Ld CIT(A) on this issue and direct the AO to delete the addition of Rs. 5.00 lakhs each made in the hands of both the assessee in AY 2006-07. Ramagondanahalli property - assessee there is merit in the explanations given by the assessees and they have effectively rebutted the presumption regarding the impugned seized materials. A perusal of the assessment order would show that the assessees have accepted some of the unaccounted payments on the basis of evidences seized at the time of search, meaning thereby, the assessees have disputed the evidences, when the facts are against the presumptions drawn by the AO - AO did not make any enquiries from the sellers of the land in order to disprove the explanations given by the assessee - no other material was brought on record to prove that the impugned payments were made outside the the books of accounts. Hence, in the absence of any contrary material to disprove the submissions of the assessee the explanations given by the assessee have to be accepted. The surrounding circumstances and evidences, in our view, supports the explanations of the assessee - addition liable to be deleted. Property located at White filed - earlier noticed that the assessees have accepted the additions, whenever the payments were not accounted for, meaning thereby, the assessees have disputed the evidences, when the facts are against the presumptions drawn by the AO - AO did not make any enquiries from the Mr. Wilfred Nelson or Mr. N G Jaikumar in order to disprove the explanations given by the assessee. Further, no other material was brought on record to prove that the impugned payments were made outside the books of accounts. Hence, in the absence of any contrary material to disprove the submissions of the assessees, the explanations given by the assessees have to be accepted. The surrounding circumstances and evidences, in our view, supports the explanations of the assessees. Accordingly, we hold that the addition each sustained by Ld CIT(A) in the hands of the assessees herein are liable to be deleted. Treating the payments made outside books of accounts - HELD THAT:- AO has not taken any steps to verify the agreed consideration, payments made by way of cheques etc., mentioned in the receipts. Without establishing that other information available in the receipts are correct, it may not be proper to presume that the cash component alone has been paid under these receipts. As earlier noticed that the AO has made the addition by making observations relating to some other property, which fact would show that the AO has made the addition in a mechanical manner. Hence, we are of the view that the AO and Ld CIT(A) were not justified in making this addition. Accordingly, we set aside the orders passed by Ld CIT(A) on this issue and direct the AO to delete the addition. Disallowance of part of agricultural income declared by the assessee and assessing the same as income of the assessee from income from other sources - HELD THAT:- A perusal of the receipt No.1733 would show that is clearly stated therein that this receipt is to be destroyed, as another voucher no.1735 has been collected from Mrs. Vasantha Lakshmi. Hence, we agree with the contentions of the assessee that the receipt no.1733 is the temporary voucher and the same is replaced by voucher no.1735. Accordingly, we are of the view that no credence should be given to voucher no.1733, i.e., both voucher no.1733 and 1735 relates to the same transaction and hence only a sum of Rs. 20.00 lakhs has been given by the assessee to Mrs. Vasantha Lakshmi and Ms. Vidhya Lakshmi. Accordingly the tax authorities are not justified in taking the amount of transactions at Rs. 40.00 lakhs. The value of transactions under both the vouchers should be taken as Rs. 20.00 lakhs only. With regard to the transaction amount of Rs. 20.00 lakhs, it is the submission of the assessees that the same was paid for purchasing their property, but it did not go through. From the explanations given by the assessee as well as the discussions made by the tax authorities, it is not clear as to whether the assessee has explained the sources for payment of Rs. 20.00 lakhs. If the assessee has explained the sources, then no addition is not called for. Since there is lack of clarity on this issue, we restore this issue to the file of the AO in the case of both the assessees for examining the same afresh. Disallowance of part of agricultural income - HELD THAT:- Assessee have furnished a Statement showing sale value of agricultural produce and the expenses in support of the agricultural income declared by them. As observed by the AO, the assessee have not furnished various details called for by the AO, particularly the details of yield, quantity raised, selling price etc. There should not be any doubt that it is the responsibility of the assessee to prove the agricultural yield, realization etc., by furnishing cogent evidences. Mere furnishing of Statement may not be sufficient. At the same time, the AO also did not attempt to find out the average yield, average selling price etc., from the surrounding areas or from agricultural department. Thus, the AO has also made estimate without any basis. Thus the issue of agricultural income requires fresh examination in all the years. Appeals of the assessee are treated as partly allowed for statistical purposes.

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• 2020 (11) TMI 207
  Rectification of mistake u/s 154 - exemption u/s. 54 - benefit of indexation in a case where property is acquired by way of gift - Tribunal suffers from a mistake apparent on the face of record inasmuch it proceeded on the basis that consequent to allowing deduction u/s. 54, there would be no long term capital gain that would remain for taxation - Not granting indexation benefit from the year in which property was acquired by the previous owner as the assessee got the property way of gift - HELD THAT:- Issue of allowing benefit of indexation property which was subject matter of transfer was purchased by the father and mother of assessee under a Sale Deed dated 15.9.1980. The property was given by way of gift by the assessee on 15.3.2006 Plea of assessee that since property was acquired in the year 1980 and since as per the provisions of Explanation (1) to section 2(42A) and the provisions of section 49(1) of the Act, if the property is acquired by way of gift, then the period of holding as well as the date of acquisition of the property should be reckoned from the date on which the predecessor of the assessee acquired the property. These submissions are contained in of the CIT(A) s order. Though the submissions have been extracted, the CIT(Appeals) has, however, not considered those submissions and has not rendered any finding on the above issue. The issue of allowing the benefit of indexation in a case where property is acquired by way of gift has been considered and decided in the case of CIT v. Manjula J. Shah [ 2011 (10) TMI 406 - BOMBAY HIGH COURT ] as held that legislature by introducing deeming fiction seeks to tax gains arising on transfer of a capital asset acquired under a gift or will and, capital gain under section 48 has to be computed by applying deemed fiction and that fiction contained in Explanation 1(i)(b) to section 2(42A) has to be applied in determining indexed cost of acquisition under section 48 of Act also - while computing capital gains arising on transfer of a capital asset acquired by assessee under a gift or will, indexed cost of acquisition has to be computed with reference to year in which previous owner first held asset and not year in which assessee became owner of asset. Hon ble High Court of Karnataka in the case of CIT v. Smt. Asha Machaiah [ 2014 (10) TMI 101 - HIGH COURT OF KARNATAKA ] applied the same analogy to acquisition of property by way of inheritance holding that when an asset is acquired by way of inheritance, cost of acquisition of asset should be calculated on basis of cost of acquisition to previous owner and said cost of acquisition of previous owner has to be calculated on basis of indexed cost of acquisition as provided in Explanation (3) to section 48. Reasoning applicable when property is acquired by way of inheritance and when the same is acquired by way of gift, cannot be different. We are, therefore, of the view that the assessee should be allowed the benefit of indexation from AY 198-81. We hold and direct accordingly and allow the relevant grounds of appeal.

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• 2020 (11) TMI 206
  Income accrued in India - PE in India - Income attribution - AO computed income of assessee as PE in relation to the booking fee relatable to the segments booked from India through the CRS developed by the assessee - AO attributed 75 % of the income as income of the assessee as PE in India - HELD THAT:- Hon ble High Court of Delhi in the assessee s own case for the assessment years 1996-97 to 2006 -07 [ 2007 (11) TMI 330 - ITAT DELHI-B] and [ 2019 (7) TMI 1083 - ITAT DELHI] has held that computers installed at the premises of the subscribers constitute a PE of the assessee in India in terms of Article 5(1) of Indo-Spain treaty. It was also held that since the Amadeus India is functionally dependent upon the assessee it do constitute an agency PE in India in terms of Article 5(iv) of the Indo- Spain treaty. Since, the facts are undisputed and since the Hon ble Jurisdictional High Court in assessee s own case (based on the judgment in the case of DIT Vs. Galileo International Inc.. [ 2009 (2) TMI 497 - DELHI HIGH COURT] has held that the assessee constitutes an agency PE and as the matter pending before the Hon ble Supreme Court, the issue do not call for any interference from our side. The order of the ld. DRP is being upheld on this ground. Attribution of profits - As relying on own case since payment to the agent is already @33 %, no further addition is warranted in the case of the assessee. Disallowance of the distribution expenses - HELD THAT:- We have gone through the history of such expenditure and find that the addition is being made owing to confusion in the description of the services as export of processed data/software or distribution fee This expenditure has been allowed by the Co-ordinate Bench of the Tribunal from the assessment years 1996-97 to 2006-07. Since, the facts have not been disputed, in the absence of any material change, we hereby allow the claim of distribution expenses. CRS Income - Royalty OR Business income - AO has held that the income received by the assessee with respect to bookings arising from India is also taxable as royalty income - As the assessee supplies/licenses its proprietary products free of charge to Amadeus India for distribution to the Subscribers and assessee has granted to Amadeus India the right to further grant the right to access and right to use its platforms/software/product offerings to Subscribers. Amadeus India has the exclusive rights to distribute the CRS in India - HELD THAT:- In the assessment framed for assessment year 2006-07 [ 2007 (11) TMI 330 - ITAT DELHI-B] the Assessing Officer had substantively brought to tax, the booking fee as business income and protectively held the same to royalty since in that year the tax worked out in treating the income as royalty was less than the tax worked out after attributing income to the alleged PE of the assessee. Tribunal in assessee s own case for the assessment year 2006-07 has held that booking fee received by the assessee is taxable as business income and not under the head royalty. Thus we hereby hold that the booking fee received is in the nature of business income. Income from royalty - bookings arising from India, the payment for Altea Reservation System (ARS) is made by the British Airways for the use of system for the purpose of business in India and for the purpose of earning income from India - AO held that the ARS has been specifically and exclusively used by British Airways, hence, taxed this amount under the head income from royalty and tax @ 20% - HELD THAT:- India s change in position to the OECD Commentary cannot be a fact that influences the interpretation of the words defining royalty as they stand today. Mere amendment to Section 9(1)(vi) cannot result in a change. It is imperative that such amendment is brought about in the agreement as well. Any attempt short of this, even if it is evidence of the State s discomfort at letting data broadcast revenues slip by, will be insufficient to persuade this Court to hold that such amendments are applicable to the DTAAs. Consequently, since we have held that the Finance Act, 2012 will not affect Article 12 of the DTAAs, it would follow that the first determinative interpretation given to the word royalty in Asia Satellite, when the definitions were in fact pari materia (in the absence of any contouring explanations), will continue to hold the field for the purpose of assessment years preceding the Finance Act, 2012 and in all cases which involve a Double Tax Avoidance Agreement, unless the said DTAAs are amended jointly by both parties to incorporate income from data transmission services as partaking of the nature of royalty, or amend the definition in a manner so supra note that such income automatically becomes royalty. It is reiterated that the Court has not returned a finding on whether the amendment is in fact retrospective and applicable to cases preceding the Finance Act of 2012 where there exists no Double Tax Avoidance Agreement. Thus held that the interpretation advanced by the Revenue cannot be accepted. The question of law framed is accordingly answered against the Revenue. Charge of Interest u/s 234B - HELD THAT:- This issue squarely covered in favour of the assessee by the decision of the Hon ble Delhi High Court in the case of DIT Vs GE Packaged Power Incorporation [ 2015 (1) TMI 1168 - DELHI HIGH COURT] The amendment brought into the Act by the Finance Act 2012 is applicable with effect from the fund of 2012 and is applicable from assessment year 2013 - 14 In view of this we direct the learned Assessing Officer to not to charge interest u/s 234 B of the Income Tax Act for the above reasons - Decided in favour of assessee.

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• 2020 (11) TMI 205
  Rights on property or gain/losses - co-ownership agreement made between the assessee s brother and relative - HELD THAT:- Land in question was purchased by the assessee along with co-owners in pursuance to the deed of co-ownership entered into by the assessee with other 2 co-owners Shri. N. Srinivasan and K. N. Ramesh. From copy of this co-ownership agreement it is stated that the nature of business will be joint purchase of the land. In co-ownership agreement, it is also stated that the net income of the co-ownership after deduction of all expenses shall be shared by the co-owners in accordance with this deed of co-ownership. When this is admitted position that the purchase of the land in question in the month of September 2005 was in pursuance to this co-ownership agreement entered into in June 2002 and as per this co-ownership agreement, this is the business of this co-ownership to have joint purchase of land and the net income of the co-ownership after deduction of all expenses is to be shared by the co-owners in accordance with the manner provided in the co-ownership agreement, nothing further is required to be seen and it can concluded without any hesitation that the income arising on purchase and sale of land in pursuance to this co-ownership agreement is taxable as business income and this is not relevant as to whether any other activity was done by the co-owners on the land purchased or in any other manner. As per the co-ownership agreement executed on 15.06.2002, the nature of business of this co-ownership arrangement is to have joint purchase of land and the income arising to this co-ownership after deduction of all expenses has to be shared by the co-owners in accordance with this deed of co-ownership and therefore, we hold that there is not infirmity in the order of CIT(A) and hence, no intervention is called for in the order of CIT(A). - Decided against assessee.

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• 2020 (11) TMI 204
  Disallowance u/s. 40(a)(ia) - non deduction of tds on contract receipt - HELD THAT:- We note that the assessee submitted a similar issue was raised during the A.Ys. 2011-12 and 2012-13 and CIT(A) deleted the said disallowance made by the AO. This Tribunal in assessee s own case for A.Y. 2009-10 decided the same issue in favour of the assessee. Also assessee s own case by latest in A.Y. 2013-14 wherein held simultaneously take affirmative note of the argument on behalf of the assessee that rigours of section 40(a)(ia) are diluted in the facts of the case since the payee has admittedly filed its return of income disclosing the impugned receipts and income earned by it embedded in the receipt has been duly offered for taxation. In this view of the matter, the assessee Joint Venture cannot be treated as assessee in default in view of the decision of Ansal Land Mark Township (P.) Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT ] and Shri Chandrakant J. Mandale [ 2015 (4) TMI 1140 - ITAT PUNE ] - Thus, seen from any angle, we find no infirmity in the order of the CIT(A). Accordingly, the appeal of the Revenue is dismissed

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• 2020 (11) TMI 203
  Capital gain computation - sale of joint property - assessee s claimed that, they are entitled to 1/6th share, in the total property under Hindu succession Act and that, they have sold the joint property along with their Mother, 1 sister and sons of their Brothers - AO from documents filed by assessee observed that, assessee was entitled to 1/4th share - HELD THAT:- On perusal of sale deed assessee along with her mother and 2 sisters. It is also recorded in sale deed that, by virtue of judgment and decree dated 29/05/2003, widow of Late M.Murthy and her son Prakash were also considered to be holding share in the said property sold by assessee, her mother and 2 sisters. Merely because sale consideration was distributed amongst assessee her mother and 2 sisters, will not dissolve the right of widow of Late M.Murthy and her son Prakash - amount disbursed to these legal hairs is not clear from the sale agreement filed in the paper book. Under such circumstances we find it necessary to send back this issue to Ld. AO for verification in respect of share received by widow of Late M.Murthy and her son Prakash from sale price of land at measuring 1 acre 20.04 Gunta, bearing survey No. 81/2. We direct Ld. AO to call for these people to enquire upon amount disbursed to them and accordingly compute share received by assessee s before us for purposes of capital gains. Deduction u/s 54F towards investment in new residential property - investment in property in the name of a son - HELD THAT:- Strict interpretation cannot be given to exemption provisions. As we have already remitted the issue in respect of sale consideration to be computed in the hands of assessee to Ld.AO, this issue also is remanded to Ld.AO to determined claim under section 54F in accordance with share computed in the hands of assessee. Investment made by assessee jointly with her sister and agricultural land cannot be considered for exemption under section 54F and accordingly rejected. Ld. AO may consider investment by assessee s in respect of residential property to the extent of share computed in their hands of assessee. Appeal of assessee allowed for statistical purposes.

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• 2020 (11) TMI 202
  Disallowance u/s 14A r.w.rule 8D - assessee made suo moto disallowance - HELD THAT:- The Hon ble Jurisdictional High Court in the case of Pragathi Krishna Gramin Bank Vs. JCIT [ 2018 (6) TMI 1283 - KARNATAKA HIGH COURT] has held the disallowance under Section 14A of the Act cannot exceed the exempt income. In the instant case, the exempted income earned for the relevant assessment year admittedly is only a sum of Rs. 15,431. This is evident from copy of audited financial statement filed along with audit report in Form No.3CB. Going by the dictum laid down by the Hon ble Jurisdictional High Court, the disallowance under Section 14A of the Act has to be restricted to Rs. 15,431, however since the assessee has suo moto in the Return of Income had disallowed a sum of Rs. 3,30,421 under Section 14A the disallowance is restricted to Rs. 3,30,421 as per the Return of Income filed by the assessee. - Appeal filed by the assessee is allowed.

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• 2020 (11) TMI 201
  Rectification of mistake u/s 254 - TP Adjustment - Comparable selection - omission in the order of the Tribunal in the final conclusion on exclusion of the 4 companies viz., Sasken Communication Technologies Ltd., Persistent Systems Ltd., Tata Elxsi Ltd. and Infosys Ltd. - HELD THAT:- There has been an omission in the order of the Tribunal in the final conclusion on exclusion of the aforesaid 4 companies and the said omission constitutes a mistake apparent on the face of record. It is clear from the observations of the Tribunal that there was no dispute that these 4 companies were to be excluded in the light of decisions rendered in the cases referred to by the ld. counsel for the assessee and set out in the last para of page 6 of the order of Tribunal Order of Tribunal suffers from a mistake and the said mistake is rectified by adding the following sentence at the end of para 16 of the order of Tribunal:- In the light of the aforesaid discussion, we direct the TPO to exclude all the 7 comparable companies set out in para 9 of the order of Tribunal from the list of comparable companies. Miscellaneous petition by the assessee is allowed.

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• 2020 (11) TMI 200
  Deduction u/s 80P(2) on interest income received from co-operative banks - lower authorities disallowed the claim of deduction against this income and added to the income of the assessee - contention of the assessee before lower authorities was that assessee is basically a co-operative society and registered under Karnataka Co- operative Society Act, 1959 and as such the interest income earned from S.B. Account and F.Ds Account which is eligible for deduction under Section 80P(2) - HELD THAT:- As decided in M/s. Sindhu Credit Souharda Sahakari Niyamita [2019 (12) TMI 1277 - ITAT BANGALORE] Assessee s claim regarding deduction u/s. 80P(2)(a)(i) cannot be rejected on this basis that assessee is a Souharda Sahakari and therefore, cannot be regarded as a co-operative society. But after holding so, set aside the order of CIT(A) and restore the matter back to the AO for fresh decision regarding allowability of deduction u/s. 80P(2)(a)(i) after examining other conditions for allowing such deduction because those conditions are not examined by the AO till now. Appeal of the assessee is allowed for statistical purposes.

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• Customs

• 2020 (11) TMI 199
  Classification of goods - machinery used for making footwear and footwear sole/strap/heel - whether classified as M/C for use in leather footwear industries injection moulding of PVC/TPR/EVA soles with STD ACC Model global 138/150 , therefore, not covered under Heading 8453 of the Customs Tariff or not? - applicability of notification dated 23rd March, 2010 - HELD THAT:- The argument of the appellant that the entry 8453 refers independently to Machinery for making or repairing footwear , cannot be countenanced. For, that expression will have to be understood in the context of the heading dealing with Machinery for preparing, tanning or working hides, skins or leather . The fact that in some other case benefit has been given to the importer on the basis of clamping force being less than 40 tons, also, will be of no avail to the appellant as that contention was not specifically taken by the appellant before the authorities concerned, being question of fact. Appeal dismissed.

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• 2020 (11) TMI 198
  Provisional release of goods - Section 110-A of Customs Act - Seizure of gold bars - direction to Respondents to supply copies of mobile forensic data, all documents and relevant CCTV footage of 13.12.2019 of the Customs arrival hall from 7.45 am to 15.15 hours - HELD THAT:- Having regard to the fact that the Order-in-Original dated 7th October, 2020 has already been passed by the adjudicating authority in respect of the show cause notice dated 29th January, 2020, it would be just and proper if the Petitioner seeks her redress before the appellate forum. Consequently, we are not inclined to entertain the Writ Petition as the Petitioner has efficacious alternate remedy under the provisions of Section 128 of the Customs Act, 1962. We express no opinion on merit and all contentions are left open. Petition dismissed.

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• 2020 (11) TMI 197
  Amendment of IGM - Section 30 of the Customs Act, 1962 - petitioner contends that the insistence upon the no objection certificate by the official respondents is not sustainable especially when respondent No.4 is not coming forth in any manner despite various efforts having been made - HELD THAT:- The claim of the petitioners, as put forth by them, for amendment of the IGM, needs to be considered by the Competent Officer, who is respondent no.3 and a decision needs to be taken at an early date keeping in view the fact that the matter is pending since long and the petitioners are suffering on day to day basis. Direction is, therefore, issued to respondent No.3 to finalize the claim of the petitioners with regard to the amendment of IGM within a period of one week from today, keeping in view of the judgments, reference whereof has been made in the earlier part of this order. Petition disposed off.

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• 2020 (11) TMI 196
  Withdrawal of customs broker license to petitioner - Legality and validity of public notice No.29/2020-21 dated 07.09.2020 - HELD THAT:- Since the impugned order withdrawing customs brokerage license of the petitioners would admittedly lead to adverse civil consequences upon the petitioners, the same ought to have been preceded by a notice and a reasonable opportunity of hearing. Intimating the petitioners about nine months back that because of the new regulations (2018 Regulations), its license may be withdrawn if there is no compliance, may not meet the requirement of principles of natural justice in so far the impugned action is concerned. Besides, the order must speak in itself. An order withdrawing a benefit must give reasons why the benefit has been withdrawn. Non-furnishing of reasons would vitiate such an order. Matter remanded back to respondent No.2 i.e., Principal Commissioner of Customs (General), Mumbai who shall give an opportunity of hearing to the petitioners and thereafter pass an appropriate order in accordance with law within a period of 3 weeks from the date of receipt of a copy of this order - petition allowed by way of remand.

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• 2020 (11) TMI 195
  Maintainability of appeal - appeal was entertained without the party/appellant before it exhausting its remedy of representation before the Chief Commissioner under Regulation 14(2) of the Regulation - Regulation 14(1) of the Courier Imports and Exports (Clearance) Regulations, 1998 - HELD THAT:- The Regulations had been made by the then Central Board of Excise and Customs in exercise of the powers conferred by section 157 read with section 84 of the Customs Act. Section 157 deals with the general power to make regulations. The erstwhile Central Board of Excise and Customs and now after amendment, Central Board of Indirect Taxes and Customs has been conferred the power to make regulations consistent with the Customs Act. Likewise, the Board has been conferred the power to make regulations regarding goods imported or to be exported by post or courier under section 84. Evidently, it is a subordinate piece of legislation - While Regulation 14(1) empowers the Principal Commissioner of Customs or Commissioner of Customs to revoke the registration of an authorized courier and also order for forfeiture of security; Regulation 14(2) provides for an opportunity to the aggrieved courier or an authorised officer of customs to represent before the Principal Chief Commissioner of Customs or Chief Commissioner of Customs if aggrieved by an order passed under Regulation 14(1). Thus, the remedy provided under Regulation 14(2) is by way of a representation to the higher authority. Remedy of appeal to the CESTAT is provided under section 129A of the Customs Act i.e., by the parent enactment. This right of appeal is a substantive right of an aggrieved person. It is not a matter of procedure but is a vested right conferred by the statute. Being a statutory right, it can only be circumscribed by the conditions of the statute granting it. On the other hand, an additional remedy of making representation to the higher authority is provided under Regulation 14(2) of the Regulations, which as we have noted is a subordinate legislation. Such a remedy cannot supplant or curtail the remedy of appeal granted by the empowering statute; at best it can be construed as a supplementary remedy. For non-availing of the additional or supplementary remedy provided by the subordinate legislation, an aggrieved person cannot be non-suited in appeal, a statutory remedy provided by the parent enactment. The substantial question of law is answered in the negative and against the appellant - Appeal dismissed.

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• 2020 (11) TMI 194
  Maintainability of petition - appealable order or not - Section 129-A of the Customs Act, 1962 - sufficient opportunity of hearing not provided - principles of Natural Justice - HELD THAT:- The petition appears to involve highly disputed question of fact regarding the service of the notice of personal hearing to the petitioner. It is alleged by the petitioner that no notice of hearing was given whereas it is alleged by the respondents that adequate chances were given to the petitioner to reply to the show cause notice as well as to avail the opportunity of being heard by the respondent-authorities who had passed the Order-in-Original. We are not inclined to pass any order or direction or writ in the present writ petition upon the respondents. The Tribunal is the final fact finding authority. The Appellate Tribunal in this case is CESTAT, under Section 129-A of the Customs Act, 1962. The petitioner is permitted to prefer an appeal under the Customs Act, 1962 against the Order-in-Original dated 30th June, 2020 (Annexure P-7) which is under challenge in this writ petition and raise all the points which are agitated in this writ petition as well as to agitate all the grounds on the merits of the case as well - Petition dismissed.

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• Insolvency & Bankruptcy

• 2020 (11) TMI 193
  Refund of amount which had been adjusted during CIRP by the Appellant Bank from Fixed Deposits of the Corporate Debtor - restoration od credit to the Corporate Debtor s account so as to facilitate Resolution Plan - HELD THAT:- It is apparent that CIRP was initiated on 27th March, 2019 and later on, the Respondent found that the Appellant Bank had adjusted certain amounts which it could not, considering Section 14 of IBC. The facts and developments are apparent from the above letter and considering the provisions of Section 14, we have no doubt that the impugned order as passed by the Adjudicating Authority is required to be maintained. Once CIRP was initiated and Section 14 of IBC applied such adjustment by Appellant cannot be maintained. Lack of knowledge of initiation of CIRP would not be relevant. When CIRP was initiated, the Appellant Bank could not have adjusted the amounts as has been done in this matter. Appeal dismissed - decided against appellant.

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• Central Excise

• 2020 (11) TMI 192
  Interest on delayed refund claim - claim of interest rejected on the ground that in terms of Section 35FF of Central Excise Act, 1944, interest is only to be granted after expiry of three from the date of order of appellate authority - HELD THAT:- I am in agreement with the claim of the learned Counsel that the amount of Rs. 15 Lakh deposited was not under the provisions of Section 35F and therefore, the provisions of Section 35FF which reads as under, will not apply - It is clear that Section 35FF is only for recoveries made under Section 35F. In these circumstances, I have no doubt in holding that order of Commissioner (Appeals) is incorrect and based on wrong premise. Learned Authorised Representative argued that no application for refund of interest is made under Section 11B on 24.12.2007 - the appreciation of learned Authorised Representative regarding Section 11B is improper and incorrect. The reference to refund of interest in Section 11B, is to the interest, if any, paid by the assessee along with duty. Section 11B does not apply to the claim of interest on the refund of duty to the appellant. In respect of claim of interest of duty to the appellant, Section 11BB applies - there are no merits in the argument of the learned Authorised Representative that the appellants were required to claim interest along with refund of duty. Section 11BB prescribes that interest is to be granted suo-moto along with refund. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (11) TMI 191
  Maintainability of appeal - waiver of pre-deposit - appeal was dismissed by the Deputy Excise and Taxation Commissioner (Admin), Ludhiana Division, Ludhiana on the ground that the petitioner was directed to deposit 10% of the total demand instead of 25% under Section 62(5) of the PVAT Act by 21.03.2017 - HELD THAT:- It was observed that the petitioner was having remedy under Article 226 of the Constitution of India for seeking any relaxation or waiving off the amount for hearing of the appeal. No doubt, any specific ground has not been taken for showing the financial hardship but it has been mentioned in second prayer that due to financial loss in business, the petitioner could not deposit the amount of 25% as pre-deposit. During the course of arguments, it has been submitted by learned counsel for the petitioner that the petitioner would deposit 10% of the total demand as directed by the Appellate Authority, in case, his appeal is heard on merits. Although, as per provisions of Section 62(5) of the PVAT Act, no appeal can be entertained unless the same is accompanied by satisfactory proof of the prior minimum payment of twenty-five percent of the total amount of additional demand created, penalty and interest, if any. By considering the interest of justice and also the fact that the petitioner is ready to deposit 10% as pre-deposit instead of 25% of the total demand before the Appellate Authority within some reasonable period for deciding his appeal on merits - petition disposed off by directing the petitioner to file an appeal within a period of two weeks from the date of receipt of certified copy of the order and respondent No.2 i.e the Deputy Excise and Taxation Commissioner (Admin), Ludhiana Division, Ludhiana is directed to entertain the appeal and to decide the same in accordance with law within a period of four weeks thereafter on depositing of 10% of the total demand.

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• 2020 (11) TMI 190
  Rejection of rectification of Form F - direction to the respondents to issue Form F for period May 2017 to March 2018 - HELD THAT:- This Court is of the view that no useful purpose would be served by keeping the petition pending. Consequently, this Court directs the respondent no.2 to allow the amendment sought for by the petitioner in its return of Assessment Year 2017-18. However, this direction shall remain suspended till the Civil Appeals pending before the Supreme Court, taken note of hereinabove, are decided and this direction shall abide by the decision that the Supreme Court renders. Petition disposed off.

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• Indian Laws

• 2020 (11) TMI 189
  Jurisdiction of the Consumer Forum / Commission - Buyers of Flat - consumer or not - applicability and effect of the RERA Act - statutory remedies available under the Haryana Cooperative Societies Act, 1984 as against those under the CP Act - effect of registration of the Project under the RERA Act - whether in the face of Section 156 of the Tamil Nadu Cooperative Societies Act, 1983 the concerned persons could avail remedies under the CP Act? - HELD THAT:- It has consistently been held by this Court that the remedies available under the provisions of the CP Act are additional remedies over and above the other remedies including those made available under any special statutes; and that the availability of an alternate remedy is no bar in entertaining a complaint under the CP Act. In terms of Section 18 of the RERA Act, if a promoter fails to complete or is unable to give possession of an apartment duly completed by the date specified in the agreement, the Promoter would be liable, on demand, to return the amount received by him in respect of that apartment if the allottee wishes to withdraw from the Project. Such right of an allottee is specifically made without prejudice to any other remedy available to him . The right so given to the allottee is unqualified and if availed, the money deposited by the allottee has to be refunded with interest at such rate as may be prescribed. The proviso to Section 18(1) contemplates a situation where the allottee does not intend to withdraw from the Project. In that case he is entitled to and must be paid interest for every month of delay till the handing over of the possession. It is upto the allottee to proceed either Under Section 18(1) or under proviso to Section 18(1). - It is, therefore, required to be considered whether the remedy so provided under the RERA Act to an allottee is the only and exclusive modality to raise a grievance and whether the provisions of the RERA Act bar consideration of the grievance of an allottee by other fora. Proviso to Section 71(1) of the RERA Act entitles a complainant who had initiated proceedings under the CP Act before the RERA Act came into force, to withdraw the proceedings under the CP Act with the permission of the Forum or Commission and file an appropriate application before the adjudicating officer under the RERA Act. The proviso thus gives a right or an option to the concerned complainant but does not statutorily force him to withdraw such complaint nor do the provisions of the RERA Act create any mechanism for transfer of such pending proceedings to authorities under the RERA Act. As against that the mandate in Section 12(4) of the CP Act to the contrary is quite significant - Again, insofar as cases where such proceedings under the CP Act are initiated after the provisions of the RERA Act came into force, there is nothing in the RERA Act which bars such initiation. The absence of bar Under Section 79 to the initiation of proceedings before a fora which cannot be called a Civil Court and express saving Under Section 88 of the RERA Act, make the position quite clear. Further, Section 18 itself specifies that the remedy under said Section is without prejudice to any other remedy available . Thus, the parliamentary intent is clear that a choice or discretion is given to the allottee whether he wishes to initiate appropriate proceedings under the CP Act or file an application under the RERA Act. It is true that some special authorities are created under the RERA Act for the Regulation and promotion of the real estate sector and the issues concerning a registered project are specifically entrusted to functionaries under the RERA Act. But for the present purposes, we must go by the purport of Section 18 of the RERA Act. Since it gives a right without prejudice to any other remedy available , in effect, such other remedy is acknowledged and saved subject always to the applicability of Section 79 - Section 100 of 2019 Act is akin to Section 3 of the CP Act and Section 107 saves all actions taken or purported to have been taken under the CP Act. It is significant that Section 100 is enacted with an intent to secure the remedies under 2019 Act dealing with protection of the interests of Consumers, even after the RERA Act was brought into force - the proceedings initiated by the complainants in the present cases and the resultant actions including the orders passed by the Commission are fully saved. Appeal dismissed.

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• 2020 (11) TMI 188
  Imposition of penalty under Section 112 of the Customs Act, 1962 - application for release of passport - applicant has submitted that applicant is engaged in the business of shipping and therefore, he has to travel abroad - HELD THAT:- It is not in dispute that earlier the applicant was also allowed to go abroad with certain conditions and there is no breach of any of the conditions committed by the applicant. Under the circumstances and looking to the facts of the case, the aforesaid conditions incorporated in the order dated 21.06.2014 are modified to the extent that the applicant shall mark his presence at every six months before DRI Office, Jamnagar. The passport of the applicant is also released for a period of two years. It is further clarified that, in case, the applicant travels abroad, he shall submit all his itinerary and all details, including the address of his stay, to the DRI office, Jamnagar, before traveling - Application allowed.

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