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TMI Tax Updates - e-Newsletter
December 1, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Refund of input tax credit - accumulated credit due to inverted rate of GST - stipulation of lapsing of credit and cut-off date for refund - the Notification dated 26.07.2018 and that the clarified Circular dated 24.08.2018 have not been considered or appreciated by the respondents in their proper perspective, which has resulted in erroneous conclusion in rejecting the refund claim of the petitioner - matter restored back - HC
Income Tax
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Reopening of assessment u/s 147 - validity of second show cause notice - The subsequent issuance of the notice cannot be said to be dropping the earlier show cause notice as observed and held by the High Court. The reasons to reopen the assessment for the A.Y. 2008-09 were already furnished after the first show cause notice which ought to have been considered by the High Court. However, the High Court has considered the reasons recorded after the second show cause notice which was not required to be considered at all. - SC
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Stay of demand - Recovery of demand - In the present cases, the impugned orders are non-reasoned orders. Neither the AO nor the Commissioner of Income Tax have either dealt with the contentions and submissions advanced by the petitioner nor has considered the three basic principles i.e. the prima facie case, balance of convenience and irreparable injury while deciding the stay application. - HC
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Scope of the DTVSV scheme - As under the DTVSV Act, 2020 each appeal, writ petition or SLP is treated as a separate dispute which is evident from Section 2(1)(j) read with Section 2(1)(a) of the Act - The unit for settlement of dispute under the DTVSV Act, 2020 is an appeal, writ petition or SLP and not the assessment year as had been canvassed by the revenue. - there is no restriction on an assessee to choose an appeal to be settled under the DTVSV Act as Section 2(1)(j) uses the words “any appeal” which even on a literal interpretation would mean any one or more appeals. - HC
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Disallowance u/s 14A - necessity of recording satisfaction - Dissatisfaction of the AO is expressly recorded in the assessment order. The said dissatisfaction has been upheld by the appellate authorities after perusing the records of the Assessee. We do not find any merit in the submission of the Appellant that the AO has failed to record satisfaction. - HC
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Revision u/s 263 by CIT - mistake of non-initiation or incorrect initiation of penalty - the inherent indication u/s 271(1) makes it clear that the Pr. CIT / CIT does not have any powers to direct either of the authorities, the AO or the appellate authority, to initiate and levy penalty. The section requires the AO or the appellate authority to be satisfied in the course of ‘any proceedings’. This means, any proceedings before either of the specified authority - AT
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Reopening of assessment u/s 147 - Reopening based on audit objection and also change of opinion - the reasons recorded in the present case are verbatim what the audit objection is - It means that the AO has not applied his independent mind to the facts of the case before recording reasons - AT
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Bad Debts - Addition on account of deposits written off on surrender of land development rights - Once the developer was sure that it is not possible to receive back any further amount of the deposit, as a commercial expediency the balance amount has been written off, since it is arising out of the business exigency and commercial expediency. - Claim allowed - AT
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Addition u/s 43CA - assessee-company inadvertently entered into a transaction of purchase of agricultural land, which was void ab-initio - assessee being party of cancellation deed, do not tantamount to entering the transaction of sale /transfer. In absence of element of transfer sec 43CA can’t be applied. - AT
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Revision u/s 263 - exemption u/s 10(1) - agricultural income - no details are filed by the assessee and the Ld.AO has not verified the exemption claimed by the assessee under section 10(1) of the Act. Thus, in our view, the original assessment is completed without proper enquiries - revision proceedings sustained - AT
Customs
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Confirmation of penalty, after 15 years of issue of SCN - purchase of goods from the importer - This being a transaction concerning purchase of an item within India, which is unrelated to its importation and to the importer as the said transaction is confined between the Appellant Citibank and M/s. Philips India, confirmation of penalty under Section 112 of the Customs Act against this Appellant is unsustainable both in law and facts. - AT
Corporate Law
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Restoration of name of the company - It is not in dispute that Learned NCLT has rightly recorded that the company was not generating funds, but only on account of non-generation of fund, the prayer of a struck off company for its restoration under Section 252(3) of the Act may not be rejected if a company is in a position to satisfy that the company was in operation. - AT
IBC
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Validity of order of NCLT - Not considering the Interlocutory Application raising the issue of jurisdiction - Much time and energy is spent by the NCLT on hearing on the interlocutory application. In view of that it would be appropriate for the NCLT to decide the interlocutory application before proceeding to deal with the other issues. - HC
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Seeking extension of time, for 90 days’ time, with a Bonafide request - to extend the time, to pay the balance purchase consideration - The Appellant / Applicant either as a matter of routine or as a matter of right, cannot lay a claim to seek for an extension of time. - AT
PMLA
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Money laundering - The quashing of FIR of regular case automatically created a situation that the offences, stated and alleged in the FIR has no existence; thus the “Scheduled Offence” has also no existence after quashing of the FIR. When there is no “Scheduled Offence”, the proceeding initiated under the provisions of Prevention of Money Laundering Act, 2002 cannot stand alone. - HC
Service Tax
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Classification of services - Business Support Services or not - Joint venture - co-developer or agent - if strictly go through the above agreement, it is nowhere mentioned that appellant is a service provider to some service recipient. As per the agreement, all the parties to co-development agreement have been assigned to their respective jobs and all have performed in favor of the joint venture in which again all the three parties are participants. Therefore, it is clear that the appellant have not provided any service to the joint venture. - AT
Central Excise
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Manufacture - conversion of waste oil/ sludge into reclaimed fuel oil/re-refining used oil - process of cleaning of waste oil to yield reclaimed fuel oil does not amount to manufacture as defined under Section 2(f) of the Central Excise Act, 1944. - AT
VAT
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Refund of the excess Central Sales Tax collected by IOCL and remitted to the State of West Bengal - production of Form “C” declarations - The circular issued by the Union of India dated 01.11.2018 is binding on the appellants/State of West Bengal as they being the agent of the Central Government for levy and collection of Central Sales Tax and non-refunding of the excess tax collected is contrary to the instruction dated 01.11.2018. - HC
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Recovery of arrears of tax from the ex-directors - Since the 2nd respondent-Company is not wound-up, no recourse can be made to recover the dues from the Director, who either continues to be on Board or ceases to be Director of the Company, inasmuch as the respondents-authorities can take steps to recover such arrears from the 2nd respondent-Company - HC
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Re-assessment - Time limitation for notices issued - period of limitation enhanced from 5 years to 6 years - Prospective or retrospective amendment - 5 year period already expired - When the provision is amended enhancing the period of limitation from 5 years to 6 years, the issuance of notice is well within the jurisdiction, and no exception could be taken. - Notice sustained - HC
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Recovery of arrears of tax due from a private limited companyfrom the Directors of the company - The stand of the respondent that since the 3rd respondent has been amalgamated with the 4th respondent, the same is to be deemed to be under winding up, does not appeal this Court for acceptance - The procedure for winding up of a company is prescribed under Part II of Chapter XX of the Companies Act, and operates in a different field and cannot be considered same as in the case of amalgamation. - HC
Case Laws:
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GST
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2022 (11) TMI 1307
Refund of input tax credit - accumulated credit due to inverted rate of GST - stipulation of lapsing of credit and cut-off date for refund in Notification No.20/2018-CT (Rate) dated 26.07.2018 - Section 54 of the CGST Act, 2017 - HELD THAT:- As rightly contended by the learned counsel for the petitioner, it is the specific contention of the petitioner that the input tax credit in relation to the goods that were lying in stock with the petitioner and which were not cleared as on 31.07.2018 would not lapse and that the petitioner would be entitled to refund of the same in view of the notifications and circulars of the respondents, in particular, the Notification dated 26.07.2018 and that the clarified Circular dated 24.08.2018 have not been considered or appreciated by the respondents in their proper perspective, which has resulted in erroneous conclusion in rejecting the refund claim of the petitioner. It is also significant to note that the petitioner has produced all relevant documents along with the claim for refund including documents produced in the present petition comprising of details of stock, Chartered Accountant Report, etc., for the purpose of establishing that the stock was available with the petitioner and the same was not cleared as on 31.07.2018. The impugned order passed by the adjudicating authority and the impugned order passed by the Appellate Authority without taking into account or properly or correctly considering or appreciating the material on record is set aside - petition allowed by way of remand.
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Income Tax
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2022 (11) TMI 1306
Reopening of assessment u/s 147 - validity of second show cause notice - Section 129 as permits to continue with the earlier proceedings in case of change of the AO - Appellant feeling aggrieved and dissatisfied with the impugned judgment of High Court has not only quashed and set aside the reopening of the assessment but has also quashed and set aside the Assessment Order for the A.Y. 2008-09 - HELD THAT:- Section 129 of the Act permits to continue with the earlier proceedings in case of change of the Assessing Officer from the stage at which the proceedings were before the earlier AO - In that view of the matter, as such, fresh show cause notice dated 18.01.2016 was not at all warranted and/or required to be issued by the subsequent Assessing Officer. Still, for whatever reason, the subsequent Assessing Officer issued the fresh notice on dated 18.01.2016 which, as observed hereinabove, was not warranted and/or required at all. Section 129 of the Act is very clear. The subsequent issuance of the notice cannot be said to be dropping the earlier show cause notice as observed and held by the High Court. The reasons to reopen the assessment for the A.Y. 2008-09 were already furnished after the first show cause notice which ought to have been considered by the High Court. However, the High Court has considered the reasons recorded after the second show cause notice which was not required to be considered at all. The finding recorded by the High Court that the subsequent notice dated 18.01.2016 can be said to be barred by limitation is unsustainable. It is required to be noted that the Assessment Order is passed on the basis of the first notice dated 23.03.2015 and not on the basis of the notice dated 18.01.2016. Under the circumstances and in view of the above factual aspect, the High Court has erred in quashing and setting aside the reopening of the assessment for the A.Y. 2008-09. The impugned judgment and order passed by the High Court holding so is unsustainable and the same deserves to be quashed and set aside. the impugned judgment and order passed by the High Court is set aside. - Decided in favor of Revenue
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2022 (11) TMI 1305
Stay of demand - Recovery of demand - requirement of payment of twenty per cent of disputed tax demand as a pre-requisite - Assessee-in-default for short deduction of tax at source - payment to the extent of 20% of total tax demand arising under Section 201(1) - HELD THAT:- This Court is of the view that the requirement of payment of twenty per cent of disputed tax demand is not a pre-requisite for putting in abeyance recovery of demand pending first appeal in all cases. The said pre-condition of deposit of twenty per cent of the demand can be relaxed in appropriate cases. Even the Office Memorandum gives instances like where addition on the same issue has been deleted by the appellate authorities in the previous years or where the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee. As pointed out by the learned senior counsel for the petitioner, the Supreme Court in the case of PCIT vs. M/s LG Electronics India Pvt. Ltd [ 2018 (7) TMI 1905 - SC ORDER ] has held that tax authorities are eligible to grant stay on deposit of amounts lesser than twenty per cent of the disputed demand in the facts and circumstances of a case. In the present cases, the impugned orders are non-reasoned orders. Neither the AO nor the Commissioner of Income Tax have either dealt with the contentions and submissions advanced by the petitioner nor has considered the three basic principles i.e. the prima facie case, balance of convenience and irreparable injury while deciding the stay application. The impugned orders and notices are set aside and the matters are remanded back to the respondent No.1-Commissioner of Income Tax for fresh adjudication in the application for stay.
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2022 (11) TMI 1304
Scope of the DTVSV scheme - Requirement to settle all the pending appeals filed by the respondents-revenue for an assessment year - settlement any appeal under the DTVSV Act - what is the rule of interpretation that the Court must apply while interpreting the DTVSV Act? - whether the DTVSV Act is a taxing statute or an amnesty act or a beneficial/remedial act, one has to examine what is the objective and intent behind enacting the statute? - HELD THAT:- Every modern legislation is actuated with some policy. While the intent of taxing statutes is to collect taxes, the intent of amnesty acts like Voluntary Disclosure of Income Scheme (for short VDI Scheme ) is to provide an opportunity to the assesses to declare their undisclosed income on fulfilling certain terms and conditions. There are also legislations which are directed to cure some mischief and bring into effect some type of reform by improving the system or by relaxing the rigour of the law or by ameliorating the condition of certain class of persons who according to present-day notions may not have been treated fairly in the past. Such welfare, beneficent or social justice oriented legislation are also known as Remedial statutes. It is settled law that any ambiguity in a taxing statute enures to the benefit of the assessee, but any ambiguity in the amnesty act or exemption clause in an exemption notification has to be construed in favour of the revenue and amnesty/exemption has to be given only to those assesses who demonstrate that they satisfy all the conditions precedent for availing the amnesty/exemption. [See: Commissioner of Customs (Import), Mumbai vs. Dilip Kumar Company and Ors [ 2018 (7) TMI 1826 - SUPREME COURT] . For determining whether the DTVSV Act is a taxing statute or an amnesty act or a beneficial/remedial act, one has to examine what is the objective and intent behind enacting the statute. It is a statute which provides benefit as it recovers the taxes for the Department upfront without having to wait to succeed in the litigation which itself is uncertain. DTVSV Act also provides a sop to an assessee, as it puts an end to the litigation and the assessee is relieved of payment of interest and penalty if the same were to imposed. The DTVSV Act also benefits the society as it reduces litigation, acrimony, decongests the Courts and relieves the system of unnecessary burden. Consequently, this Court is of the view that DTVSV Act is neither a taxing statute nor an amnesty act. It is a remedial/beneficial statute. The Courts have only to see that the particular case is within the mischief to be remedied and falls within the language of the enactment. The words of such a statute must be so construed as to give the most complete remedy which the phraseology will permit, so as to secure that the relief contemplated by the statute shall not be denied to the class intended to be relieved. Consequently, the appropriate principles of interpretation to be applied having regard to the entire conspectus of facts are the principles of purposive and liberal interpretation. Applicability of judgment of the Supreme Court in Commissioner of Customs vs. Dilip Kumar Co. [ 2018 (7) TMI 1826 - SUPREME COURT] which deals with interpretation of exemption notification - The benefit of the notification was denied to the assessee on the ground that the goods imported by the assessee contained chemical ingredient for animal feed and not animal feed/ prawn feed as such. Therefore, the question before the Supreme Court was whether the assessee who is seeking exemption from taxation under the provisions of the Act is covered by the said exemption notification. It was in this context that the Supreme Court held that the exemption notification is required to be construed strictly and any ambiguity in the exemption notification must enure to the benefit of the revenue. As already held hereinabove, the DTVSV Act is neither an amnesty act nor an exemption scheme as it does not provide for any exemption or benefit solely to the taxpayer. While interpreting Kar Vivad Samadhan Scheme , the Supreme Court in Commissioner of Income Tax, Rajkot Versus Shatrusailya Digvijaysingh Jadeja, [ 2005 (9) TMI 362 - SUPREME COURT] held that the object of the said Scheme was to settle tax arrears locked in litigation at a substantial discount and it provided that any tax arrears could be settled by paying the prescribed amount of tax arrears, and it offered benefits and immunities from penalty and prosecution. The Supreme Court held that the Kar Vivad Samadhan Scheme was in substance a recovery scheme though it was nomenclatured as a litigation settlement scheme and was not similar to the earlier VDI Scheme. It further held that the object of Kar Vivad Samadhan Scheme was to put an end to all pending matters in the form of appeals, reference, revisions and writ petitions under the IT Act/Wealth Tax Act and the object was to put an end to litigation in various forms and at various stages under the IT Act/Wealth Tax Act and therefore the rulings on the scope of appeals and revisions under the IT Act or VDI Scheme will not apply. Consequently, the judgment of the Supreme Court in Dilip Kumar (supra) which deals with interpretation of exemption notification, has no application to the present case. As under the DTVSV Act, 2020 each appeal, writ petition or SLP is treated as a separate dispute which is evident from Section 2(1)(j) read with Section 2(1)(a) of the Act - The unit for settlement of dispute under the DTVSV Act, 2020 is an appeal, writ petition or SLP and not the assessment year as had been canvassed by the revenue. Even assuming that the DTVSV Act is a taxing statute, there is no restriction on an assessee to choose an appeal to be settled under the DTVSV Act as Section 2(1)(j) uses the words any appeal which even on a literal interpretation would mean any one or more appeals. The issues raised by the Department in the SLP filed before the Supreme Court is in respect of deduction for salary paid to expatriates and the applicability of Section 115JB of the Act. However, this issue is not at all connected with the deemed appeal arising from the order of the Tribunal dated 16th September, 2019 wherein the issue of taxability of ECB interest and levy of interest under Section 234D of the Act is involved. Since, the issues involved in both the appeals are different and unconnected, this Court is of the view that the contention of the Department that the Petitioner ought to have settled the SLP pending in the Supreme Court, along with the deemed appeal of the Department is incorrect and bad in law. Reliance on FAQ-7, 27, 11 and 14 is misconceived and untenable in law - FAQ - 27 is consequential to FAQ - 7, as it provides for the manner of computing disputed tax when the declarant files a declaration for settlement of issues which are remanded by an appellate authority to the AO. FAQ - 27 states that in the event the declarant decides to settle the issues remanded by an appellate authority, the declarant is also required to settle the issues which are not set aside by the appellate authority and further provides that the disputed tax for the issues remanded to the AO will be the same amount if the addition was to be repeated by the AO. FAQ-27 has no application in the instant case as the Petitioner had filed a declaration with respect to a deemed appeal of the Department arising from the order of the Tribunal dated 16th September, 2019 and there were no issues pending before the AO for consideration. This Court is of the view that FAQ No. 11 deals with cases where in one appeal a qualifying and a non-qualifying issue arise for consideration. However, the case of the Petitioner does not fall under any clauses of the section 9, which defines non-qualifying tax arrears. Consequently, FAQ-11 has no applicability to the present case. This Court is also of the view that FAQ-14 supports the case of the Petitioner as it allows the assessee to make a declaration for settlement of a dispute with respect to one order and does not require the assessee to settle all the disputes arising from different orders for a particular year. Option to the assessee to choose appeals for the same assessment year, which are pending before different forums, to be settled under the provisions of DTVSV Act - The contention of the respondents-revenue that the option is available to the petitioner only in a case where there are cross appeals arising from the same order is incorrect as FAQ-19 in unequivocal terms indicates that the assessee has an option to choose the appeals to be settled under the DTVSV Act and there is no obligation on the petitioner to settle all the appeals filed by the assessee for a particular assessment year. This Court is of the view that an assessee is free to settle any appeal under the DTVSV Act and is not required to settle all the pending appeals filed by the respondent-revenue for an assessment year.
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2022 (11) TMI 1303
Deduction u/s 80IB - some of the flats constructed in Tower A of its housing project had exceeded the area of 1000 sq.ft. - structural changes noticed in the building as on the date of survey - Facts at all unearthed during survey proceedings which clearly suggest non compliance of the requirement of provision of section 80IB - HELD THAT:- We have also gone through the very comprehensive order passed by the CIT, which has discussed all the issues which have been flagged by the survey team point by point. The statement of one Samir Makhani to the extent that he had purchased a single unit with one entrance, but under two agreements in regard to Flat No.1603 and 1604, also appears to have been subsequently changed when he stated that changes have been made in the said flats by merging the same and while Flat No.1603 was standing in his name, Flat No.1064 was in the name of his mother and that two separate agreements had been executed. The conclusions drawn by the CIT (Appeals) based on the material on record goes to show that the view expressed and subsequently upheld by the Tribunal cannot be in any way said to be a view or a conclusion which is perverse. The question essentially involved in the case, which had to be established beyond any doubt by the Revenue, ought to have been that the respondent had not only built but also sold the residential units, in respect of which the benefit of 100% deduction was claimed with an area of more than 1000 sq.ft., which only then could have justified the action of the Revenue in denying the benefit of 100% deduction under the said provision. In the present case, however, the revenue has failed to establish that fact. Not only this even the completion certificate could not have been issued by the competent authority, as rightly held by the Tribunal, if there was any violation of the approved plans by the municipal authorities. No substantial question of law arises. Appeal is dismissed.
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2022 (11) TMI 1302
Disallowance u/s 14A - necessity of recording satisfaction - as argued AO has failed to record proper satisfaction before rejecting the explanation offered for the disallowance made by the Assessee itself and proceeding to make the disallowance u/s 14A read with Rule 8D(2)(iii) - HELD THAT:- AO recorded his dissatisfaction with the computation of disallowance after examining the accounts of the Assessee. Section 14A read with Rule 8D(2)(iii) prescribes the method to be applied for determining the expenditure incurred for earning exempt income. AO and the appellate authorities, in the facts of this case, cannot be faulted for applying the statutory method for determining the expenditure and rejecting the Assessee s suo moto disallowance. Dissatisfaction of the AO is expressly recorded in the assessment order. The said dissatisfaction has been upheld by the appellate authorities after perusing the records of the Assessee. We do not find any merit in the submission of the Appellant that the AO has failed to record satisfaction. The Assessee has failed to point out any error in the findings of the appellate authorities except to state that the disallowance offered by the Assessee should be accepted as it was done in AY 2008-09 and AY 2009-10 on the principle of consistency. In this regard, we observe that this Court in its decision for AY 2008-09 while setting aside the deletion under Section 14A has not upheld the self devised method adopted by Assessee for making the allowance but adjudicated on the failure of the AO to record his proper satisfaction before invoking Section 14A. We have already rejected the submission of application of principle of consistency and further, held that the disallowance offered by the Assessee in the assessment years under consideration being on an ad-hoc basis has been rightly rejected by the AO. We, therefore, do not find any reason to interfere with the said concurrent findings of the appellate authorities. A perusal of the record reveals that the AO has applied his mind to the controversy as he firstly examined accounts, secondly duly invited the reply of the Assessee to explain the basis of the disallowance offered by the Assessee and thirdly after examining the explanation of the Assessee has recorded its dissatisfaction after observing that the basis adopted by the Assessee for making such an estimate was unclear. CIT(A) and ITAT, which are the fact finding authorities upon examination of record, have concurred with the said finding of dissatisfaction of the AO. No substantial question of law arises.
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2022 (11) TMI 1301
Assessment u/s 153A - limitation for passing of the aforesaid orders u/s 153A - Period of limitation - HELD THAT:- The limitation for passing of the aforesaid orders under Section 153A of the Act, admittedly, expires on 31.03.2023 as the last date of the authorizations is dated 06.07.2021. To be noted that Section 153B provides for a limitation of one year from the end of the financial year in which the last of the authorization was issued for completion of the assessments under Section 153A. As far as the order of assessment challenged is concerned, a regular assessment, limitation for completion of the same expires on 31.03.2023. In light of the apparent violation in compliance with the principles of natural justice, all impugned orders of assessment are set aside. Let the petitioner be heard and orders passed de novo, in accordance with law and in strict adherence to the principles of natural justice and law, within the expiry of limitation. To facilitate the commencement of the proceedings, let the petitioner appear before the authority on Friday, the 18th of November, 2022 at 10.30 a.m. without awaiting any further notice in this regard.
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2022 (11) TMI 1300
Party to writ petition - WP filed by the appellant espousing the cause of his wife for a simple mandamus - specific case of the petitioner is that the petitioner's wife has filed a suit against one P.M.Elavarasan - Parties to civil suit, and their wives or husbands. Husband or wife of person under criminal trial - suits have been transferred to the IV Additional City Civil Judge, City Civil Court, Chennai - single Judge, after considering the arguments, at the time of admission, has dismissed the writ petition and also imposed costs of on the ground that neither the petitioner's wife nor the said Ilavarasan has been made a party in the said writ petition - HELD THAT:- Only in a proceeding initiated before a Court of law or any authority, the appellant could appear and depose evidence on behalf of his wife. Therefore, the Writ Petition could not have been filed by the appellant as a witness of his wife. It was for the appellant's wife to have filed the said Writ Petition after impleading the proper and necessary parties. We are in agreement with the views expressed by the learned Single Judge while dismissing the Writ Petition. Therefore, there is no merit in the present Writ Appeal. That apart, the appellant cannot rely on Section 120 of the Indian Evidence Act, 1872, to justify in filing of the Writ Petition Only in a proceeding initiated before a Court of law or any authority, the appellant could appear and depose evidence on behalf of his wife. Therefore, the Writ Petition could not have been filed by the appellant as a witness of his wife. It was for the appellant's wife to have filed the said Writ Petition after impleading the proper and necessary parties. We are therefore inclined to dismiss this Writ Appeal. We however expunge the cost imposed on the appellant, considering the fact that the appellant's wife may have a case against the said P.M.Ilavarasan.
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2022 (11) TMI 1299
Undisclosed sales - AO found difference between Tax Audit Report Audited Accounts in local sales - CIT-A deleted the addition - HELD THAT:- CIT(A) considered the submissions of the assessee including the tax audit report and other details/particulars and based on the same deleted the addition stating that AO acted in an erroneous manner by comparing the particulars of sales to AEs reported u/s 40A(2)(b) with the sales figure reported in the Profit Loss Account - also find merit in the appellant's case that the sales made was in the nature of deemed exports since the aforesaid body corporate is located in an SEZ and hence it was rightly reported by way of export sales. It is noted that once the sales made to M/s Pacific Jute Ltd is excluded, the sales to related entities within the territory of India (excluding deemed exports) which was lower than the overall local sales - In the circumstances impugned addition made by way of unrecorded local sales was untenable on the given facts of the case - Decided in favour of assessee. Addition u/s 68 - unexplained increase in short term borrowings under the head advance received from the parties and increase in liability under the had trade payables for goods - CIT(A) considered the submissions of the assessee including the tax audit report and other details/particulars, deleted the addition - HELD THAT:- AO did not consider aspect while making additions of sundry creditor under Section 68 of the Income Tax Act there was no case for disallowance for corresponding purchase, no addition could be made under Section 68 inasmuch as it is not in dispute that the creditors outstanding related to purchases and the trading results were accepted by the AO. We are, therefore, of the opinion that no substantial question of law arises for consideration in this case - AO was unjustified in adding the net increase in current liabilities invoking Section 68 of the Act. The Ld. AO is accordingly directed to delete the impugned addition in full. - Decided in favour of assessee.
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2022 (11) TMI 1298
Validity of assessment against company non existent - assessee company stands dissolved by NLCT - HELD THAT:- In the present case before us, the admitted facts are that the assessee company is dissolved and there is no successor for assessee company, SBQ Steels Ltd., in our view, no proceedings shall be continued against the assessee company because it is nonexistent as on date. In term of the above, we dismiss these appeals of Revenue as infructuous.
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2022 (11) TMI 1297
Addition of interest expenditure u/s 36(1)(iii) - lending business - non-charging interest or interest free loans given - AO held that the interest expenses incurred on loans obtained cannot be treated as business expenditure u/s 57 and the same cannot be allowable out of the income derived from partnership firm as there is no nexus between additions, in income and expenditures as no loans have been invested into a partnership firm as capital as stated by the assessee - HELD THAT:- CIT(A) has taken charging interest at 4.36% as compared to the interest charged at 6% on loans to friends and families but the assessee before us has demonstrated that rate of interest earned at 6% per annum for the time period of loans and advances is for particular set up of loans and advances. Similarly borrowed loan at 6% was also there in the relevant A.Y. There was 0% return of income on borrowing of unsecured loan and the same was detailed before the AO as well as CIT(A). There was not a single case of non-charging interest or interest free loans while giving the loans by the assessee. Therefore, AO as well as the CIT(A) has made the addition on presumptive and assumptive percentage of charging of interest. The expenditure incurred was wholly and exclusively for the purpose of business of land trading and the same was also explained by the assessee in respect of lands sold reflected in the opening stock and land which was not sold at the closing stock and various unsecured loans borrowed were utilised during the course of normal business of land trading and financial business. Thus, AO and the CIT(A) was not right in disallowing the interest and has not taken proper cognisance of the provisions of Section 36(1)(iii) - Decided in favour of assessee.
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2022 (11) TMI 1296
Capital gain computation - valuation of property by DVO - difference in sale value as estimated by DVO and declared value by assessee - value declared by assessee on 01.04.1981 is more than its fair market value - Scope of amendment in Section 55A - whether estimation of value of assets as on 01.04.1981 is required to be ignored? - HELD THAT:- As find that there is no dispute that assessee has sold both the properties / assets prior to the amendment in Section 55A. Therefore as per the decision in the case CIT vs. Gaurangiben S. Shodhan Indl. [ 2014 (2) TMI 78 - GUJARAT HIGH COURT] the amended provision in clause-(a) of Section 55A, which is inserted with effect from 01.07.2012 and the words at variance with its fair market value , is not applicable on the transaction of assessee. Therefore, find merit in the submission of assessee direct the Assessing Officer to verify the computation of income furnished by assessee which is recorded in para- 7 of this order and grant appropriate relief to assessee. Needless to direct that before passing the order the Assessing Officer shall grant opportunity of hearing to assessee. In the result, the grounds raised by assessee are allowed.
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2022 (11) TMI 1295
Income deemed to accrue or arise in India - Taxability of the amounts received by the assessee on the sale of software licences - royalty receipts - HELD THAT:- As decided in own case A.Y. 2013-14 the amount received by the assessee from sale of software products/licenses to be not royalty as per Article 12(3) and as per Section 9(1)(vi) of the Act. Thus the grounds of the assessee are allowed.
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2022 (11) TMI 1294
Revision u/s 263 by CIT - mistake of non-initiation or incorrect initiation of penalty - assessment order that Penalty u/s. 271(1)(c) is initiated for concealment of income by way of issue of notice u/s. 274 r.w.s. 271(1)(c) - HELD THAT:- It is well-settled that once an appeal has been preferred against an order of assessment the entire assessment is open before the appellate authority. The appellate authority is entitled to do all that the AO could have done. The powers of the appellate authority are co-extensive and co-terminus with the powers of the AO. It is equally well-settled that PCIT cannot exercise revisional jurisdiction qua proceedings before an appellate authority. The order of assessment does not have any independent existence and stands merged with the order of the appellate authority. Hence, to read s. 263 as being applicable only in case of an AO for the purposes of initiation and levy of penalty and not being applicable to the appellate authority, cannot be the legislative intent. To the contrary, the inherent indication u/s 271(1) makes it clear that the Pr. CIT / CIT does not have any powers to direct either of the authorities, the AO or the appellate authority, to initiate and levy penalty. The section requires the AO or the appellate authority to be satisfied in the course of any proceedings . This means, any proceedings before either of the specified authority Pr. CIT / CIT cannot create proceedings. If he is not permitted to direct the appellate authority (and this is an accepted position) he cannot be permitted to substitute jurisdiction/powers of only the AO by his satisfaction by creating proceedings where none exist- assessment having already been completed.. The identical issue is directly covered by the binding decision in case of CIT vs Keshrimal Parasmal [ 1985 (5) TMI 34 - RAJASTHAN HIGH COURT] As decided in Smt.Rekha Shekawat [ 2022 (8) TMI 791 - ITAT JAIPUR] on examination of assessment record, the PCIT cannot direct initiation of penalty proceedings because penalty proceedings are not part of assessment proceedings. Thus, the PCIT s revisionary decision relating to non-initiation/ incorrect initiation of penalty which without holding that assessment order passed by the AO as erroneous and prejudicial to the interest of revenue is vague and bad in law. Being consistent, as there is no contrary finding serviced before us by the revenue we are of the considered view that the invocation of provision of 263 to correct the section under which the penalty is leviable or not is beyond the power vested under section 263 of the Act, when there are other options available with the ld. AO. Therefore, the appeal of the assessee is allowed.
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2022 (11) TMI 1293
Reopening of assessment u/s 147 - reason to believe - Reopening based on audit objection and also change of opinion - HELD THAT:- Thus in view of the above discussion and case law of Hon ble Madras High Court in the case of Cholamandalam Investment Finance Co. Ltd.[ 2018 (1) TMI 146 - MADRAS HIGH COURT] that the reasons recorded in the present case are verbatim what the audit objection is. It means that the AO has not applied his independent mind to the facts of the case before recording reasons and hence, the reason merely based on audit objection cannot be a basis of reopening. Therefore, we held that reopening is bad in law and hence, the reassessment framed is quashed. Appeal filed by the assessee is allowed.
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2022 (11) TMI 1292
Levying of penalty u/s 271(1)(c) - addition made on account of LTCG for furnishing of inaccurate particulars of income - HELD THAT:- As relying on CHINUBHAI AMBALAL PATEL [ 2017 (8) TMI 1685 - ITAT AHMEDABAD] we do not justify the imposition of penalty levelled against the assessee on the basis of the deeming provision of Sub-Section (2) to Section 50C of the Act. Thus, the order passed by the authorities below under Section 271(1)(c) of the Act is found to be erroneous and bad in law and hence, quashed. Assessee s appeal is allowed.
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2022 (11) TMI 1291
Disallowance of Expenses written off - M/s. Fortune Construction Pvt. Ltd. has refunded an amount from the security deposit paid by the assessee company under the project development agreement - HELD THAT:- The assessee abandoned the project due to commercial expediency and in terms surrendered the same in favour of the land owner M/s. Fortune Construction Pvt. Ltd. Further, the amount of Rs. 13 crores refunded to the assessee towards security deposits is out of the security deposit of Rs. 80 crores as on 31.03.2009 which reduce to Rs. 67 crores as on 31.03.2010. Nothing was produced by the revenue to controvert the submissions filed by the assessee before the ld. CIT(A) and the finding of the ld. CIT(A) on this issue. Hon'ble Madras High Court in the case of Chemplast Sanmar Ltd. [ 2018 (9) TMI 75 - MADRAS HIGH COURT] has held that where assessee company set up a new project which was subsequently abandoned, since new project was managed from common funds, control over all business units was in hands of assessee and there was unity of control, it could not be said that pre-operative expenditure incurred by assessee was on a new line of business, thus, same was to be allowed as revenue expenditure. Hon'ble Calcutta High Court in the case of Binani Cement Ltd [ 2015 (3) TMI 849 - CALCUTTA HIGH COURT] has held that expenditure incurred for construction/acquisition of new facility which was subsequently abandoned at work-in-progress stage was allowable in year of write off as incurred wholly and exclusively for purpose of assessee's business. We do not find any infirmity in the order of the ld. CIT(A) on this issue. Accordingly, the same is upheld and the grounds raised by the revenue are dismissed. Disallowance of Customers Settlement Claims - said amount did not crystallize in the year under consideration and therefore a contingent liability - direct and intimate connection between the claim and the business - HELD THAT:- It is an admitted fact that the direct and intimate connection between the claim and business is not in dispute before the lower authorities. The settlement of the claim by the assessee pursuant to the legal process arising out of the contractual liability is in the course of carrying on of its business and the same is also not in dispute - claim being revenue in nature is also not disputed by the AO. It is also relevant to mention here that the accounts were duly audited and signed by the auditor on 29.09.2013 before which the order of the State Consumers Disputes Redressal Commission was available and therefore, in view of the guidelines issued by the ICAI for events occurring after the balance sheet date and considering the fact that the tax rate of both the assessment years are same, we do not find any infirmity in the order of the ld. CIT(A) in deleting the addition. Accordingly, ground of appeal no. 1 by the revenue is dismissed. Addition on account of deposits written off on surrender of land development rights - HELD THAT:- As find from the details so furnished that CASA I, project was implemented and carried. The development rights of project CASA II, were surrendered in terms of registered document dt. 31-10-2012, duly registered as Doc. No. 4758/2012 in the office of Sub-Registrar, Medchal. Pursuant to the cancellation of the development rights, as against the deposit amount of Rs. 17,80,61,366/- the developer returned only an amount of Rs. 14,17,10,000/-. The submission of ld. counsel for the assessee that the balance amount of deposit has not been returned by the developer has not been controverted by the revenue. The deed of cancellation of surrender of rights is categorical in the preamble mentioned to the effect that the deposit amount refunded was only Rs. 13,67,10,000/-. Once the developer was sure that it is not possible to receive back any further amount of the deposit, as a commercial expediency the balance amount of Rs. 3,63,51,366/- has been written off, since it is arising out of the business exigency and commercial expediency. We uphold the order of the ld. CIT(A) in deleting the addition. The ground raised by the revenue is dismissed.
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2022 (11) TMI 1290
Validity of valuation by the DVO u/s 142A - Estimation of value of assets by Valuation Officer - Applicability of provisions of section 142A(6) - CIT-A allowed the appeal of the assessee - HELD THAT:- The valuation officer shall send a copy of the valuation report to the AO within the period of six months from the end of the month in which reference was made under sub section (1) of section 142A - in this case, the DVO has submitted his report on 14.06.2018 based on the reference made by the AO on 12.09.2017. The due date of the report of the valuation officer is ending on March 2018. But the DVO has submitted the report with the delay of 3 months, beyond the due date prescribed under the Act. The Ld.DR also could not contest the argument of the AR that the DVO s valuation report is non-est in the eyes of law, since it is submitted beyond the prescribed due date u/s 142A(6) There is no material placed before us regarding any stay being granted on the operation of the order of the Hon ble ITAT. In the absence of the same pending disposal of the appeal by decision of Hon ble ITAT in [ 2019 (9) TMI 628 - ITAT VISAKHAPATNAM ] is valid in law as on date. We are therefore, in concurrence with the CIT(A). We are of the considered view that the CIT(A) has rightly considered the provisions of the Act, hence, no interference is required in the order of the Ld.CIT(A). Accordingly, the appeal of the revenue is dismissed.
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2022 (11) TMI 1289
Addition u/s 43CA - substantial difference between the market value and the agreement value in respect of some immovable property sold - assessee-company entered into this transaction of cancellation of earlier purchase transactions - HELD THAT:- Sec. 43CA is applicable in the case of transfer of property in addition to other ingredients of the section. In this case what we observed assessee-company inadvertently entered into a transaction of purchase of agricultural land, which was void ab-initio. It means assessee was never a lawful owner of the said agricultural land as mentioned supra. When assessee is not an owner of any asset, there can t be any question of transferring the same to someone else whether provisions of sec 43CA is complied with or not will be a secondary issue. In this case assessee-company simply rectified its earlier mistake to safe-guard the financial interest of the company and to come out an unlawful transaction entered earlier. For ready reference we are reproducing herein below the relevant provisions of Maharashtra Tenancy and Agricultural Lands Act 1948 along with relevant provision of contract Act and Transfer of Property Act. In view of the above action of AO in applying sec 43CA On the given facts of case was unlawful. AO and Ld. CIT(A) committed a mistake by ignoring the facts of the case and provisions of other civil laws applicable in the present case. In our considered opinion assessee being party of cancellation deed, do not tantamount to entering the transaction of sale /transfer. In absence of element of transfer sec 43CA can t be applied. We therefore direct the AO to delete the addition to be deleted with consequential reliefs. Appeal filed by the assessee is allowed.
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2022 (11) TMI 1288
Revision u/s 263 - exemption u/s 10(1) - CIT setting aside the assessment order passed by the Ld.AO, with a direction, to carry out fresh examination of the claim of agricultural income claimed to be exempt by the assessee under section 10 (1) - HELD THAT:- Before us, the assessee has not filed any agreement, showing the lands being leased in favour of the assessee. It is submitted that these were the documents filed by the assessee in reply to the query raised by the AO at the time of original assessment proceedings. Even there are no agreements placed before us that reveals ownership in land by the assessee, on which farming was carried out. From the materials placed before the Ld.AO it is prima facie inferred that the no details are filed by the assessee and the Ld.AO has not verified the exemption claimed by the assessee under section 10(1) of the Act. Thus, in our view, the original assessment is completed without proper enquiries, that necessitated the Ld.Pr.CIT to issue section 263 of the Act. We draw support from the decision of Hon ble Karnataka High Court in case of CIT vs. Infosys Technologies Ltd. [ 2012 (1) TMI 76 - KARNATAKA HIGH COURT ] Therefore in our view, the decisions relied by the Ld.AR are distinguishable on facts with that of assessee. We therefore do not fine any infirmity in the action of the Ld.Pr.CIT in invoking the provisions of section 263 - Decided against assessee.
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2022 (11) TMI 1287
Revision u/s 263 - As per CIT not declaring of deemed rent in the return of income and A.O. erroneously passed the order without considering the same - HELD THAT:- Section 23(5) of the Act is not applicable for the assessee for this assessment year. The assessee explained and replied to the revenue about the issues in response to the notices of the Ld. PCIT. The formation of the opinion and belief of the Ld. PCIT was changing time to time after receiving reply of the assessee. We may also like to add here that section 23(5) of the Act has been inserted by the Finance Act, 2017 w.e.f. 01.04.2018 whereby notional annual value of the property held as stock in trade is sought to be brought to tax. The said amendment is only prospective in application. PCIT in his third show cause notice had sought to consider the taxability of deemed rental income not u/s 23(5) but u/s 23(1)(a) - Assessee had duly submitted that rental income has been correctly offered in return of income - PCIT has not brought with cogent evidence on record as to how the submission made by the assessee is incorrect. All facts submission with regard to offer of rental income is already on record before the Ld. PCIT. Nothing prevented the Ld. PCIT to just verify those facts which are staring on him, before invoking his revisionary jurisdiction u/s 263 A.O. is neither erroneous nor prejudicial to the interest of the Revenue and hence, Ld. PCIT action u/s 263 of the Act is beyond jurisdiction and the same order is quashed. Appeal of assessee allowed.
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2022 (11) TMI 1269
Reopening of assessment - non disposal of objections - HELD THAT:- Our attention is drawn to the order dated 09.03.2022 received through e-mail by the assessee in relation to the very assessment year. The total income of the assessee is computed as nil. This, according to learned counsel, is no longer available on the website. The reason put forth by the other side is possibly because on 08.03.2022 the Court granted the interim order in favour of the petitioner. Not only the issue of disposal of objection has been put to the rest, but, ultimately, the assessment has been framed where no addition has been made to the income which has thus favoured the petition. The cause of the petition therefore no longer survives.
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2022 (11) TMI 1268
Reopening of assessment - non disposal of objections - HELD THAT:- Our attention is drawn to the order dated 09.03.2022 received through e-mail by the assessee in relation to the very assessment year. The total income of the assessee is computed as nil. This, according to learned counsel, is no longer available on the website. The reason put forth by the other side is possibly because on 08.03.2022 the Court granted the interim order in favour of the petitioner. Not only the issue of disposal of objection has been put to the rest, but, ultimately, the assessment has been framed where no addition has been made to the income which has thus favoured the petition. The cause of the petition therefore no longer survives.
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Customs
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2022 (11) TMI 1286
Duty Drawback - Provisional attachment order - Fraudulent/unlawful availment of duty drawback - bogus dummy Importer Exporter Codes - stand of the petitioner is that if in the first instance the action was contrary to law, the same could not have been cured by issuance of subsequent provisional attachment order - whether we should allow the petitioner to take benefit of the duty drawback amounting to Rs.49,23,635/- lying credited in its bank account, while the adjudication is on? HELD THAT:- A careful perusal of sub-rule (1) of Rule 18 of the 2017 Rules shows, that where duty drawback has been paid to an exporter, or a person authorized by him, but the sale proceeds in respect of such exports have not been realized by or on behalf of the exporter located in India, within the period allowed under the Foreign Exchange Management Act, 1999 [FEMA] or within such time as extended by the concerned authority, such drawback is required to be recovered [except in circumstances or conditions specified in sub-rule (5)] in the manner specified in the said Rule. A case where duty drawback has been paid to the exporter [in the instant case, the petitioner], but admittedly, up until now, sale proceeds have not been received against such exports, and therefore the deeming provision incorporated in the second (2nd) proviso to Section 75 of the Act will kick in - since the amount, which is lying credited to the petitioner s account, concededly, represents a part of the duty drawback sanctioned in favour of the petitioner against 20 shipping bills, no such direction can be issued which would result, ultimately, in the petitioner, at this stage, getting access to those funds. The petitioner s assertion vis-a-vis these summons is, that it remained available at the given premises, and for this purpose, it has placed reliance on a rent agreement dated 16.09.2020 - these are not the aspects up for adjudication, in this writ petition - the petitioner will be free to operate the impugned bank account, as at the moment, there is no legal impediment, given the fact that the provisional attachment orders which were issued to make course correction have outlived their legal efficacy. Petition disposed off.
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2022 (11) TMI 1285
Confirmation of penalty, after 15 years of issue of show-cause notice on the Appellant, under Section 112 of the Customs Act - importation by a third party of ATMs and its Controllers for alleged mis-declaration of description and value of goods - Time Limitation - HELD THAT:- On limitation, this Tribunal had specifically condoned the period of delay of 5 years and 4 months in filing the appeals by imposing cost of Rs.20,000/- that has been paid to the Respondent-Department. This being so and having been addressed by this Tribunal the ground that appeal is barred by limitation cannot be agitated again. In respect of the unusual delay in passing the Order-in-Original, law is well settled that such unusual delay vitiates the proceedings, on which count alone the appeals can be stated to have merit. Moreover, our attention is drawn to the copy of the letter of DRI dated 17.03.2020 addressed to the Commissioner (AR) CESTAT, Mumbai that clearly indicates that show-cause notice was not received by Appellant Mafatlal R. Mehta, and the same letter of DRI was issued upon perusal of their own records. Further, it also indicates that there was no proof of service of intimation of personal hearing of notices on Appellant Mafatlala R. Mehata. Unfortunately, he has been penalised in gross violation of the principles of natural justice. In respect of Appellant bank, as could be observed during the course of hearing and from the case record, it is a subsequent purchaser of the goods form M/s. Philips India who had allegedly purchased the imported goods imported by Jiten P. Mody and no complacence is noticeable between the Appellant bank and the said Jiten P. Mody except that in the statement of Mr. Ramamrutham, former Philips India employee, it is stated that they considered the possibility of importing ATMs from Philips Holland to Philips India through 3rd party supplier and after obtaining quotation from the said importer Jiten P. Mody, they quoted price of the machine to banks namely Citibank and HSBC bank with 40% profit margin. This being a transaction concerning purchase of an item within India, which is unrelated to its importation and to the importer as the said transaction is confined between the Appellant Citibank and M/s. Philips India, confirmation of penalty under Section 112 of the Customs Act against this Appellant is unsustainable both in law and facts. Appeal allowed.
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Corporate Laws
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2022 (11) TMI 1284
Seeking restoration of name of the company - name was struck off due to non filing to returns - Section 252(3) of the Companies Act, 2013 - HELD THAT:- It is true that under Section 253(3), twenty years period has been given for approaching for restoration of company to ROC but at the same time provisions contained in Section 248 of the Companies Act, 2013 cannot be termed as redundant. If this Tribunal is satisfied on the basis of the material available on record that struck off company during the relevant period was in operation though not generating any revenue, it may approach for restoration of company on the roll of ROC. In the present appeal we have noticed from the material on record that to some extent the company in question was in operation during the relevant period. It is not in dispute that Learned NCLT has rightly recorded that the company was not generating funds, but only on account of non-generation of fund, the prayer of a struck off company for its restoration under Section 252(3) of the Act may not be rejected if a company is in a position to satisfy that the company was in operation. Appeal allowed.
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Insolvency & Bankruptcy
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2022 (11) TMI 1283
Validity of order of NCLT - Not considering the Interlocutory Application raising the issue of jurisdiction - Section 10A of the Insolvency and Bankruptcy Code, 2016 (IBC) - Seeking consideration of application before proceeding to enter upon the merits of the Company Petition - HELD THAT:- Admittedly the Petitioner has filed the interlocutory application before NCLT challenging its jurisdiction under section 10A of the IBC. It is pending there, the NCLT has heard both parties on said application for ten dates, written submissions are also filed by both the parties on that issue. Mr. Seervai and Mr. Joshi are ad idem on one point that is the NCLT has already heard the lawyers extensively on the aspect of jurisdiction viz on interlocutory application filed by the Petitioners, written submissions are also filed. Much time and energy is spent by the NCLT on hearing on the interlocutory application. In view of that it would be appropriate for the NCLT to decide the interlocutory application before proceeding to deal with the other issues. The Hon ble Apex Court in the case of Ramesh Kymal [ 2021 (2) TMI 394 - SUPREME COURT ] has dealt with the issue of Section 10A of IBC. As the NCLT has extensively heard both the parties on interlocutory application, hence the NCLT shall decide it before dealing with other issues. The Petition is allowed.
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2022 (11) TMI 1282
Stay of proceedings relating to the debt due - Appellants submits that in view of the triggering of the interim moratorium in proceedings under Section 95 by order dated 06.12.2021 and 07.12.2021 all proceedings have to be stayed - HELD THAT:- Section 96(1)(b) read with the definition of debt in Section 3(11), what is contemplated to be stayed is the proceeding relating to debt, which means a liability or obligation in respect of a claim which is due from any person. Interim moratorium shall be for such proceedings which relate to a liability or obligation due i.e. due on date when interim moratorium has been declared. Section 96(1)(b) cannot be read to mean that any future liability or obligation is contemplated to be stayed. Thus, stay of proceedings under Section 19(2) and Section 66-67 is not contemplated under Section 96(1)(b) and the scheme of Code in no matter provide for stay of such applications. The Adjudicating Authority did not commit any error in rejecting application of the Appellants praying for stay of proceedings under Section 19(2) and Section 66-67. Hon ble Supreme Court in STATE BANK OF INDIA VERSUS V. RAMAKRISHNAN AND ANR. [ 2018 (8) TMI 837 - SUPREME COURT ], where the Hon ble Supreme Court had occasion to consider Section 96 and Section 101 with Section 14 and it was observed that Section 14 cannot be possibly apply to a personal guarantor - Hon ble Supreme Court in the above case does not support the submissions of the Appellants which has been raised in the facts of the present case that proceedings under Section 19(2) and Section 66-67 shall be deemed to have been stayed by virtue of interim moratorium under Section 96(1)(b). Thus, no error has been committed by the Adjudicating Authority in rejecting application of the Appellants - appeal dismissed.
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2022 (11) TMI 1281
Seeking extension of time before the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench, Court No.II) for 90 days time, with a Bonafide request, to extend the time, to pay the balance purchase consideration, to complete the sale by exhausting all avenues, including approaching the Bank for Funding - HELD THAT:- It is an evident from the terms of Paragraph 3.2 of the Updated Process Document dated 08.04.2022, that, if there is failure to the Bid, within the time of the Letter of Intent, further consequences will flow for the Default. It is relevantly pointed out, that if a condition is to be followed by the Bidders and that when a confirmation of the Bid had taken place, then, at a later point of time, it is not open to the concerned Bidder to resile from the same and it cannot be brushed aside that the Bid is valid for a particular certain period. The Appellant / Applicant either as a matter of routine or as a matter of right, cannot lay a claim to seek for an extension of time. In this connection, this Tribunal points out that I B Code, 2016 is an inbuilt and self-contained code. Speed is the Essence / Gist of the Code. Moreover, the Provisions of I B Code, 2016 are summary in nature, and they are not adversarial in character. Also, that the Appellant / Applicant is bound, as per the relevant clause of the Letter of Intent concerning the Bid. No wonder, the I B Code, 2016 stipulates the time limit that the period, in which the entire CIRP process is to be completed, with a view to ensure maximisation of value of Assets of the Corporate Debtor and to avoid depreciation value, of the property concerned. This Tribunal keeping in mind that the Appellant had defaulted in fulfilling the tenor and spirit of Letter of Intent for the second time, and also, the observations, made by the Members of the Stakeholders Consultation Committee, in their 14th Meeting held on 21.09.2022 and on a cumulative consideration of the facts and circumstances of the present Case, in a Holistic Manner, the plea of the Appellant, in seeking an extension of time, in application towards the payment of balance purchase consideration, the said request cannot be acceded to by this Appellate Tribunal, to secure the ends of justice. On going through the contents of the impugned order comes to an inevitable and unescapable conclusion that the impugned order of dismissing the application is free from any Legal Flaws - application dismissed.
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PMLA
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2022 (11) TMI 1280
Interpretation of statute - whether quashing of a regular case of scheduled offence shall automatically quashed the subsequent case registered under the provisions of PMLA Act? - money laundering - proceeds of crime - HELD THAT:- This court is a view that the pendency of PMLA case cannot be sustained at this juncture. Moreover, Hon ble Appellate Tribunal PMLA is of specific finding that no proceeds of crime of the PMLA case has arisen from the regular case No. RCBSK2009E0008. The said regular case has already been quashed by this court. Thus, at the situation there is no proceeds of crime by virtue of order of quashing of the regular case. The quashing of FIR of regular case automatically created a situation that the offences, stated and alleged in the FIR has no existence; thus the Scheduled Offence has also no existence after quashing of the FIR. When there is no Scheduled Offence , the proceeding initiated under the provisions of Prevention of Money Laundering Act, 2002 cannot stand alone. The instant criminal revisional application has merit to entertain and it is allowed.
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Service Tax
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2022 (11) TMI 1279
Classification of services - Business Support Services or not - Joint venture - co-developer or agent - appellant developed and built residential scheme on the land owned by Sameet and Samprat, a non-trading organization - Department contended that the appellant's activity is the Support of Business of the joint venture therefore, the appellant have provided Business Support Service - time limitation - suppression of facts or not - HELD THAT:- It is clear that the appellant is not an agent and providing service to anyone else whereas the appellant (SCPL) is an active party to the joint venture with M/s. Safal Infrastructure Pvt. Limited and M/s. Pegasus Commercial Co-op Society Limited. The consideration is also on the basis of the profit of joint venture. In this fact, the appellant (SCPL) is not providing any service to any other person and the appellant was assigned the work in the capacity of co-developer and not an agent. Therefore, it cannot be said that appellant have provided Business Support Service to any other person. The Hon'ble Supreme Court in the case of UOI vs. Mahindra Mahindra Limited [ 1995 (3) TMI 88 - SUPREME COURT] held that ordinarily the Court should proceed on the basis that apparent tenor of agreement reflects the real state of affairs. Though it is open to Revenue to allege and prove that apparent is not real. In the present case also, if strictly go through the above agreement, it is nowhere mentioned that appellant is a service provider to some service recipient. As per the agreement, all the parties to co-development agreement have been assigned to their respective jobs and all have performed in favor of the joint venture in which again all the three parties are participants. Therefore, it is clear that the appellant have not provided any service to the joint venture. Time limitation - Suppression of facts - HELD THAT:- The appellant have not carried out activities clandestinely as the same were as per the co-development agreement and was on principal to principal basis. The case was made out on the observation of audit from various records of the appellant and all the transactions were admittedly recorded in the books of accounts. In this fact, the suppression of fact or any malafide to evade payment of service tax is not established. Therefore, the demand of service tax is hit by limitation also. The impugned order is not sustainable hence, the same is set-aside to the extent it confirms demand of service tax, interest and penalties - Appeal allowed - decided in favor of appellant.
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2022 (11) TMI 1278
Refund claim - refund was rejected on the ground that trenching work for irrigation network was not fully within the SEZ and partly outside the SEZ - N/N. 09/2009-ST as amended by 15/2009-ST - HELD THAT:- Once it is admitted that service tax payable on the service received and consumed within SEZ, the same is not taxable and the same is to be refunded even without applying Notification No. 09/2009. Refund claim - CHA Service - rejection on the ground that it is not CHA service as the invoice shows various costs such as salaries and other expenses - HELD THAT:- Even though total service charge of CHA was bifurcated under different heads but the fact remains that service was provided by CHA towards CHA service only. Therefore, merely because the invoice is for amount towards various expenses but the same were in relation to CHA service by the CHA, hence, the refund cannot be rejected. Refund claim - Construction service received from Jay Khodiyar in relation to construction of trenching and pipelines - HELD THAT:- The construction was exclusively for SEZ only. It is very obvious that a part of the same will be outside the premises of the SEZ but that does not mean that service was received for other than authorised operations of SEZ. Accordingly, on the admitted fact that trenching pipeline installed partly in SEZ and partly outside but for use in operation of the SEZ is admissible and the refund of the same is clearly admissible. The appellant are entitled for the refund - Appeal allowed - decided in favor of appellant.
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2022 (11) TMI 1277
Rectification of mistake - it is contended that some demand were set aside erroneously, without reasonable observation - HELD THAT:- It is clarified that service tax is payable for the period under dispute with regard to guide fees, audio tour charges elevator fee and parking charges. We further clarify that no service tax is payable on camera ticket charges as the same is in the nature of additional admission fee to the museum. In view of the clarification that no entry fee has been charged for Chokel Deo Garden Restaurant, we clarify that the entry fees with respect to Chokel Deo Bagh is also exempt. As the appellant have already paid the service tax with regard to guide fee plus Audio tour charges plus elevator fee and parking fee, alongwith interest, there is no further demand with respect to the same for the period under dispute. We further clarify that the penalties under Section 77(2) 78 are set aside. The miscellaneous application is allowed by modification of the final order in the aforementioned terms.
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Central Excise
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2022 (11) TMI 1276
Process amounting to manufacture - conversion of waste oil/ sludge into reclaimed fuel oil/re-refining used oil - HELD THAT:- In the present case, the demand is for the subsequent period whereas on the same issue for the earlier period the case has been decided in favour of the appellant by this Tribunal in ALICID ORGANIC INDUSTRIES LIMITED AND SHRI MANISH C PATEL VERSUS C.C.E. S.T. -AHMEDABAD-III [ 2022 (8) TMI 163 - CESTAT AHMEDABAD ] wherein it was held that the process of cleaning of waste oil to yield reclaimed fuel oil does not amount to manufacture as defined under Section 2(f) of the Central Excise Act, 1944. It is clear that except for the different period, the issue is identical which has been settled in the above order - Appeal allowed - decided in favor of appellant.
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2022 (11) TMI 1275
Refund claim - time limitation - availability of credit for the period prior to 01.04.2011 - HELD THAT:- The operating portion of the order passed by this Tribunal on the earlier occasion clearly reveals that the entire Order-in-Appeal passed by the Commissioner (Appeals) was set aside and the matter was remanded back to the original adjudicating authority to adjudicate on the point of limitation as well as availability of credit for the period prior to 01.04.2011 apart from examination of documents like filing of return, verification of entries in the CENVAT Credit accounts etc. This being facts on record observation of the Commissioner (Appeals), while confirming the rejection of refund order passed by the adjudicating authority, to the extent that Appellant had sought for refund by filing refund application dated 04.07.2018 on the basis of Order-in-Appeal dated 29.05.2017 that was set aside by this Tribunal on 05.12.2017 is not maintainable, appears to be rational and proper. Appeal dismissed.
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CST, VAT & Sales Tax
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2022 (11) TMI 1274
Refund of the excess Central Sales Tax collected by IOCL and remitted to the State of West Bengal - production of Form C declarations - disallowance of claim for concessional rate of tax - whether the writ petitioner has locus standi to claim refund of the excess tax collected directly from the state of West Bengal and whether can be stated to be a person aggrieved over that portion of the assessment order of IOCL (2017-18), rejecting the Form C declarations filed by the writ petitioner on the grounds that IOCL have not filed revised return, not amended the invoices and not issued credit notes? - applicability of doctrine of unjust enrichment - if refund is ordered should it carry interest? - whether the State of West Bengal can claim for adjustment of the excess tax collected are to be dealt with? HELD THAT:- The reasons for refusing to grant concessional rate of tax is on the ground that the IOCL has not revised their returns, they have not amended the invoices and not issued credit notes to the writ petitioner. Therefore, it is to be seen that whether there is a necessity for IOCL to file a revised return so as to enable the assessing officer to take note of the Form C declaration and levy concessional rate of tax. A combined and conjoint reading of Section 8(4) of the CST Act and the proviso to Rule 12(7) of the CST rules shows that the necessity to file revised return does not arise. In Radio and Electricals Limited [ 1966 (4) TMI 59 - SUPREME COURT ], the Hon ble Supreme Court held that though the tax under the Act is levied primarily from the seller; the burden is ultimately passed on to the consumer of goods because it enters into price paid by them. The Parliament with a view to reduce the burden on the consumer arising out of the multiple taxation as provided in respect of sales of declared goods which have special importance in interstate trade or commerce and other classes of goods which was purchased at an intermediate stage in the stream of trade or commerce prescribed low rates of tax when transactions take place in the course of interstate trade or commerce. It was further held that the seller can have in these transactions no control over the purchaser and he has to rely upon the representation made to him, and he must satisfy himself that the purchaser is a registered dealer and the goods purchased are specified in the certificate and his duty extends no further. When Form C declarations are filed beyond the time prescribed the prescribed authority is empowered to accept such forms on being satisfied that the dealer was prevented by sufficient cause for not filing the forms within the time prescribed - In the instant case, the appellants/state have not raised any such contention that the dealer has not shown sufficient cause for having not been able to produce the form C declaration along with their returns or within the time prescribed. Thus, it goes without saying that the appellants are aware of the legal position as time limit prescribed for filing the form C declaration was directory as the statute empowered the prescribed authority to accept the declarations even after the expiry of the time prescribed. The underlying principle behind this interpretation is Article 265 of the Constitution of India. Whether the decisions which was referred to by the learned Advocate General more particularly the decision in George Oakes [ 1961 (4) TMI 78 - SUPREME COURT ] and Central Wines could be applied to the facts and circumstances of the case on hand? - HELD THAT:- George Oakes (Private) Limited where dealers in motor cars, spare parts and accessories, for the years 1951-1952 and 1952-1953, they submitted their return and claimed exemption from tax with regard to the certain amount realized on transactions of sales which the appellant therein contended as interstate sales and hence exempt from tax under Article 286 of the Constitution as it stood at the relevant time. The assessing officer not only rejected the claim for exemption but added to the turn over certain amounts which the appellant had collected by way of tax - In Paragraph 12 of the decision, the Hon ble Supreme Court while rejecting the argument with regard to the validity of the statute observed that either the Principle Act or the impugned Act (Madras Act 17 of 1954) proceeds on any immutable distinction between sale price and tax as contended by the appellant. It was further pointed out that the Principle Act does not contain any separate definition of sale price and after referring to the definition of sale and turn over, it was held that there is nothing in those provisions which would indicate that when the dealer collects any amount by way of tax that cannot be part of the sale price and so far as the purchasing dealer is concerned, he pays for the goods what is sellers demand namely price even though it may include tax and therefore there is no reason why the whole amount paid to the seller by the purchaser should not be treated as the consideration for the sale and included in the turn over. Further the Hon ble Supreme Court pointed out that when the seller passes on the tax and the buyer agrees to pay sales tax in addition to the price, the tax is really part of the entire consideration and the distinction between the two amounts tax and price loses all significance. Firstly, the decision cannot be applied to the facts of the case on hand as in the said decision, the Hon ble Supreme Court was considering the constitutional validity of statute which did not contain a definition for sale price . Secondly, in paragraph 14, the observation made by the Hon ble Supreme Court that distinction between the two amounts, tax and price loses significance is from the point of view of legislative competence. Therefore, the decision in George Oakes cannot be made applicable to the case on hand. The writ petitioner is entitled to the concession rate of tax as they have fulfilled the conditions in Section 8 of the Central Sales Tax Act, 1956 and the Form C declarations having been verified and found to be in order by the concerned authority of the State of West Bengal - Refund cannot be denied to the writ petitioners by the State of West Bengal disregarding the fact that excess tax was paid under compelling circumstances namely non-issuance of form C declarations - the writ petitioner can claim refund directly from the appellants/State of West Bengal having borne the burden of tax which have been collected from the writ petitioner and deposited by IOCL with the Exchequer of the State of West Bengal - The State of West Bengal/ appellants are unjustified in refusing to refund the excess tax as it had been allowing concessional rate to the writ petitioners before and after the disputed period. The circular issued by the Union of India dated 01.11.2018 is binding on the appellants/State of West Bengal as they being the agent of the Central Government for levy and collection of Central Sales Tax and non-refunding of the excess tax collected is contrary to the instruction dated 01.11.2018. The order and directions issued by the learned Single Bench stands affirmed and the appellants/State of West Bengal is directed to effect the refund of the excess tax collected directly to the writ petitioner within 45 days from the date of receipt of the server copy of this order together with interest at the statutory rate as stipulated under the WBST Act, from 01.07.2020 that is the day after the date on which the assessment order in the case of IOCL was passed that is 30.06.2020 till the date on which refund is effected. If there is any discrepancy in the date, it is clarified that interest shall be payable from the next day after the date of the assessment order till the date of payment.
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2022 (11) TMI 1273
Recovery of arrears of tax from the ex-directors - Attachment of property belonging to the petitioner - legality of the notice - violation of principles of natural justice - HELD THAT:- A reading of Section 16B of Revenue Recovery Act, 1864 indicates that the liability of the Directors of a private company would arise only when the a private company is wound-up and any tax assessed on the company under the Act for any period before or in the course of or after its liquidation cannot be recovered. Thus, every person who was a Director of the private company at any time during the period for which the tax is due shall be jointly and severally liable for payment of said tax. Further the provisions of Section 16B of the Act does not provide for recovery from the Director automatically in the event of failure to recover from the private limited company. On the other hand the provision specifies that if the Director proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company, no recovery can be made from the said Director. Since the 2nd respondent-Company is not wound-up, no recourse can be made to recover the dues from the Director, who either continues to be on Board or ceases to be Director of the Company, inasmuch as the respondents-authorities can take steps to recover such arrears from the 2nd respondent-Company - Since the petitioner in the present case is an Ex-Director of the 2 nd respondent-Company, which admittedly is not wound-up, the impugned notice of attachment for recovery of arrears of tax cannot be sustained. The impugned notice of attachment for recovery of arrears of tax is set aside - Petition allowed.
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2022 (11) TMI 1272
Re-assessment - Time limitation for notices issued - period of limitation enhanced from 5 years to 6 years - Prospective or retrospective amendment - whether the notices issued are within the period of limitation stipulated by the amended provision and also before a right accrued in favour of the dealer? - HELD THAT:- When the provision is amended enhancing the period of limitation from 5 years to 6 years, the issuance of notice is well within the jurisdiction, and no exception could be taken. The argument of the respondents is accepted by this Court then, the amendment made through Finance Act 11/2017 is made more prospective than what is intended by the Legislature and the judgments of this Court. The subtle attempt made to sustain the judgments under appeal does not find favour with us for the above reasons. Hence, the judgments under appeal are set aside. The dealers/respondents herein are given liberty to file appeal before the Appellate Authority by enclosing a copy of the judgment within four weeks from today. The delay occasioned during the pendency of the appeal and the writ petition is excused. Appeals are allowed.
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2022 (11) TMI 1271
Recovery of arrears of tax due from a private limited companyfrom the Directors of the company - Section 27 of the Andhra Pradesh Revenue Recovery Act, 1864 - HELD THAT:- This Court had categorically held that tax due from a private limited company under the APGST Act can be recovered from the Directors of the company, only in terms of Section 16-B of the Act, i.e. when the company is in liquidation and not other wise. The stand of the respondent that since the 3rd respondent has been amalgamated with the 4th respondent, the same is to be deemed to be under winding up, does not appeal this Court for acceptance for the reasons that the amalgamation is undertaken, under Section 397 of the Companies Act, 1956, whereunder there would be transfer of assets and liabilities of the company being taken over by the other company with which it is being amalgamated and thus, it cannot be considered as deemed to be wound up. The procedure for winding up of a company is prescribed under Part II of Chapter XX of the Companies Act, and operates in a different field and cannot be considered same as in the case of amalgamation. In the light of the settled position of law as enunciated by this Court in MADDI SWARNA VERSUS COMMERCIAL TAX OFFICER, CHILAKALURIPET AND ANOTHER [ 2001 (6) TMI 795 - ANDHRA PRADESH HIGH COURT] , this Court is of the view that the action of the 1st respondent in issuing the impugned notice of attachment in Form 5 dt.22.08.2007 under section 27 of the Act of 1864, cannot be countenanced. Petition allowed.
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2022 (11) TMI 1270
Eligibility for compounded rate of tax - works contractor or not - Assessment Year 2012-13 - HELD THAT:- The findings recorded in paragraph nos.10 and 15 are not consistent, and also contradictory. The labour charges whether are part of labour charges employed for bus body building or received independently by the dealer has, for the purposes stated above, not been spelt out. Since these details are necessary for appreciating the findings recorded in this behalf, we are pursuaded to accept the alternative submission made by Mr Abdul Azees that the matter be remitted to the Tribunal for consideration and disposal afresh, only to the extent whether labour charges are entitled to be excluded from the turnover of dealer or not. The findings of the Tribunal to the extent recorded in paragraph 15 are set aside. Matter remitted to Tribunal for consideration and disposal afresh - revision allowed.
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9911796707
