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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter December 11, 2020 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles NON-COMMENSURATE BENEFIT OF TAX RATE REDUCTION – A FIT CASE FOR PROFITEERING New URL for NSE - NEAPS Filing News RBI releases Draft Circular on Declaration of Dividend by NBFCs Notifications GST - States 39/2020-GST - dated 19-10-2020 - Assam SGST Seeks to prescribe return in FORM GSTR-3B of CGST Rules, 2017 along with due dates of furnishing the said form for October, 2020 to March, 2021. 38/2020-GST - dated 19-10-2020 - Assam SGST Seeks to prescribe the due date for furnishing FORM GSTR-1 by such class of registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year, for each of the months from October, 2020 to March, 2021. F-A3-93-2017- 1 -V (70) - dated 5-12-2020 - Madhya Pradesh SGST Amendment in Notification No. F-A-3-93-2017-1 -V (162) dt. 29 December 2017 F-A3-33-2020-1 -V (66) - dated 5-12-2020 - Madhya Pradesh SGST Appoints the 1st day of January, 2020 as the date on which the provisions of Sections 2 to 21 , expect Section 2, Section 7, Section 10 and Sections 13 to 20 of the Madhya Pradesh Goods and Services Tax (Second Amendment) Act, 2019, shall come into force F-A3-32-2020- 1 -V (65) - dated 5-12-2020 - Madhya Pradesh SGST Extend period to pass order under Section 54(7) of the Act F-A3-31-2020- 1 -V (67) - dated 5-12-2020 - Madhya Pradesh SGST Extend due date of compliance which falls during the period from “20.03.2020 to 29.06.2020” till 30.06.2020 and extend validity of e-way bills under section 168A of the Act. F- A-3-43-2020-1-V (71) - dated 5-12-2020 - Madhya Pradesh SGST Seeks to grant waiver/reduction in late fee for not furnishing FORM GSTR-10, subject to the condition that the returns are filled between 22.09.2020 to 31.12.2020 F- A-3-40-2020-1-V (69) - dated 5-12-2020 - Madhya Pradesh SGST Appoints the 1st day of September, 2020, as the date on which the provisions of Sections 10 of the Madhya Pradesh Goods and Services Tax (Second Amendment) Act, 2019, shall come into force F- A-3-34-2020- 1 -V (68) - dated 5-12-2020 - Madhya Pradesh SGST Appoints the 1st day of September, 2019, as the date on which the provisions of Sections 13 of the Madhya Pradesh Goods and Services Tax (Second Amendment) Act, 2019, shall come into force 43/2020 - State Tax - dated 7-12-2020 - Maharashtra SGST Seeks to bring into force Section 11 of MGST (Second Amendment) Act, 2020 15/2020–C.T./GST - dated 2-12-2020 - West Bengal SGST Seeks to extend the due date for furnishing of FORM ITC-04 for the period July- September 2020 till 30th November, 2020 14/2020–C.T./GST - dated 2-12-2020 - West Bengal SGST Seeks to rescind Notification 11/2020-C.T./GST dated 04.11.2020. Highlights / Catch Notes GST Rejection of Refund claim - Inverted duty structure - Trading of goods - Purchase @18% of GST and supply @5% to Public Funded Research Institutes - The goods procured are attracting the same rate as the appellant has also supplied the goods at the rate of 18% GST to other purchaser without availing the benefit of notification, therefore such goods can not be treated as Inputs and does not qualify the criteria prescribed under Inverted rated duty structure as provided under Section 54 (3) (ii) of CGST Act, 2017. - Commissioner Visit to Get Source Income Tax Late fees payable under section 234E - Amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E - intimation issued by the Assessing Officer under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. - AT Visit to Get Source Unexplained cash credits - this income offered us. 44AD of the Act is to be accepted. - Now, there is no necessity of maintaining books of accounts and production of bills and vouchers Accordingly, we delete the addition - AT Visit to Get Source Accrual of income - deferred revenue income - receipt has finally been suffered to the tax but in the subsequent assessment year - if any addition is sustained in the year under consideration then there has to be deletion of the corresponding amount of the income shown by the assessee in the subsequent assessment years otherwise it would lead to double addition to the total income of the assessee which is not desirable under the provisions of law. - AT Visit to Get Source Unexplained cash credit u/s 68 - there was no actual transaction of cash credit in the books of accounts which were based on fake entries having no substance. - Question of identity, creditworthiness of the parties and genuineness of transaction arises where there is a real transaction, then the assessee is under the obligation to discharge the onus imposed under Section 68 of the Act. Once it has been established beyond doubt that impugned cash credit entries represents the bogus/fake entries after manipulating the accounts, then in such a situation, in our considered opinion the question of discharging the onus as imposed under Section 68 of the Act does not arise. - It is well-settled that an obligation gets discharged due to impossibility of performance. - AT Visit to Get Source Unaccounted income - TDS deducted by the Principal - it appears that the assessee has included the amount received from Apollo Hospital group in his return of income filed for the relevant assessment year including the impugned assessment year. - Making ad-hoc addition on the basis of information received from third party source on the pretext that assessee has received consultation charges in cash amounts to double taxation, which is incorrect. But, the fact remains that relevant documents including bank statement and form 26AS were not produced before the AO or even before learned CIT(A), because the assessee neither appeared before the authorities below nor filed any details. - Matter restored back - AT Visit to Get Source Exemption u/s 11 - proviso to section 2(15) is invoked - by incurring such expenditure by way of grants to the district cricket association, the assessee society is contributing to creation of necessary infrastructure and purchase of equipments however such infrastructure and equipments results in creation/enhancement of existing/new infrastructure or acquisition of assets in the hands of the district cricket association, however as far as the assessee society is concerned, such an expenditure doesn’t result in creation of any asset or advantage of enduring benefit in the hands of the assessee society and therefore, the same cannot be termed as capital expenditure. - AT Visit to Get Source Reopening of assessment u/s 147 - In case incorrect, wrong and non-existing reasons are recorded by the A.O. for reopening of the assessment and A.O. failed to verify the information received due to non application of mind to information, reopening of the assessment would be unjustified and is liable to be quashed. - Reopening of the assessment is illegal and bad in Law and is liable to be quashed. - AT Visit to Get Source LTCG - Deduction u/s 54F - The physical structuring of the new residential house, whether it is lateral or vertical, cannot come in the way of considering the building as a residential house. The fact that the residential house consists of several independent units cannot be permitted to act as an impediment to the allowance of the deduction u/s 54/54F. It is neither expressly nor by necessary implication prohibited. - AT Visit to Get Source Penalty u/s 271D and 271E - Accepting loans by way of cash in excess of the prescribed limit - If the assessee is able to establish that all the cash transactions are arising out of the bank withdrawals and recorded in the assesse’s books of accounts within a reasonable span of time from the date of cash withdrawals from the respective bank accounts and further if all the entities are pertaining to sister concerns (arising out of the same group of ownership), then the provisions of section 269SS and 269T will not be applicable - AT Visit to Get Source Addition of contingent liability, which do not constitute expenditure and not allowable u/s 37 (1) - The assessee Board does not have any domain or control on this issue. It is the Ministry of Petroleum & Natural Gases which advises the Board about the payment of royalty to the respective State Governments which is evident from the letters produced by the Assessee Board during the Assessment Proceedings and the appellate proceedings. Thus, the CIT(A) has rightly deleted the said addition - AT Visit to Get Source Customs Entitlement to DFIA benefit - import of Inshell Walnut covered under the description of Fruit/Food Flavour/Dietary Fibre - there is no dispute that inshell walnut is correctly covered under the description of goods i.e, fruit/flavour/dietary fibre as mentioned in the annexures annexed along with DFIA Scheme as well as specified in SION. - The imported goods “In shell Walnuts” are not specified under Sensitive items under Para 4.30 of FTP- (2015-2020) of DFIA’s. Therefore the exporter is not required to give a declaration of the technical specification, quality and characteristics of inputs used in the resultant product. - AT Visit to Get Source Entitlement to DFIA benefits - import of “Wheat Gluten” against the input product description “Wheat Flour” - It cannot be said that if the specific name of input in the present case ‘Wheat Gluten’ is not mentioned in the licence or in the export shipping bill, benefit of DFIA cannot be extended particularly when the broad description as wheat flour is specified in SION as well as in the annexure to the DFIA licence - AT Visit to Get Source Unconditional clearance of imported goods - It is glaring to the naked eye that the respondents have committed two illegalities. First illegality is they have detained the goods without affecting seizure. Secondly, they have exceeded the time limit for detention of the goods even if it is construed to be a case of seizure. In such circumstances, the impugned action cannot at all be justified - Respondents are directed to forthwith release the imported goods of the petitioner - HC Visit to Get Source Indian Laws Dishonor of Cheque - legally enforceable debt or not - the accused discharged his burden under Sections 118 and 139 of the N.I.Act to prove that the cheque had not been issued towards a legally enforceable debt. Thus, the trial court as well as the appellate court wrongly appreciated the evidence on record. - The conviction and sentence imposed against the revision petitioner/accused by the trial court as well as the appellate court are set aside - HC Visit to Get Source IBC Initiation of CIRP - Default on the part of Corporate Debtor in making repayment of its dues - The Adjudicating Authority has landed in error in holding that there was no ‘debt’ as claimed by the Appellant and there was ‘deficiency in service’ provided by the Appellant. The findings recorded by the Adjudicating Authority are grossly erroneous and same cannot be supported. - AT Visit to Get Source Service Tax SVLDRS - rejected on the ground of ineligibility - quantification of service tax liability on or before 30.06.2019 - It is evident that the word ‘quantified’ under the scheme would mean a written communication of the amount of duty payable which will include a letter intimating duty demand or duty liability admitted by the person concerned during enquiry, investigation or audit or audit report and not necessarily the amount crystalized following adjudication. Thus, petitioner was eligible to file the declaration in terms of the scheme under the category of enquiry or investigation or audit as its service tax dues stood quantified before 30.06.2019. - HC Visit to Get Source Refund of Service Tax - Service Tax paid for construction of residential complex - because of availability of 13 floors, learned Commissioner (Appeals) had failed to reach at a conclusion that the complex had less than 12 residential units to admit refund as the said was not taxable. However, going by the Architect certificate at annexure 3, floor plan referred above and the full occupation certificate issued by the Executive Engineer (building proposal) of the Municipal Corporation of Greater Mumbai dated 02.08.2013 would clearly indicate that the complex comprised of 9 residential units, taking each duplex to be counted as one unit. Therefore, the appellant is entitled to get the refund sought for. - AT Visit to Get Source Central Excise Rejection of SVLDRS-1 application - The petitioner/declarant could avail benefit of the “Sabka Vishwas Scheme” only in accordance with the provisions of the Scheme. Section 125(1)(h) of the Act 2019/“Sabka Vishwas Scheme” has specifically excluded persons seeking to make declarations with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944. Undisputedly, S.K.O. is an excisable goods set forth in the Fourth Schedule to the Act, 1944. - HC Visit to Get Source VAT Concessional benefit of tax / CST - purchase of High Speed Diesel - The Appellant State and the Revenue Authorities are directed not to restrict the use of 'C' Forms for the inter-State purchases of six commodities by the Respondent/Assessees and other registered Dealers at concessional rate of tax and they are further directed to permit Online downloading of such Declaration in 'C' Forms to such Dealers. The Circular letter of the Commissioner dated 31.5.2018 stands quashed and set aside - HC Visit to Get Source Case Laws: GST 2020 (12) TMI 361 Detention of goods - transport of beverages - classification disputes - Section 129 of the GST Act - HELD THAT:- Taking note of the reason cited in Exts.P1 and P1(a) order and notice respectively and finding that what has been raised is a classification dispute which does not come within the ambit of the power conferred on the detaining authority under Section 129 of the GST Act, I quash Exts.P1 and P1(a) and direct the respondent to release the goods and the vehicle covered by Exts.P1 and P1(a) to the petitioner on the petitioner producing a copy of this judgment before the respondent. Petition disposed off. 2020 (12) TMI 360 Direction to receive the applications from the publishers/members of the Petitioner society without insisting on production of GST - Section 23 of the Central Goods and Services Tax Act, 2017 read with Schedule I Entry 119 to the Rates of GST on Goods - HELD THAT:- Keeping in view the submissions made and subject to the members of the petitioner giving an undertaking/affidavit to the effect that they are not liable to pay GST on reverse charge basis as provided under Section 9(3) of the Act, the tender/application of the members of the petitioner in response to the advertisement published on 20.11.2020 shall not be rejected by the respondent no. 2 only on the ground of their inability to give the GST registration number. List on 17th February, 2021 alongwith the main petition. 2020 (12) TMI 359 Validity of proviso to Section 16(4) of the Central Goods And Services Act, 2017 - petitioner/applicant states that though the ground to challenge the proviso to Section 16(4) had been pleaded by the petitioner in the present writ petition, however, inadvertently, the prayer challenging the validity of proviso to Section 16(4) was not incorporated in the Prayer Clause (A) of the petition - HELD THAT:- Issue notice. Since the amendment is formal in nature, the same is allowed and the amended writ petition is taken on record - present application stands allowed. 2020 (12) TMI 358 Detention of goods - no opportunity has been granted to the petitioner before concluding the proceedings - payment of tax and penalty under protest - Section 129 of GST Act, 2017 - HELD THAT:- Matter be listed after 5 weeks. 2020 (12) TMI 357 Principles of natural justice - impugned Order of Assessment cum Penalty cum Interest passed by the First Respondent without affording reasonable opportunity to the Petitioner - HELD THAT:- The petitioner received the notice for final hearing, dated 06.11.2019, by way of a registered post on 12.11.2019. Immediately thereafter, he contacted his Tax Consultant, who was at Hyderabad. The Tax Consultant informed him that it is not possible for him to come over from Hyderabad to Proddatur on a day s notice, as he has to adjust his work. So he himself prepared an adjournment letter informing the facts and sought 15 days time for attending the hearing. The petitioner went to the office of respondent No.1 on 13.11.2019 in the afternoon but the officer was not present. He stayed there and met the officer before the closing hours, who informed that the impugned order has already been passed. The argument of the learned counsel for the petitioner that deciding the matter without hearing the petitioner amounts to violation of principles of natural justice, cannot be brushed aside. Even assuming that the notice was sent by e-mail, we feel that the petitioner should have been given some more time so as to enable him to engage a counsel, who can present his case well before the concerned authority, more so, having regard to the background in which he is placed. The matter is remanded back to the authority with a direction that the same shall be decided on or before 15.12.2020 after hearing the petitioner - Petition allowed by way of remand. 2020 (12) TMI 356 Rejection of Refund claim - Inverted duty structure - Trading of goods - Purchase @18% of GST and supply @5% to Public Funded Research Institutes - appellant has procured the Scientific and Technical Instruments, Apparatus, Equipment etc., from various suppliers on payment of 18% tax and supplies the same as such even without change of its packing to various research institutes on the payment of 5% tax by availing exemption N/N. 47/2017-IGST(rate) dated 14.11.2017 and 45/2017-CGST(rate) dated 14.11.2017 and part supplies were also made to other purchasers on full rate of tax i.e. 18% - whether the goods on which credit is accumulated and refund is claimed can be treated, as 'Input and falls under the purview of inverted duty structure or otherwise'? HELD THAT:- The appellant is engaged in the trading activities and supplied the goods i.e. Scientific and Technical Instruments, Apparatus, Equipment etc., as such to Public Funded Research Institutes at 5% rate of GST by availing benefit under Notification No.47/2017-IGST(rate) dated 14.11.2017 and 45/2017-CGST(rate) dated 14.11.2017. The same goods were also supplied by the appellant at the rate of 18% GST to other purchasers. The appellant also did not carryout any further processes i.e. checking of goods, testing, inspection etc., and supplied the goods as such, it is also found that no value addition has been done by the appellant. The goods procured are attracting the same rate as the appellant has also supplied the goods at the rate of 18% GST to other purchaser without availing the benefit of notification, therefore such goods can not be treated as Inputs and does not qualify the criteria prescribed under Inverted rated duty structure as provided under Section 54 (3) (ii) of CGST Act, 2017. Appeal dismissed. Income Tax 2020 (12) TMI 355 Stay of demand - alternative effective remedy by filing a review petition - petitioner has been directed to deposit 20% of the outstanding demand as a condition to stay further demand - HELD THAT:- A perusal of the aforesaid Office Memorandums reveal that the petitioner has an alternative effective remedy by filing a review petition before the jurisdictional Administrative Principal Commissioner of Income Tax / Commissioner of Income Tax under para 4(C) of the Office Memorandum dated 29th February, 2016. Present writ petition and pending applications are disposed of with liberty to the petitioner to avail of the alternative effective remedy. 2020 (12) TMI 354 Proportionate claim u/s 80IB(10) - as per revenue assessee had built 12 pent houses each exceeding 1,500 sq.ft. as a part and parcel of the residential project, thus, violating the basic condition of affordable housing project - HELD THAT:- The substantial question of law framed in this appeal has already been answered against revenue by this Court [ 2020 (9) TMI 1137 - KARNATAKA HIGH COURT ] The aforesaid aspect of the matter could not be disputed by the learned counsel for the revenue. - Decided in favour of assessee. 2020 (12) TMI 353 Disallowance u/s 14A - contention of the assessee before the Assessing Officer was there was no expenditure incurred in relation to income which does not form part of total income, the amount of expenditure in relation to such income shall be worked out in accordance to sub-Rule (2) - HELD THAT:- In order to attract the applicability of section 14A of the Act, an assessee has to incur expenditure. In the present case the income pertains to income on dividend, which by no stretch of imagination can be treated to be an expenditure to attract the provisions of section 14A - Hon ble Supreme Court in case of Maxopp Investments Ltd.[ 2018 (3) TMI 805 - SUPREME COURT ] and Walfort Share and Stock Brokers (P.) Ltd. [ 2010 (7) TMI 15 - SUPREME COURT ] reiterated the same. CIT(A) was rightly deleted this addition as there is no exempt income in this particular assessment year. - Decided against revenue. Addition on account of Royalty payment to Assam Govt. - contravention of the accounting standards with regard to prior period expense - DR submitted that the assessee has used the mix accounting system which categorically prohibits the allowability of prior period expenses unless it is proved that the expenses and the liability thereof is crystallized during the relevant year under consideration - CIT-A deleted the addition - HELD THAT:- CIT(A) has given a categorical finding that royalty payment is an additional payment and the same was not disputed by the Revenue. Once the royalty expenses of ₹ 14.95 crores have been crystallized in the present Assessment Year, the genuineness of the same is not questioned by the Revenue authorities. Hence, there is no need to interfere the findings of the CIT(A). Ground of the Revenue s appeal is dismissed. Addition of contingent liability, which do not constitute expenditure and not allowable u/s 37 (1) - DR submitted that in the present case the expenses on account of royalty payable to Government of Arunachal Pradesh Gujarat has been debited on estimated basis as assessee is not able to furnish any documentary evidence or explain basis as to how the expenditure on royalty has been crystallized - CIT-A deleted the addition - HELD THAT:- CIT(A) has given a categorical finding that the Assessee Board is under an obligation of payment of royalty to the respective State Governments wherein oil wells are located. The amount payable on account of royalty is determined by the Government with regard to the rate, quantity of crude oil extracted etc. The assessee Board does not have any domain or control on this issue. It is the Ministry of Petroleum Natural Gases which advises the Board about the payment of royalty to the respective State Governments which is evident from the letters produced by the Assessee Board during the Assessment Proceedings and the appellate proceedings. Thus, the CIT(A) has rightly deleted the said addition. - Decided against revenue. 2020 (12) TMI 352 Penalty u/s 271(1)(c) - Defective notice - Non specification of charge - HELD THAT:- In the assessment order the AO has recorded satisfaction for furnishing inaccurate particulars of income. It is also an undisputed fact that the penalty has been levied for concealment of income. Therefore, it cannot be said that the AO has made it clear to the assessee under which limb he is going to impose the penalty. Penalty levied by the AO u/s. 271 (1) (c) of the Act is bad in law and deserves to be deleted. We order accordingly. Assessee claimed depreciation inadvertently as the flats were shown in the block of assets in the balance sheet - Assessee has claimed depreciation on flats. It is equally true that when the returned income of the assessee is in crores a claim of paltry sum of few lacs would do no tax benefit to the assessee. In our considered opinion the claim is definitely a human error and merely the claim was not allowable the same cannot lead to the levy of penalty u/s. 271 (1) (c) of the Act as held by the Hon ble Supreme Court in the case of Reliance Petro Projects Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT .] Considering from this angle also we do not find impugned appeals fit for levy of penalty u/s. 271 (1) (c) of the Act. We accordingly direct the AO to delete the penalty. Appeal of assessee allowed. 2020 (12) TMI 351 Penalty u/s 271D and 271E - Default under provisions of section 269SS and 269T - Accepting loans by way of cash in excess of the prescribed limit - HELD THAT:- If the assessee is able to establish that all the cash transactions are arising out of the bank withdrawals and recorded in the assesse s books of accounts within a reasonable span of time from the date of cash withdrawals from the respective bank accounts and further if all the entities are pertaining to sister concerns (arising out of the same group of ownership), then the provisions of section 269SS and 269T will not be applicable and accordingly the penal provisions of section 271D and 271E cannot be invoked. Therefore, in the interest of justice, we hereby remit the matter back to the file of the Ld. AO to examine accordingly. - Decided in favour of assessee. 2020 (12) TMI 350 Assessment u/s 153A - Whether incriminating material found during the course of search on the assessee's premises? - addition of bogus exempt long term capital gains on sale of shares - HELD THAT:-Addition has been made based upon the search carried out at the premises of Shirish C. Shah and documents found during such search - such documents as relied upon by the Ld. AO found from the premises of Shri Shah and not from the assessee are the dumb documents and addition on such basis in the garb of Section 153A is not sustainable in the eye of law. Loose papers or statement recorded during the course of search/survey at Shri Shah as only relied upon; no reference of any single incriminating material found during the course of search at appellant s premises has been made by the Ld. AO while making addition under Section 153A of the Act. All along and all through the Ld. CIT(A) considered the relevant judgments applicable to the instant case as discussed hereinabove and rejected the decision made by the Ld. AO in treating the exempt long term capital gain as undisclosed income not sustainable under Section 153A of the Act and finally deleted the addition made by the AO based upon no incriminating documents found during the course of search at appellant s premises without any ambiguity so as to warrant interference. - Decided in favour of assessee. 2020 (12) TMI 349 Revision u/s.263 - provision for bad and doubtful debts u/s. 36(1)(viia) - PCIT had held that the assessee had claimed excess bad debts u/s.36(1)(vii) without reducing the opening credit balance (that is the amount of deduction allowed u/s.36(1)(viia) in the A.Y.2014-15) and the same was wrongly allowed by the Assessing Officer - HELD THAT:- As decided in own case [ 2020 (10) TMI 1011 - ITAT MUMBAI ] assessee has filed detailed submissions before the Assessing Officer and the Assessing Officer has considered the submissions even though he has not discussed it in his order under Section 143(3) of the Act. The material submitted before us clearly indicate that assessee has made elaborate submissions on this issue and the Assessing Officer has satisfied himself that assessee is eligible to claim deduction under Section 36(1)(vii) and 36(1)(viia) of the Act and, therefore, in our considered view, ld. PCIT cannot form another view on the same issue in which the Assessing Officer has already satisfied himself and passed an order which clearly indicates that the Assessing Officer has verified and investigated the matter in detail. Therefore, even in this issue, the provisions of Section 263 of the Act cannot be invoked - Decided in favour of assessee. 2020 (12) TMI 348 Deduction u/s 54F - except for making submission that the construction of residential building started in the month of June,2014, the assessee did not furnish any proof in support of this claim such as vouchers and bills for purchase of construction materials, payment of labour charges, house construction account - HELD THAT:- One may build a house consisting of four bedrooms (all in same or in different floors) or in such a manner than an independent residential unit consisting of two or three bedrooms may be carved out with an independent entrance so that it can be let out. He may even arrange for his children and family to stay there, so that they are nearby, an arrangement which can be mutually supportive. He may construct his residence in such a manner that in case of a future need he may be able to dispose of a part thereof as an independent house. There may be several such considerations for a person while constructing a residential house. The physical structuring of the new residential house, whether it is lateral or vertical, cannot come in the way of considering the building as a residential house. The fact that the residential house consists of several independent units cannot be permitted to act as an impediment to the allowance of the deduction u/s 54/54F. It is neither expressly nor by necessary implication prohibited. Assessee in principle, is entitled for deduction under section 54F in respect of investment made in impugned property subject to production of other relevant evidence by the assessee before the A.O. In the present case, the assessee has not filed relevant evidences for incurring the cost on new residential house before the A.O. Hence, we inclined to restore the issue to the file of A.O. for quantification purpose the deduction u/s 54F of the Act. The assessee is directed to produce all relevant evidences in support of the claim of deduction u/s 54F of the Act. Appeal of the assessee is allowed for statistical purposes. 2020 (12) TMI 347 Penalty levied u/s. 271(1)(c) - Defective notice - non specification of charge - HELD THAT:- In the penalty notice inappropriate words have not been struck off. Even the last line of the said notice only speaks of Section 271 and does not even mention of section 271(1)(c) - here that the penalty order is based on furnishing of inaccurate particulars but the notice is not specifying exactly on which limb the penalty u/s 271(1)(c) has been initiated. From the notice dated 6.3.2014, it can be seen that the Assessing Officer was not sure under which limb of provisions of Section 271 the assessee is liable for penalty. Therefore, the issue is squarely covered by the decision in case of M/s SSA' Emerald Meadows,[ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] and Manjunatha Cotton Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] wherein, it was held that notice u/s.274 of the Act specifically states as to whether penalty is being proposed to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of income. As inappropriate words in the penalty notice have not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the ld CIT(A) was not justified in confirming the penalty levied u/s 271(1)(c) - Decided in favour of assessee. 2020 (12) TMI 346 Rectification u/s.254 - deduction u/s.80-IA admissibility - reference made by the Tribunal does not relate to the issue in dispute, rather it is with respect to subsidy on Sales Tax benefit which is altogether a different issue - HELD THAT:- The power of rectification u/s.254(2) can be exercised only when the mistake which is sought to be rectified is an obvious and patent mistake which is apparent from the record, and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions. If we examine the records, then it will reveal that while adjudicating the issue, the Tribunal made reliance upon the finding which is not on the issue whether the deduction u/s.80-IA is admissible to the assessee or not. The reliance has been placed on an issue wherein benefit of subsidy on Sales Tax component was given. Therefore, we are of the view that an apparent error has crept in the order of the tribunal, it required rectification. Hence, we allow both the applications and recall the order of the Tribunal for readjudication on merit. Accordingly, the Registry is directed to restore the appeal to its original number and fix the same for fresh hearing in due course under the intimation to both the parties. As far as application filed by the Revenue is concerned, it is also identical pointing out same mistake. Therefore, this Miscellaneous Application is also treated as allowed. 2020 (12) TMI 345 Reopening of assessment u/s 147 - wrong, incorrect and non-existing facts - addition on account of cash deposit and addition of income from MCX Business - HELD THAT:- Neither assessee has made any investment for purchase of mutual fund in assessment year under appeal nor the A.O. has made any such addition in the assessment year. Therefore, such information received by A.O. was totally wrong, incorrect and non-existing and thus the fact mentioned in the reasons recorded for reopening of the assessment as regards investment made in purchase of mutual fund is wrong, non-existing and incorrect. A.O. has recorded wrong, incorrect and non-existing reasons for reopening of the assessment which is not permissible under Law. As regards the transaction in commodity exchange contract of ₹ 10 lakhs, Learned Counsel for the Assessee referred to para-3.3 of the assessment order in which the A.O. has made addition of ₹ 7,72,461/- on account of profit on the MCX business. A.O. has also mentioned in the same para that in the show cause notice he has mentioned such income at ₹ 11,80,571/- which is appearing at page-3 of the assessment order, but, after examination this figure was also found incorrect and A.O. has ultimately restricted the addition to ₹ 7,72,469/- i.e., for income only but no addition is made of transaction of MCX Investment. A.O. has recorded wrong, incorrect and non-existing facts in the reasons recorded for reopening of the assessment that assessee has made transaction in commodity exchange contract of ₹ 10 lakhs. A.O. in the assessment order has mentioned that assessee has made investment of ₹ 10 lakhs in purchase of mutual funds which fact is also incorrect and is contradictorily recorded in the reasons for reopening of the assessment for ₹ 2 lakhs only. A.O. in the assessment order has also recorded same statement that assessee has made contract in commodity exchange exceeding ₹ 10 lakhs which fact was ultimately found incorrect by the A.O. himself and he has made part addition as against the income mentioned in the show cause notice. In case incorrect, wrong and non-existing reasons are recorded by the A.O. for reopening of the assessment and A.O. failed to verify the information received due to non application of mind to information, reopening of the assessment would be unjustified and is liable to be quashed. Considering the totality of the facts and circumstances of the case and in the light of material on record, we are of the view that reopening of the assessment is illegal and bad in Law and is liable to be quashed. We, accordingly, set aside the Orders of the authorities below and quash the reopening of the assessment. Resultantly, all additions stand deleted. In view of the above, there is no need to decide other issues raised in the present appeal which are left with academic discussion only. Accordingly, appeal of the Assessee is allowed. 2020 (12) TMI 344 Unexplained receipt of money u/s 68 - as per AO creditworthiness and genuineness of the transaction cannot be said to have been proved - information received by AO under exchange of information provisions - assessee has got an investment from Kstart LLC, Mauritius as a contribution towards issue of 20,000 compulsorily convertible preference shares - HELD THAT:- Evidences obtained by the learned assessing officer in terms of article 26 of the Double Taxation Avoidance Convention between India and Mauritius, the annual financial statement of the investor, the background of the investor as mentioned in the financial statements, the amount of investments made by the investor in other companies across the globe, the amount of share capital introduced by the holding company of the investor, the financial operations of the investor deciphered from the financial statements of the investor, Financial and Legal Due diligence by investors, we do not find that there is an iota of doubt about the creditworthiness and genuineness of the about transaction of allotment of 20,000 compulsorily convertible redeemable shares resulting into allotment of shares worth ₹ 1, 67,50,000 from K start LLC of Mauritius. Various judicial precedents relied upon by the learned CIT A and the learned assessing officer supporting the above addition made by the learned assessing office are not applicable to the facts of this case as in this case assessee has proved identity, creditworthiness of the investor as well as the genuineness of the whole transaction - We delete the addition made u/s 68 with respect to the about transaction - Decided in favour of assessee. 2020 (12) TMI 343 Exemption u/s 11 - proviso to section 2(15) is invoked in the case of the assessee as the activities of the assessee are being run on commercial basis - assessee is a society trust registered under Rajasthan Society Trust Registration Act, 1958 and also registered under Sport Association s Registration Accreditation Act, 2005 - CIT (A) held that the registration of the assessee society u/s 12A has been restored by the Tribunal vide its order dated 09.06.2016 and it is thus entitled to claim exemption under section 11 and 12 - CIT(A) held that the activities of the assessee are charitable in nature though the same are the objects of general public utility but the primary or dominant purpose is to carrying out the general public utility and not earning the profit - HELD THAT:- It is not in dispute that the registration of the assessee society u/s 12A has been restored by the Tribunal and on appeal by the Revenue, the order so passed by the Tribunal has been affirmed by the Hon ble Rajasthan High Court. [ 2018 (8) TMI 196 - RAJASTHAN HIGH COURT] . Primary condition for availing exemption under section 11 and 12 of the Act that the assessee society should be registered u/s 12A is satisfied in the instant case. Applicability of proviso to section 2(15) for the impugned assessment year 2010-11 to the assessee society by virtue of which, can it be denied the exemption claimed u/s 11 and 12 - Assessee has given grants to various district cricket association in the nature of subsidy, grants for infrastructure development and for buying cricket equipments. We find that by incurring such expenditure by way of grants to the district cricket association, the assessee society is contributing to creation of necessary infrastructure and purchase of equipments however such infrastructure and equipments results in creation/enhancement of existing/new infrastructure or acquisition of assets in the hands of the district cricket association, however as far as the assessee society is concerned, such an expenditure doesn t result in creation of any asset or advantage of enduring benefit in the hands of the assessee society and therefore, the same cannot be termed as capital expenditure. There is no dispute that the assessee is duly registered u/s 12A of the Act and is eligible for exemption under section 11 and 12 of the Act and therefore, the said expenditure is clearly in nature of application of income as the same has a direct nexus with the objectives of the assessee society in terms of promotion of sport of cricket in the state of Rajasthan.- Decided in favour of assessee. 2020 (12) TMI 342 Unaccounted income - Consultation charges received from Apollo Hospital group, Chennai - As included in the return of income filed for relevant assessment years or which is outside the books of account as claimed by the Assessing Officer on the basis of information received from PCIT., Central Circle, Chennai - HELD THAT:- As gone through the paper book filed by the assessee and find that the assessee has entered into agreement with Apollo Hospital group, Chennai and as per which Apollo Hospital group directly collects consultancy charges from outpatients and after deducting 15% of the fees collected from patients, the balance amount has been paid to the assessee. The said payment has been made through banking channel after deducting applicable TDS under section 194J of the Act - assessee has included the amount received from Apollo Hospital group, Chennai in his return of income for the impugned assessment year and also claimed TDS deducted by the Principal in his return of income. All these records are part of the paper book filed by the assessee - it appears that the assessee has included the amount received from Apollo Hospital group in his return of income filed for the relevant assessment year including the impugned assessment year. Making ad-hoc addition on the basis of information received from third party source on the pretext that assessee has received consultation charges in cash amounts to double taxation, which is incorrect. But, the fact remains that relevant documents including bank statement and form 26AS were not produced before the AO or even before learned CIT(A), because the assessee neither appeared before the authorities below nor filed any details. There was no occasion for the lower authorities to examine the case of the assessee in light of various evidences including form 26AS filed for relevant assessment years. Therefore, the issue needs to go back to the file of the Assessing Officer for limited purpose of examining the issue with regard to amount received from Apollo Hospital group, Chennai, to ascertain the facts whether the said amount is part of income declared by the assessee for the relevant assessment year - Decided in favour of assessee for statistical purposes. 2020 (12) TMI 341 Deduction claimed u/s. 80P - assessee has not filed its return of income u/s.139(1) of u/s.139(4) of the Act or in response to notice u/s.148 within the prescribed time allowed hence in view of Specific provisions of Section 80A(5) deduction claimed u/s.80P(2)(a)(i) cannot be allowed - HELD THAT:- What is required to be seen is whether the assessee has made a claim in the return of income filed for the relevant year or not, even though such return is not filed within due date. In this case, the assessee although not filed its return of income for the impugned assessment year u/s.139 of the Act but such return of income has been filed in response to the notice issued u/s.148 of the Act and in the said return of income the assessee has made a claim for deduction u/s.80P(2)(a)(i) - no merit in the arguments taken by the ld.DR that the assessee is not entitled for deduction u/s.80P unless such deduction is claimed by filing return of income within the prescribed time allowed u/s.139(1) or 139(4) of the Act. This view is fortified by the decision of the Hon ble Kerala High Court in the case of Chirakkal Service Co-operative Bank Ltd. [ 2016 (4) TMI 826 - KERALA HIGH COURT ]. Interest income earned from fixed deposits and claimed deduction u/s.80P(2)(d) - AO has denied deduction on interest income earned from a co-operative bank on the ground that as per the said provisions, interest earned from any other co-operative society is only eligible for deduction u/s.80P(2)(a)(i) - HELD THAT:- In this case, the assessee is primarily engaged in the business of providing credit facilities to its members and in the course of its business it has parked funds collected from its members in other co-operative banks / nationalized banks as per the statutory requirements of the cooperative societies Act. The assessee has treated interest earned from other co-operative banks as part of its business activity. Once the assessee has earned interest income as part of its business activity and such interest income is earned out of the funds belonging to its members, then the assessee is entitled for deduction u/s.80P(2)(d) in respect of such interest income. identical issue was considered by the Hon ble Madras High Court in the case of CIT vs. Veerakeralam Primary Agricultural Co-operative Credit Society [ 2016 (7) TMI 922 - MADRAS HIGH COURT ] wherein held that the benefit of deduction u/s.80P of the Act is excluded for cooperative banks but credit co-operative societies are entitled to claim deduction u/s.80P of the Act in respect of interest income earned from deposits kept in other co-operative banks. CIT(A) was right in allowing the benefit of deduction claimed u/s.80P of the Act in respect of income derived from the activity including interest income earned from fixed deposits. - Decided against revenue. 2020 (12) TMI 340 Best judgement order u/s.144 - Assessee has not filed any relevant bills and vouchers nor other documents in respect of the expenditure incurred by the Assessee - Assessee has not co-operated to complete the assessment - Case of the Assessee is that, at the relevant point of time due to the heavy floods, the Assessee could not file any relevant material before the learned Assessing Officer - HELD THAT:- Taking into consideration all the submissions of the Assessee and the Certificate issued by the Tahsildar, Mambalam Taluk, we find that one more opportunity should be given to the Assessee to substantiate his case before the learned Assessing Officer. So far as the observations made by CIT(Appeals) that the Managing Director of the Company has to sign, we direct the learned Assessing Officer to examine the issue in accordance with the rules. So far as the admission of additional evidences is concerned, we remit the entire paper-book filed by the Assessee consisting of 636 pages, we direct the learned Assessing Officer to peruse the relevant and necessary bills and vouchers and documents and by considering the same, it is open to the learned Assessing Officer to pass an assessment order de novo in accordance with law. Appeal of assessee allowed for statistical purposes. 2020 (12) TMI 339 Unexplained cash credit u/s 68 - Unexplained cash credit u/s 68 - there was no actual transaction of cash credit in the books of accounts which were based on fake entries having no substance. - assessee has used fraudulent device to show the share capital in the books of accounts in order to comply the SEBI Guidelines for bringing the public issue. - whether the share capital increased in the respective years under consideration represents the unexplained cash credit within the meaning of Section 68? - HELD THAT:- There was no actual transaction cash inflow carried out by the assessee for enhancing the share capital in the years under consideration - enhancement in the share capital represents merely a book entry which was based on the manipulation of the accounts with collaboration of bank staff. This fact has not been addressed by the authorities below despite such contention was pleaded by the assessee before them. Thus, in the absence of any doubt on the contention of the assessee which is also supported from the report of the bank and the SEBI, it is concluded that the impugned cash credit in dispute is nothing but represents the bogus/fictitious entries after manipulation in the accounts. Whether book entry can attract the provisions of Section 68 ? - There was no iota of doubt expressed by the authorities below on the explanation furnished by the assessee regarding the entries showing the alleged unexplained cash credit - there was no actual transaction of cash credit in the books of accounts which were based on fake entries having no substance. As such the assessee has used fraudulent device to show the share capital in the books of accounts in order to comply the SEBI Guidelines for bringing the public issue. There is a legal fiction created under Section 68 and on the basis of such legal fiction an entry in the books of accounts is deemed to be income of the assessee chargeable to tax in the event the assessee fails to discharge the onus imposed upon it under Section 68 - such legal fiction can be applied in the case of actual transactions incorporated in the books and not be applied on the transactions which are merely book entries and representing the fake transactions, having no substance. Admittedly it is the set-aside proceedings before us. The ITAT on the earlier occasion has set aside the matter to the file of the AO with the direction to verify the identity, credit worthiness and genuineness of the transactions and to adjudicate the issue afresh. Undisputedly, the scope for deciding the issue in the set-aside proceedings is very limited. As such, it is limited to the extent of the direction provided by the higher authority. Question of identity, creditworthiness of the parties and genuineness of transaction arises where there is a real transaction, then the assessee is under the obligation to discharge the onus imposed under Section 68 of the Act. Once it has been established beyond doubt that impugned cash credit entries represents the bogus/fake entries after manipulating the accounts, then in such a situation, in our considered opinion the question of discharging the onus as imposed under Section 68 of the Act does not arise. It is because and for the simple reason that it is beyond the capacity of the assessee to comply the direction of the ITAT as discussed above. Accordingly, a question arises, should the assessee be penalized due to the non-compliance of the conditions imposed under Section 68 of the Act in the given facts and circumstances. It is well-settled that an obligation gets discharged due to impossibility of performance. The law of impossibility of performance does not necessarily require absolute impossibility, but also encompass the concept of severe impracticability. In our humble opinion, the doctrine of impossibility of performance applies in this case. Due to uncontrollable circumstances, the performance of the obligation as specified under Section 68 of the Act became impossible to perform for the assessee. The impossibility of performance releases the assessee from its obligation for the non-compliance of the conditions imposed under Section 68. The assessee cannot be penalized if it fails to furnish the details of the parties to justify the identity, creditworthiness and genuineness of the transaction in the given facts and circumstances. Accordingly, we set aside the finding of the Learned CIT(A) and direct the AO delete the addition - Decided in favour of assessee. 2020 (12) TMI 338 Accrual of income - deferred revenue income - Addition of development Funds and expenses - whether a particular receipt represents the income of the assessee in the years under consideration - AO being dissatisfied with the method of accounting for the receipt of development expenses fund held that the receipt of development expenses fund are trading receipt of the assessee - assessee has shown certain receipts as liability on the reasoning that such a liability shall be accounted for as income against the corresponding expenses but AO was of the view that such receipts, treated as deferred revenue income, has become the income of the assessee under mercantile system of accounting - HELD THAT:- Assessee has been following a unique method of accounting for recognizing the certain receipts as income in the future years. Method of accounting adopted by the assessee since incorporation 14-05-1992 was accepted by the revenue till the Assessment Year 2010-11 without pointing out any flaw in such method of accounting - revenue has no authority to change the method of accounting of the assessee until and unless it contains the defects or there is any specific prohibition under the provisions of law. As such we are of the view that the principles of consistency should be adopted. Receipts which was treated by the assessee as deferred revenue income has been offered to tax by the assessee in the subsequent assessment years. In such a situation, we are of the view that there is no loss to the revenue for the simple reason that receipt has finally been suffered to the tax but in the subsequent assessment year - if any addition is sustained in the year under consideration then there has to be deletion of the corresponding amount of the income shown by the assessee in the subsequent assessment years otherwise it would lead to double addition to the total income of the assessee which is not desirable under the provisions of law. - Appeal of the Revenue is dismissed. 2020 (12) TMI 337 Revision u/s 263 - A.O. has not verified the details of house property income offered by the assessee resulting in escapement of income - CIT set aside the assessment order and directed the A.O. to re-do the assessment bringing to tax the annual value of 1MG Mall - assessee, along with two other co-owners, owns a shopping Mall named 1MG located at M.G. Road, Bengaluru - HELD THAT:- Agreement entered by the assessee with M/s. Lido states that M/s. Lido would retain 2% of license fees/rent receipts and 75% of the other income, we notice that the A.O. has not examined the tax implication of the agreement in the context of section 23 24 of the Income tax Act, as the Mall income has been offered by the assessee under the head Income from house property . As rightly pointed out by Ld. D.R. the tax on income from house property is charged on the annual letting value and term Annual letting value has been defined u/s 23 of the Act. Further, the assessee is entitled to claim only those expense which are listed out in section 24 of the Act from the annual letting value determined u/s 23 of the Act. Admittedly, the A.O. did not examine any of the issues pointed out by the Ld. Principal CIT. A.R took support of the decision rendered in the case of Sunbeam Auto Ltd [ 2009 (9) TMI 633 - DELHI HIGH COURT] - We notice that the said decision was rendered prior to the insertion of Explanation 2 in sec. 263(1) by Finance Act, 2015 w.e.f. 1.6.2015. As per clause (a) of Explanation 2, the order passed without making inquiries or verification which should have been made shall be deemed to be erroneous and prejudicial to the interests of the revenue. Since the A.O. failed to examine these issues, in our view, the Ld. Principal CIT was justified in observing that there is lack of application of mind and hence the order is erroneous and prejudicial to the interest of the revenue, in the facts and circumstances of the case. A.R arguments on the concept of diversion of overriding title are not relevant while examining the validity of revision proceedings and the assessee may take these arguments before the AO, if so advised. Since the A.O. has not examined these issues on merits, we are of the view that the same need not be considered by the Tribunal while examining the validity of revision proceedings, unless it is shown that the view taken by Ld. Principal CIT is not totally sustainable in law. Accordingly, we decline to address the arguments advanced on merits. Principal CIT was justified in passing the impugned revision order. - Decided against assessee. 2020 (12) TMI 335 Condonation of delay - delay of 158 days in filing this appeal before the Tribunal - HELD THAT:- Admittedly, the assessee is suffering from physical disability certified by the Directorate for Empowerment of Differently Abled Senior Citizens, Bangalore. The assessee in the affidavit has stated that he has handed over the papers to earlier counsel who appeared before the CIT(Appeals), who failed to take proper action to file necessary appeal before the Tribunal. Later, he approached the present counsel, Mr. V. Srinivasan, who has filed the appeal within 48 hours before this Tribunal. In my opinion, there exists sufficient reason in filing the appeal belatedly before this Tribunal. Relying on the Hon ble Supreme Court judgment in the case of Collector, Land Acquisition v. MST. Katiji Ors. [ 1987 (2) TMI 61 - SUPREME COURT ] we are inclined to condone the delay and admit the appeal for adjudication. Addition u/s 68 or 69A - Deposits into bank accounts - HELD THAT:- When the amounts could not have been added under section 68, the Tribunal was not competent to make the addition under section 69A. That being so, when the Tribunal has no power to sustain addition u/s. 69A of the Act, after deleting it u/s. 68, the same is equally applicable to CIT(Appeals) also. He cannot sustain addition u/s. 69A after deleting it u/s. 68 of the Act. The orders relied on by the ld. DR in the case of Anup Sharma [ 2014 (9) TMI 1185 - ITAT CHANDIGARH ] and P.V. Ajay Narayan [ 1996 (7) TMI 172 - ITAT BANGALORE ] have no occasion to consider judgment of Hon ble Allahabad High Court in the case of Smt. Sarika Jain v. CIT [ 2017 (7) TMI 870 - ALLAHABAD HIGH COURT ] - the Hon ble Allahabad High Court judgment (supra) will prevail over the orders of the Tribunal cited by the ld. DR. Therefore, I have not considered the orders of Tribunal relied on by the ld. DR. In light of the above, the addition sustained by the CIT(Appeals) u/s. 69A of the Act is deleted. Appeal by the assessee is allowed. 2020 (12) TMI 334 Unexplained cash credit - cash seized at the time of search - being 449 grams of gold added by the AO by alleging that the same is unexplained investment of the assessee and the addition of bogus purchases - As argued orders of authorities below are without providing adequate opportunity of being heard to the assessee and also without properly considering the evidences brought on record by the assessee before the lower authorities - HELD THAT:- Matter should go back to the file of AO for a fresh decision on all the issues because the Assessment Order has been passed by the AO without properly considering the details brought on record by the assessee. On pages 6 and 7 of the assessment order for A. y. 2007 08, the AO has noted that the assessee has furnished several papers running into thousands of pages including PAN of investors, copy of Share Application Forms and Ledger Accounts of the Share Applicants but the AO brushed aside all these documents by saying that confirmation letters and source of the share application money was not submitted although before us, it is established by the assessee by filing various documents in the paper book that confirmation of some investors, bank statements of some investors, NBFC Certificate of some investors issued by RBI etc. were very much submitted before the AO and there is no finding of the AO as to how the same are not relevant for examining and deciding the identity and credit worthiness of the investors and genuineness of the transaction. Instead of brushing aside all documents without any discussion, the AO should have discussed about the issue and the documents brought on record by the assessee as to how the same fails to establish the identity and credit worthiness of the investors and genuineness of the transaction. But the AO has not done so and therefore, it is not possible for us to examine the correctness or otherwise of the conclusion drawn by the AO in a summary manner. It is also seen that copy of Investigation Wing report was also not provided to the assessee to enable the assessee to file reply. Hence, we do not decide any of the issues on merit and restore the entire matter (Technical issue or issue on merit) involved in these five appeals back to the file of AO for a fresh decision 2020 (12) TMI 333 Rectification u/s 254 - only contention raised by learned AR of the assessee that the Tribunal is not correct in saying that no argument was advanced regarding ground No.4 of the original grounds of appeal - HELD THAT:- No evidence could be brought on record by learned AR of the assessee in this regard to establish that arguments were in fact advanced by learned AR of the assessee in respect of ground No.4 of the original grounds of appeal filed by the assessee. CIT (A) has decided the issue about R D Segment as per para 7 to 7.9.7.1 of his order running from pages 9 to 25 of the order of CIT (A) and as per our log Book, no reference was made by the learned AR of the assessee to para 7 to 7.9.7.1 of the order of CIT (A) where he decided the issue about R D Segment by way of detailed discussion in 16 17 pages hence, the order about this issue is not cryptic and in ground No. 4 of the Original grounds raised before the tribunal, the issue raised is about R D segment and hence, we find no apparent mistake in this finding of the tribunal that no argument was made by the learned AR of the assessee about R D Segment and hence, there is no apparent mistake in the tribunal order regarding the inference that Ground No. 4 is also not pressed. Hence, we hold that there is no merit in the MP filed by the assessee. 2020 (12) TMI 332 Unexplained cash credits - Assessee depositing the cash to the savings bank account - assessee offered income u/s. 44AD of the Act which has been accepted by the AO - CIT(A) enhancing the assessment without giving mandatory notice u/s. 251(2) - HELD THAT:- The assessee s turnover was ₹ 9,45,200/- and offered income of ₹ 4,84,158/-- u/s. 44AD of the I.T. Act. If the AO wants to make any addition, he shall ignore income returned by the assessee and proceed to scrutiny the accounts so as to make any addition. Therefore, in our opinion, this income offered us. 44AD of the Act is to be accepted. Now, there is no necessity of maintaining books of accounts and production of bills and vouchers Accordingly, we delete the addition made by the AO and confirmed by the CIT(A). Further, at this stage, it is observed that the CIT(A) is not justified in enhancing the assessment without giving mandatory notice u/s. 251(2) of the I.T. Act. This ground of appeal of the assessee is allowed. 2020 (12) TMI 331 Late fees payable under section 234E - Intimation issued u/s 200A and/or order passed u/s 154 - charging of fees payable under section 234E of the Act prior to amendment to section 200A(1)(c) of the Act vide Finance Act, 2015 w.e.f. 01.06.2015, while processing the TDS returns - Whether where the return for the TDS deduction was filed under respective sections of the Act, for the period prior to 01.06.2015 though belatedly, but no late filing fee can be charged under section 234E - HELD THAT:- The machinery provisions of charging the said fee as per clause (c) of Section 200A(1) of the Act was inserted by legislature with effect from 01.06.2015. We find that the said issue has been decided in the case of Fateh Raj Singhvi Ors. vs UOI [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] and it is held that section 200A of the Act inserted with effect from 01.06.2015 had prospective effect and was not applicable for different quarters of assessment years prior to 01.06.2015. Where power is being enshrined upon the Assessing Officer to charge late fees while processing the TDS returns w.e.f. 01.06.2015, such provision cannot have retrospective effect as it would be detrimental to the case of tax payer. The provision under which a new enabling power is being given to charge fees under section 234E of the Act while processing TDS returns / statements and such power is to be applied prospectively. In any case, the Parliament itself has recognized its operation to be prospective in nature while introducing clause (c) to section 200A(1) of the Act and hence, cannot be applied retrospectively. Amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E - intimation issued by the Assessing Officer under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law. - Decided in favour of assessee. 2020 (12) TMI 330 Maintainability of appeal - low tax effect - case was reopened u/s 148 basis information received from Investigation Wing, Mumbai and therefore, the present appeal has been preferred by the Revenue - HELD THAT:- We note that the tax effect in this appeal is not exceeding the monetary limit as revised by the CBDT vide Circular dated 08.08.2019 for the purpose of filing of appeal by the department before the Income Tax Appellate Tribunal from ₹ 20,00,000/- to ₹ 50,00,000/-. The exception 10(e) which has been referred by the ld DR relates to cases where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI/ ED/ DRI/ SFIO/ Directorate General of GST Intelligence (DGGI). Both administratively and functionally, there cannot be any dispute that the Investigation Wing of Income Tax Department is part of Income Tax Department and is therefore clearly not an external law enforcement agency and that too, as specified in the aforesaid exception. Therefore, in the instant case, where the matter has been reopened based on information received from Investigation Wing and the assessment has been completed by the Assessing officer where the matter under appeal has tax effect less than the prescribed limit, it will continue to be governed by low tax effect circular issued by the CBDT which is binding on the Revenue. Present appeal filed by the Department is dismissed on account of low tax effect Customs 2020 (12) TMI 329 Detention of goods - Seeking Unconditional clearance of imported goods - Primary contention of the petitioner is that the imported goods were detained for more than six months but without issuing show-cause notice under section 124 of the Customs Act though there is no seizure of the goods under section 110 of the Customs Act - HELD THAT:- A conjoint reading of sections 110(2) and 124 of the Customs Act would make it clear that a show-cause notice has to be issued to the person from whom the goods were seized within six months of seizure failing which the goods shall be returned to the person from whose possession the goods were seized. However, it is provided under the first proviso that the said period of six months can be extended for a further period not exceeding six months by the higher authority for reasons to be recorded in writing with intimation to the person concerned within the extended period. There is no provision in the Customs Act authorizing detention of goods. Secondly, even if the understanding of the customs department is accepted, then also detention would be at a stage after seizure. Detention and seizure therefore cannot be used interchangeably meaning one and the same thing. Detention cannot be taken resort to or the customs authorities cannot take the plea of detention to avoid consequences of seizure under sub section (2) of section 110 of the Customs Act. If no show-cause notice under section 124(a) is issued, customs authorities cannot retain the seized goods for more than six months though the aforesaid period of six months can at best be extended for a further period not exceeding six months. Therefore beyond the period of one year at the maximum, there cannot be any detention of goods even in the case of seizure without issuing show-cause notice under section 124(a) of the Customs Act. It is glaring to the naked eye that the respondents have committed two illegalities. First illegality is they have detained the goods without affecting seizure. Secondly, they have exceeded the time limit for detention of the goods even if it is construed to be a case of seizure. In such circumstances, the impugned action cannot at all be justified and is liable to be appropriately interfered with. Respondents are directed to forthwith release the imported goods of the petitioner - petition allowed. 2020 (12) TMI 328 Principles of Natural Justice - Withdrawal of Customs Broker License - Direction to the respondent to allow the petitioner to resume its customs business on customs broker license - petition has been filed primarily on the ground that no notice or hearing was granted before such withdrawal of license - Validity of public notice No.28/2020-21 dated 07.09.2020 - HELD THAT:- Petitioner in the present case is identically placed with M/S. S.K. FREIGHT LINES PVT. LTD. AND ANOTHER VERSUS UNION OF INDIA AND ANOTHER [ 2020 (11) TMI 196 - BOMBAY HIGH COURT] where it was 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 and, therefore, the decision would be applicable to the facts of the present case as well. The public notice No.28/2020-21 issued on 07.09.2020 is set aside - matter remanded back to the respondent who shall give an opportunity of hearing to the petitioner and thereafter pass an appropriate order in accordance with law within a period of three weeks from the date of receipt of a copy of this order. 2020 (12) TMI 327 Maintainability of appeal - appropriate Forum - section 129A of Customs Act - Entitlement to DFIA benefits - import of Wheat Gluten against the input product description Wheat Flour - DFIA s issued by DGFT gives the description of Wheat Flour with ITC (HS) classification shown as 11010000 whereas, the importer has imported all wheat gluten of having classification as 11090000 and declared the same in the Bill of Entry - case of Revenue is that DGFT Circular No.13 dated 31.01.2011 clarified that import of wheat gluten as alternative inputs against import item No. 1 of SION E-5 is not to be allowed under DFIA. Maintainability of appeal - HELD THAT:- The contention of the revenue that there is no legal obligation to follow the decision of higher authorities while discharging the quasi judicial powers vested in the Act is incorrect. In the present case, the Commissioner has decided to reject the claim of DFIA benefits by giving reasons in writing. It is also a fact on record that the appellant has been directed to pay applicable customs duty for clearance of goods - the appeal is maintainable and not premature. Merits of the case - HELD THAT:- In the present case, the DFIAs produced by the appellant are post export entitlements. The DFIA s are issued for import of wheat flour against Export of Biscuits as per SION E5. As per the provision of Para 4.27 (ii) of FTP- 2015-20, DFIA is issued for products for which Standard Input output Norms are notified - It is settled law that a DFIA is governed by SION which is notified for the relevant export product. There is no provision either in the Policy or in the Hand book to say that DFIA benefits can be claimed on the basis of ITC (HS) numbers. Even SION does not prescribe any ITC (HS) Numbers. Under post transferability DFIA s, there is no actual user condition exists in the DFIA license issued under Custom Notification No. 19/2015-cus dated 01.04.2015. The issue is squarely covered by the Hon ble Bombay High Court (Nagpur Bench) in SHAH NANJI NAGSI EXPORTS PVT. LTD. VERSUS UNION OF INDIA, MINISTRY OF COMMERCE INDUSTRY, DIRECTORATE GENERAL OF FOREIGN TRADE AND JOINT DIRECTOR GENERAL OF FOREIGN TRADE [ 2019 (4) TMI 146 - BOMBAY HIGH COURT ] In the said judgement it was held that so long as the export goods and the import items corresponds to the description given in the SION, it cannot be held to be invalid by adding something else which is not in the policy. As regard the description of the goods in the said case the license was issued for input namely Maize against export product of Maize Starch Powder, whereas, the importer had imported Popcorn Maize. The revenue s contention was that the popcorn maize is not used for manufacture of Maize starch powder. The Hon ble court has decided that even though the popcorn maize is not used for manufacture of maize starch powder but since it is capable of being used, it s import is permitted under DFIA. The present case is on a better footing that the Wheat Gluten is not only capable of being used but invariably used for manufacture of biscuits. Moreover, as per various technical opinions, the Wheat Gluten is used in the manufacture of biscuits. Therefore, there is no dispute that Wheat Gluten is correctly covered under the description of goods i.e, Wheat Flour as mentioned in the annexures annexed along with DFIA Scheme as well as specified in SION. It cannot be said that if the specific name of input in the present case Wheat Gluten is not mentioned in the licence or in the export shipping bill, benefit of DFIA cannot be extended particularly when the broad description as wheat flour is specified in SION as well as in the annexure to the DFIA licence - The import goods Wheat Gluten or Wheat Flour are not specified under Sensitive items under Para 4.30 of FTP- (2015-2020) of DFIA s. Therefore the exporter is not required to give a declaration of the technical specification, quality and characteristics of inputs used in the resultant product. The appellant is entitle for the benefit of DFIA for import clearance of Wheat Gluten - Appeal allowed - decided in favor of appellant. 2020 (12) TMI 326 Maintainability of appeal before this Tribunal - Entitlement to DFIA benefit - import of Inshell Walnut covered under the description of Fruit/Food Flavour/Dietary Fibre - benefit in terms of Custom Notification No. 19/2015-Cus. dated 01.04.2015 denied on the ground that appellant has not produced evidence to show that Inshell Walnut is actually used in export product and the import goods Inshell Walnut is not mentioned in the DFIA against input item description Fruit /Food Flavour/Dietary Fibre - According to the revenue, only those inputs which are actually used in export product shall be allowed exemption from payment of customs duty in terms of Custom Notification No. 19/2015-cus. Maintainability of appeal before this Tribunal - HELD THAT:- The decision against which this appeal was filed, was admittedly taken by the Principal Commissioner of Customs which was merely communicated by the lower officer. As per the Ld. Commissioner s decision it was categorically decided that the appellant is not entitled to clear import goods against the DFIA Licences and also directed to pay applicable custom duty. In this undisputed position, in our clear view the only remedy left with the appellant is to file appeal before this Tribunal - The appeal is maintainable in terms of Section 129 (1) of the Customs Act, 1962. The contention of the revenue that there is no legal obligation to follow the decision of higher authorities while discharging the quasi judicial powers vested in the Act is incorrect. In the present case, the Commissioner has decided to reject the claim of DFIA benefits by giving reasons in writing. It is also a fact on record that the appellant has been directed to pay applicable customs duty for clearance of goods - the appeal is maintainable and not premature. Merits of the case - HELD THAT:- The DFIA s produced by the appellant are post export entitlements . The DFIA s are issued against Export of Biscuits as per SION E-5. As per the provision of Para 4.27 (ii) of FTP- 2015-20, DFIA is issued for products for which Standard Input output Norms are notified - It is settled law that a DFIA is governed by SION which is notified for the relevant export product. There is no provision either in the Policy or in the Hand book to say that DFIA benefits can be claimed on the basis of ITC (HS) numbers. Even SION does not prescribe any ITC (HS) Numbers. Chapter Heading 08020000 is the main chapter heading which covers the items of import under the said heading. Therefore the input item Inshell Walnut is correctly covered under the description of goods under Fruit/Flavour/Dietary Fibre as mentioned in the annexures annexed alongwith the DFIA s in question. Expert Technical Opinion given by technical qualified person from a reputed Institute like IIT cannot be brushed aside unless such technical opinion is displaced by specific and cogent evidence. The respondent has not provided any cogent evidence to show on the contrary in the instant case. The Hon ble Gujarat High Court in the case of Inter-Continental (India) Vs. Union of India, [ 2002 (2) TMI 129 - HIGH COURT OF GUJARAT AT AHMEDABAD ] is squarely covered in the present case. The revenue contended that vide notification no. 21 dated 05.12.2017, Central Government has notified FTP- (2015-20) and revised FTP by inserting the stipulations of Para 4.12 (i) and (ii) under Para 4.29 (iv) (v) which deals with validity and transferability of DFIA. Therefore it was contended that DGFT vide above amendment in FTP, has clearly spelled out that only specific inputs alongwith quantity will be permitted to be imported under DFIA Scheme - said Para 4.29 (iv) (v) refers to Para 4.12 of FTP while incorporating the provisions therein - However, the Hon ble Bombay High Court in the case of Shah Nanji Nagsi Exports Pvt. Ltd., Vs. UOI [ 2019 (4) TMI 146 - BOMBAY HIGH COURT ](Bom) has already considered the provision of Para 4.12 for transferred DFIA and held that even though the popcorn maize is not used for manufacture of maize starch powder but since it is capable of being used, its import is permitted under DFIA. The present case is on a better footing that the Inshell Walnut is not only capable of being used but invariably used for manufacture of biscuits as fruit/flavor/dietary fibre - Moreover, as per the custom s lab report dated 08.08.2018 and various technical opinions, the Inshell Walnut is used as flavor or fruit/nut or dietary fibre in the manufacture of biscuits/cookies and confectionary. Therefore, there is no dispute that inshell walnut is correctly covered under the description of goods i.e, fruit/flavour/dietary fibre as mentioned in the annexures annexed along with DFIA Scheme as well as specified in SION. The imported goods In shell Walnuts are not specified under Sensitive items under Para 4.30 of FTP- (2015-2020) of DFIA s. Therefore the exporter is not required to give a declaration of the technical specification, quality and characteristics of inputs used in the resultant product. The Central Board of Excise Customs vide Circular No. 46 of 2007 had earlier clarified the above provisions which existed under the previous policy period under Para 4.55.3 of HBP) - It is settled law that Board Circulars are bindings on customs authorities - As per Policy Circular No. 72/2008 dated 24.03.2009, flexibility has been given to import alternative inputs or goods which are capable of using in the export product. Therefore inputs which are covered under the description are entitled for DFIA exemption for claiming DFIA benefits by either exporter or transferee or the importer under the Transferable DFIA Scheme. As per Policy Circular No. 22, even a transferee of the license can apply for amendments in ITC (HS) Numbers of the inputs from the regional licensing authorities. Therefore it cannot be said that if the specific name of input in the present case In shell Walnut is not mentioned in the licence or in the export shipping bill, benefit of DFIA cannot be extended particularly when the broad description is specified in SION as well as in the annexure to the DFIA licence - he appellant is entitle for the benefit of DFIA for import clearance of in shell walnut - appeal allowed - decided in favor of appellant. Insolvency & Bankruptcy 2020 (12) TMI 325 Maintainability of application - initiation of CIRP - Default on the part of Corporate Debtor in making repayment of its dues - the Adjudicating Authority arrived at a conclusion that there was no debt as claimed by the Appellant besides there being deficiency in service provided by the Appellant warranting dismissal of application - HELD THAT:- It is futile on the part of the Corporate Debtor to raise the grievance that there was a dispute relating to the quality of service. No suit or arbitration proceedings were pending on the date of filing of application under Section 7 in regard to quality of service to bring the same within the ambit of dispute as contemplated under Section 5(6)(b) of the I B Code to disentitle the Appellant- Financial Creditor from initiating Corporate Insolvency Resolution Process. No such dispute was even brought to the notice of the Appellant- Financial Creditor as the demand notice served under Section 8(1) of the I B Code was not responded to by the Corporate Debtor. Therefore, we have no hesitation in holding that the Appellant- Financial Creditor was entitled to raise the invoice dated 20.04.2019 in regard to the unpaid balance amount of ₹ 2,05,00,000/- in respect whereof default was committed by the Corporate Debtor who admittedly paid only ₹ 75 Lakhs as part payment. There is nothing on the record to even suggest that the liability was at all denied by the Corporate Debtor and any agreement or settlement was reached inter se the parties for reduction of amount of fee payable in lieu of services provided for the reason that the timelines were not adhered to by the Appellant in arranging financer for the Corporate Debtor s project. The Adjudicating Authority landed in error in observing that there was a clear deficiency in service provided by the Appellant falling within the ambit of Section 5(6)(b) of the I B Code which cannot be supported. The Adjudicating Authority has landed in error in holding that there was no debt as claimed by the Appellant and there was deficiency in service provided by the Appellant. The findings recorded by the Adjudicating Authority are grossly erroneous and same cannot be supported. Once the liability in respect of ₹ 75 lakh was admitted and the same was not discharged by the Corporate Debtor, dispute in regard to quantum of debt would be immaterial at the stage of admission of application under Section 7 unless the debt due and payable falls below the minimum threshold limit prescribed under law. The impugned order is liable to be set aside as the same is unsustainable. Petition allowed. 2020 (12) TMI 324 Maintainability of application - initiation of CIRP - alleged default on the part of the Respondent in settling an amount including interest are lying towards the goods supplied by the Applicant - Ex-parte order - HELD THAT:- The applicant has supplied basic and high temperature refectories items to the Respondent M/s. Rathi Ispat Ltd. and various outstanding invoices were raised against the Respondent. Further, the claims of the applicant are barred by the Limitation Act, 1937, because last invoice was raised by the applicant on 22.03.2007 against which the Limitation has expired way back. The remedy pursued by the applicant by way of recovery suit which was decided on 26.09.2016 does not entitle the applicant to exclude such period out of limitation for the purpose of ascertaining limitation under the provisions of the code. The operational creditor is not entitled to get the computation of limitation under section 14(2) of the Limitation Act therefore the same is barred by limitation - Application dismissed. 2020 (12) TMI 323 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its financial dues - existence of debt and dispute or not - time limitation - HELD THAT:- The application filed on behalf of financial creditor/Applicant under Section 7 of IBC is found complete. The present petition being filed in 22.10.2019 is well within limitation and the date of default is 30.03.2017., in which date the corporate debtor declared as NPA is much prior to the amendment made in Insolvency and Bankruptcy Code on 05th of June, 2020 whereby Sec. 10A was inserted. In the present application the date of default in the present application is 13.03.2017, thus the amendment made will not be applicable in the present petition. This adjudicating Authority is inclined to admit this petition and initiate CIRP of the Respondent Company. Accordingly, this petition is admitted - Moratorium declared. 2020 (12) TMI 322 Release of Fixed Deposits Receipts of Anush Finlease and Construction Private Limited (Corporate Debtor) maintained with SBI in the Controlled Account of the Corporate Debtor - whether or not margin money shall be released on the premise that it is the asset of the Corporate Debtor? HELD THAT:- These FDRs are given towards margin money against the bank guarantees given to the beneficiary, not as FDRs to be realized by the Corporate Debtor as and when it wishes. We must say that as per RBI guidelines and also as per the ratio decided in various judgements, margin money is construed as substratum of a Trust created to pay to the beneficiary to whom Bank Guarantee is given. Once any asset goes into trust by documentation for the benefit of beneficiary, the original owner will not have any right over the said asset unless is it is free from the trust. In this case, the Bank Guarantee being given to Government Authority, 100% margin money is deposited in the form of FDRs. In the event the margin money is free from the Bank Guarantee either by discharge or by efflux of time, then the Corporate Debtor is entitled for release of FDRs. Whether the asset held in Trust amounts to the asset of the Corporate Debtor or not? - HELD THAT:- The assets held under Trust cannot be considered as the asset of the Corporate Debtor. When margin money has character of Trust for the benefit of the beneficiary, as long as the Bank Guarantee Contract is not determined, the margin money will have the character of Trust. When it is not the asset of the Corporate Debtor, the Corporate Debtor, either during the CIRP process or after the CIRP period, will not have any legal right to have a claim on the said asset. Applicant has made another argument saying that this asset is covered by moratorium, therefore, Bank Guarantee cannot be invoked by DGFT nor Bank can release the same to the beneficiary - HELD THAT:- The margin money was no where covered under Sec. 14 of the Code, (a) deals with prohibition of initiation or continuation of legal proceedings against the Corporate Debtor, (b) deals with prohibition of creation of rights over the asset of the Corporate Debtor, (c) prohibition of action under SARFAESI, it need not be said separately that performance guarantee is exempted from the ambit of Code, (d) speaks of recovery of property in possession of the Corporate Debtor, the present issue is not relevant to (d). In effect, margin money is not covered under section 14 of the Code, Moratorium is indeed a calm period to be maintained, but Moratorium will not alter or confer new rights upon anybody - Moreover, the period after approval of Resolution Plan will not fall within the ambit of Moratorium. DGFT has not made any claim against the Corporate Debtor or the Resolution Applicant. Merely having some Clauses in the Resolution Plan will not alter the legal rights of the beneficiary, which are not affected by the Insolvency and Bankruptcy Code. Moreover, this Bench has made it clear that clauses not permissible under law in the Resolution Plan is held as not approved, therefore, this Applicant cannot cite some clause as a right conferred upon this Applicant to lay its hands on the margin money having character of Trust - SBI is not a Creditor to the Corporate Debtor. As long as claim is not raised by the beneficiary against the Corporate Debtor, no claim is considered to have come into existence The Resolution Plan shall not contravene any of the provisions of the laws for time being in force, the same is again reiterated in Section 238 of the Code saying that this Code will have overriding effect over other laws which are inconsistent with the provisions of this Code. Harmonisation of statutes is the hall mark of justice, not invalidating the rights conferred under one enactment by another enactment save and except to the extent mentioned - Security Interest shall not include the Performance Guarantee, the incidental actions to the performance guarantee cannot be called as falling within the ambit of the Code. On the day the Bank is discharged, the applicant can get back this money from the Bank. Application dismissed. 2020 (12) TMI 321 Permission to sale the assets of the CD which were attached by the respondent/ED - section 32A inserted by Insolvency and Bankruptcy Code (Amendment) Act, 2020 - respondent submitted that section 32A is not applicable to the liquidation proceedings and that only in a case where a resolution plan is passed this provision would apply - HELD THAT:- The CD is undergoing liquidation and the Liquidator seek permission to sell the assets already under order of attachment by the respondent in view of the application of amended provision of the Code. Considering the first objection our endeavour is to see whether section 32A is not applicable to the sale of assets of the CD which is under order of attachment and the proceedings of the respondent is under challenge and pending before the Appellate Authority, PMLA against confirmation of Provisional Attachment order, of the Adjudicating Authority, PMLA. What is prayed for in the case at hand is not for releasing the attachment. According to the Ld. Liquidator, de-attachment is not at all necessary because section 32A provide immunity against prosecution of the corporate debtor and preventing action against the property of such corporate debtor undergoing CIRP or Liquidation. According to him the effect of attachment of the properties of the CD is to be nullified upon applying section 32A and de-attachment if any is to be asked for by the buyer and not by the liquidator. A reading of sub-section (2) of section 32A with the object behind the introduction we are of the considered opinion that section 32A is also applicable to liquidation proceedings. Under the object as well as under section it is specifically dealt with that the section is applicable to prevent insolvency in case the company goes into CIRP or liquidation. Coming to the objection that the ld. Counsel for the respondent submitted that proceedings are going on before the PMLA Appellate Authority which is attended by the Ld. Liquidator and the challenge against the attachment became final and therefore, even if the provisions of Code are amended, if the right of the parties had already been crystallized then, subsequent change in law would not take away such rights which had attained finality - It is true that the Liquidator who was the then RP preferred an application for de-attachment of the assets of the CD issued by the respondent on the ground of violation of moratorium declared under section 14 of the Code. The CA(IB) No. 399/KB/2018, which was filed by the RP was dismissed for the reason that the attachment was prior to the declaration of moratorium. The properties of a CD under liquidation is also to be exempted from the purview of the commission of such offence. In view of the above said position of law we are of the considered opinion that a liquidator can proceed with the sale of the assets even if it is under attachment by the respondent, to continue the time bound process of liquidation under the provisions of the Code and upon completion of the sale proceedings the buyer can take appropriate steps to release the attachment. It appears to us that the attachment and confiscation of properties of a CD undergoing CIRP or liquidation become void under section 32A of the Code. The liquidator is permitted to sell the assets of the CD as per the provisions of the Code and Regulation which were attached by the respondent/ED subject to the right of the buyer to apply for de-attachment in accordance with section 32A of the Code from the appropriate authority - The respondents are directed to render as much co-operation to the liquidator to proceeds with the sale of the assets. 2020 (12) TMI 320 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - HELD THAT:- The Operational Creditor had served a Demand Notice in Form 3 dated 18-6-2018 to the Corporate Debtor (Exhibit '1', pp. 12-18) in terms of section 8 of the IBC. The Corporate Debtor has not replied to the Demand Notice. Section 69(2) of the Indian Partnership Act, 1932 would apply only to a 'suit' and not to proceedings. Applications filed under the IBC are not 'suits' but only proceedings, and therefore, the bar in terms of section 69(2) of the Indian Partnership Act, 1932, would not apply to applications filed under the IBC. Time Limitation - HELD THAT:- Article 137 of the Limitation Act, 1963 stipulates a limitation period of three years from the date on which the right to apply accrues - The date of default is stated to be 23-6-2015 and the petition was filed on 25-9-2018 - Noting that there is no acknowledgement of liability in terms of section 18 of the Limitation Act, 1963, before the expiry of the period of limitation, the present petition is barred by limitation. Petition dismissed. 2020 (12) TMI 319 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- In sum - (a) The date of default is 30.06.2014. (b) The balance confirmation letter placed on record is dated 30.06.2013. See page 19 of the Petition (c) The letter informing the Corporate Debtor about the accounts having become NPA is dated 13.11.2014. See p.2117 of the Petition (d) There is nothing on record to show that there is any acknowledgement of debt after the accounts were declared as NPA on 13.11.2014. (e) The OTS proposal is dated 01.08.2018, See page 14 of the reply i.e., long after the expiry of the prescribed period of limitation. The present petition filed byUCO Bank against Deegee Orchards Private Limited is barred by limitation - Petition dismissed. Service Tax 2020 (12) TMI 318 Rejection of declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - SVLDRS - rejected on the ground of ineligibility - quantification of service tax liability on or before 30.06.2019 - case of respondent is that petitioner was not eligible to make a declaration as the outstanding amount due to be paid by the petitioner was not determined upon adjudication on or before 30.06.2019 - section 125(1)(e) of the Finance (No.2) Act, 2019 - HELD THAT:- There is clear admission / acknowledgment by the petitioner about the service tax liability. The acknowledgment is dated 27.06.2019 i.e., before 30.06.2019 both in the form of letter by the petitioner as well as statement of its Director, Shri. Sanjay R. Shirke. In fact, on a pointed query by the Senior Intelligence Officer as to whether petitioner accepted and admitted the revised service tax liability of ₹ 2,47,32,456.00, the Director in his statement had clearly admitted and accepted the said amount as the service tax liability for the period from 2015-16 upto June, 2017 with further clarification that an amount of ₹ 1,20,60,000.00 was already paid. It is evident that the word quantified under the scheme would mean a written communication of the amount of duty payable which will include a letter intimating duty demand or duty liability admitted by the person concerned during enquiry, investigation or audit or audit report and not necessarily the amount crystalized following adjudication. Thus, petitioner was eligible to file the declaration in terms of the scheme under the category of enquiry or investigation or audit as its service tax dues stood quantified before 30.06.2019. Matter remanded back to the Designated Committee to consider afresh the declaration of the petitioner dated 24.11.2019 as a valid declaration and grant the consequential relief after giving due opportunity of hearing to the petitioner who shall be informed about the date, time and place of the hearing - petition allowed by way of remand. 2020 (12) TMI 317 Refund of Service Tax - Service Tax paid for construction of residential complex before 30.06.2012 - rejection on the ground that appellant failed to establish that it comprised of less than 12 residential units so as to be covered under exemption clause - October, 2011 and March, 2012 - principles of unjust enrichment - appellant also agreed to discharge the tax liability during investigation. Non-establishment of number of units by the appellant that was cited as the main ground in the Order-in-Appeal was not a ground in the show-cause notice - HELD THAT:- Meeting the requirement of law, which is the paramount consideration for establishment of tax liability, need not necessarily be made a ground in the show-cause notice since everyone is presumed to know the law/rules governing the affair of the State. Unjust Enrichment - HELD THAT:- Customers were not charged Service Tax for Bandra unit. Appellant agreed to discharge the tax liability during investigation - HELD THAT:- This issue which is raised by the learned respondent-department is hit by Rule 10 of the CESTAT Procedure Rule, 1982 as has not been argued during the hearing of the petition. Therefore, the only aspect that is required to be dealt in this appeal is the establishment of construction of less than 12 units by the appellant in the disputed complex. Thus, it can be inferred that because of availability of 13 floors, learned Commissioner (Appeals) had failed to reach at a conclusion that the complex had less than 12 residential units to admit refund as the said was not taxable. However, going by the Architect certificate at annexure 3, floor plan referred above and the full occupation certificate issued by the Executive Engineer (building proposal) of the Municipal Corporation of Greater Mumbai dated 02.08.2013 would clearly indicate that the complex comprised of 9 residential units, taking each duplex to be counted as one unit. Therefore, the appellant is entitled to get the refund sought for. Appeal allowed - decided in favor of appellant. Central Excise 2020 (12) TMI 316 Rejection of declaration filed under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - SVLDRS - application of the petitioner for taking benefit of the aforesaid scheme has been arbitrarily rejected by impugned communication dated 26.02.2020 on the ground that as per Section 125 (1)(h) of the Finance (No.2) Act, 2019 the product i.e. SKO is set forth in the 4th Schedule of Central Excise Tariff Act, 1944 - vires of of section 174 of Central Goods and Service Tax 2017 and also violative of Entry No.84 of List I (Union List) of the Seventh Schedule to Constitution of India - HELD THAT:- Perusal of the Fourth Schedule to the Central Excise Act, 1944 and the provisions of Section 2(d) read with Section 2(f)(ii) leaves no manner of doubt that Superior Kerosene Oil is an excisable goods under the Central Excise Act, 1944, even if no rate of duty has been notified by the Central Government under the Act, 1944. Section 125(1)(h) of the Finance (No.2) Act, 2019 (Sabka Vishwas Scheme) specifically excludes applicability of the Sabka Vishwas Scheme with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act 1944 - Since the 'SKO is an excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944, therefore, the petitioner was not eligible to make a declaration under the Scheme in view of Section 125 of the Finance (No.2) Act 2019. Undisputedly, Superior Kerosene Oil is mentioned in the Fourth Schedule although no rate of duty has been provided. If rate of duty has not been provided it shall merely mean that no duty is leviable in the absence of rate of duty. It does not mean that such goods are not excisable. All the goods mentioned in Fourth Schedule to the Act, 1944 shall continue to be excisable goods unless the goods is removed from the Schedule by an amendment. Section 174 of the CGST Act has not repealed the Central Excise Act, 1944 as respect to the goods included in entry 84 of the Union List of the Seventh Schedule to the Constitution. The Central Excise Act, 1944 as amended by Act 18 of 2017 has been enacted with respect to the goods included in entry 84 of the Union List of the Seventh Schedule to the Constitution which includes S.K.O. Deletion of SKO from the Fourth Schedule of Central Excise Tariff Act, 1944 - HELD THAT:- There is no such Act. The relief sought is without substance. Apart from this, inclusion of SKO in the Fourth Schedule of the Act, 1944 is not violative of Section 174 of the CGST Act, 2017. The petitioner/declarant could avail benefit of the Sabka Vishwas Scheme only in accordance with the provisions of the Scheme. Section 125(1)(h) of the Act 2019/ Sabka Vishwas Scheme has specifically excluded persons seeking to make declarations with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944. Undisputedly, S.K.O. is an excisable goods set forth in the Fourth Schedule to the Act, 1944. The petitioner was not eligible to make a declaration under the Sabka Vishwas Scheme with respect to S.K.O. - non acceptance of the declaration of the petitioner by the respondents does not suffer from any manifest error of law. Petition dismissed. CST, VAT & Sales Tax 2020 (12) TMI 315 Concessional benefit of tax - purchase of High Speed Diesel from suppliers in other States - difficulty in obtaining C-Form - HELD THAT:- The issue decided in the case of M/S. DHANDAPANI CEMENT PRIVATE LTD., M/S. TERU MURUGAN BLUE METAL VERSUS THE STATE OF TAMIL NADU, THE PRINCIPAL COMMISSIONER COMMISSIONER OF COMMERCIAL TAXES, THE ASSISTANT COMMISSIONER (ST) , THE JOINT COMMISSIONER (ST) TERRITORIAL, THE DEPUTY COMMISSIONER (ST) [ 2019 (2) TMI 1850 - MADRAS HIGH COURT] where it was held that the benefit cannot be denied on this ground. The Appellant State and the Revenue Authorities are directed not to restrict the use of 'C' Forms for the inter-State purchases of six commodities by the Respondent/Assessees and other registered Dealers at concessional rate of tax and they are further directed to permit Online downloading of such Declaration in 'C' Forms to such Dealers. The Circular letter of the Commissioner dated 31.5.2018 stands quashed and set aside along with the consequential Notices and Proceedings initiated against all the Assessees throughout the State of Tamil Nadu. The petitioner is entitled to the inclusion of High Speed Diesel Oil as a commodity in the registration certificate - petition allowed. 2020 (12) TMI 314 Classification of goods - hybrid cotton seeds - validity of Clarification No. 147/2005 in D. Dis Acts Cell II/39022/05 dated 26.09.2005 issued by the First Respondent - taxable at the rate of 4% under entry No. 6(iii) of the Second Schedule to TNGST Act - grievance is that exemption has been denied for sale of hybrid cotton seeds for seeding purpose by pointing out that as per entry 7 of Part B in the Third Schedule of the TNGST Act - HELD THAT:- It is brought to notice that in respect of person similarly placed to the Petitioner, this Court in TVL. RASI SEEDS (P) LTD. VERSUS THE SPECIAL COMMISSIONER AND COMMISSIONER OF COMMERCIAL TAXES, THE DEPUTY COMMERCIAL TAX OFFICER [ 2019 (5) TMI 124 - MADRAS HIGH COURT] has set aside the assessment order, where similar claim for exemption was refused, and the matter has been remitted for consideration afresh in the light of the principles laid down in that decision. Matter remitted to the Second Respondent for fresh consideration - It is incumbent upon the Second Respondent to afford full opportunity of personal hearing, follow the prescribed procedure in consonance with the principles of natural justice, deal with each of the contentions of the Petitioner with particular reference to the principles laid down in the decision in TVL. RASI SEEDS (P) LTD. VERSUS THE SPECIAL COMMISSIONER and pass reasoned order on merits and in accordance with law and communicate the decision taken to the Petitioner under written acknowledgment. Petition disposed off. Indian Laws 2020 (12) TMI 313 Dishonor of Cheque - legally enforceable debt or not - Rebuttal of presumptions - whether the offence punishable under Section 138 of the N.I.Act is made out against the accused? - Sections 118 and 139 of the N.I.Act - HELD THAT:- Section 118 of the N.I.Act provides certain presumptions to be raised laying down some special rules of evidence relating to presumptions. The presumption, therefore, is a matter of principle to infuse credibility to negotiable instruments including cheques and to encourage and promote the use of negotiable instruments in financial transactions. Section 118 of the N.I.Act provides presumptions to be raised until the contrary is proved, (i) as to consideration, (ii) as to date of instrument, (iii) as to time of acceptance, (iv) as to time of transfer, (v) as to order of indorsements, (vi) as to appropriate stamp, and (vii) as to holder being a holder in due course. That apart, Section 139 of the N.I.Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 of the N.I.Act for the discharge, in whole or in part, of any debt or other liability. Applying the definition of the word 'proved' in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the N.I.Act, it becomes evident that in a trial under Section 138 of the N.I.Act, a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. The civil court held that the complainant herein was not the owner of the vehicle and the accused was the registered owner of the vehicle. According to the civil court, an owner of the vehicle cannot lease the vehicle to himself. It was further held that the outstanding amount covered under Ext.P4 cheque which was produced as Ext.A5 in the civil case was not proved. Rightly or wrongly, the civil court entered a finding that the amount covered under Ext.P4 was not recoverable from the accused. The said finding has not been set aside in a process known to law. The finding has become conclusive between the parties. Sitting in revision, this Court has no jurisdiction to examine the correctness of the decision taken by the civil court. Going by the tenor of judgment, it is clear that, what was covered under Ext.P4 is not a legally enforceable debt. In the case on hand, the accused admitted execution of Ext.P4 cheque. His contention is that the amount covered under Ext.P4 is not a legally enforceable debt. The accused adduced evidence before the trial court to show that Ext.P4 cheque had not been issued towards discharge of a legally enforceable debt, but was issued by way of security or any other reason on account of some business transaction between the complainant and the accused. The burden on the part of the accused has been discharged by producing Exts.D1 to D8 before the trial court. DW1 adduced evidence before the trial court to show that he was the owner of the vehicle and the vehicle was repossessed on 22.11.97 illegally by the complainant. He also produced Ext.D7 passbook issued by the complainant - It is true that the standard of proof required in the criminal and civil proceedings are entirely different. Civil cases are decided on the basis of the preponderance of evidence. In a criminal case the entire burden lies on the prosecution and the prosecution is bound to prove the offence beyond reasonable doubt. In Ext.D1 civil case, the cause of action for institution of suit was on the basis of Ext.P4 cheque issued by the accused in favour of the complainant pursuant to a business transaction between the complainant and the accused. The prosecution under Section 138 of the N.I.Act also initiated on the same set of facts. This Court is of the view that the amount covered under Ext.P4 cheque is not a legally enforceable debt and the finding in Ext.D2 judgment is relevant under the Scheme of the Evidence Act to decide this case. Further, the accused as DW1 adduced evidence to rebut the presumption contemplated under Sections 118 and 139 of the N.I.Act. DW1 adduced evidence to prove that he issued several cheques in favour of the complainant pursuant to the transactions between the parties as security and one of the cheques was utilized by the complainant to file the complaint under Section 138 of the N.I.Act - the accused discharged his burden under Sections 118 and 139 of the N.I.Act to prove that the cheque had not been issued towards a legally enforceable debt. Thus, the trial court as well as the appellate court wrongly appreciated the evidence on record. When the conviction and sentence imposed by the courts below against the revision petitioner/accused are based on untenable grounds, it would be just and proper for the High Court to interfere with the findings of the courts below in exercise of powers under Section 401 of the Cr.P.C. The conviction and sentence imposed against the revision petitioner/accused by the trial court as well as the appellate court are set aside. The revision petitioner/accused is found not guilty of the offence punishable under Section 138 of the N.I.Act and he is acquitted thereunder - criminal revision petition is allowed.
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