TMI Tax Updates - e-Newsletter
December 11, 2021

Case Laws in this Newsletter:

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

Articles

1. VALUATION & PROVISIONAL ASSESSMENTS UNDER CUSTOMS: GEMS, PRECIOUS AND SEMI-PRECIOUS STONES – AN UNDERSTANDING

   By: Vivek Jalan

2. GST Annual Return for F.Y.2020-21 : Due date is 31.12.2021

   By: Ganeshan Kalyani

News

1. Criteria Under ODOP

2. Revival of Exports

3. Access of Global Markets to Industries and Farmers

4. The Department for Promotion of Industry and Internal Trade (DPIIT) initiates the first ever Development of ‘Indian Footwear Sizing system’ in consultation with Central Leather Research Institute (CLRI)

5. Income Tax Department conducts search operations in West Bengal

6. Income Tax Department conducts search operations in Gujarat

7. World has not still seen the huge potential of the North-East": Shri Piyush Goyal

Notifications

GST - States

1. 12/2021 – State Tax (Rate) - dated 29-11-2021 - Jharkhand SGST

Seeks to exempt JGST on specified medicines used in COVID-19, up to 31st December, 2021

2. 11/2021 – State Tax (Rate) - dated 29-11-2021 - Jharkhand SGST

Amendment in Notification No. 39/2017-State Tax (Rate), dated the 24th October, 2017

3. 10/2021 – State Tax (Rate) - dated 29-11-2021 - Jharkhand SGST

Amendment in Notification No. 4/2017-State Tax (Rate), dated the 29th June, 2017

4. 09/2021 – State Tax (Rate) - dated 29-11-2021 - Jharkhand SGST

Amendment in Notification No. 2/2017- State Tax (Rate), dated the 29th June, 2017

5. 08/2021 – State Tax (Rate) - dated 29-11-2021 - Jharkhand SGST

Amendment in Notification No. 1/2017- State Tax (Rate), dated the 29th June, 2017

6. F.12(1)FD/Tax/2021-86 - dated 10-12-2021 - Rajasthan SGST

Rajasthan Goods and Services Tax (Ninth Amendment) Rules, 2021

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/DF2/CIR/P/2021/683 - dated 10-12-2021

Circular on Mutual Funds

2. SEBI/HO/IMD/IMD-I/DOF9/P/CIR/2021/682 - dated 10-12-2021

Publishing Investor Charter and Disclosure of complaints by AIFs

3. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/0000000679 - dated 10-12-2021

Clarification regarding amendment to SEBI (Portfolio Managers) Regulations, 2020

FEMA

4. 20 - dated 10-12-2021

Introduction of Legal Entity Identifier for Cross-border Transactions

Highlights / Catch Notes

GST

• Court Faults Bank Account Freeze Without Notice Under Goa GST Act; Appointment of Officer Not Justification for Action.

  Case-Laws - HC : Attachment of Bank Accounts - Neither any show cause notice has been issued to any of the petitioners. It appears that the impugned order is passed only because the respondent No.1 has appointed an appropriate officer for determining the tax liability of the petitioners. Mere appointment of an appropriate officer for determining the tax liability will certainly not be a ground to initiate any action, like the present one i.e. of provisionally freezing the bank accounts of the petitioners under the Goa GST Act. - HC
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• Appellant's services to State Urban Development Agency and PMAY classified as pure services under GST, per Articles 243W and 243G.

  Case-Laws - AAAR : Classification of services - pure services or not - Project Development Service - the Services rendered by the appellant to the State Urban Development Agency, Uttar Pradesh (SUDA), and for PMAY, are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India and such services would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods). - AAR
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Income Tax

• Court Quashes Order u/s 144B for Ignoring Stay; No Contempt Notice for Assessing Officer's Oversight.

  Case-Laws - HC : Validity of order passed u/s 144B - disregarding the stay granted by this court - In the assessment order, the Assessing Officer is referring to a letter stating that the assessee has furnished the Hon’ble High Court’s letter and reproduce the letter. But it is not a letter but an order of the court, which also shows total non application of mind by the Assessing Officer and by referring to an order of this court as letter the Assessing Officer is undermining the authority of this court. At the request of Mr. Pinto we are not issuing notice for contempt against the Assessing Officer but at the same time such gross disobedience cannot be ignored. This order, therefore, has to be quashed and set aside. - HC
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• High Court Affirms ITAT's Decision: Medical Services Qualify for Tax Exemption u/s 12AA, Income Tax Act.

  Case-Laws - HC : Exemption u/s 11 - grant of registration u/s 12AA - Assessee engaged providing activities like sale/purchase of medicine, running of pathological clinic, x-ray clinic, polyclinic etc. - ITAT held that assessee would qualify for grant of registration under Section 12AA of the Act and their activity is undoubtedly a charitable activity - Order of ITAT sustained - HC
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• Assessee's Notional Capital Gains Adjustment Complies with Section 43A, Avoids Tax on Unrealized Gains, Balances Credits/Debits.

  Case-Laws - HC : Foreign exchange fluctuation - As we understand from the record, the gist of the method followed by the assessee is that, the assessee in Schedule IX claimed less deduction than claimable by adjusting the notional capital gain on Forex and corresponding deductions of the same amount while computing the net income of assessee for purpose of tax. In effect, both credit and debit are given and the tax liability is not materially impacted. Anyway, when the actual event has taken place, tax is stated to have been paid. The converse is that if the deduction is disallowed, the assessee would be called upon to pay tax on unrealised/notional capital gain; the treatment is as per the accounting standard, and the claim for deduction conforms with Section 43A of the Act. - HC
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• High Court dismisses appeal; TDS must be remitted to the Income Tax Department per Section 194LA of the Income Tax Act.

  Case-Laws - HC : TDS u/s 194LA - compensation paid to the land owners - in cases where TDS was deducted before payment of consideration, the same is liable to be made over to the Income Tax Department. In cases where the consideration was paid without deduction of tax as per the judgment, it is needless to state that the judgment had worked itself out. - Revenue Appeal dismissed. - HC
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• Reassessment u/s 147 Valid: New Evidence Justifies Notice Issuance and Order Framing by Assessing Officer.

  Case-Laws - AT : Reopening of assessment u/s 147 - Initiation of reassessment proceedings, u/s.148 of the Act and issued notice to the assessee was based on valid reason on the strength of new tangible material which was not before the AO during the original assessment proceedings. Therefore, we are unable to see any ambiguity, perversity or invalidity in the action of the AO in initiating reassessment proceedings, issuing notice u/s.148 of the Act and framing reassessment order u/s.143(3) r.w.s.147 of the Act. - AT
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• PCIT's Attempt to Revise Accepted Tax Loss Deemed Inappropriate Due to Time Limit Violation u/s 263.

  Case-Laws - AT : Revision u/s 263 to set aside an order passed u/s. 154 - Once a loss has been disclosed in the income tax return, and such a loss has not been disturbed in the scrutiny assessment proceedings, such a loss is treated to have been accepted, and quantification thereof cannot be disturbed. What the learned PCIT has done is to disturb this quantum of loss, but then that could have been done within two years from the end of the financial year in which the related scrutiny assessment order was passed. - AT
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• Financial Crisis Delays TDS Filing; No Penalty u/s 271A(2)(g) Due to Reasonable Cause Per Section 273B.

  Case-Laws - AT : Levy of penalty u/s. 271A(2)(g) - default in compliance of TDS provision - financial crisis - The assessee has demonstrated from the material placed on record that because of financial crisis there was delay in depositing TDS, therefore, TDS return filed late which resulted in issuing TDS certificate late - neither the AO nor the Ld. CIT(A) has controverted nor disprove the contention of the assessee that there was financial crisis, therefore, we consider that the case of the assessee is covered by the provision of Section 273B of the Act - No penalty - AT
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• Deduction for Late TDS Interest u/s 37(1) of Income Tax Act: Rewarding Default or Justified Expense?

  Case-Laws - AT : Business expenditure u/s 37(1) - The issue can also be looked into from another angle. Admittedly, the assessee is collecting TDS on behalf of the Government. The TDS collected does not belong to the assessee and has to be remitted to the Government account within the prescribed time. By not depositing the TDS in time, the assessee is not only depriving the Government from utilizing the money for public purpose but also creating problem for the payee in getting timely credit of TDS. On the other hand, the assessee is utilizing the TDS amount for his own benefit. Thus, for the default in depositing the TDS amount in time, interest is levied. - Therefore, allowing deduction of such interest under section 37 of the Act would amount to rewarding the assessee for a default committed. - AT
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• Interest Income from Deposits Not Eligible for Tonnage Tax Scheme u/s 115VI; Classified as 'Other Sources' Income.

  Case-Laws - AT : Addition of interest income under the head ‘income from other sources’ while computing tonnage tax u/s.115VI - The question whether the assessee had maintained separate books of accounts or not is irrelevant to decide the nature and head of income. Therefore, we are of the considered view that interest income earned by the assessee from deposits is not an income derived from shipping business and thus, the same is not entitled for tonnage tax scheme. - AT
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• Assessing Officer Wrongly Disallows Depreciation; Accounting Entries Don't Define Correct Income Calculation for Assessee.

  Case-Laws - AT : Depreciation - Disallowance of amount released from reserves account under normal computation of income - The net result of the accounting entries passed in the books of accounts was that the assessee has claimed enhanced depreciation on concessional duty and at the same time, reversed the same from reserves and surplus account and thus, the net effect of the entry is nil adjustment to income computed for the year. Therefore AO was erred in disallowing depreciation claim on asset and added back to total income without understanding the fact that entries passed in the books of accounts is not determinative to compute correct income of the assessee - AT
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Customs

• High Court rules denial of MEIS benefits unjustified due to technical lapse; supports exporter's intent to claim benefits.

  Case-Laws - HC : Seeking amendment of shipping bill - Benefit of merchandise export from India Scheme (MEIS) - The Customs House, in fact, issued certificate of amendment. Thus, denial of benefits only on such technical lapse on the part of exporter cannot be accepted, particularly, when there was sufficient indication from the other details pointing out exporters' intention to avail the benefit. - HC
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Corporate Law

• Court Quashes Criminal Complaint on Directorship Offences; Pending Compounding Application u/s 441 Addressed.

  Case-Laws - HC : Compounding of offences - threshold limit of holding directorship in companies - This Court is of the opinion that earlier one show cause notice was issued on 07.04.2017, for which the petitioner has sent a reply dated 14.04.2017. Thereafter the petitioner also filed a Compounding Application under Section 441 of the Act on 12.05.2017, for compounding of the offence under Section 165 of the Act. Without considering the Compounding Application, the respondent issued another show cause notice on 23.06.2017 and for which also, the petitioner had sent a reply on 10.07.2017, intimating the pendency of the Compounding Application, to the respondent. - the criminal complaint for offence under Section 165 r/w 165(6) of the Companies Act, 2013, is quashed. - HC
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• Company Seeks Compounding of Offence u/s 67(3) of Companies Act, 1956; No Pending Complaints or Investigations.

  Case-Laws - Tri : Compounding of offences and payment of compounding fee - there are no complaints and there is no inspection/investigation pending. - In the present case, the company has made an application suo motu and has stated that this or similar offences has not been compounded during the last three years - it is considered reasonable to compound the offence under Section 67(3) of the Companies Act, 1956 - Tri
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Indian Laws

• Court Upholds Cheque Dishonor Claim: Appellant's Coercion Defense Rejected, Previous Financial Dealings Point to Legitimate Debt.

  Case-Laws - SC : Dishonor of Cheque - discharge of legally enforceable debt - the defence sought to be put forth relating to the cheque and other documents having been obtained by force, cannot be accepted as a probable defence when the respondent successfully discharged the initial burden cast on him of establishing that the cheque signed by the appellant was issued in his favour toward discharge of a legally recoverable amount. The fact that the appellant has admitted about an earlier transaction where according to him, he had borrowed the amount and repaid the same in the year 1995, would indicate that the appellant and the respondent had entered into financial transactions earlier as well and another transaction was probable between the parties who were known to each other. - SC
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Central Excise

• Appellants entitled to CENVAT credit refund for export services u/r 5; rejection based on incorrect notification.

  Case-Laws - AT : Refund of CENVAT Credit - The appellants have claimed the refund in respect of the input service used in relation to export of finished goods, therefore, the refund is correctly governed by Rule 5 read with Notification No. 27 of 2012-CE(NT), therefore, rejection of refund referring to Notification 41/2007-ST is absolutely incorrect being not relevant. - even if the document is bearing the name and address of the Mumbai office, only on this ground, refund cannot be rejected since service is attributed to the appellant’s factory. - AT
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VAT

• Late CST Registration Amendment Allowed; Rules Permit Date Changes Despite Delay; Respondents Must Update Portal for Compliance.

  Case-Laws - HC : Amendment of CST Registration Certificate - the application for amending the CST Registration Certificate has been made belatedly on 19.09.2020, nevertheless, there is no embargo under the aforesaid Rules to amend the date in the CST Registration Certificate - the records will be available with the respondents and therefore the respondents cannot reject the request of the petitioner merely stating that it is not possible to amend the Certificate at a later point of time. It was for the respondents to make suitable internal changes in their Web Portal to amend the Certificates of registration. - HC
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Case Laws:

• GST

• 2021 (12) TMI 420
  CENVAT Credit - input service or not - out-door catering services - HELD THAT:- The statutory provision - Rule 2(1) defining Input Service post 01.04.2011 is very clear and the out-door catering services when such services are used primarily for personal use or consumption of any employee is held to be excluded from the definition of Input Service . It cannot be said that the High Court has committed any error in denying the input tax credit and holding that such a service is excluded from input service - SLP dismissed.

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• 2021 (12) TMI 419
  Refund of excess payment of IGST - Petitioner has failed to submit any reply with regard to the show cause notice - Interpretation of the term subsequently held as per Circular dated 25.09.2021 - Section 77 of CGST Act, 2017 and Section 19 of the IGST Act, 2017 - HELD THAT:- While referring to the aforesaid circular which is clarificatory in nature of the word subsequently held , it is contended by learned counsel for the Petitioner that since the said word referred to the aforesaid provisions of Section 77 of the CGST Act, 2017 read with Section 19 of IGST Act, 2017, has been interpreted by observing inter alia that the refund under the said sections is also available when the inter-State or intra-State supply made by a taxpayer, is subsequently found by taxpayer himself as intra-State and inter-State respectively, therefore, the matter may be remitted to the concerned appellate authority for the consideration of his claim/application made under sub-rule (1) of Rule 89 of the Rules, 2017 for refund of Rs. 12,69,255/- afresh in the interest of justice. T he circular dated 25.09.2021 interpreting and/or clarifying the word subsequently held , it would, therefore, be appropriate to remit the matter back to the concerned appellate authority. The order impugned is accordingly set aside and the matter is remitted back to the concerned appellate authority with a direction to decide the same afresh - petition allowed by way of remand.

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• 2021 (12) TMI 418
  Attachment of Bank Accounts - Section 83 of the Goa Goods and Services Tax Act, 2017 - HELD THAT:- Section 83 of the Goa GST Act would come into operation only if any proceedings are pending under Sections 62, 63 or 64 or Section 67 or section 73 or section 74. Admittedly, as noted above, there are no proceedings pending or initiated as against the petitioners under any of the provisions. Neither any show cause notice has been issued to any of the petitioners. It appears that the impugned order is passed only because the respondent No.1 has appointed an appropriate officer for determining the tax liability of the petitioners. Mere appointment of an appropriate officer for determining the tax liability will certainly not be a ground to initiate any action, like the present one i.e. of provisionally freezing the bank accounts of the petitioners under the Goa GST Act. The impugned order cannot be sustained - petition allowed.

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• 2021 (12) TMI 417
  Principles of Natural Justice - Transitional Credit - un-utilized input tax credit in their VAT Account - adequate notice was given to the petitioner and petitioner failed to avail the opportunity - HELD THAT:- There is no clarity on what basis an amount of Rs. 10,32,218/- has been determined in the impugned order. The petitioner has also not filed a reply in response to notice dated 20.11.2020. Ultimately, if the petitioner is liable to establish that the amount of Rs. 5,34,633/- was the transitional credit in TRANS-1 it cannot be denied by the respondent. On the other hand if the petitioner is liable to pay any tax, it requires a detailed consideration by the respondents. Considering the same the impugned orders are quashed and the case is remitted back to the 1st respondent to pass a speaking order within the period of 45 days from the date of copy of receipt of this order - the order to be passed by the 1st respondent shall be after due compliance within the principles of natural justice and after affording an opportunity of hearing to the petitioner. Petition allowed.

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• 2021 (12) TMI 416
  Award of Excess Royalty Collection Contract (ERCC) to the Royalty Contractors - double burden on the miner/lease holder/end user - reverse charge mechanism - HELD THAT:- Once, the reverse charge mechanism itself has not been contested by the respondents and it is an accepted proposition and the same is further supported by the pleadings filed by the respective respondent parties, we do not find any reason to make any further adjudication in the matter. Petition allowed.

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• 2021 (12) TMI 415
  Liability to pay GST under Normal or under Reverse Charge Mechanism - Import of Services which are not rendered in India - Intermediary services - HELD THAT:- From the submissions made by the applicant it is not very clear as to ; what is the service rendered and who is the recipient of service. The applicant has just made a statement that the recipient of service is located outside India and that they are not the recipient of service. No supporting evidences/submissions have been made by the applicant in this regard. The applicant has just made a statement that they are not an intermediary, How they are not an Intermediary has not been brought out clearly, in their submissions, with evidences and records. In fact the subject application is very ambiguous and cryptic and no evidences are forthcoming supporting the claim of the applicant that, the services are not imported by them and the applicant is not an intermediary - the applicant was asked during the Final Hearing held on 28.09.2021 to explain the facts/transactions with evidence and detailed submissions in support of their contention that the impugned services are not imported by them and the applicant is not an intermediary but till the date of passing this order, they have not responded at all. The Applicant s questions are thus not answered.

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• 2021 (12) TMI 414
  Classification of services - pure services or not - Project Development Service (i.e. Detailed Project Report Service) and Project Management Consultancy services ( PMCS ) provided by the applicant to the recipient under the Contract from State Urban Development Authority (herein after referred as SUDA ) and the Project Management Consultancy services ( PMC ) under the Contract for PMAY - activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India? - serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018. HELD THAT:- As per Sl. No. 3 of Notification No. 12 / 2017-CT (Rate) dated 28.06.2017 Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution are exempt from tax - the Authority for Advance Ruling has observed that SUDA is not covered in the definition of Central Government, State Government, Local Authority, Government Authority or Government Entity. As per the Registration Certificate issued to SUDA and as per the TDS Credit Received Summary provided by the Appellant, SUDA is deducting GST-TDS amount from each and every payment made by them, in term of section 51 of the Act - the Consultancy services rendered by the Appellant under the contract with SUDA, and for PMAY are in relation to functions entrusted to Municipalities / Panchayats under Article 243W / 243G of the Constitution of India. Whether such services provided by the Appellant would qualify as Pure services? - HELD THAT:- The services mentioned in the contract would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods) as provided in serial number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28 June, 2017, as amended by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 issued under Central Goods and Services Tax Act, 2017 ( CGST ) and corresponding Notifications No.- KA.N.I.-2-843/X1- 9 (47) / 17-UP. Act-1 - 2017 - Order - (10) 2017 Lucknow, dated June 30, 2017 issued under Uttar Pradesh Goods and Service Tax Act, 2017 ( UPGST Act ), where the Project cost includes the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service, and, thus, be eligible for exemption from levy of CGST and UPGST, respectively.

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• Income Tax

• 2021 (12) TMI 413
  Reopening of assessment u/s 147 - Bogus share transactions - eligibility of reasons to believe - HELD THAT:- Revenue received information in respect of two penny stock companies sometime in February 2019 and petitioner was one of the beneficiary who had traded in the scrip of those two penny stock companies - also mentioned that the assessee was one of the beneficiary of transaction classified as non genuine shares sale / purchase transactions and assessee had traded to the tune of Rs. 33,68,750/- in one scrip and Rs. 1,42,42, 303/- in another scrip for A.Y.-2012-2013. According to the reasons petitioner is one such person who has availed accommodation entries of bogus sale of two penny stock companies and, therefore, the transactions are not genuine and are merely accommodation entries executed solely to accommodate unaccounted income of assessee. We do not find in these reasons anything which can be termed illusory, hypothetical or a matter of conjecture. There is nothing wrong in the notice for us to set it aside exercising our jurisdiction under Article 226 of the Constitution of India. Validity of order passed u/s 144B - As argued AO has proceeded to pass the assessment order dated 13th May 2021 disregarding the stay granted by this court - HELD THAT:- This assessment order has been passed in gross breach of the order passed by this court. We would add this order amounts to willful disobedience of the order passed by this court. In fact the Assessing Officer has recorded in the assessment order there is a stay granted but because limitation in this case will be barred on 30th March 2021, he has no option but to complete the case before the limitation and passes the order on 13th May 2021. In the assessment order, the Assessing Officer is referring to a letter stating that the assessee has furnished the Hon ble High Court s letter and reproduce the letter. But it is not a letter but an order of the court, which also shows total non application of mind by the Assessing Officer and by referring to an order of this court as letter the Assessing Officer is undermining the authority of this court. At the request of Mr. Pinto we are not issuing notice for contempt against the Assessing Officer but at the same time such gross disobedience cannot be ignored. This order, therefore, has to be quashed and set aside. Since we have found there was no error in the notice dated 26th March 2019 issued under Section 148 of the Act, we would remand the matter back to that stage. The Assessing Officer shall consider the submissions of petitioner and shall, within 6 weeks from the time this order is uploaded, pass fresh order after strictly complying with the provisions of Section 144B including giving a personal hearing to petitioner. As regards the Assessing Officer who has passed the assessment order in gross breach of order passed by this court and we would say in willful disobedience of the order of this court, the Assessing Officer shall pay a sum of Rs. 25,000/- as donation from his / her personal account to P. M. Cares Fund.

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• 2021 (12) TMI 412
  Exemption u/s 11 - grant of registration u/s 12AA - Assessee engaged providing activities like sale/purchase of medicine, running of pathological clinic, x-ray clinic, polyclinic etc. - assessee contended that Trust has been established for general charitable objective as specified in Section 2(15) of the Act, which provides medical services to the public at large without discrimination of caste, creed and religion - As submitted polyclinic which the assessee Trust has established and being administered undertakes pathological tests, x-ray and render other medical services comes within the purview of medical relief within the meaning of charitable purpose as defined in Sub-section 15 of Section 2 of the Income Tax Act, 1961 - ITAT held that assessee would qualify for grant of registration under Section 12AA of the Act and their activity is undoubtedly a charitable activity - HELD THAT:- As decided in OXFORD ACADEMY FOR CAREER DEVELOPMENT [ 2008 (12) TMI 192 - ALLAHABAD HIGH COURT] as relying on AMERICAN HOTEL LODGING ASSOCIATION EDUCATIONAL INSTITUTE [ 2008 (5) TMI 17 - SUPREME COURT] wherein it was held that the prescribed authority while examining an application for grant of registration is only required to examine the nature, activities and genuineness of the institution and mere existence of profit/surplus did not disqualify the institution. Also held in ST. LAWRENCE EDUCATIONAL SOCIEITY (REGD.) ANOTHER [ 2011 (2) TMI 72 - DELHI HIGH COURT] institution seeking exemption under the provisions of the Act should not generate a quantitative surplus was a condition which was legally untenable. In the light of the above discussion, we hold that the order passed by the Tribunal does not call for any interference. In the result, the appeal is dismissed and the substantial questions are answered against the Revenue.

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• 2021 (12) TMI 411
  Validity of assessment u/s 144B - National Faceless Assessment - order passed without issuing a Show Cause Notice and a draft assessment order which is mandated under Section 144B(1)(xvi)(b) - HELD THAT:-National Faceless Assessment Centre would introduce a system of alerts and checks to ensure that no final Assessment order is passed without prior issuance of a Show Cause Notice as well as draft assessment order and without considering reply by the Assessee and a request, if any, of the Assessee for an opportunity of hearing. As in view of Section 144B (9) of the Act that any assessment order not made in accordance with the procedure laid down in Section 144B of the Act would be non est, this Court directs the Principal Chief Commissioner to examine as to whether the National Faceless Assessment Centre would withdraw a final assessment order, passed in violation of principles of natural justice and/or without issuing Show Cause Notice and draft assessment order as well as without considering the reply and/or assessee s request for a personal hearing. She states that she would file an affidavit after discussing the aforesaid suggestions with CBDT and with her officers within three weeks. List on 24th December, 2021.

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• 2021 (12) TMI 410
  Deduction u/s 80IB(10) for its profits derived from sale of residential units - separate sales to the same buyer of two separately situated independent residential units - AO considered the said claim and rejected the same holding that the embargo placed under Section 80IB(10) would stand attracted as the area of the residential complex exceeds 1500 sq. ft. - ITAT also denied deduction - Whether the built up area of the two independent residential units can be clubbed merely because one of the units is for the residence of the servants and the purported findings of the Tribunal denying deduction of Rs. 4,05,48,257/- under Section 80IB(10) of the Income Tax Act, 1961 are arbitrary, erroneous, unreasonable and perverse? - HELD THAT:- The argument advanced by the assessee before the Tribunal as has been advanced before us by the learned Senior Counsel for the appellant assessee with regard to the fact that two units were separate and thereby separate documents in respect of the sale, was considered by the Tribunal and a factual finding has been recorded by the Tribunal that the utility rooms/servants quarters cannot be sold independently to any other person other than the flat owner to whom the said servant quarters is attached - Tribunal concluded that it is of absolutely no relevance whether servant quarters documentation has been made by a separate conveyance deed or by way of a separate letter to the concerned flat owner and the substance of the transaction needs to be seen than its form - Tribunal also noted the facts which are brought on record by the AO in respect of the various sales which have been done by the appellant assessee and concluded that it is not in dispute that while taking into account inner measurement of the 73 residential units plus the respective servants quarters, the total extent exceeds 1500 sq. ft. thereby violating Section 80IB(10)(c). Thus, it rejected the case of the assessee. Considering the findings recorded by AO, the first appellate authority and the Tribunal, we find that the matter is entirely factual and the documents have been gone into and on our part also we have examined the Indenture of Conveyance dated 20th September, 2010 executed by the assessee in favour of the purchaser, which clearly shows that prior to the execution of conveyance deed there were agreements entered into between the parties which will go to show that the utility rooms/servants quarters forms integral part of the residential flat. No substantial question of law - Appeal dismissed.

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• 2021 (12) TMI 409
  Correct head of income - income from house property OR business income - expenses pertaining to said property had been allowed as business expenditure the Appellate Tribunal erred in treating the above income as income from house property - HELD THAT:- The questions covered by (a) and (b) are similar to the questions raised by the assessee for the AY 2003-04 [ 2021 (9) TMI 736 - KERALA HIGH COURT] Court vide order [ 2021 (9) TMI 736 - KERALA HIGH COURT] has answered the said questions against the assessee and in favour of the Revenue. By following the reasons stated therein, question nos. (a) and (b) are answered in favour of the Revenue and against the assessee. Disallowance of the amount being year-end provision for payment of commission as an unascertained liability - AO disallowed the provision made by the assessee towards commission payable to STU commission agents - HELD THAT:- The ex post facto reversing of the entry and payment of commission in the subsequent year together with deduction of TDS is not acceptable while treating the provision made for the Assessment Year 2009-10. The subject expenditure does not satisfy the provision of Section 40(a)(ia) - A mere provision of expenditure is not allowable as expenditure inasmuch as the assessee has not suffered actual expenditure on account of the said commission payable to the agents. The conclusion and reasoning of the Assessing Officer was affirmed by the CIT (Appeals). The Tribunal independently examined the tenability of the deduction, considered every facet of the explanation given by the assessee and whether it merits acceptance as an expenditure for the subject Assessment Year. Assessee could be given liberty to prove actual payment made in favour of commission agents in any subsequent year before the Assessing Officer, place such proof of the expenditure incurred on account of commission paid to the agents and upon such details being furnished by the assessee, the Assessing Officer is required to pass revised assessment order in respect of such claims. With the above observation, question no.(c) is answered in favour of the Revenue and against the assessee. Interest component in the foreign exchange gain was a revenue receipt - HELD THAT:- As this Court in the decision reported in Apollo Tyres Ltd v. Assistant Commissioner of Income Tax [ 2019 (5) TMI 33 - KERALA HIGH COURT] has recorded a finding that the gains on the cancellation of forward contracts are a capital receipt and not a revenue receipt. Such a finding has become final between the assessee and the Revenue. The underlined portion excerpted above is liable to be set aside for it treats the capital gain as revenue receipt. From the views taken by this Court, the receipt is treated as capital gain and this is accepted by the Tribunal. However, an unintended observation is resulting in contradictory findings. We affirm the substantial findings recorded in favour of the assessee in paragraph 31 of the order under appeal, and while affirming the said finding we set aside the following observation in the order of the Tribunal - However, foreign exchange fluctuation related to the interest portion is to be treated as revenue receipt which shall be brought to tax. Being so, this ground of the assessee is partly allowed. - the question is answered in favour of the assessee and against the Revenue. Foreign exchange fluctuation has to be treated as revenue income - HELD THAT:- As not examined by the authorities on the actual details furnished in Schedule IX, the effect thereof, and Section 43A, as is applicable, enables the assessee to revise the value before actual payment of such amount. The assessee, it is brought to our notice that, in the subsequent Financial Year, has duly accounted for this item in the Financial Year 2008-09 and added it to the income in the Financial Year 2009-10. The authorities and the Tribunal have denied the claim more by inappropriately appreciating the accounting standard followed by the assessee and the effect to be given at the stage of preparation of P L account and balance sheet for the year ending 31.03.2009 and the claim to which the assessee is entitled while filing the return. As we understand from the record, the gist of the method followed by the assessee is that, the assessee in Schedule IX claimed less deduction than claimable by adjusting the notional capital gain on Forex and corresponding deductions of the same amount while computing the net income of assessee for purpose of tax. In effect, both credit and debit are given and the tax liability is not materially impacted. Anyway, when the actual event has taken place, tax is stated to have been paid. The converse is that if the deduction is disallowed, the assessee would be called upon to pay tax on unrealised/notional capital gain; the treatment is as per the accounting standard, and the claim for deduction conforms with Section 43A of the Act. For the above reasons, we answer question no.(e) in favour of the assessee and against the Revenue.

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• 2021 (12) TMI 408
  GP estimation on purchase of liquor - best judgment assessment - HELD THAT:- For the two assessment years, different percentage of gross profits have been taken, the addition for the two years is on the higher side. The assumption of the assessing officer that three star hotels earn huge profits cannot be a proposition of general application. Various factors will determine the extent of profits. Since the assessee failed to maintain the books of account, best judgment assessment was validly resorted to. Though the assessing officer is entitled to enter into some guess work while carrying out the best judgment assessment, we are of the opinion that 70% or even 65% was excessive for the said two years. We are of the considered view that 55% of the gross profit would be a justifiable addition in these two revision petitions. We allow these two revision petitions and direct the sales turn over of liquor to be estimated for the assessment years 2010-11 and 2011-12 by adding gross profit at 55% of the purchase value of liquor and beer sold by the assessee.

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• 2021 (12) TMI 407
  TDS u/s 194LA - compensation paid to the land owners which was arrived at based on negotiated settlements - acquisition of land initiated under Section 11 of the Land Acquisition Act, 1894 - Whether tax is liable to be deducted at source for amounts paid as compensation arrived at under negotiated settlements during acquisition of property? - HELD THAT:- Acquisition of property becomes compulsory in nature whenever and wherever property is obtained by the government, pursuant to proceedings initiated for land acquisition under the relevant land acquisition laws. Negotiated settlements arrived at with government or governmental bodies for transfer of property, after proceedings for acquisition have been initiated remain in the realm of compulsory acquisition. The decision to part with the property, which is the subject matter of a negotiated settlement, does not originate from any exercise of a free mind of the owner of the property. It stems from the compulsion imposed by proceedings for acquisition. The transfer of property remains in the nature of compulsory acquisition. Once the proceedings for acquisition are initiated under law, whatever be the nature of payment, whether as compensation for acquisition or as consideration for a negotiated settlement, the character of the acquisition remains compulsory in nature and hence Section 194LA of the Act will apply. The judgement in Balakrishnans case [ 2017 (3) TMI 745 - SUPREME COURT] clearly covers situations of this nature. In the above circumstances, the judgment of the learned Single Judge is liable to be set aside. We do so, in all these appeals. After the impugned judgment there was no stay of operation of the judgment and the compensation or consideration as the case may be would have been paid without deducting the TDS. We clarify that in cases where TDS was deducted before payment of consideration, the same is liable to be made over to the Income Tax Department. In cases where the consideration was paid without deduction of tax as per the judgment, it is needless to state that the judgment had worked itself out. Appeal dismissed.

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• 2021 (12) TMI 406
  Deduction u/s 80P - assessee has earned interest income from nationalized bank, i.e., other than its Members or other Co-operative Societies - HELD THAT:- Any interest income earned from its Members or any investments made with the co-operative societies will qualify for the grant of deduction under Section 80P(2) and 80P(2)(d) of the Act. AO has worked out exclusion of income from the eligible amount under some formula without disclosing what is exact interest amount earned from nationalized bank, what are the expenditure and how he has worked out the disallowance - findings of the learned Assessing Officer for both the assessment years. It is totally not discernable. AO further nowhere recorded the basic facts. In Assessment Year 2013-14, in paragraph No.3.1, he simply observed that assessee has gross receipt of Rs. 1,09,06,710/-; while the interest earned on deposits with other banks other than Co-Operative Society or Banks is shown at Rs. 43,78,709/-. It is pertinent to observe that if investment has been made with the Co-operative Bank, then it will qualify for deduction under Section 80P(2)(d) of the Act. Therefore, we allow both these appeal statistically and remit the issue to the file of the Assessing Officer for re-adjudication. The learned Assessing Officer shall examine the issue afresh in the light of judgment in the case of State Bank of India vs. CIT [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] and keeping in mind the provisions of Section 80P(2)(d) of the Act. It is also to be kept in mind that a co-operative bank first happens to be a society; therefore, interest income earned from investment with co-operative bank would qualify for grant of deduction under Section 80P(2)(d) of the Act. The issues in both the appeals are remitted back to the file of the Assessing Officer. Appeals filed by the assessee are allowed for statistical purposes.

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• 2021 (12) TMI 405
  Deduction u/s 80P - profits and gains attributable to non-members arising as a result of advancement of loans - assessee s (cooperative societies) engaged in the providing credit facilities to the non-members along with its members - HELD THAT:- As decided in case THE MAVILAYI SERVICE COOPERATIVE BANK LTD. ORS. [ 2021 (1) TMI 488 - SUPREME COURT] absolute denial of deduction under Section 80P(2)(a)(i) of the Act to the assessee s (cooperative societies) engaged in the providing credit facilities to the non-members along with its members is not warranted under the Act and only that part of profit and gains that is attributable and/or pertains to the non-members shall not be allowed as deduction under Section 80P(2)(a)(i). Thus, the profits and gains attributable to non-members arising as a result of advancement of loans was held to be not an allowable deduction under Section 80P(2)(a)(i) of the Act. - Appeal of the assessee is dismissed.

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• 2021 (12) TMI 404
  Penalty levied u/s. 271(1)(c) - validity of notice issued u/s 274 - mere failure to tick mark the applicable grounds - non-strike off of the irrelevant part in the notice issued u/s.271(1)(c) - Whether notice was issued stating that assessee has concealed particulars of income or furnished inaccurate particulars of such income? - HELD THAT:- As in the case of Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT ] while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s.271(1)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. Ratio of this full bench decision of the Hon ble Bombay High Court (Goa) squarely applies to the facts of the assessee s case as the notices u/s. 274 r.w.s. 271(1)(c) of the Act were issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued On a perusal of the notices issued u/s. 274 r.w.s. 271(1)(c) of the Act, we observe that the Assessing Officer has not specified any limb for which the notices were issued i.e., either for concealment of particulars of income or for furnishing inaccurate particulars of such income. Assessing Officer did not strike off irrelevant limb in the notices specifying the charge for which notices were issued. It can be seen from the notices issued u/s. 271(1)(c) of the Act it appears that the charge was for both the limbs. - Decided in favour of assessee.

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• 2021 (12) TMI 403
  Exemption u/s 11 - denial of claim as assessee has earned on account of IPD charges from patients which according to AO was nothing but the charges recovered from accommodation facilities provided to the customers who visits the trust to attend the shivirs and participate in the various activities of trust - HELD THAT:- We find that AO while deciding the case for A.Y. 2009-10 had held that the assessee was not eligible for exemption u/s 11/12 of the Act and the order of AO was upheld by CIT(A). When the matter for A.Y. 2009-10 was carried before the Tribunal, Tribunal held that AO was not justified in denying the exemption u/s 11/12 of the Act to the assessee [ 2013 (10) TMI 211 - ITAT DELHI] Thereafter, Revenue had carried the matter before the Hon ble Uttarakhand High Court [ 2019 (2) TMI 1616 - UTTARAKHAND HIGH COURT] and the Hon ble Uttarakhand High Court had upheld the order of the Tribunal. Against the order of Uttarakhand High Court, Revenue had filed SLP before the Hon ble Apex Court [ 2019 (8) TMI 535 - SC ORDER] which was dismissed. We also find that identical issue arose in assessee s own case in A.Y. 2014-15 and the Co-ordinate Bench of Tribunal had dismissed the appeal of the Revenue by following the order of Co-ordinate Bench of Tribunal for A.Y. 2010-11 to 2013-14 and relying on Hon ble Uttarakhand High Court order in assessee s own case for A.Y. 2009-10. Since the facts in the year under consideration being identical to that of earlier years, we find no reason to interfere with the order of CIT(A). Thus the grounds of Revenue are dismissed.

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• 2021 (12) TMI 402
  Reopening of assessment u/s 147 - receipt of information from Sales Tax Department, Maharashtra which had conducted inquiries in cases of several dealers located on across Maharashtra and had unearthed of a racket involving more than 1935 Hawala Dealers and more than 33,700 beneficiaries including the present assessee - HELD THAT:- We incline to hold that initiation of reassessment proceedings, u/s.148 of the Act and issued notice to the assessee was based on valid reason on the strength of new tangible material which was not before the AO during the original assessment proceedings. Therefore, we are unable to see any ambiguity, perversity or invalidity in the action of the AO in initiating reassessment proceedings, issuing notice u/s.148 of the Act and framing reassessment order u/s.143(3) r.w.s.147 of the Act. Therefore, we are of the opinion that the findings recorded by the First Appellate Authority is quite reasonable and justified and thus, the same does not call for any interference. Consequently, the findings of the Ld. CIT(Appeals) is upheld and Ground No.1 raised in appeal by the assessee is dismissed. Estimation of income - bogus purchases - Disallowance of 25% of total impugned bogus purchases - HELD THAT:- As per case M/S. PARAMSHAKTI DISTRIBUTORS PVT. LTD. [ 2019 (7) TMI 838 - BOMBAY HIGH COURT] we are of the considered view that it would be reasonable to sustain addition @ 10% of the amount of bogus purchases, being profit element involved therein.

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• 2021 (12) TMI 401
  Rental income received from letting out the house property - AO disallowed the claim of deduction claimed u/s 24 - DR submitted that the CIT(A) erred in not appreciating the provisions of section 56(2)(iii) - HELD THAT:- CIT(A) has given a categorical finding that the assessee purchased bare office space in bare shell condition and as per the Leave and Licence Agreement/Deed of Adherence all the fit out works including furniture, fittings and fixture etc. were required to be executed by the licensee and there was no rent element in respect of furniture, fitting, fixtures etc. It is a clear case of rental income of the assessee received from letting out the house property which can be subject to tax u/s 22 of the Act. Thus the CIT(A) has rightly allowed the interest expenses and partly allowed the portion which is made as per total addition. CIT(A) has categorically observed that all the fit out workings including furniture, fitting, fixtures etc. were required to be executed by the licensee. The observations made by the CIT(A) are in consonance with the Leave and Licence Agreement and no contrary evidence was put up before us or before any revenue authorities by the assessee. Therefore, there is no need to interfere with the order of the CIT(A). Hence cross objection of the assessee is dismissed.

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• 2021 (12) TMI 400
  Estimation of income - Bogus purchases - Case was selected for scrutiny by issuing notice u/s. 143(2) of the Act. Assessing Officer based on information from the Sales Tax Department, Mumbai about the accommodation entries provided by various dealers and assessee was also one of the beneficiary from those dealers - HELD THAT:- There should be an estimation of profit element from these purchases and should be estimated reasonably as the assessee could not conclusively prove that the purchases made are from the parties as claimed, especially in the absence of any confirmations from them. Taking the totality of facts and circumstances, keeping in view the nature of business of the assessee i.e. trader in Bright Steel Bars and Wire rods, it would be justified if the profit element embedded in those purchases are estimated at 12.5% - Appeal of the assessee is partly allowed.

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• 2021 (12) TMI 399
  Levy of interest u/s. 220(2) - As per AO the interest u/s. 220(2) is attracted from the expiry of the period of 30 days from the issuance of the income tax computation form - HELD THAT:- As per provisions of section 220(2) and also to the circular No. 334 dated 03.04.1992 which says in unequivocal terms that where an assessment order is cancelled under section 146 or cancelled/set aside by an appellate/revisional authority and the cancellation/setting aside become final, no interest U/s. 220(2) can be charged pursuant to the original demand notice. The necessary corollary of this position will be that even when the assessment is reframed, interest can be charged only after the expiry of 30 days from the date of service of demand notice pursuant to such fresh assessment order. CIT(A) also followed the decision of Hindalco Industries Ltd. [ 2005 (8) TMI 533 - ITAT MUMBAI] where it was held that on set aside of assessment, operation of original assessment order stands withdrawn and the demand notice issued pursuant to such assessment order becomes inoperative and stands extinguished; and therefore, in a case where the assessment was set aside, interest u/s. 220(2) has to be charged only after expiry of 30 days from the date of service of demand notice pursuant to fresh assessment order but it shall not relate back to the date of the assessment order which was set aside. On a perusal of the circular referred to by the ld. CIT(A) and also the order of the Tribunal in Hindalco Industries Ltd. (supra), we are of the considered opinion that the legal position does not admit of any doubt and the issue is no longer res integra. It is clear that the interest u/s. 220(2) of the Act shall be levied with reference to the order passed subsequent to remand u/s. 254, but not with reference to the assessment order that stood set aside - Decided against revenue. Addition of prior period expenses - HELD THAT:- For expenditure on account of payment of bonus to the employees and on account of repairs and maintenance were incurred wholly and exclusively for the purpose of business. Absolutely, there cannot be any dispute on this aspect because it is born out of record. To this factual position, ld. CIT(A) obviously applied the law laid down by Hon ble Apex Court in the case of Kedarnath Jute Manufacturing Co. [ 1971 (8) TMI 10 - SUPREME COURT] and reached a conclusion that such an expenditure is an allowable expenditure. We do not find anything illegality or irregularity in the conclusion reached by the ld. CIT(A) and accordingly, uphold the same. This ground of Revenue is dismissed.

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• 2021 (12) TMI 398
  Revision u/s 263 to set aside an order passed u/s. 154 - eligibility of the loss from specified business being eligible for being carried forward as such - whether the observations about the eligibility of loss being carried forward does indeed affect the interests of the assessee in any manner? - HELD THAT:- Assessee deserves to succeed for these short reasons alone. In the first place, as learned counsel for the assessee vehemently submits, the issue regarding eligibility for set-off is wholly academic so far as the year of incurring loss in question is concerned. The very exercise of seeking a specific mention, by moving the rectification petition, about the eligibility for carrying forward of loss was thus, in a way, somewhat academic and more as a measure of abundant caution rather than the requirement of law. The rectification order was thus wholly infructuous in the eyes of the law. Once a loss has been disclosed in the income tax return, and such a loss has not been disturbed in the scrutiny assessment proceedings, such a loss is treated to have been accepted, and quantification thereof cannot be disturbed. What the learned PCIT has done is to disturb this quantum of loss, but then that could have been done within two years from the end of the financial year in which the related scrutiny assessment order was passed. Limited scope of mistake apparent on record under section 154 and in the light of Hon ble Supreme Court ;s judgment in the case of ITO Vs Volkart Brothers [ 1971 (8) TMI 3 - SUPREME COURT] could not have been disturbed in the proceedings under section 154, and what cannot be done under section 154, cannot be done under section 263 r.w.s. 154 either. Whichever way one looks at it, the impugned revision order is vitiated in law. DR s plea that the quantification of loss in question was never examined at any stage in the scrutiny assessment proceedings, and, therefore, it cannot be allowed to be carried forward, all we can say is that the Assessing Officer could surely have done so in the scrutiny assessment proceedings under section 143(3), but just because he has missed the bus, we cannot bend the law to allow that examination now. The finality of time limits has to be respected and followed - we quash the impugned revision proceedings. The assessee gets the relief accordingly.

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• 2021 (12) TMI 397
  Deemed dividend addition u/s 2(22)(e) - Whether the impugned transaction is in the nature of business transaction and not in the nature of loan or advances? - HELD THAT:- After perusing the judgments of Rameshwarlal Sanwarmal [ 1979 (12) TMI 1 - SUPREME COURT] , CIT Vs. Impact Containers (P.) Ltd. [ 2014 (9) TMI 88 - BOMBAY HIGH COURT] and CIT Vs. Jignesh P. Shah [ 2015 (1) TMI 1165 - BOMBAY HIGH COURT] and CIT Vs. Ankitech Pvt. Ltd. [ 2011 (5) TMI 325 - DELHI HIGH COURT] and after giving due credence to the circular of the CBDT and looking into the facts of the instant case, where it can be held that the transaction is a commercial transaction and hence the provisions of Section 2(22)(e) are not attracted - Decided in favour of assessee.

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• 2021 (12) TMI 396
  Reopening of assessment u/s 147 - Unexplained Cash deposits - HELD THAT:- As reasons recorded by the Assessing Officer while reopening the case have been grossly erroneous as at the first instance there were no such cash deposits in the bank account. Further, an amount has been deposited through cheques which pertain to regular course of business of the assessee. Hence, in view of the erroneous reasons recorded on account of unexplained cash deposits by the Assessing Officer, the addition made on this account cannot be upheld. Unexplained investments u/s 69 - Since, the amount stands assessed in the hands of the assessee for the A.Y. 2006-07, the property involved is the same and there was no evidence of payment of Rs. 10,00,000/- by the assessee, we hold that no further addition is required to be made in the instant assessment year. In view of these facts, the order of the ld. CIT(A) cannot be sustained. Appeal of assessee allowed.

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• 2021 (12) TMI 395
  Levy of penalty u/s. 271A(2)(g) - assessee company had failed in compliance of TDS provision by not filing due quarterly return within the due date nor furnished certificate as required under Section 203 - assessee company had failed in compliance of TDS provision by not filing due quarterly return within the due date nor furnished certificate as required under Section 203 - HELD THAT:- As per decision of Jyoti Power Corporation (P) Ltd. [ 2018 (2) TMI 671 - GUJARAT HIGH COURT] wherein it is held that since the assessee had deposited tax deducted along with interest and fully explain the reason for late deposit of such amount during the course of penalty proceeding which was neither controverted or found to be false by the JCIT, provision of Section 273B would be attracted and no penalty could be levied upon assessee. The assessee has demonstrated from the material placed on record that because of financial crisis there was delay in depositing TDS, therefore, TDS return filed late which resulted in issuing TDS certificate late. The assessee has attached copy of Income Tax Return, copy of bank statement of Tamil Mercantile Cooperative Bank, HDFC Bank showing borrowing of amount on 18.02.2013 for payment of TDS on 20.03.2013. The assessee has also submitted before the AO and Ld. CIT(A) that there was financial crisis in the case of the assessee company due to which TDS was deposited late - neither the AO nor the Ld. CIT(A) has controverted nor disprove the contention of the assessee that there was financial crisis, therefore, we consider that the case of the assessee is covered by the provision of Section 273B of the Act as it had submitted an explanation which found to be reasonable and the same has not been disproved by the lower authorities. Therefore, the appeal of the assessee is allowed.

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• 2021 (12) TMI 394
  TDS u/s 195 - deduct tax at source on the remittance to IIRF Holdings XVI Ltd. towards buyback of shares - AO was of the firm belief that neither any tax has been deducted at all in respect of the above remittances to the non-residents nor any copy of the order has been furnished by the assessee u/s 195(2) /195(3) of the Act or certificate issued u/s 197(1) - HELD THAT:- As gone through the statement of HSBC placed at PDF. We find that the remittances have been made on 31.05.2013 which conclusively proves that the assessee company remitted the buy-back of equity shares on or before 31.05.2013 which makes the CBDT Circular 3/2016 dated 26.02.2016 squarely applicable as in that Circular, the Board has categorically spelled out that the consideration received on 01.04.2000 to 31.05.2013 would be taxed as capital gains in the hands of the recipients in accordance with section 46A of the Act and no such amount shall be treated as dividend in view of provisions of section 222(iv) of the Act. We are of the considered view that the facts of the case squarely fall within the circular of CBDT [supra] which is binding on the Revenue authorities and has been rightly followed by the first appellate authority. Therefore, no interference is called for.

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• 2021 (12) TMI 393
  Approval u/s 80G (5) rejected - registration u/s 12AA already granted - as submitted that the order of rejecting Section 80G benefit by the CIT(Exemption) seem to be generic in nature as no verification of documents as well as the grant of Section 12AA Registration was not taken into consideration by the CIT(Exemption) - Whether CIT (Exemption) has confused an application for exemption u/s 80G with that for registration u/s 12AA and altogether ignored that registration u/s 12AA has been already granted to the trust? - HELD THAT:- The assessee/applicant is a trust constituted under trust deed dated 30/5/2015 and has obtain Registration u/s 12AA w.e.f 1/4/2016 vide order dated 23/2/2017. At the time of grant of Registration u/s 12AA, the assessee has given details about the purpose and object of the applicant trust which was related to the religious purposes and not for any other business purpose. CIT(Exemption) has totally ignored the fact that the purpose was not at all change from the charitable purpose to any commercial purpose. In-fact, there is no proper reason given by the CIT(Exemption) while rejecting the prerequisite for approval u/s 80G. Therefore, we are directing the CIT(Exemption) after verifying all the documents as per the pre-required conditions of grant of Section 80G benefits and thereafter grant the benefit of Section 80G as per the law - assessee be given opportunity of hearing by following principles of natural justice. The appeal of the assessee is partly allowed for statistical purpose.

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• 2021 (12) TMI 392
  Penalty u/s 271(1)(c) - assessee has failed to prove the genuineness of the transactions and the claims - CIT-A deleted the penalty - HELD THAT:- Since the quantum appeal is allowed by the Hon ble Tribunal therefore the penalty will not sustained. We are of the opinion that the CIT(A) dealt on the facts and has relied on the decision of Hon ble Tribunal and passed a reasoned order. Accordingly, we do not find any infirmity in the order of the CIT(A) and uphold the same and dismiss the grounds of appeal raised by the revenue

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• 2021 (12) TMI 391
  Disallowance of deduction claimed towards interest on delayed payment of tax deducted at source (TDS) - As per assessee interest paid on delayed payment of TDS is eligible for deduction as business expenditure u/s 37(1) - as per DR assessee has not remitted the TDS amount within the stipulated time AND interest paid for delayed payment of TDS is not eligible as deduction under section 37 - HELD THAT:- As the decision of the Hon ble jurisdictional High Court in case of Ferro Alloys Corporation Ltd. [ 1991 (12) TMI 39 - BOMBAY HIGH COURT] and the decision case of CIT vs. Chennai Properties Investment Ltd. [ 1998 (4) TMI 89 - MADRAS HIGH COURT] are not only directly on the issue but are in favour of the revenue. Therefore, respectfully following the aforesaid two decisions of the Hon ble jurisdictional and Hon ble Madras High Court, we hold that assessee s claim of deduction under section 37(1) of the Act in respect of interest charged on delayed payment of TDS is not allowable. The issue can also be looked into from another angle. Admittedly, the assessee is collecting TDS on behalf of the Government. The TDS collected does not belong to the assessee and has to be remitted to the Government account within the prescribed time. By not depositing the TDS in time, the assessee is not only depriving the Government from utilizing the money for public purpose but also creating problem for the payee in getting timely credit of TDS. On the other hand, the assessee is utilizing the TDS amount for his own benefit. Thus, for the default in depositing the TDS amount in time, interest is levied. Therefore, allowing deduction of such interest under section 37 of the Act would amount to rewarding the assessee for a default committed. This, in our view, is unconscionable. Decided in favour of assessee.

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• 2021 (12) TMI 390
  Depreciation - Disallowance of amount released from reserves account under normal computation of income - depreciation claimed on assets purchased at concessional import duty - CIT-A deleted addition made by AO - HELD THAT:- Admittedly, the assessee has imported certain capital asset on a concessional import duty with a condition that if export obligations are met, then it could avail the benefit of concession duty payable for import of goods. Further, when the assets were imported under confessional import duty scheme, the assessee has accounted plant machinery in books of accounts with its monetary value including concessional duty availed under the scheme and credited the concessional duty benefit to reserves and surplus account under the head deferred income account. The assessee has claimed depreciation on said plant machinery with its full value, but released an equal amount from reserves and surplus account and credited to Profit Loss account. The net result of the accounting entries passed in the books of accounts was that the assessee has claimed enhanced depreciation on confessional duty and at the same time, reversed the same from reserves and surplus account and thus, the net effect of the entry is nil adjustment to income computed for the year. Therefore AO was erred in disallowing depreciation claim on asset and added back to total income without understanding the fact that entries passed in the books of accounts is not determinative to compute correct income of the assessee - Decided against revenue. Addition of interest income under the head income from other sources while computing tonnage tax u/s.115VI - HELD THAT:- In this case, the assessee has earned interest income and claimed that such interest income is derived from shipping business, on the ground that it had maintained separate books of accounts for shipping business and hence, whatever income derived from the segment of shipping business is eligible for tonnage tax scheme. We do not find merits in the arguments of the assessee for the simple reason that interest earned on deposits or loans out of income generated from shipping business cannot be considered as income derived from core activity of operating a ship or incidental activities connected to operating a ship. The question whether the assessee had maintained separate books of accounts or not is irrelevant to decide the nature and head of income. Therefore, we are of the considered view that interest income earned by the assessee from deposits is not an income derived from shipping business and thus, the same is not entitled for tonnage tax scheme. The ld.CIT(A) without appreciating the facts simply deleted addition made by the AO. Hence, we reverse the findings of ld.CIT(A) and allow the ground taken by the Revenue. Disallowance u/s.14A at the rate of 0.5% of average value of investments, income from which does not form part of total income - claim of the assessee before the AO that only those investments which yielded exempt income for the year needs to be considered while computing disallowance under Rule 8D(2)(iii) of the IT Rules, 1962 - HELD THAT:- An identical issue has been considered by the Co-ordinate Bench of ITAT, Chennai in assessee s own case for assessment years 2007-08 [ 2016 (1) TMI 1028 - ITAT CHENNAI] , where the Tribunal held that, only those investments which yielded exempt income shall be considered to disallow 0.5% of average value of investment, the income from which does not form part of total income - in the case of ACIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] had considered an identical issue and held that only those investments which yielded exempt income for the year needs to be considered for computing disallowance of 0.5% of the average value of investment.CIT(A) after considered relevant facts has rightly directed the AO to recompute disallowance by taking those investments which yielded exempt income for the year. Therefore, we are of the considered view that there is no error in the findings of the ld.CIT(A) and hence, we are inclined to uphold the findings of ld.CIT(A) and reject ground taken by the Revenue. Disallowance of interest cost on borrowings u/s.36(1)(iii) - AO has disallowed proportionate interest expenses u/s.36(1)(iii) of the Act, on the ground that assessee has diverted interest bearing funds for non-business purpose - CIT-A deleted the addition - HELD THAT:- AO has exactly done what the Hon ble Supreme Court said in the case of M/s. Hero Cycles Ltd.[ 2015 (11) TMI 1314 - SUPREME COURT] and sat in the arm-chair of businessman and decided himself that investment made in above two companies are not strategic investments but only a quid pro quo without bringing on record any evidence to prove that said investments is a quid pro quo. The CIT(A) after considering relevant facts has rightly deleted additions made by the AO and hence, we are inclined to uphold the findings of the ld.CIT(A) and reject ground taken by the Revenue. Addition u/s 14A to book profit computed u/s.115JB of the Act - HELD THAT:- As relying on own case [ 2019 (12) TMI 1562 - ITAT CHENNAI] and Vireet Investment Pvt. Ltd., [ 2017 (6) TMI 1124 - ITAT DELHI] , held that computation under Clause (f) of the Explanation -1 to Section 115JB(2) is to be made without resorting to the computation as contemplated u/s.14A r.w.rule.8D of the Rules . Therefore, we direct the AO to delete addition made towards disallowance u/s.14A r.w.rule 8D to book profit computed u/s.115JB. Disallowance of advertisement expenditure - HELD THAT:- We find that an identical issue has been considered by the Tribunal in assessee s own case for assessment year 2011-12 and after considering relevant facts held that advertisement charges paid to M/s. Kalaignar TV Pvt. Ltd., is for business purpose and the AO has disallowed the expenses on suspicious grounds by doubting the genuineness of payment but fact remains that assessee has paid the amount towards cost of advertisement for 5 years and filed necessary evidences to prove that M/s. Kalaignar TV Pvt. Ltd., has telecasted the advertisement in the TV for a period of 5 years - we are of the considered view that there is no error in findings recorded by the CIT(A) and delete addition made towards disallowance of advertisement expenses. Hence, we are inclined to uphold the findings of CIT(A) and reject the ground taken by the Revenue. Disallowance of loss on redemption of FCCBs - HELD THAT:- CIT(A) opined that when the assessee is following a consistent method of accounting to treat loss / gain of reinstatement of liability towards FCCBs to account gain as income and loss as expenditure, there is no reason for the AO to take different view for the year under consideration, unless there is change in facts for the relevant year. The ld.CIT(A) further observed that the issue is covered by the decision of Hon ble Supreme Court in the case of Woodward Governor India P. Ltd. [ 2009 (4) TMI 4 - SUPREME COURT] The facts remain unchanged. The Revenue has failed to bring on record any evidence to prove the findings of fact recorded by the ld.CIT(A) is incorrect or any judgment of Supreme Court or High Courts to take a different view. Therefore, we are of the considered view that the ld.CIT(A) was right in deleting addition made by the AO towards disallowance of loss on redemption of FCCBs and hence, we are inclined to uphold the findings of ld.CIT(A) and reject ground taken by the Revenue. Disallowance of Forex monetary item translation difference - HELD THAT:- On perusal of facts, the assessee has treated loss incurred on fluctuation in foreign currency as per the circular of MCA and has accounted loss related to loans borrowed for capital purpose into capital account and added to concerned asset and loans related to general business purpose has been treated as revenue and added to Forex monetary item translation difference. Further the assessee has accounted said loss in the books of accounts as per the circular issued by MCA however, in the statement of total income deduction has been claimed towards total loss incurred in the year in respect of revenue account. The assessee has following said accounting method consistently for several years and further, when the loss incurred on fluctuation in foreign currency is on revenue account then said loss is deductable u/s.37(1) of the Act irrespective of accounting treatment given in books of accounts of the assessee. Therefore, we are of the considered view that there is no error in findings recorded by the ld.CIT(A) to delete addition made by the AO towards loss on foreign currency translation difference account and hence, we are inclined to uphold the order of the CIT(A) and reject ground taken by the Revenue. Transfer pricing adjustment to deduction claimed u/s.80IA of the Act towards income generated on captive power plant - HELD THAT:- We find that an identical issue has been considered by the Tribunal in assessee s own case for assessment year 2011-12. [ 2019 (12) TMI 1562 - ITAT CHENNAI] where the Tribunal under identical set of facts by following certain judicial precedents including the decision of Hon ble Bombay High Court in the case of Reliance Industries Ltd. [ 2019 (2) TMI 178 - BOMBAY HIGH COURT] and the decision of M/s.Godavari Power and Ispat Ltd [ 2013 (10) TMI 5 - CHHATTISGARH HIGH COURT] held that while computing deduction u/s.80IA for generation of power for captive consumption, the rate at which electricity board supply power to its consumers should be considered instead of the rate at which the power generating companies supply its power to the electricity board. As per SRI VELAYUDHASWAMY SPINNING MILLS (P.) LTD. [ 2011 (7) TMI 965 - ITAT CHENNAI] and EVEREADY SPINNING MILLS (P.) LTD. [ 2011 (11) TMI 368 - ITAT CHENNAI] deleted additions made by the AO by holding that market value of the power captively consumed should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power at which power could have been sold to SEBs because this is not the rate for which a consumer could have purchased power in the open market. Therefore, we are of the considered view that there is no error in the finding recorded by the ld.CIT(A) to delete additions made by the AO towards TP adjustment on deduction claimed u/s.80IA of the Act. Hence, we reject the ground taken by the Revenue. Depreciation on franchisee right of Indian Premier League - Assessee was owner of franchisee rights of Chennai Super Kings - HELD THAT:- In an identical issue in assessee s own case for assessment year 2008-09 [ 2016 (1) TMI 1028 - ITAT CHENNAI] , where under identical set of facts has allowed depreciation claimed by the assessee on total value of franchisee rights of Rs. 364 crores capitalized in books of accounts even though the assessee has paid said amount over a period of 10 years. Disallowance of interest paid on TDS under MAT computation - HELD THAT:- TDS cannot be considered as income tax payable by the assessee on its income. Therefore, any interest paid on belated remittance of TDS also in the nature of expenditure deductible under the Act and hence, the same cannot be added back to book profit computed u/s.115JB of the Act. This is so, as per Circular No.1 of 2009 dated 27.03.2009 issued by the CBDT where it has been clarified that the intention behind add backs to book profit is the items which mainly appear below the line in the Profit Loss account. From the above it is very clear that only those items which appear below the line needs to be added back to compute book profit u/s.115JB of the Act. Since interest on TDS is an item above the line in the Profit Loss account, the same cannot be added back while computing book profit u/s.115JB of the Act. The CIT(A) after considering relevant facts has rightly deleted additions made by the AO and hence we are inclined to uphold the order of CIT(A) and reject the ground taken by the Revenue. Depreciation on UPS - @ 60% as applicable to computers whereas, the AO has restricted depreciation @15% on UPS on the ground that UPS is a separate item of plant machinery. - HELD THAT:- Tribunal in assessee s own case for assessment years 2011-12 to 2016-17 [ 2019 (12) TMI 1562 - ITAT CHENNAI] where the Tribunal has deleted addition made by the AO towards excess depreciation on UPS by holding that UPS is an integral part of computer system which is eligible for depreciation @ 60% as applicable to computers. The CIT(A) after considering relevant facts has rightly deleted addition made by the AO and hence, we are inclined to uphold the finding of ld.CIT(A) and reject ground taken by the Revenue. Nature of receipts - Treatment of subsidy from Government as revenue in nature - HELD THAT:- As decided in own case [ 2019 (12) TMI 1562 - ITAT CHENNAI] held that subsidy granted by the Government of Maharashtra for setting up new manufacturing unit under Industrial Promotion Policy is capital in nature which is not taxable under the Act. In the present case, the ld.CIT(A) has recorded categorical finding that the assessee had set up a new cement manufacturing plant at Parli, Beed District, Maharashtra under the Industrial Promotion Policy of Government of Maharashtra and the Package Scheme of Incentives 2011 notified by the Directorate of Industries. The CIT(A) further noted that the assessee has made investments in fixed assets of Rs. 15,214.34 lakhs up to 31.03.2011. The subsidy has been given to offset the capital investment made for setting up new cement manufacturing plant at Parli. Therefore, we are of the considered view that, there is no error in findings recorded by CIT(A) to delete addition made by the AO and hence, we are inclined to uphold the findings of CIT(A) and reject ground taken by the Revenue.

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• Customs

• 2021 (12) TMI 389
  Seeking amendment of shipping bill - Benefit of merchandise export from India Scheme (MEIS) - section 149 of Customs Act - HELD THAT:- There is no substance in the defence raised by the respondent no.3. It appears that claims in cases where the exporters had omitted to tick Yes in the portal only for a period of 6 months from the date of introduction of scheme by virtue of circular issued by DGFT instruction was allowed. Therefore, amendment to bill is allowed to be carried out only for a limited period of 6 months from the date of introduction of the scheme. If shipping bills are perused in the column meant for description of the goods, the petitioners had clearly indicated their intention to avail the benefit of MEIS. However, it appears that there is technical lapse on the part of the exporters in not ticking a particular box in the web portal, more so, when there was sufficient indication in other details entered therein about the intention of the exporter to claim the rewards. Not only this, the Assistant Commissioner of Customs issued certificate of amendment by which reward item under shipping bills stands amended as mentioned in table 1 - it could not be amended in the EDI system as the EGM has been closed. It appears that exporter did not check the box concerned, to read Yes , whereas in the column meant for the description of the good he had clearly indicated his intention to avail the benefit of the export promotion scheme. The Customs House, in fact, issued certificate of amendment. Thus, denial of benefits only on such technical lapse on the part of exporter cannot be accepted, particularly, when there was sufficient indication from the other details pointing out exporters intention to avail the benefit. It is necessary to direct the respondent to consider the claim of the petitioner for export benefit, afresh within a period of one month from the date of receipt of the copy of this judgment by granting due opportunity of hearing to the petitioner, if required - in order to overcome this technical flaw, the respondent nos.2 3 to take steps to develop a software so that amendment, if any required, can be facilitated.

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• Corporate Laws

• 2021 (12) TMI 388
  Inability to recover the debts due to banks and financial institutions, particularly of the nationalised bodies - Sections 337 to 341 or Section 212(1)(c) of the Companies Act, 2013 - HELD THAT:- The concern expressed by the petitioners here pertains to the vanishing money from the Indian economy and the next to nothing that is realised in course of insolvency proceedings or even bank claims in respect of non-performing assets. While the courts were blamed in the several reports that emanated in the late 1980s and early 1990s to park bank claims with a specialised body, first with an Ordinance and then with the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 being enacted, the realisation of the debts due did not pick up and in less than a decade there were further committee reports before the NPA Act the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 came in force. The petitioners seek a rather tall order on somewhat vague and over-generalised principles and submission. If the law exists, the court need not reinvent the wheel and ask the Union to act in accordance therewith, when the Union is already obliged to act in such manner. An omnibus order to reform the system cannot be sought at this level and given the current trend of the diminution of authority of the High Courts, it may not even be taken seriously - the petitioners and larger public interest may be better served if the petitioners focussed on any particular entity and presented cogent grounds to the Central Government to excite the Central Government to exercise its statutory authority in such regard, whether under Sections 337 to 341 or Section 212(1)(c) of the Companies Act, 2013. It may even be possible for the petitioners to seek an investigation under Section 213 of the Act of 2013. Petition disposed off.

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• 2021 (12) TMI 387
  Compounding of offences - threshold limit of holding directorship in companies - Section 165 r/w 165(6) of the Companies Act, 2013 - HELD THAT:- The facts in the present case is not in dispute that the petitioner is implicated for the offence under Section 165 read with Section 165(6) of the Companies Act, 2013, on the ground that he is holding Directorship in 24 companies instead of 20 companies and violated the provisions of the Companies Act and due to which, the present impugned complaint came to be filed. This Court is of the opinion that earlier one show cause notice was issued on 07.04.2017, for which the petitioner has sent a reply dated 14.04.2017. Thereafter the petitioner also filed a Compounding Application under Section 441 of the Act on 12.05.2017, for compounding of the offence under Section 165 of the Act. Without considering the Compounding Application, the respondent issued another show cause notice on 23.06.2017 and for which also, the petitioner had sent a reply on 10.07.2017, intimating the pendency of the Compounding Application, to the respondent. For the reasons aforesaid, this Criminal Original Petition is allowed and the complaint, on the file of the Additional Chief Metropolitan Magistrate (EO.I), for the offence under Section 165 r/w 165(6) of the Companies Act, 2013, is quashed. Petition allowed.

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• 2021 (12) TMI 386
  Compounding of offences and payment of compounding fee - issuance of securities beyond thresold limit - Section 441 of the Companies Act, 2013 read with Section 67(3) of the Companies Act, 1956 - HELD THAT:- As per the provisions of Section 441(1) of the Act, compounding can be made of any offence punishable under the Act (whether committed by a company or any officer thereof) not being an offence punishable with imprisonment only, or punishable with imprisonment and also with fine. Section 441(6) also reiterates that any offence which is punishable under the Act with imprisonment only or with imprisonment and also with a fine shall not be compounded. In the present case, the default is for non-compliance of Section 67(3) of the Companies Act, 1956 and the penalty for the default in noncomplying with Section 67(3) is provided for in Section 629A of Companies Act, 1956 - the third proviso to Section 441(1) of the Act provides for non-compounding of offence if the investigation against the company has been initiated or is pending under the Act. We have already discussed above that the report of the RoC has stated that there are no complaints and there is no inspection/investigation pending. In the present case, the company has made an application suo motu and has stated that this or similar offences has not been compounded during the last three years - it is considered reasonable to compound the offence under Section 67(3) of the Companies Act, 1956 in the case of Capital Small Finance Bank Limited on payment of a compounding fee of Rs.8,00,000/- - amount of the compounding fee be deposited with the Pay and Accounts Officer Ministry of Corporate Affairs, New Delhi within a period of one month from the date of receipt of certified copy of the order. Petition disposed off.

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• Insolvency & Bankruptcy

• 2021 (12) TMI 385
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- From the perusal of the Reply Affidavit filed by the Respondent/ Resolution Professional shows that the Appellant herein have not taken the plea of Section 14(2) of the IBC before the Ld. Adjudicating Authority which he has taken valid service which was rendered by the Appellant fall within the definition of essential services. There is no illegality committed by the Ld. Adjudicating Authority while passing the impugned order therefore, we do not need to interfere in the impugned order - Appeal dismissed.

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• 2021 (12) TMI 384
  Prayer to recall of the judgment and order passed by this Appellate Tribunal - section 424(1) of the Companies Act, 2013, as amended, read with Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 - HELD THAT:- Neither Section 242 (1) of the Companies Act, 2013 nor Rule 11 of the NCLAT Rules, 2016 gives power to this Appellate Tribunal to recall the judgment passed by this Appellate Tribunal, after the judgment dated 08.12.2020 was questioned before the Hon ble supreme Court in Appeal and the Appeal was dismissed by the Hon ble Supreme Court. The power to recall the judgment is not permitted in IBC - application dismissed.

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• Central Excise

• 2021 (12) TMI 383
  Maintainability of petition - availability of alternative remedy of appeal - Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - HELD THAT:- The petitioner has to workout the remedy before the Appellate Commissioner by filing suitable appeal under Section 84 of the Finance Act, 1994 on pre-deposit of 7.5% of the service tax demanded. The only option is available to the petitioner to approach the Director of Central Board of Indirect Taxes and Customs for appropriate relaxation in the light of outbreak of Covid-19 and on account of lock down imposed by the Government - petitioner is therefore directed to file a statutory appeal before the Commissioner of GST Central Excise (Appeals), within a period of thirty (30) days from the date of receipt of a copy of this order. If such an appeal is filed within such time, the appeal shall be held maintainable - petition disposed off.

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• 2021 (12) TMI 382
  Refund of CENVAT Credit - Banking and Financial Services - Insurance Services - export of finished goods i.e. Gold Jewellery - time limitation as per N/N. 41/2007-ST - denial on the ground that documents in respect of insurance service are not in the name and address of the appellant but in the name and address of Mumbai Office - evidence produced to substantiate that credit or not - documents are lacking vital details - Rule 4A of Service Tax Rules, 1993 read with Rule 4(7), Rule 9(2) of Cenvat Credit Rules, 2004 - HELD THAT:- The refund is governed by Notification 41/07-ST, it is found that the appellant is correct in submitting that at the relevant time this Notification was not in existence, therefore, it is wrong on the part of the Learned Commissioner (Appeals) to import and apply the non-existent notification. The appellants have claimed the refund in respect of the input service used in relation to export of finished goods, therefore, the refund is correctly governed by Rule 5 read with Notification No. 27 of 2012-CE(NT), therefore, rejection of refund referring to Notification 41/2007-ST is absolutely incorrect being not relevant. The learned Commissioner (Appeals) also given finding for rejection of the claim that the cenvat document is not in the name of the appellant but in the name of their Mumbai Office. Mumbai Office is not an independent entity and not carrying out a business separately. The Mumbai office is working solely for the manufacturing unit of the appellant company, one of the factories is the appellant Ahmedabad Factory. It is the submission of the appellant that they have taken credit only to the extent it is related to Ahmedabad Factory, therefore, even if the document is bearing the name and address of the Mumbai office, only on this ground, refund cannot be rejected since service is attributed to the appellant s factory. Therefore, on this ground also, the learned Commissioner (Appeals) has erred in denying the refund. Whether documents on which the cevnat credit was taken are proper in terms of Rule 4A of Cenvat Credit Rules, 2004 read with Rule 9(2) of Cenvat Credit Rules, 2004? - HELD THAT:- The appellants have produced the invoices on which cenvat credit was taken and, on going through the invoices, it is found that all the details as required in terms of Rule 4A read with Rule 9 of Cenvat Credit Rules, 2004 are appearing in the invoices. Financial Services - HELD THAT:- The amount shown is consolidated amount inclusive of service tax, therefore, the appellant has bifurcated the said amount into the gross value and in the service tax amount, there are nothing incorrect in doing such bifurcation - the documents are correctly bearing all the information required, therefore, the cenvat documents are in confirmation to Rule 4A and read with Rule 9 of Cevnat Credit Rules, 2004. Appeal allowed - decided in favor of appellant.

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• 2021 (12) TMI 381
  CENVAT Credit - various input services - Hospitality services - pest control services - Commercial or Industrial construction service - Repair/servicing of motor vehicles services - AMC services - Services in respect of printing and issue of Meal vouchers to the employees - Supply of Tangible Goods services - AMC of passenger elevators - Horticultural consultancy at various places - Maintenance of garden and fixing of agriculture artificial grass - Laying and maintenance of milestones - Installation, commissioning and maintenance of Public Address System in the factory - Goods sent for job work services - Maintenance of mason s shed services - Apply of sky/street lights and fixing of roof sheeting services - Services received for own aircraft - Repair and maintenance of non-factory building, electrical installation and installation of rapid doors - Architect service - Laying, maintenance and repair of railway service - Manpower Supply services - Cleaning Services - Excavation of earth, roof work, sheeting work, PCC and RCC work of the buildings within the factory - Advertising Services - Air Travel Agent services - Airport services - Banking and Financial services - Business Support Services - Cargo Handling Services - Chartered Accountant Service - Convention Hall (Renting) services - Custom House Agent services - Goods Transport by Road - Health Care Services - Information Technology and Software services - Intellectual Property services - Interior Decorator services - Membership of Club or Association services - Port services - Sponsorship services - Survey and Map Making services - technical Testing and Analysis services - technical Inspection and Certification Service - Telecommunication services - HELD THAT:- It appears that the definition of input service did give vast connotation before or after amendment making the services used directly or indirectly, in or in relation to the manufacture of the final products. Only change made after amendment is that certain services are excluded. Various High Courts have interpreted to Rules to have a wider connotation rather than the constrictive view taken by Revenue. Hon ble High Court of Bombay in the case of M/S. COCA COLA INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, PUNE-III [ 2009 (8) TMI 50 - BOMBAY HIGH COURT] has held that the manufacturer is entitled to take credit on services used directly or indirectly, in or in relation to manufacture and clearance of the final products up to the place of removal and on various services as illustrated in the inclusive part of the definition; further they held, in the case of CCE, NAGPUR VERSUS ULTRATECH CEMENT LTD., [ 2010 (10) TMI 13 - BOMBAY HIGH COURT] , that the definition of input service read as a whole makes it clear that the said definition not only covers services, which are used directly or indirectly in or in relation to the manufacture of final product, but also includes other services, which have direct nexus or which are integrally connected with the business of manufacturing the final product. The appellants have correctly availed the credit on various disputed services - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (12) TMI 380
  Amendment of CST Registration Certificate - intra-departmental communications exchanged between the first and second respondents - only reason given in the impugned Email Communication dated 02.03.2021 of the second respondent is that the effective date cannot be amended - HELD THAT:- It is also noticed that though the authorized representative of the petitioner has sent an Email requesting the amendment of CST Registration Certificate on 13.10.2020 at 4:59:24 PM, the second respondent has informed the rejection of the request to the petitioner vide impugned Email Communication dated 02.03.2021 only. That apart, it is also noticed that the petitioner has sent two letters dated 19.09.2020 and 07.12.2020 to the first respondent and the intra office communication has been exchanged between the first and second respondents on 07.12.2020. Though the arguments of the learned Special Government Pleader appearing for the respondents are that the application for amending the CST Registration Certificate has been made belatedly on 19.09.2020, nevertheless, there is no embargo under the aforesaid Rules to amend the date in the CST Registration Certificate. It is noticed that under the aforesaid Rules, such application for amendment cannot be made if the records otherwise indicate that the petitioner had not indeed filed the application for registration on 07.06.2017 by declaring the effective date of commencement of business as 20.05.2017 - the records will be available with the respondents and therefore the respondents cannot reject the request of the petitioner merely stating that it is not possible to amend the Certificate at a later point of time. It was for the respondents to make suitable internal changes in their Web Portal to amend the Certificates of registration. Rule 7(1) of the Central Sales Tax (Registration and Turnover) Rules, 1957 also makes it clear that the application can be entertained for amending the CST Registration Certificate. There is no also limitation prescribed therein. Therefore, the respondents are directed to make suitable corrections in the CST Registration Certificate granted to the petitioner, within a period of thirty (30) days from the date of receipt of a copy of this order. Petition allowed.

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• 2021 (12) TMI 379
  Validity of assessment order - inclusion of the margin trading profit received by the dealer during the relevant assessment year as constituting sale/turnover under the KVAT Act - HELD THAT:- The Tribunal is the final Authority on consideration of fact and there ought not to be abstract application of circular dated 06.10.2016 to the case of the instant dealer. The reasons and the principles applied by the Authority ought to be considered by the Tribunal instead of this Court examining the circular dated 06.10.2016 and applying to the facts of the case. He suggests that the Tribunal could be called upon for re-examination of the issue by keeping in perspective the decision taken in circular dated 06.10.2016 and case could be remitted to the Tribunal. The matter requires reconsideration by the Tribunal by adjudicating the circumstances stated by the dealer and application of circular in the case on hand to the case of instant dealer - revision allowed by way of remand.

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• 2021 (12) TMI 378
  Rectification of mistake - error apparent on the face of record - whether the office of the 1st respondent was justified in returning the appeal filed by the petitioner against the rectification order dated 29.04.2021? - Section 84 of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- A reading of Sub Section (5) to Section 84 of the TNVAT Act, 2006 makes it clear that the provisions of this Act relating to appeal and revision shall apply to an order or rectification made under this section as they apply to the order in respect of which such order of rectification has been made which reads as under - Same principle will apply in the case of review under section 84 of the Tamil Nadu Value-Added Tax Act, 2006. Thus, if a review application was dismissed, the petitioner would have been entitled to file a statutory appeal against the original order of assessment and pray for exclusion of time taken in pursuing the application under section 84 by virtue of Section 14 of the Limitation Act, 1963 while preferring an appeal under section 51/52 of the Tamil Nadu Value-Added Tax Act, 2006. If the order, passed originally stands substituted by another order under section 84 of the Tamil Nadu Value- Added Tax Act, 2006, as in the present case, appellate remedy cannot disallowed. It can be appealed before the Appellate Commissioner under section 51/52 of the Tamil Nadu Value-Added Tax Act, 2006 as a fresh period of limitation would commence for appeal from passing of the order under review. Once an assessment order is rectified, the remedy to file an appeal against such assessment order cannot be denied. The memo returning of the appeal filed by the petitioner under Sections 51 / 52 of TNVAT Act, 2006 cannot be sustained - there is no merits in the impugned return memos of the office of the 1st respondent - petition allowed.

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• Indian Laws

• 2021 (12) TMI 377
  Dishonor of Cheque - discharge of legally enforceable debt - the appellant herein was convicted and sentenced - rebuttal of presumption - preponderance of probability - Section 138 of N.I. Act - HELD THAT:- Even if we take the arguments raised by the appellants at face value that only a blank cheque and signed blank stamp papers were given to the respondent, yet the statutory presumption cannot be obliterated. The defence raised by the appellants does not inspire confidence or meet the standard of preponderance of probability . In the absence of any other relevant material, it appears that the High Court did not err in discarding the appellants defence and upholding the onus imposed upon them in terms of Section 118 and Section 139 of NIA. The object of Chapter XVII of NIA is not only punitive but also compensatory and restitutive. The provisions of NIA envision a single window for criminal liability for dishonour of cheque as well as civil liability for realisation of the cheque amount. It is also well settled that there needs to be a consistent approach towards awarding compensation and unless there exist special circumstances, the courts should uniformly levy fine up to twice the cheque amount along with simple interest @ 9% p.a. - when a cheque is drawn out and is relied upon by the drawee, it will raise a presumption that it is drawn towards a consideration which is a legally recoverable amount; such presumption of course, is rebuttable by proving to the contrary. The onus is on the accused to raise a probable defence and the standard of proof for rebutting the presumption is on preponderance of probabilities. On perusal of Section 138 NI Act, it is indicated that the sum and substance of the defence is that the documents and cheque had been obtained by the respondent on 20.01.2004 by threatening the appellant. In that regard, the circumstances thereto were referred and it has been categorically stated that the appellant had filed a complaint, pursuant to which a case was registered against the respondent for the offence punishable under Sections 365, 342, 323 and 506 of IPC. This makes it relevant for us to take note of the aspect that was considered in the above noted criminal complaint filed by the appellant. The defence sought to be put forth in the instant case and the witnesses examined in the instant proceedings are only by way of improvement in respect of the same cause of action. Therefore, the defence sought to be put forth relating to the cheque and other documents having been obtained by force, cannot be accepted as a probable defence when the respondent successfully discharged the initial burden cast on him of establishing that the cheque signed by the appellant was issued in his favour toward discharge of a legally recoverable amount. The fact that the appellant has admitted about an earlier transaction where according to him, he had borrowed the amount and repaid the same in the year 1995, would indicate that the appellant and the respondent had entered into financial transactions earlier as well and another transaction was probable between the parties who were known to each other. Appeal dismissed.

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