TMI Tax Updates - e-Newsletter
December 12, 2020

Case Laws in this Newsletter:

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

Articles

1. REGISTRATION OF ‘FIR’ NOT A CONDITION PRECEDENT FOR ARRESTING A PERSON

   By: DR.MARIAPPAN GOVINDARAJAN

2. Article on Service of Crushing of Food Grains by Flour Millls

   By: Vivek Jalan

News

1. GSTR-9 of FY 2019-20 is available now

2. Shri Piyush Goyal says India and Sweden should work together to build a more resilient & strong partnership

Notifications

GST - States

1. 80/2020 - State Tax - dated 19-11-2020 - Chhattisgarh SGST

Amendment in Notification No. 41/2020-State Tax, dated the 8th May, 2020

2. 72/2020-State Tax - dated 2-12-2020 - Himachal Pradesh SGST

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

3. 90/2020 - State Tax - dated 7-12-2020 - Maharashtra SGST

Seeks to make amendment to Notification no. MGST-1017/C.R.103(19)/Taxation-1., (12/2017- State Tax) dated the 29th June,2017

4. 89/2020 - State Tax - dated 7-12-2020 - Maharashtra SGST

Seeks to waive penalty payable for noncompliance of the provisions of notification No.14/2020 – State Tax, dated the 30th March, 2020

5. 49/2020 - State Tax - dated 7-12-2020 - Maharashtra SGST

Seeks to bring into force Sections 2 & 12 of MGST (Second Amendment) Act, 2020

6. CT/LEG/GST-NT/12/17/2508-13/2020 - dated 10-11-2020 - Nagaland SGST

Seeks to extend the due date for FORM GSTR-1

7. CT/LEG/GST-NT/12/17/2507-12/2020 - dated 28-10-2020 - Nagaland SGST

Seeks to amend Notification No. 07/2020 dated the 5th May, 2020

8. 940-F.T. - dated 2-12-2020 - West Bengal SGST

Seeks to implement e-invoicing for the taxpayers having aggregate turnover exceeding ₹ 100 Cr from 01.01. 2021

Circulars / Instructions / Orders

Customs

1. PUBLIC NOTICE NO. 141/2020/JNCH - dated 11-11-2020

Implementation of the Sea Cargo Manifest and Transhipment Regulations

2. PUBLIC NOTICE No. 73/2020 - dated 26-10-2020

Testing of outside samples by Revenue Laboratories

3. Public Notice No.- 40/2020 - dated 22-10-2020

Faster assessment and clearance of goods under Faceless Assessment

4. PUBLIC NOTICE NO. 32/2020 - dated 21-10-2020

All India roll-out of Faceless Assessment

5. PUBLIC NOTICE No.72/2020 - dated 19-10-2020

Faceless Assessment- Measures for timely assessment of Bills of Entry and clarification on defacement of physical documents

6. PUBLIC NOTICE No. 43/2020 - dated 8-10-2020

Implementation of the Sea Cargo Manifest and Transhipment Regulations

7. PUBLIC NOTICE NO. 30/2020 - dated 19-9-2020

Guidelines regarding implementation of section 28DA of the Customs Act, 1962 and CAROTAR, 2020 in respect of Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin and Capturing additional details for Certificate of Origin (COO) as per Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 in Bill of Entry

8. PUBLIC NOTICE NO. 31/2020 - dated 14-9-2020

Guidelines regarding implementation of section 28DA of the Customs Act, 1962 and CAROTAR, 2020 in respect of Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin

Highlights / Catch Notes

GST

• Government Grants for Tourism in Himachal Pradesh Exempt from GST, Confirms Authority for Advance Rulings.

  Case-Laws - AAR : Taxability of GST - receipts being Grant in Aid (in the form of license fee), donations etc received from the Government of Himachal Pradesh for promotion of Tourism activities in the State - Government Entity - The receipt as grant in aid or financial assistance is exempt under GST - AAR
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• Court Sets Aside Order, Remands GST Refund Case for Fair Hearing to Uphold Natural Justice Principles.

  Case-Laws - HC : Second refund application under GST - Validity of SCN - Principles of Natural Justice - the learned Counsel for the parties is unable to point out prohibition in law against grant of extension of time by the third respondent and to serve the interest of justice, this Court is of the considered view that it would be appropriate to set aside the impugned order and restore the proceeding to the third respondent for a considered decision with a reasonable opportunity to the petitioner to file its detailed objections and to avail personal hearing. - HC
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Income Tax

• ITAT Upholds Assessee's Use of India-UK DTAA for Software Sales Income, Overrules Amended 'Royalty' Definition in Income Tax Act.

  Case-Laws - HC : Income accrued in India - receipts of the assessee from sale of software - In view of Section 90(2) of the Income Tax Act, the assessee opts for Double Taxation Avoidance Agreement between India and UK to override the provisions of the Act as there is no corresponding amendment to the definition of the term ‘royalty’ in Article 13(3) of the aforesaid DTAA as carried out in the definition of royalty u/s 9 (1)(6) of the Act. - ITAT rightly rejected the arguments of revenue - HC
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• Invalid Reopening of Assessment: Notice Issued Without "Reason to Believe" u/s 147 Rendered Action Void.

  Case-Laws - AT : Reopening of assessment u/s 147 - eligibility of reasons to believe - the foundation on which the AO based his belief that income chargeable to tax had escaped assessment was absent at the material time when he issued notice u/s. 148, and therefore, the basic legal requirement of reopening u/s. 148 of the Act i.e. AO’s formation of reasons to believe escapement of income prior to reopening of assessment was absent in the given facts of the present case. - AT
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• Court Upholds Assessee's Claims for Vehicle Expenses Despite Non-ownership; Registration in Directors' Names Deemed Valid.

  Case-Laws - AT : Addition being depreciation allowance, interest and insurance expenses relating to vehicles though the assessee was not the owner of such vehicles - The action taken by the assessee for registry the vehicles in the name of individual directors was within the framework of the provisions of law. Accordingly, we are of the view that this cannot be a ground to reject the claim of the assessee. - AT
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• Court Upholds 8% Income Estimation; Rejects Books Due to Bogus Expenditure Claims, Section 44AD Not Applicable.

  Case-Laws - AT : Estimation of income - Rejection of books of accounts - bogus expenditure - absence of bills and vouchers to support the expenditure claimed by the assessee - Estimation of income @8% is reasonable. Even though the assessee had the turnover over and above the limit of Section 44AD - AT
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• Interest Expense Deductible u/s 57(iii) If Directly Linked to Interest Income Earned by Taxpayer.

  Case-Laws - AT : Addition u/s 57(iii) - Interest expenditure - monies borrowed at a higher rate of interest - it is established that the interest expenditure is linked to the interest income earned by assessee from the company. Therefore, it is allowable expenditure u/s 57(iii) of the Act. - AT
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Customs

• Court Grants Provisional Release of Seized Vessel MT Global Rani; Requires Bond and Bank Guarantee Deposit.

  Case-Laws - HC : Mis-declaration of the country of origin - Provisional release of the vessel - Even from a perusal of the impugned seizure memorandum it is seen that the officer seizing the vessel had recorded that it was not practicable to physically takeover custody of the vessel. Therefore, custody of the vessel has been handed over to the master of the vessel with the condition that he shall not remove, part with or otherwise deal with the vessel except with the permission of the Special Intelligence and Investigation Branch. - provisional release of the vessel MT Global Rani granted subject to furnishing of Bond equal to the value of vessel and further deposit of bank guarantee - HC
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• Customs Department Fails to Prove Smuggling of Betel Nuts; Confiscation Deemed Unwarranted Due to Unreliable Evidence.

  Case-Laws - AT : Confiscation of seized goods - The betel nut being non notified goods; burden to prove the fact of smuggling lies on the department and the same has not been discharged; the report of ADRF, Mangalore cannot be relied upon - On the issue of goods being held to be unfit for human consumption, it is held that as the goods are neither imported nor proved to be smuggled, no action by Customs is warranted. - AT
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Corporate Law

• Petition Dismissed: Tribunal Rejects Director Removal Challenge Due to Delay, Lack of Good Faith and Prior Verification.

  Case-Laws - Tri : Removal of Director - The Petitioner cannot plead ignorance about the affairs of Company till 2018 when he is alleged to have verified the MCA to know the affairs of Company. He is estopped from raising the disputes with regard to affairs of Company took place long time ago. Therefore, the Petition is also barred by laches and limitation and has not approached the Tribunal with any bona fide grounds and clean hands - Tri
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Indian Laws

• Borrowers Must Repay Public Fund Loans Promptly to Ensure Financial Liquidity and Prevent Unnecessary Legal Delays.

  Case-Laws - HC : CIRP Proceedings - Loans by financial institutions are granted from public money generated at the tax payers expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same. - HC
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Central Excise

• Appellant Not Liable for Additional Duty on Rectified Goods; Revenue Neutral Due to Eligible CENVAT Credit.

  Case-Laws - AT : Revenue Neutrality - CENVAT Credit - rejected goods - rectify/re-make the goods for sale - the appellant has cleared these goods to their another unit. Admittedly, whatever duty have been paid, the same are entitled to cenvat credit to themselves. In that circumstances, it is a revenue neutral situation. In that circumstances also, the appellant are not required to pay any differential duty or any amount on account of cenvat credit. - AT
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• CENVAT Credit Eligible for Factory Repairs: Show Cause Notice Deemed Baseless, Authorities Ignored Audit Objections.

  Case-Laws - AT : CENVAT Credit - input services or not - service of repairs and renovation of factory premises - The allegation in the show cause notice to deny service tax is without any basis and nobody bother about to find out what was the audit objection and what is the allegation in the show cause notice, both authorities below as did not pay any head to the request of the appellant to go through the factual position of the case - On this along ground, the whole show cause notice can be quashed but in the interest of justice, the Credit is available on merit also - AT
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Case Laws:

• GST

• 2020 (12) TMI 409
  Taxability of GST - receipts being Grant in Aid (in the form of license fee), donations etc received from the Government of Himachal Pradesh for promotion of Tourism activities in the State - Government Entity - N/N. 32/2017-Central Tax (Rate) dated 13th October, 2017 - HELD THAT:- The said notification defines Government Entity as an authority or a board or any other body including a society, trust, corporation, (i) set up by an Act of Parliament or State Legislature; or (ii) established by any Government, with 90 percent or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority. . Therefore, The HP Tourism Development Board fulfils the criterion laid down for the Government entity as per Notification No 32/2017- Central Tax (Rate) because it has been established by the Government with 100% control to carry out the function of promotion and regulation of tourism activities in the state. The amount credited in favour of H.P Tourism Development Board by Department of Tourism, Govt. of H.P, as grant in aid or financial assistance is exempt under GST as per Serial No 9C of Notification No 32/2017-Central Tax (Rate) dated 13th October, 2017.

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• 2020 (12) TMI 408
  Permission for withdrawal of petition - permission to revise the returns in GSTR-3B for the period from July 2017 onwards to enable them to utilize the credit carried forward through GST TRAN-1 from July 2017 onwards - HELD THAT:- Writ Petition is dismissed as withdrawn.

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• 2020 (12) TMI 407
  Principles of Natural Justice - petitioner requested for additional fifteen days time to file a detailed reply and also for personal hearing - SCN issued on the ground that the second refund application cannot be filed in view of the fact that a similar application filed in the month of September 2018 has been sanctioned - HELD THAT:- The petitioner who has not participated in the proceeding pursuant to the show cause notice cannot canvass such grounds. But, the learned Counsel is unable to controvert that the impugned order is without considering the petitioner s request for grant of additional time. Also for the reasons that the learned Counsel for the parties is unable to point out prohibition in law against grant of extension of time by the third respondent and to serve the interest of justice, this Court is of the considered view that it would be appropriate to set aside the impugned order and restore the proceeding to the third respondent for a considered decision with a reasonable opportunity to the petitioner to file its detailed objections and to avail personal hearing. Petition allowed in part.

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• 2020 (12) TMI 406
  Rejection of Bids - petitioner submitted his bid along with all relevant documents, but the bid of the petitioner was rejected on the ground that the petitioner has not submitted the GST Registration Certificate in his name along with the bid documents - HELD THAT:- The financial bid has not been opened and the opposite parties have not taken any final decision and have not executed any agreement, we require the Commissioner- cum-Secretary, Tourism Department, Odisha, Bhubaneswar-opposite party no.1 to examine grievance of the petitioner and consider the validity of the decision of the Committee in disqualifying the bid of the petitioner in the light of the aforesaid decision of the Hon ble Supreme Court in the case of ADANI GAS LIMITED VERSUS PETROLEUM AND NATURAL GAS REGULATORY BOARD AND ORS. [ 2020 (2) TMI 1391 - SUPREME COURT] in view of the fact that the case of the petitioner comes under Eligibility Condition-B of Table-6 of the RFP and that the RFP conditions do not specifically require the bidders to submit GST Registration Certificate along with bid documents and take a decision on the same by passing a speaking order after providing opportunity of hearing to the petitioner as well as bidder likely to be affected thereby, before execution and signing of the agreement. The petitioner shall be requested to submit such representation along with a copy of this order within seven days.

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• Income Tax

• 2020 (12) TMI 405
  Vivad Se Vishwas Scheme - Assessee submits that the assessee already filed the declaration/undertaking under the Vivad Se Vishwas Scheme on 06.12.2020 and is awaiting orders to be passed in Form No.3 - HELD THAT:- Competent Authority shall process the applications/declarations in accordance with the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) and pass appropriate orders as expeditiously as possible. The assessee is given liberty to restore these appeals in the event the ultimate decision to be taken on the declarations filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any applications to be filed for condonation of delay in restoration of the appeals and on such request made by the assessee by filing miscellaneous petitions for restoration, the Registry shall place such petitions before the appropriate Division Bench for orders.

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• 2020 (12) TMI 404
  Exemption u/s 10(23)(vi) - whether the present petitioner, namely Bihar Combined Entrance Competitive Examination Board would be entitled for exemption under the provisions of Section 10(23)(vi)? - HELD THAT:- We are of the considered view that the authority below, while concluding that the petitioner was not an educational institution, did not have complete material, including as to whether it was generating any profit by taking fees for conducting the examination. After the matter was heard for some time, learned counsel for the parties were ad-idem that the matter can be remanded back to the authority for consideration afresh, by affording opportunity to the parties to place all material, enabling the authority to arrive at a decision in accordance with law.

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• 2020 (12) TMI 403
  Income accrued in India - receipts of the assessee from sale of software - taxable as royalty under the India -UK DTAA or not? - Whether ITAT was right in holding that explanation 4 to section 9(1)(vi) of the I.T. Act, 1961, would not apply to India - UK DTAA ? - HELD THAT:- ITAT has decided the appeals in favour of the Respondent-Assessee on the basis of the decision of this Court in the case of Principal CIT Vs. M. Tech India Pvt. Ltd. [ 2016 (1) TMI 812 - DELHI HIGH COURT] wherein the Court relied upon the earlier decisions on the same issue including the judgment of this Court in Director of Income Tax v. Infrasoft Ltd. [ 2013 (11) TMI 1382 - DELHI HIGH COURT] and inter alia held that payment made by the reseller for the purchase of software for sale in Indian market could not be considered as royalty. ITAT also dealt with the contention of the Appellant- Revenue regarding Explanation 4 to Section 9 (1)(vi) of the Act for interpreting the terms used in Article 13 of the DTAA and observed in para 6 of the impugned order that In view of Section 90(2) of the Income Tax Act, the assessee opts for Double Taxation Avoidance Agreement between India and UK to override the provisions of the Act as there is no corresponding amendment to the definition of the term royalty in Article 13(3) of the aforesaid DTAA as carried out in the definition of royalty u/s 9 (1)(6) of the Act. The learned ITAT then rejected the contention of the Appellant-Revenue by relying upon the judgment of this Court in Director of Income Tax v. New Skies Satellite BV Ors. [ 2016 (2) TMI 415 - DELHI HIGH COURT] which deals with the question of retrospective effect of the amendment - No substantial question of law.

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• 2020 (12) TMI 402
  MAT application u/s 115JB on Banking companies - assessee bank is eligible for deduction under section 36(1)(vii) of the Act, when the assessee has not debited any bad debts write off in the profit and loss account and only the provision for bad debts (prudential write off) has been claimed as deduction in the computation of income as bad debt write off? - HELD THAT:- In view of the aforesaid submission and for the reasons assigned in the judgment [ 2020 (11) TMI 486 - KARNATAKA HIGH COURT ], the substantial questions of law involved in this appeal are answered against the revenue and in favour of the assessee.

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• 2020 (12) TMI 401
  Revision u/s 263 - CIT setting aside order by ACIT u/s. 143(3) - deduction u/s 80P on account of interest received by assessee from Saraswat Co-op Bank Ltd. as well as from Maharashtra State Co-operative Bank denied - HELD THAT:- Assessee was subjected to limited scrutiny assessment vide notice dated 27/07/2016. One of the reasons for selection of scrutiny was deduction under Chapter-VI-A. Accordingly, during the course of assessment proceedings, the assessee was directed to explain the deduction claimed under Chapter-VI-A. The assessee, in its submissions dated 09/08/2016 as well as 22/12/2017 filed complete details of interest so earned along with note on deduction claimed u/s 80P. Finally, after considering the same, Ld. AO chose to accept the same and therefore, allowed the same specifically while framing the assessment. These facts would show that Ld. AO was clinched with the issue and had taken a possible view in the matter. The view was in line with the various judicial decisions prevailing at the time of making the assessment and the same could not be said to be perverse or against the law, in any manner. There was due application of mind to the issue by Ld. AO. Hon ble Supreme Court in Malabar Industrial Co. Ltd. V/s CIT [ 2000 (2) TMI 10 - SUPREME COURT] has held that the phrase prejudicial to the interests of the revenue has to be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue - revisional jurisdiction could not be held to be valid under law. - Decided in favour of assessee.

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• 2020 (12) TMI 400
  Monetary limit for maintaining the appeal of Department - Rectification of mistake - HELD THAT:-In the instant case, we find that the appeal was filed by the Revenue on 11.02.2019 and therefore, the present appeal was not filed pursuant to special order of the CBDT dated 16.09.2019 and as the matter didn t fall in any exception as so prescribed by the CBDT in its earlier circular dated 8.8.2019 and the special order doesn t apply in the instant case, the appeal was rightly dismissed by the Coordinate Bench on account of low tax effect in light of CBDT s circular dated 8.8.2019. We find that both CBDT Circular no. 23 of 2019 and special order dated 16.09.2019 were not in existence and thus not part of the record at the time when the matter was heard on 20.08.2019 or at the time of passing of order by the Tribunal on 22.08.2019 and therefore, non-consideration of subsequent CBDT Circular and the special order so passed by the CBDT is not a mistake apparent from record which can be rectified within the narrow compass of section 254(2) of the Act. Miscellaneous application so filed by the Revenue is not maintainable and is hereby dismissed in light of aforesaid discussion.

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• 2020 (12) TMI 399
  Unexplained investment - HELD THAT:- During the course of assessment proceedings, the assessee firm has accepted the same and in its submission has stated that we have inspected the seized records and only invoice of Rs. 45,000/- has been issued in name of our firm and related to us . Further submission of the assessee firm that the payment for such purchase was made by Shri W. R Singhal in his individual capacity is contradictory and in any case, is not supported by any corroborative evidence which has been brought on record. Once the bill is issued in name of the assessee firm and the assessee firm accepts the same and consequent purchase of electronic item, the onus is clearly on the assessee firm to demonstrate through verifiable evidence that such purchases have been done from its disclosed sources of income. In absence of any evidence on record that such purchases were made by the assessee firm from its own disclosed sources, the unexplained investment towards such purchase of Rs. 45,000 is hereby upheld. As far as the other bill no. 1199 of Rs. 175,000/- is concerned, the presumption is not rebutted that the said document was found from the residential premises of Shri S.K Singhal and therefore, any action where so required as per law is to be taken in his individual hands and not in the hands of the assessee firm. Further, we find that there is no mention of the assessee firm s name on the said bill and thus, there is no basis to hold that the said document belongs to the assessee firm. The addition of Rs. 175,000 is thus deleted

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• 2020 (12) TMI 398
  Disallowance u/s 14A r.w.r. 8D - A.R. submitted that the disallowance made by the AO consisted of interest disallowance made u/r 8D(2)(ii) as well as expenditure disallowance made u/r 8D(2)(iii) - as argued no disallowance out of interest expenditure under rule 8D(2)(ii) is called for, in A.Y. 2011-12, since the own funds available with the assessee is more than the value of investments - HELD THAT:- As rightly pointed out by Ld. D.R., this submission of the Ld. A.R. requires verification of facts and hence it requires to be examined by the A.O. Accordingly, we set aside the order passed by Ld. CIT(A) on the issue of disallowance of interest expenditure under rule 8D(2)(ii) and restore the same to the file of the A.O. for examining the same in accordance with the decision rendered by jurisdictional High Court in the case of Micro Labs Ltd. (supra). The disallowance of administrative expenses made under rule 8D(2)(iii) in AY 2011-12 is confirmed. Disallowance made u/s 14A in assessment years 2010-11 2012-13 - HELD THAT:- CIT(A) has followed the decision rendered by the coordinate bench in holding that the disallowance u/s 14A of the Act should not exceed the amount of exempt income.CIT(A) referred to the decision rendered by Hon ble Delhi High Court in the case of Joint Investments Pvt. Ltd. ( 2015 (3) TMI 155 - DELHI HIGH COURT ) . Disallowance of compensation paid to a person named Shri Mahesh Bhupathi and claimed as expenditure - HELD THAT:- Identical issue in the assessee s own case and since there is no change in the facts relating to the impugned disallowance, we do not find any infirmity in the order passed by Ld. CIT(A) on this issue. Accordingly, we confirm the same. Addition u/s 40(a)(ia) - Scope of amendment - HELD THAT:- We restore this issue to the file of A.O. for examining the applicability of second proviso to section 40(a)(ia) of the Act in AY 2010-11. See PERFECT CIRCLE INDIA PVT LTD - [ 2019 (1) TMI 1532 - BOMBAY HIGH COURT]

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• 2020 (12) TMI 397
  Exemption u/s 11 - Denial of registration u/s 12AA - CIT(E) came to the conclusion that the assessee did not satisfy the nature of activities as charitable for enabling granting of the registration u/s.12AA - HELD THAT:- The assessee was set up in the year 1999 and the application for registration was moved twenty years down the line on 31-03-2019. In such a situation, we cannot take an exception to the ld. CIT(E) examining the activities of the assessee w.r.t. the annual accounts for earlier years. AR strenuously emphasized that the assessee was not accorded adequate opportunity of hearing inasmuch as the ld. CIT(E), just after obtaining information from the assessee, passed the impugned order without confronting with his point of view or seeking clarifications from the assessee as to carrying or non-carrying out of any charitable activities. A prayer was made that another opportunity may be granted to explain the factual matrix in detail before the ld. CIT(E). No serious objection was raised by the ld. DR in this regard. In view of the position as obtaining in the instant case, we are satisfied that it would be in the fitness of things if the impugned order is set-aside and the matter is restored to the file of the ld. CIT(E). We order accordingly and direct him to decide the issue afresh after allowing reasonable opportunity of hearing to the assessee - Assessee appeal is allowed for statistical purposes.

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• 2020 (12) TMI 396
  Correct head of income - profit on sale of shares - business income or income from Capital Gains - HELD THAT:- In the present case, there is no dispute that all the shares are delivery based and same has been shown in the separate investment portfolio. Further, assessee has treated all the delivery based shares in investment portfolio and made entries to that effect in his books of accounts. Further, the respondent Revenue consistently accepted the treatment of shares and the profits arising thereon as capital gain for A.Ys. 2008-09 and 2009-10. The intention of the assessee is clearly established in treating the same as shares in investment portfolio for the earlier two years and respondent Revenue consistently accepted the said treatment shown by the assessee. Therefore, in our opinion, the order of ld.CIT(A) is liable to be set aside in terms of principle laid down by the Hon ble Jurisdictional High Court in Gopal Purohit [ 2010 (1) TMI 7 - BOMBAY HIGH COURT ] which was upheld by the Hon ble Supreme Court [ 2010 (11) TMI 222 - SC ORDER ] - Decided in favour of assessee. Disallowance u/s 14A r.w.r 8D - HELD THAT:- Disallowance made by the AO is not maintainable but however, we restrict the addition to an extent of exempt income - See M/s. Nirved Traders Pvt. Ltd. [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT ]

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• 2020 (12) TMI 395
  TDS u/s 195 - disallowance u/s.40(a)(i) for non-deduction of TDS - export commission paid to foreign agents for rendering services outside India - HELD THAT:- We find that the assessee has made payment to M/s.Biggleswade Ltd., Hong Kong, a non-resident agent who rendered services to the assessee outside India for marketing the products of the assessee. Assessee has filed necessary evidence to prove that although the agreement between the parties specifies various services but payment made for the impugned assessment year is only for export sales and such services are rendered outside India. Considering the facts and circumstances of the case and also the consistent view taken by the co-ordinate Bench in the case of M/s. Turbo Energy Ltd. [ 2017 (5) TMI 1749 - ITAT CHENNAI] we are of the view that the export commission paid to foreign agents for rendering services outside India is not liable for deduction of tax at source u/s.195 and consequently, no disallowance could be made u/s.40(a)(i) for non-deduction of TDS. CIT(A) after considering the relevant facts and also by following the decision of the Hon ble High Court in the case of Faizan Shoes Pvt.Ltd, [ 2014 (8) TMI 170 - MADRAS HIGH COURT] has rightly deleted the addition made towards disallowance of export commission made to non-resident agents - Decided in favour of assessee.

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• 2020 (12) TMI 394
  Reopening of assessment u/s 147 - eligibility of reasons to believe - HELD THAT:- It is a legal necessity that a foundation based on information is a must before the AO has reason to believe escapement of income. So, here the appraisal report on which the AO builds the reason to belief was absent when he recorded the reason before invoking the reopening jurisdiction u/s. 147 by issuing notice u/s. 148 on 31.03.2016. We are inclined to uphold the contention of the Ld. AR that the foundation on which the AO based his belief that income chargeable to tax had escaped assessment was absent at the material time when he issued notice u/s. 148 of the Act on 31- 03-2016, and therefore, the basic legal requirement of reopening u/s. 148 of the Act i.e. AO s formation of reasons to believe escapement of income prior to reopening of assessment was absent in the given facts of the present case. AO did not comply with the requirement of law set out in Section 147/148 of the Act before reopening the assessment for AY 2009-10 originally completed u/s. 153A/143(3) of the Act dated 31.03.2015, and as a consequence thereto, the order dated 29-12-2016 passed by the AO being without jurisdiction is held to be a nullity in the eyes of law. The assessee therefore, succeeds on this legal issue. The cross objections taken by the assessee for AY 2009-10, is thus allowed. As relying on Hon ble Supreme Court in the case of NDTV Ltd. [ 2020 (4) TMI 133 - SUPREME COURT] and other case laws, we hold that the reopening of the assessments for AYs 2010-11 2011-12 are bad in law in as much as the AO did not satisfy the condition precedent in first proviso to Section 147 of the Act which was sine qua non for usurping jurisdiction u/s 147 . Bogus loss incurred in trading of commodities on the National Multi Commodity Exchange ( NMCE ) - HELD THAT:- AO had simply copy-pasted his reasoning of AY 2009-10 and did not even bother to examine the assessee s commodity transactions for AY 2014-15. Unlike AY 2009-10 to AY 2012-13, in the assessment order for AY 2014-15, there was no allegation by the AO that the assessee had engaged in synchronized trading in this year. The charts and tables extracted by the AO analyzing the trades of the assessee pertained only to FYs 2008-09 to 2011-12 and there was nothing contained in the assessment order for AY 2014-15 which would even remotely suggest that the AO had applied his mind to the assessee s commodity transactions for AY 2014-15 and then arrived at a conclusion that it was contrived or bogus. When confronted with the aforesaid fact, even the Ld. CIT, DR could not controvert the same. We therefore, find merit in the assessee s alternate plea for AY 2014-15 that the reasoning given by the AO to disallow the loss incurred in commodity transactions in that year, was factually perverse and therefore rightly deleted by the Ld. CIT(A).

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• 2020 (12) TMI 393
  Assessment u/s 153A - Deemed dividend addition u/s 2(22)(e) - HELD THAT:- In a case where no assessment proceedings are pending on the date of the search and seizure proceedings, the assessment under section 153A can be carried out only on the basis of seized material. In a case where no incriminating material is unearthed during the course of search proceedings and the assessment proceedings remain unabated as on the said date, no additions can be validly made in the hands of the assessee. Our aforesaid view is fortified by the judgment of the Hon ble High Court of Delhi in the case of CIT vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] . As on the date of the search and seizure proceedings no assessment proceedings were pending in the case of the assessee before us, therefore, in the absence of any incriminating material having been found in the course of such proceedings no addition could have been validly made in the hands of the assessee. Accordingly, respectfully following the aforesaid judgments in the case of M/s Mala Builders Pvt. Ltd. [ 2016 (11) TMI 1046 - ITAT CHANDIGARH] we find no infirmity in the view taken by the CIT(A) who had rightly quashed the addition made by the A.O u/s 2(22)(e) of the Act. - Decided against revenue.

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• 2020 (12) TMI 392
  Depreciation u/s 32 on the membership card - assessee in the present case is a limited company and engaged in the business of stock broking - assessee was not in the possession of stock exchange card in the year under consideration - depreciation claimed by the assessee on the intangible asset being membership card of the stock exchange is not allowable - CIT (A) who deleted the addition - HELD THAT:- As decided in own case [ 2015 (11) TMI 1368 - ITAT AHMEDABAD] co-ordinate bench of the tribunal in case of assessee s sister concern s case M/s. Edelweiss Stock Broking Ltd.[ 2015 (10) TMI 917 - ITAT AHMEDABAD] grants identical depreciation relief. We also draw support therefrom for allowing the impugned depreciation claimed. This ground is accepted. - Decided in favour of assessee. Addition being depreciation allowance, interest and insurance expenses relating to vehicles though the assessee was not the owner of such vehicles - AO disagreed with the contention of the assessee by observing that the assessee failed to substantiate based on documentary evidence that it had dominion over the vehicles and such vehicles were used for the purpose of the business - HELD THAT:- Exclusive possession, right to exclude others from enjoyment of the assets, full control over the assets, right to retain possession and defend the same are some of the basic and important characteristics of the ownership which would entitle a person to claim benefit of depreciation allowance under Section 32 of the Act. Admittedly, the assessee enjoys all such benefits with respect to such vehicles. It is because the assessee has incurred the cost for the purchase of the vehicles, it is paying the instalments of the car loans, regularly paying the wealth tax on such vehicles, bearing the running and maintenance expenses. Assessee cannot be denied the benefit of depreciation merely on the reasoning that it is not the legal owner of such vehicles. we note that the assessee has claimed repair and maintenance expenses with respect to such vehicles which were also allowed by the Revenue. Thus it is inferred that such vehicles were used for the purpose of the business of the assessee - assessee is eligible for interest and insurance expenses incurred by it with respect to such vehicles. As alleged that the assessee has minimized the tax payable to the RTO by registering the vehicles in the name of the individual directors. In this regard, we note that there is no denial under the Motors Registration Act to register the vehicles in the name of the individual directors. The action taken by the assessee for registry the vehicles in the name of individual directors was within the framework of the provisions of law. Accordingly, we are of the view that this cannot be a ground to reject the claim of the assessee. In view of the above and after considering the facts in totality, we do not find any infirmity in the order of the Learned CIT (A). Addition of interest expenses under the provisions of Section 36(1)(iii) - AO disregarded the contention of the assessee by observing that the assessee failed to substantiate the fact that it has provided loans and advances for the purpose of its business activities - HELD THAT:- As decided in own case [ 2015 (11) TMI 1368 - ITAT AHMEDABAD] CIT (A) prepares a party-wise tabulation qua loans as incurred in reimbursement of expenses. He finds the same to have been incurred in business purposes as per case law of S A Builders vs. CIT,[ 2006 (12) TMI 82 - SUPREME COURT] as having business expediency element embedded therein. Addition u/s 14-A read with rule 8D - HELD THAT:- As decided in own case [ 2015 (11) TMI 1368 - ITAT AHMEDABAD] when there is no net interest expenditure upon setting off interest credited to P L account, no part of interest debited is to be disallowed as attributable to earning of exempt income. The Revenue does not point out any exception thereto. We accordingly delete the interest disallowance under Rule 8D(2)(ii) -. Coming to administrative expenses disallowance under Rule 8D(2)(iii), the assessee fails to dispute correctness thereof since the impugned assessment year is 2008- 09. This latter disallowance figure is confirmed. - Decided partly in favour of assessee. Disallowing the expenditure representing NSE penalty - HELD THAT:- As decided in own case [ 2015 (11) TMI 1368 - ITAT AHMEDABAD] CIT(A) allowed deduction as relying on GDB SHARE AND STOCK BROKING SERVICES LIMITED. [ 2003 (8) TMI 169 - ITAT CALCUTTA-C] Addition of bad debts as the conditions specified under Section 36 (2) - AO disregarded the contention of the assessee by observing that the deduction on account of bad debts can be admitted only upon the fulfilment of the condition specified under Section 36(1) (vii) r.w.s 36(2) - HELD THAT:- These entries are mainly in the nature of vatav kasar. Some of them are less than of Rs. 10,000/- even. The Assessing Officer observed that there was no material on record to prove the same to have been actually become bad. And also that the assessee had offered only brokerage sums as its income u/s 36(2) of the Act in profit and loss account. He accordingly made the impugned disallowance of this bad debts claim. Addition on account of Saudafer loss - HELD THAT:- Loss does not relate to the activity of sale/purchase of shares by the assessee for itself, then the provisions of explanation to Section 73 of the Act cannot be applied. Hence, the ground of appeal of the Revenue is dismissed whereas the ground of appeal of the assessee is allowed. Re-compute the capital gain with indexation from the FY 2005- 06 - assessee acquired old BSE membership card in the year 1995-96 at cost of Rs. 2,75,01,000/- and not claimed any depreciation on such membership card as it was acquired prior to 1st April 1998 - Whether the cost of acquisition of the BSE shares should be calculated in accordance with the original cost of acquisition of the BSE membership card under Section 55(2)(ab) or the written down value be adopted under Section 50? - Whether the relevant year for calculating indexed cost of acquisition should be the year of original acquisition of the BSE membership, i.e., year 1995-96/2000-01 or the year of allotment of shares in the BSE in lieu of membership, i.e., year 2005-06? - HELD THAT:- Both the membership card in seriatim. Regarding the first membership card of the BSE acquired in the year 1995-96, we note that the assessee has not claimed any depreciation thereon. Therefore, the same is outside the purview of the provision of Section 50 of the Act i.e. special provision for computation of capital gain in case of depreciable assets. It is because such membership card was not depreciable assets. Thus, the original cost incurred by the assessee on the acquisition of such membership card shall be taken as the cost of acquisition as defined under Section 55(2)(ab) of the Act Regarding the second membership card of the BSE acquired in the year 2000-01 , we note that the assessee has claimed depreciation thereon - Therefore, it appears that the same is subject to the provision of Section 50 of the Act i.e. special provision for computation of capital gain in case of depreciable assets which provides that written down value of the block of assets at the beginning of the previous year shall be reduced from the sale consideration. Provisions of Section 50 of the Act cannot be applied for the year under consideration. Indeed, the assessee is availing double benefit, firstly, by way of depreciation and secondly by way of claiming the deduction of the original cost of acquisition of the membership card under Section 55(2)(ab) of the Act. But the issue before us is limited to the cost of acquisition of the membership card as provided under section 55(2)(ab) of the Act. As per this section, the original cost should be takes as the cost of acquisition while determining the income under the head capital gain. What should be the period of holding for computing the capital gain with respect to shares acquired by the assessee upon the conversion of both membership cards of the BSE - AR has not brought anything on record suggesting that the assessee has accept the indexation benefit from AY 2006-07 on account of misunderstanding of the provisions of law or wrong advice of the consultant or it was against the spirit of the provisions of law. Accordingly, we decline to interfere in the order of the ld. CIT-A. Hence, the grounds of appeal of the revenue and the assessee are dismissed. Addition made by the AO on account of mismatch in ITS/26AS - HELD THAT:- The onus lies upon the assessee to justify based on the documentary evidence that it has not received any income from M/s Rajyog Share and stockbrokers Ltd for Rs. 8,678/- but the assessee failed to discharge its onus. Thus in the absence of any documentary evidence, we do not find any infirmity in the order of the authorities below. Hence, the ground of appeal of the assessee is dismissed. Expenses incurred on the purchase of the mobiles - Revenue or capital expenditure - revenue has treated the mobile phones as part of the plant and machinery and accordingly it allowed the depreciation thereon at the rate of 15% - HELD THAT:- The word plant according to section 43(3) includes ships, vehicles, boats, scientific apparatus and surgical equipment. Nowhere, does it specify mobile phones. Of course, it may be argued that plant is an inclusive definition, not an exhaustive one. But, then plant would include anything which can be comprehended within it s ordinary meaning. No one would ordinarily consider mobile phone to be a plant. When we come to the second part, which calls mobile phone as machinery, what is the definition of machinery in Income-tax Act? Well, the word machinery itself has not been defined in the Act. So, it has nowhere been defined that mobile phone is machinery. Accordingly, in the absence of any specific entry in the appendix-1 of the Act, we are of the view the assessee is eligible for claiming the impugned expenses as revenue in nature. Hence, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Thus the ground of appeal of the assessee is allowed TDS u/s 194J - payment made to the stock exchange on account of Non-deduction of TDS - HELD THAT:- We hold that there was no obligation on the part of the assessee to deduct tax at source. Consequently, the provisions of Section 40(a)( ia) were also not attracted and, therefore, the disallowance made was to be deleted. Hence the ground of appeal of the assessee is allowed. TDS u/s 194I - Disallowance on the payment made to the stock exchange on account of VSAT and lease line charges - HELD THAT:- The issue for deducting the TDS on the payment made to the stock exchange on account of VSAT charges and lease line charges is no longer res integra by virtue of the order of the ITAT Mumbai in the case of Destimoney Securities Private Ltd [ 2017 (8) TMI 714 - ITAT MUMBAI] - we hold that the assessee was not subject to the provisions of TDS under Section 194-I of the Act as alleged by the authorities below. Accordingly no disallowance on account of non-deduction of TDS is warranted. Disallowance of brokerage expenses on the reasoning that the registration certificate of broker was not produced - HELD THAT:- The amount of brokerage expenses can be claimed as deduction provided it was incurred in the course of the business. AR at the time of hearing has not brought anything on record suggesting the nature of services rendered by such brokerage. Besides the above, the payment was made against the violation of the rules of the SEBI, therefore we are of the view that payment is not eligible for deduction under the provisions of Section 37 of the Act. Accordingly we uphold the finding of the Ld. CIT (A). Hence, the ground of appeal of the assessee is dismissed. Disallowance of the expenses under Section 14A read with rule 8D cannot exceed the amount of exempted income. Hence, the ground of appeal filed by the revenue is dismissed.

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• 2020 (12) TMI 391
  TP adjustment - imputing interest on outstanding receivables as on March 31st 2013 relating to sales of services to AE s - HELD THAT:- Outstanding receivable is a separate international transaction and requires to be benchmarked post amendment in Clause (c) of Explanation to Section 92B of the Act by the Finance Act, 2012. However, since in the instant case, the working capital adjustments had been granted by the ld. TPO, on which fact there is absolutely no dispute, the outstanding receivables thereon gets subsumed thereon. Hence, there is no need to make separate adjustment towards outstanding receivables by imputation of interest on the same. This aspect has been considered in assessee s own case for A.YRs. 2011-12 and 2012-13 [ 2018 (6) TMI 508 - ITAT HYDERABAD] - we direct the ld. TPO not to make any adjustment by way of imputation of interest on outstanding receivables in the peculiar facts and circumstances of the instant case. Accordingly, the grounds raised by the assessee are allowed in this regard.

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• 2020 (12) TMI 390
  Penalty u/s 271(1)(c) - treated the gains on sale of residential flat of the assessee as short term capital gain as against the claim of the assessee that it should be assessed as long term capital gain - HELD THAT:- Addition the consequential penalty u/s. 271(1)(c) of the Act has no legs to stand. In the circumstances we do not find any infirmity in the order passed in deleting the penalty since the very basis for levy of penalty i.e. addition made in the assessment proceedings was deleted by the Tribunal and in which case penalty will not survive. Thus, we confirm the order of the Ld.CIT(A) in deleting the penalty. Ground raised by the Revenue is rejected

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• 2020 (12) TMI 389
  Assessment u/s 153A - unexplained cash credits u/s.68 - HELD THAT:- Hon ble Bombay High Court in CIT Vs. Continental Warehousing Corporation (Nheva Seva Limited) [ 2015 (5) TMI 656 - BOMBAY HIGH COURT ] held that no addition can be made in respect of assessments which have became final if no incriminating material found during the search. CIT-DR failed to bring any fact that assessment for the year under consideration was pending at the time of search on 14.02.2014 of that the issue of share capital was not the subject matter in the assessment was not reported while filing the Return of Income in the assessment year under consideration. DR referred the explanation attached with section 153A that the AO has power to assess or re-assessing total income in respect of each assessment year falling within six assessment years. There is not dispute regarding statutory provision in the Act. However, the Hon ble Bombay Delhi High Court has laid down Law that no addition in absence of incriminating material can be made in respect of assessment which has become final if no incriminating material is found during the search. DR failed to bring any contrary fact to our notice that any incriminating material was found during the search. The AO has not filed even a single piece document to support the grounds of appeal raised in these appeals. No contrary law is brought to our notice. Appeal of the Revenue is dismissed.

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• 2020 (12) TMI 388
  Validity of reopening of assessment u/s 147 - notice in name of non existent company - scheme of amalgamation conceived - HELD THAT:- A coordinate bench of this Tribunal in ACIT Vs. M/s Pride Residency (P) Ltd. [ 2019 (12) TMI 694 - ITAT DELHI ] also held that when two companies amalgamate and merge to one, the transferor company loses its entity as the decisions to have its business, and their respective rights and liabilities are determined under the scheme of amalgamation, but the corporate entity of the transferor company ceases to exist with effect from the date the amalgamation is made effective, and if the Ld. learned Assessing Officer has got knowledge about the merger and if jurisdictional notice is issued to the non-existent entity the consequent assessment is bad under law. In this matter having knowledge about the merger of M/s Anjani Exports Pvt. Ltd. with the M/s Anjani Technoplast Ltd., where back by 16.12.2009, the learned Assessing Officer issued the jurisdictional notice dated 25.03.2014 on M/s Anajani Export P. Ltd. which was not in existent as on the date, to the knowledge of the Learned Assessing Officer, and, therefore, the assumption of jurisdiction by the learned Assessing Officer u/s 147 of the Act is bad - Decided in favour of assessee.

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• 2020 (12) TMI 387
  Revised return filed - difference between the income returned as per original return and the income as per revised return - refusal to accept the revised return of income and upholding the addition - HELD THAT:- Unless and until the AO rejected the Revised Return on the basis of discrepancies in Books of Accounts it is not possible to make such an addition. If there is any defect in the Books of Accounts he specifically point out the same and make specific addition. Being so, when the Books of Accounts are duly audited and approved by the AGM, the assessment has to be completed on the basis of Revised Return. There is no scope of taking the difference in income declared in the original return and revised return as additional income of the assessee. We are completely in agreement with the contention of the assessee that the Assessing Officer cannot consider the income declared in the original return based on the unaudited books of accounts over the income declared in revised return based on the audited books of accounts. We direct the Assessing Officer to complete the assessment on the basis of the Revised Return based on the audited books of accounts. This ground of appeal is allowed. Disallowance being sundry charges and additional ground is that said amount has not claimed as deduction in the Return of Income - HELD THAT:- It is appropriate to remit this issue to the file of Assessing Officer for reconsideration to decide whether it is revenue expenditure or capital expenditure , if it is a capital expenditure, depreciation is to be granted at applicable rate. Both additional ground and main ground are allowed for statistical purposes. Disallowance being 25% of charges of tools which are written off during the year - According to the Assessing Officer, it has to be grouped under the head Block of Assets and depreciation to be claimed at applicable rate - AO disallowed the amount and granted depreciation @ 10% - HELD THAT:- Assessee has been following the Inventory Policy on valuation of loose tools which is disclosed in Schedule 18 (vii) to audited financial statements. Loose Tools are charged of consumption @ 25% p.a on the reducing balance method. The net realizable value of inventory are considered and valued at 75% of the processing value. In our opinion, the method adopted by the assessee to value the loose tools is justified. The loose tools are neither plant nor machinery nor buildings nor furniture nor fixtures and method valued by the assessee consistently accepted by the revenue authorities. Accordingly, we allow this ground of appeal of the assessee.

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• 2020 (12) TMI 386
  Estimation of income - Rejection of books of accounts - bogus expenditure - absence of bills and vouchers to support the expenditure claimed by the assessee - AO estimated the income of the assessee @8.5% of the gross bills and accordingly determined the total income on main contract works executed by the assessee - HELD THAT:- Estimation of income @8% is reasonable. Even though the assessee had the turnover over and above the limit of Section 44AD, the Special Bench of ITAT, Indore in the case of Arihant Builders Developers Vs. ACIT, [ 2006 (11) TMI 253 - ITAT INDORE ] held that estimation of income taking the cue from Section 44AD is reasonable though the limit exceeds. Therefore, taking into consideration of the submissions of the assessee and the lead from the order orders relied up on by the assessee, we hold that the estimation of income @8% meets the needs of justice.

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• 2020 (12) TMI 385
  Reopening of assessment u/s 147 - salary paid to the assessee along with other two persons was found recorded in seized documents, which was not recorded in the books of accounts of the said company - HELD THAT:- On the very same documents, the additions have been made in assessment years 2009-10 in 2010-11 respectively in the case of the assessee. In the case of the Modern Dairy Ltd., the addition was made for salary expenditure incurred out of the books of accounts, whereas in the case of the assessee addition has been made for salary received and not reported in the return of income. In our opinion, when the very basis of the addition made has been deleted by the Tribunal, the addition made on the basis of those documents in the case of the assessee cannot survive. Accordingly, we delete the additions in assessment years 2009-10 and 2010-11 respectively. The grounds of both the appeals of the assessee are accordingly allowed.

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• 2020 (12) TMI 384
  Addition u/s 40A(3) - case of the assessee is that there are no purchases from the sister concerns, therefore section 40A(3) has no application - case of the Assessing Officer is that the payments made by the assessee to the above two sister concerns are relate to purchases, therefore section 40A(3) applies - CIT-A gave a finding that it is not correct to say that the payments represent purchases without any adverse material - HELD THAT:- Even before us, no material is placed with regard to payments made by the assessee relates to purchases. In view of the above specific finding given by the ld. CIT(A), we find no reason to interfere with the order passed by the ld. CIT(A). Thus, this appeal filed by the department is dismissed.

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• 2020 (12) TMI 383
  Addition on account of deemed let out property - AO has made addition on the ground that the assessee is the Owner of Three Properties - HELD THAT:- We notice from the record that in remand proceedings, AO has agreed with the documents submitted by assessee that the flat nos. 61, 62, 51 and 52 are combined and having single kitchen and common entrance, therefore, it satisfies the definition of single dwelling unit. Therefore, we are inclined to accept the findings of Ld. CIT(A) and accordingly, ground raised by revenue is dismissed. Addition on account of low withdrawals - assessee s own cash withdrawals including those of the members of his joint family amount to less than Rs. 31,000/- per member per month which cannot be perceived as sufficient for an upper class family residing in Mumbai - CIT-A deleted the addition - HELD THAT:- We notice from the record that the assessee is living in the joint family consisting of 6 members. Such family members having independent income - CIT(A) has observed that the family has a withdrawal of Rs. 34.44 lakhs during FY 2011-12 and it appears to be adequate to maintain the entire family. Therefore, we are inclined to accept the findings of Ld. CIT(A) and accordingly, ground raised by revenue is dismissed. Addition u/s 57(iii) - assessee has accepted the fact that monies borrowed at a higher rate of interest has been utilized in avenues which offer a lower rate of interest and that too in a company in which the assessee is interested and supported the findings of AO - CIT-A deleted the addition - HELD THAT:- The loan is secured with the keyman insurance. Since, it is assigned to assessee, the loan also transferred in the name of assessee and assessee has paid interest on the above loan to the extent to LIC. This payment of interest is towards the loan assigned in the name of assessee and direct connection with the loan given to the company M/s Maneesh Pharmaceuticals Ltd. Therefore, there is direct link to the interest income earned by the assessee. Therefore, it is allowable expenditure u/s 57(iii) of the Act. With regard to Interest payment to Mr. Balkrishna Hedge, we notice that M/s Maneesh Pharmaceuticals Ltd. has taken loan from assessee and assessee has received the funds from Mr. Balkrishna Hedge on 26.11.2010 and subsequently, assessee has transferred the same to M/s Maneesh Pharmaceuticals Ltd and the company has utilized the same in their upcoming projects - A clear findings of Ld. CIT(A) that assessee has earned the interest income from M/s Maneesh Pharmaceuticals Ltd. and there is direct link to the loan given to them and link to the loan taken from Mr. Balkrishna Hedge. Therefore, it is established that the interest expenditure is linked to the interest income earned by assessee from the company. Therefore, it is allowable expenditure u/s 57(iii) of the Act. Therefore, we are inclined to accept the findings of Ld. CIT(A) and accordingly, ground raised by revenue is dismissed. Disallowance u/s 14A - balance in the assessee s capital account is already utilized in the form of assets lying in the balance sheet of the assessee and, therefore, the provisions of section 14A are required to be implemented in the case of the assessee - HELD THAT:- The interest expenditure incurred by assessee is directly linked to the interest income earned during the year and it is not incurred to make investment. Therefore, there is no separate interest expenditure incurred by assessee other than the interest incurred to earn interest income. The findings of Ld. CIT(A) is proper as per the facts. Therefore, we are inclined to accept the findings of Ld. CIT(A) in deleting the disallowance u/r 8D(2)(ii) of the rules. With regard to the rule 8D(2)(iii), assessee has not claimed any administrative expenditure and however, as per rule 8D(2)(iii), AO has to disallow 0.5% of the average investments - assessee has earned dividend income of Rs. 18,880/-. AO can calculate 0.5% of the average investments on which assessee has actually earned dividend income. AO should not calculate any other investment in which assessee has not earned any dividend income. Partly allowing the ground raised by revenue.

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• Customs

• 2020 (12) TMI 379
  Mis-declaration of the country of origin - Provisional release of the vessel - Validity of Circular No.35/2017-Customs dated 16.08.2017 - basic contention of the seizing authority was that the vessel was carrying cargo covered by bill of entry No.2262875 dated 21.09.2020 by mis-declaring the country of origin as Iraq and port of loading as Basrah, Iraq - HELD THAT:- When respondents had allowed clearance of the consignments and learned counsel for the respondents had made it abundantly clear that respondents are not concerned with the consignments as such but with the vessel, a prima facie view may be taken that section 115 of the Customs Act more particularly sub-section (2) thereof may not be applicable. However, this is a matter which may require further investigation and adjudication, if it comes to that stage. Therefore, in the facts and circumstances of the case, it may be premature for the Court to step in at this stage to determine and adjudicate legality and validity of the seizure - This Court has held more than once that seizure is not an end in itself. The worst possible scenario that can visit the petitioner post issuance of the seizure memorandum is confiscation of the vessel under section 115 of the Customs Act in which event proviso to sub-section (2) shall come into play. Instead of adjudicating on legality or validity of the seizure at this stage, it would be more appropriate to deal with the aspect of provisional release of the vessel in terms of section 110-A of the Customs Act. Section 115 more particularly sub-section (2) thereof and the proviso to sub-section (2). If a conveyance is used as a means of transport in the smuggling of any goods, it shall be liable to be confiscated. However, it will not be confiscated if the owner proves that it was so used without his knowledge or connivance or that of his agent and the person in charge of the conveyance. As per the proviso, where such conveyance is used for carriage of goods or passengers on hire, the owner of the conveyance has to be given an option to pay fine in lieu of confiscation of the conveyance. The fine shall not exceed the market price of the goods which are sought to be smuggled or the smuggled goods, as the case may be. Even from a perusal of the impugned seizure memorandum it is seen that the officer seizing the vessel had recorded that it was not practicable to physically takeover custody of the vessel. Therefore, custody of the vessel has been handed over to the master of the vessel with the condition that he shall not remove, part with or otherwise deal with the vessel except with the permission of the Special Intelligence and Investigation Branch. It may be mentioned that in the seizure memorandum itself the value of the vessel has been mentioned at Rs. 12,74,00,000.00 approximately - on due consideration and without going into the challenge to the impugned seizure memorandum dated 26.09.2020, we do not find any good reason to decline provisional release of the vessel. It is directed that respondent No.1 to grant provisional release of the vessel MT Global Rani to the petitioner under section 110A of the Customs Act on furnishing a bond of Rs. 12,74,00,000.00 with further deposit of Rs. 25,00,000.000 in the form of bank guarantee of a nationalised bank - petition allowed.

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• 2020 (12) TMI 378
  Review application - error apparent of the face of record or not - absolute confiscation of the gold weighing 446 gms - HELD THAT:- Since this Court had considered all the contentions raised by the Review Applicants in the Writ Petition while disposing of the same on 29.02.2016, I do not find any error apparent on the face of the record warranting interference in the Review Application. That apart, the Review Applicants cannot re-argue the Writ Petition in the guise of Review Application. The Review Applicants are not in a position to point out any error apparent on the face of the record to entertain the Review Application - Since there is no error apparent on the face of the record warranting interference in the Review Application, the Review Application is liable to be dismissed. Calling of the records relating to the impugned order - review application dismissed - contention of the Writ Petitioner is that the petitioner could not participate in the adjudication proceedings before the 2nd respondent and in view of the order passed in above Review Application, the impugned order dated 27.02.2016 is liable to be set aside and the matter should be remitted back to the 2nd respondent for fresh consideration - HELD THAT:- Since this Court had already allowed the Writ Petition in W.P. No.2968 of 2016 and also dismissed the above Review Application, the impugned order dated 27.02.2016 is set aside and the matter is remitted back to the 2nd respondent for fresh consideration. Review application dismissed.

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• 2020 (12) TMI 377
  Smuggling - Betel Nuts - highly perishable goods - foreign origin goods or not - confiscation of seized goods - imposition of penalties - Revenue bases its case on the certificate issued by Arecanut Research and Development Foundation (ARDF), Mangalore and the fact that the owners could not establish the Indian origin of the arecanut - HELD THAT:- It is found that investigation was only in the direction to conclude that there was no proof for indigenous and licit procurement of betel nut seized and that the claim of the appellants cannot be verified in some cases. The betel nut is not notified under Section 123 of the Customs Act, 1962 and therefore, the burden of proof lies with the department to prove the same. It s not just enough to prove by negative inference. Allegation requires to be proved by cogent and positive evidence. We find that no such positive evidence has been put forth by the department. There is not even a reference or narration as to how and wherefrom the impugned goods are smuggled. We find that the Tribunal in the case of DHARMENDRA KR. JHA VERSUS COMMISSIONER OF CUSTOMS (P) , PATNA [ 2015 (11) TMI 1639 - CESTAT KOLKATA] held that betel nut is not a notified commodity under Section 123 of the Customs Act, Act 1962 and the onus is on the department that seized goods were in fact smuggled in to India. We find that the department has not discharged its burden. Revenue relies heavily on the certificate issued by Arecanut Research and Development Foundation (ARDF), Mangalore - various fora have held that the institute is not accredited and hence, the report is not reliable - It was held by High Court of Patna in M/S AYESHA EXPORTS VERSUS THE UNION OF INDIA AND ORS. [ 2019 (1) TMI 1633 - PATNA HIGH COURT ] that in absence of any material to show ARDF Mangalore is accredited laboratory by competent authority under Act and Rules, it s report cannot have consequence of fastening of any legal liability and No legal liability can flow from report of such an institution , hence authorities not justified in again relying thereon to justify seizure in question. Tribunal, in the case of COMMISSIONER, CUSTOMS (PREV.) , LUCKNOW VERSUS M/S MAA GAURI TRADERS [ 2018 (11) TMI 1668 - CESTAT ALLAHABAD ], held that since betel nuts are also produced in India, in absence of any evidence that confiscated goods were illegally smuggled into India, same cannot be confiscated merely based on test report of an organization which later on also admitted that country of origin cannot be determined through test in the laboratory. The betel nut being non notified goods; burden to prove the fact of smuggling lies on the department and the same has not been discharged; the report of ADRF, Mangalore cannot be relied upon - On the issue of goods being held to be unfit for human consumption, it is held that as the goods are neither imported nor proved to be smuggled, no action by Customs is warranted. Seizure of impugned betel nut is not justified - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2020 (12) TMI 376
  Restoration of name of Respondent in the Register of Companies maintained by the office of ROC - Section 252(3) of the Companies Act, 2013 - HELD THAT:- The appeal is filed under section 252(3) of the Companies Act, 2013. While, going through the section 252(3) of the Companies Act, it is found that the instant provision is made when the company is struck of voluntarily on the behest of the Promoter(s)/Director(s), whereas, section 252(1) of the Companies Act, provides that, when the company is struck of by the Registrar of Companies on the failure in filing of statutory returns by the Company. Considering the public interest, and to protect the legitimate interest of revenue, the name of the Respondent Company requires to be restored in the Register of Companies maintained by the ROC, Ahmedabad so as to enable the Appellant (Income Tax Department) to proceed further as per rules and in accordance with law - Petition allowed.

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• 2020 (12) TMI 375
  Restoration of name of Respondent in the Register of Companies maintained by the office of ROC - section 252(3) of the Companies Act - HELD THAT:- While going through the section 252(3) of the Companies Act, it is found that the instant provision is made when the company is struck of voluntarily on the behest of the Promoter(s)/Director(s), whereas, section 252(1) of the Companies Act, provides that, when the company is struck of by the Registrar of Companies on the failure in filing of statutory returns by the Company - the instant application would not lie under section 252(3) of the Companies Act, 2013; rather, it would lie under section 252(1) of the Companies Act, 2013. Considering the public interest, and to protect the legitimate interest of revenue, the name of the Respondent Company requires to be restored in the Register of Companies maintained by the ROC, Ahmedabad so as to enable the Appellant (Income Tax Department) to proceed further as per rules and in accordance with law - it would be just and equitable to restore the name of the Company M/s. Bindal Impex Pvt. Ltd. in the register maintained by ROC, Ahmedabad, Gujarat as the same is not barred by any law. The present appeal is allowed to the extent of revival of the Company and the ROC Gujarat, Ahmedabad is hereby directed to restore the name of Company viz. M/s. Bindal Impex Pvt. Ltd. in the Registrar of Companies.

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• 2020 (12) TMI 374
  Sanction of scheme of amalgamation - section 230-232 of the Companies Act, 2013 - HELD THAT:- The scheme is approved as all statutory requirements are fulfilled. While approving the scheme of amalgamation, we make it clear that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges, if any, payable in accordance with law or in respect of any permission/compliance with any other requirement which may be specially required under law.

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• 2020 (12) TMI 373
  Sanction of composite scheme of amalgamation - sections 230-232 of the Companies Act, 2013 - HELD THAT:- The petitioner-companies have already assured and gave an undertaking to this effect that it shall comply with all the statutory compliance including pending Income-tax proceedings. Thus, it is made clear that sanction and approval of the present scheme shall, however, be subject to the outcome of pending IT proceedings and appeal. Therefore, the observations made by the Regional Director and official liquidator stands satisfied. Considering the entire facts and circumstances of the case and on perusal of the scheme and the proceedings, it appears that the requirements of the provisions of sections 230-232 of the Act are satisfied. The scheme is genuine and bona fide and in the interest of the shareholders and creditors. The scheme of approval is sanctioned - application allowed.

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• 2020 (12) TMI 372
  Removal of Director - Seeking declaration that the Form 32 filed in 1992 as filed by the Respondent for the removal of Petitioner from the position of Director of Respondent Company is null and void - deeking declaration that transfer of shares from Petitioners to the Respondent Nos. 2 to 7 as illegal etc. - Sections 59 and 241 of Companies Act, 2013 - HELD THAT:- It is relevant to extract Section 59 of the Act and connected rule 70 of NCLT Rules, 2016. Section 59(1) says that the name of any person is, without sufficient cause, entered in the register of members of a company, or after having been entered in the register, is, without sufficient cause, omitted therefrom, or if a default is made, or unnecessary delay takes place in entering in the register, the fact of any person having become or ceased to be a member, the person aggrieved, or any member of the company, or the company may appeal in such form as may be prescribed, to the Tribunal, or to a competent court outside India, specified by the Central Government by notification, in respect of foreign members or debenture-holders residing outside India, for rectification of the register. Therefore, separate Application/Petition has to be filed by the Petitioner, if his shares in the Company is illegally removed from the Register of Company. And filing the instant Petition shows that the Petitioner is admittedly not a shareholder of the Company, as on date of filing the instant Petition - a Petition u/s. 241 of Act, cannot be filed by non-shareholder(s) of a Company. Therefore, if the Petitioner succeeds in the Petition filed u/s. 59 of Act, he can maintain petition u/s. 241 of Act to seek relief u/s. 242 of Act Moreover, mere removal of name of a shareholders in accordance with law, cannot be termed as acts of oppression and mismanagement. Therefore, the Petition itself is filed on mis-conceived notion. The Petitioner cannot plead ignorance about the affairs of Company till 2018 when he is alleged to have verified the MCA to know the affairs of Company. He is estopped from raising the disputes with regard to affairs of Company took place long time ago. Therefore, the Petition is also barred by laches and limitation and has not approached the Tribunal with any bona fide grounds and clean hands - the instant Company petition is not maintainable, barred by laches and limitation, lacks merits and came with unclean hands, it is frivolous and thus it is liable to be dismissed with costs. Petition dismissed.

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• Insolvency & Bankruptcy

• 2020 (12) TMI 410
  Approval of the Resolution Plan - section 30(6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- On perusal of the Resolution Plan, we find that the resolution plan has necessary provisions for its effective implementation. The CoC has approved this Resolution Plan with requisite vote of more than 66% as required under the law, in favor of the Resolution Plan - We are satisfied that the Resolution Plan fulfils the mandatory requirements of Section 30 of the I B Code and Regulation 38 39 of IBBI (CIRP) Regulations, 2016. In view of the provisions of Section 30(4) of the Code, we approve the resolution plan submitted for International Book House Private Limited as approved by the CoC. The resolution plan so approved shall be binding on the corporate debtor and its employees, members, creditors [including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed,] guarantors and other stakeholders involved in the resolution plan. Approval of revised Resolution Plan - HELD THAT:- Hon ble Supreme Court in Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta Ors. [ 2019 (11) TMI 731 - SUPREME COURT ] , to buttress her point that the applicant cannot challenge the approved resolution plan despite the fact that the applicant itself has voted in favor of the Resolution Plan albeit not voted in approving the distribution pattern. The Applicant in this application is an unsecured financial creditor of the Corporate Debtor who has to share the sum of Rs. 5 lakhs with all other unsecured financial creditors thereby getting a share of only 1.44% of the admitted claim amount of all unsecured creditors, as per the resolution plan approved by the CoC. In the resolution plan all the unsecured creditors are given the same treatment. The secured financial creditors and unsecured financial creditors may not be treated alike. In our view there is no discriminatory treatment among the unsecured creditors. The Respondent No. 1 and 2 be ordered and directed to provide to the Applicant sharing percentage of its admitted claim at par with the admitted claim of other similar Financial Creditors without any discrimination - The Respondent Nos. 1 2 be ordered and directed to submit revised Resolution Plan taking into consideration the interest of all stakeholders and provide for distribution of the amount of Resolution Plan without any discrimination or preference and thereby equate it with other similarly situated Financial Creditors.

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• 2020 (12) TMI 382
  Exclusion of period of lockdown and restrictions imposed by the Government of India in view of the Pandemic of Covid-19 from 25.03.2020 to 22.07.2020 from the Liquidation Process period - HELD THAT:- Reliance placed in the the judgment of Hon ble Supreme Court in Suo Motu Writ Petition (Civil) No(s).3/2020 in Re: cognizance for extension of Limitation vide order dated 23.03.2020 [ 2020 (5) TMI 418 - SC ORDER ] where it was held that this order may be brought to the notice of all High Courts for being communicated to all subordinate Courts/Tribunals within their respective jurisdiction. The material facts of the issue are not in dispute, and the law on the issue is also settled by the judgments cited - the Applicant is justified to seek exclusion as sought for in the Application Application allowed.

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• 2020 (12) TMI 371
  Seeking directions against the Interim Resolution Professional (IRP) - It is submitted by the respondent that the only documents annexed with Form C of the applicant are balance sheets of the company for the financial years beginning from 2008-09 till 2014-15 and the calculation of interest which has been assumed @12% p.a. is based on the prime lending rate of SBI as benchmark - HELD THAT:- The Respondent has neither denied nor rejected the claim of the applicant rather has only advised to file the claim under Form F which is for other creditors as no relevant documents have been brought forth by the applicant to support his claim of being a Financial Creditor. The Respondent/RP has not rejected the claim of the Applicant. It has only sought clarificatory documents and in the absence of such documents, advised the applicant to files his claim in Form-F. The HBN Dairies and Allied Ltd. cannot be admitted to be a Financial Creditor, in absence of appropriate supporting documents to prove its claim as Financial Creditor. As per the Code, for a claimant to be categorized as Financial Creditor, there has to be a financial debt as per Section 5(8) of the Code, which is a debt disbursed against the consideration for time value of money. The amount of Rs. 61,31,09,115/- outstanding payable to HBN Dairies and Allied Ltd. does not have the essential ingredients of financial debt and does not fall under Section 5(8) of the Code, unless proven otherwise by necessary documents - the present application fails and is rejected.

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• 2020 (12) TMI 370
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is pertinent to note that the Applicant has placed on record all the invoices, stating that the Respondent itself had acknowledged the said invoices and copies of ledger account. Once the debt is shown as due, it is for Respondent to prove that there are no outstanding dues to be paid to the Applicant. There has been much cloud in the submission of the Respondent. Therefore, without any specific details of material particulars or evidence the fact of existence of a dispute cannot be sustained - In the present case, there is no such dispute as pre-existing, the dispute which was being claimed to be pre-existing by the corporate debtor does not survive. On the contrary there is an admission to outstanding amount on the part of the Corporate Debtor through its e-mail dated 6-9-2019. The present application is complete and the Operational Creditor is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, and fulfillment of requirements under section 9(5) of the Code. Hence, the present application is admitted. Application admitted - moratorium declared.

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• 2020 (12) TMI 369
  Maintainability of application - initiation of CIRP - alleged default on the part of the Corporate Debtor - Existence debt and dispute or not - HELD THAT:- A persual of the correspondence indicates that there are no documents on record to show the communication of dispute to the operational creditor about the quality of goods supplied. No complaint filed in respect of the same on record. Further the Corporate Debtor has not referred to any specific material nor any specific quality issue. There has been much cloud in the submission of the respondent. Further there is nothing on record indicating the communication of dispute to the operational creditor about the quality of goods supplied. Further no damage/counter claim has been lodged. When there is absolutely no document or particulars to support the claim of existence of dispute, the mere claim of dispute rose in the reply and in the pleadings in defence can be termed as vague and motivated to evade the liability. That the authenticity of facts can only be ascertained by supporting evidence and Mere submission would not be taken into consideration. The operational creditor has clearly established the existence of debt and default on the part of the corporate debtor - this Tribunal initiates CIRP on the corporate debtor with immediate effect. Application admitted - moratorium declared.

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• 2020 (12) TMI 368
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - HELD THAT:- The corporate debtor has tried to create and establish a preexisting dispute by asserting that the services had never been performed. Further, the corporate debtor has also raised contentions with regards to maintainability of the present application and sufficient proof to substantiate the contentions have not been provided. No documentary evidence or correspondence is placed on record by the corporate debtor to support the contentions, that there is a pre-existing dispute and the said dispute was raised for the first time only after notice under Section 8 of IBC was issued. In reply the various objections raised are mere statements made by Corporate Debtor which has not been substantiated with any proof. It is clear that such notice must bring to the notice of operational creditor the existence of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which required further investigation and that the dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. The dispute raised by the corporate debtor, is spurious, plainly frivolous and unable to categorize as genuine dispute as reproduced above. Hence, contention of the corporate debtor, of a pre existing dispute without any evidence and merit is a clear after thought to defeat the claim of the applicant - The date of default is 11.09.2019 and the present application is filed on 09.10.2019. Hence the application is not time barred and filed within the period of limitation. The Applicant has filed an affidavit in compliance of section 9(3)(b) which is placed on record - The present application is filed on the Performa prescribed under Rule 6 of the Insolvency and Bankruptcy Code, 2016 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 r/w Section 9 of the code and is complete. The applicant is entitled to claim its dues, establishing the default in payment of the operational debt. The application is admitted - Moratorium declared.

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• 2020 (12) TMI 367
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- On failure to pay the outstanding dues by the Respondent, the applicant sent a demand notice dated 25.09.2018, under Section 8 of the Insolvency and Bankruptcy Code, 2016 to the respondent, asking them to make the entire payment of Rs. 1,72,982/-, together with interest within 10 days from receipt of the notice, failing which the applicant shall initiate the Corporate Insolvency Resolution process against the Respondent. The demand notice in the present case was issued under Section 8(1) of the Code on 25.09.2018, Respondents have placed their earlier correspondences dated 06.06.2017 and beyond, raising issues with respect to the quality of goods supplied by the Operational Creditor. It is thus seen that the dispute was brought to the notice of the applicant prior to the issuance of the demand notice dated 25.09.2018 issued under Section 8(1) of the Code. This application fails and the same is hereby rejected and dismissed.

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• 2020 (12) TMI 366
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Operational Debt or not - Service of demand notice - HELD THAT:- The demand notice dated 21.08.2019 was sent at the address as per the master data at Page No. 43 of the petition in which the registered office is shown as SCO-43, Old Judicial Complex, Sector-15, Gurgaon, Haryana. The delivery receipt along with copy of duly acknowledged notice is found to be attached at Annexure-II (Colly) of the petition. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- The respondent corporate debtor has neither filed any reply to the petition nor has disputed the liability towards the operational creditor. Thus, there is no dispute as to the liability between the corporate debtor and the operational creditor. It is also observed that on the last date of hearing, learned counsel for the respondent has stated that Corporate Debtor is not in a position to clear the debt. It has been shown that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. It is also observed that the conditions under Section 9 of the Code stand satisfied. The applicant-operational creditor states that from the abovementioned fact it is clear that the liability of the respondent-corporate debtor is undisputed. Accordingly, the petitioner proved the debt and the default, which is more than Rs. 1 lac by the respondent-corporate debtor - the petition for initiation of the CIRP process in the case of the Corporate Debtor M/s. Ebusinessware (India) Private Limited is admitted. Petition admitted - moratorium declared.

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• Service Tax

• 2020 (12) TMI 381
  Refund of unutilized cenvat credit - rejection on the ground that there is no nexus between input service and output service - period January 2017 to March 2017 - HELD THAT:- It is fact on record that at the time of claiming the cenvat credit it was not objected at any moment of time with regard to admissibility of cenvat credit. The same is a legal issue and can be raised any moment of time. Moreover, in the impugned order also, the Ld. Commissioner (Appeals) has discussed the issue and it can be contested any stage of time as admissibility of cenvat credit has not been agitated at the time of availment of cenvat credit, therefore, the same cannot be disputed at the time of filing refund claim as held by this Tribunal in the case of VERISIGN SERVICES INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX BANGALORE SERVICE TAX- I [ 2018 (2) TMI 927 - CESTAT, BANGALORE] . Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (12) TMI 365
  CENVAT Credit - rejected goods - rectify/re-make the goods for sale - case of the revenue is that in the cases, the goods were cleared as scrap, the appellant is required to pay cenvat credit availed on such goods at the time of clearance as they have removed the goods as such in terms of Rule 16(2) of Central Excise Rules, 2002 - HELD THAT:- The rejected goods were received by the appellant and at the time of receiving the rejected goods, the appellant took the cenvat credit in terms of Rule 16 of Central Excise Rules, 2002. It is also fact on record that these goods were subject to re-make and during the process of re-make certain goods were found cannot be re-made and the same were cleared as scrap on payment of duty, therefore, the provision of Rule 16(2) are not applicable to the facts of this case to allege that the goods were cleared as such. In fact, as per the facts of the case itself, it is clear that the returned goods were subjected to some process and when they were not found up to the mark were cleared on payment of duty as scrap - The appellant has correctly paid the duty as scrap at the time of clearances. Revenue Neutrality - HELD THAT:- The appellant has cleared these goods to their another unit. Admittedly, whatever duty have been paid, the same are entitled to cenvat credit to themselves. In that circumstances, it is a revenue neutral situation. In that circumstances also, the appellant are not required to pay any differential duty or any amount on account of cenvat credit. Appeal allowed - decided in favor of appellant.

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• 2020 (12) TMI 364
  CENVAT Credit - input services or not - service of repairs and renovation of factory premises - service of running health centre - disposal of hazardous waste. Service tax credit on repairs/maintenance of civil structure/building - HELD THAT:- There are no such service to allege that the appellant has taken Cenvat credit on the services relating to construction of various civil structures or building/laying on foundation or making structure for spot capital goods. The allegation in the show cause notice to deny service tax is without any basis and nobody bother about to find out what was the audit objection and what is the allegation in the show cause notice, both authorities below as did not pay any head to the request of the appellant to go through the factual position of the case. Instead of doing so, both the authorities has supported the show cause notice which does not have any basis. On this along ground, the whole show cause notice can be quashed but in the interest of justice, the merits of the case are required to be discussed. Admittedly, in this case the appellant has taken Cenvat credit on repairs and maintenance of factory premises for building which is allowed as Cenvat credit in terms of definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004 - credit is allowed. Cenvat credit of manpower service for running health centre - HELD THAT:- Admittedly, in the case in hand the appellant is required to maintain health centre in terms of Factories Act, 1948, therefore, the appellant are entitled to avail Cenvat credit on health services in question - Credit allowed. CENVAT Credit - Disposal of hazardous waste - HELD THAT:- As per show cause notice the total Cenvat credit of Rs. 37,23,475/- was proposed to disallow to the appellant, but the Ld. Commissioner (Appeal) hold that the appellant is entitled to avail Cenvat credit on the said service but allowed Cenvat credit only to the tune of 37,17,304/-. The reasons are best known to the Ld. Commissioner (Appeal) for denial of Cenvat credit of Rs. 6,171/- for the service of disposal of hazardous waste, as the reasons have not been disclosed by the Ld. Commissioner (Appeal), in the impugned order for denial of Cenvat credit of Rs. 6,171/- the act of ld. Commissioner (Appeal) cannot be appreciated - Credit allowed. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (12) TMI 363
  Permission requested by the petitioner for settling arrears under the Amnesty Scheme - rejection on the ground that it had not opted for settlement of the arrears for the assessment year 2012-13 - it is the contention of the petitioner that inasmuch as on the date of submission of the application for Amnesty, the liability for the assessment year 2012-13 under the KVAT Act did not exist, on account of the order of the First Appellate Authority in its favour - HELD THAT:- The Amnesty Scheme is one that contains various provisions which have to be reckoned together for the purposes of understanding the true scope and ambit of the Scheme. On a holistic reading of the said provisions, it would appear that the Scheme envisages an option to be exercised by the assessee concerned for settlement of outstanding liabilities under the various enactments covered under the scheme. The benefit under the scheme is conditional in that if an assessee opts for settlement of arrears under any particular enactment, he/she has to opt for settlement of arrears in respect of all the assessment years where such arrears are outstanding. In the instant case, while it may be a fact that, for the assessment year 2012-13, on the date of submission of the option by the petitioner asssessee, he had a favourable order from the First Appellate Authority, the right of appeal that is granted to the Department under the Statute cannot be rendered ineffective through an unilateral action on the part of the assessee to opt for settlement. The provisions of the Act have to be read holistically so as to not render illusory the rights conferred under the Statute. When so read, it must be found that notwithstanding the submission of option by the assessee in the instant case, the appeal preferred by the Department within the time granted under the Statute cannot be ignored while reckoning the assessment years in which amounts are seen as outstanding from an assessee for the purposes of settlement. Inasmuch as there was an appeal filed by the department, within the statutory period permitted for doing so, in respect of the assessment year 2012-13 under the KVAT Act, it is for the petitioner to include the demand confirmed against him by the assessment order for the said year also while opting for the benefit of the Amnesty Scheme, in respect of arrears outstanding under the KVAT Act. Petition is disposed off by directing that if the petitioner includes the liability in respect of the assessment year 2012-13 also, in the application submitted for the benefit of Amnesty, the respondents shall consider the same.

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• Indian Laws

• 2020 (12) TMI 380
  Dishonor of Cheque - Misappropriation of fund - validity of registration of a FIR under Section 156(3) of the Code of Criminal Procedure - non-application of mind - HELD THAT:- The Hon ble Supreme Court in the case of MRS. PRIYANKA SRIVASTAVA AND ANOTHER VERSUS STATE OF UP. AND OTHERS [ 2015 (5) TMI 47 - SUPREME COURT] has held that an application under Section 156(3) of the Code of Criminal Procedure seeking a direction for registering an FIR must be supported by an affidavit. The Hon ble Supreme Court in the said judgment has further held that in a routine manner the complaint cannot be sent by exercising jurisdiction under Section 156(3) of the Code of Criminal Procedure for registering an FIR. This exercise of power requires application of mind. The Hon ble Supreme Court further has held that there should be prior application of Section 154(1) and 154(3) of the Code of Criminal Procedure while filing a petition under Section 156(3) of the Code of Criminal Procedure. In the instant case, the provisions of law have not been followed by the Magistrate. In a most mechanical manner, without application of mind the Magistrate has referred the complaint under Section 156(3) of the Code of Criminal Procedure for registering a First Information Report. There is no compliance of Section 154(1) and Section 154(3) of the Code of Criminal procedure in the instant case - Further, from the complaint, it is found that the complainant had prayed to take cognizance of the offence under Sections 420, 403, 406 of the Indian Penal Code and Section 138 of the Negotiable Instruments Act and to proceed against the accused persons. No where the complainant had prayed to refer the complaint under Section 156(3) of the Code of Criminal Procedure. Thus, the order of the Court passed under Section 156(3) of the Code of Criminal Procedure is absolutely bad and is hereby set aside. Court below is directed to proceed with the complaint case being in terms of Chapter XV of the Code of Criminal Procedure - criminal miscellaneous petition stands disposed of.

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• 2020 (12) TMI 362
  CIRP Proceedings - Validity of notice of sale under Rule 8(6) of Security Interest (Enforcement) Rules, 2002 - validity of notice for sale of secured assets in e-aucion sale in terms of SARFAESI Act - HELD THAT:- It is not in dispute that the petitioner had offered his personal properties as security for the loan availed by the corporate debtor. From perusal of the sale notice under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (Ext.P3), it is clear that because of default in repayment of loan of Rs. 50 crores availed by the corporate debtor, the secured creditor had recalled the entire loan by issuing demand notice under Section 13(2) of the SARFAESI Act on 26.10.2018. It is further seen that possession of assets mortgaged with the secured creditor was also taken by resorting to provisions of the SARFAESI Act. Subsequently, sale notice (Ext.P3) came to be issued. The argument advanced by the learned counsel for the petitioner that because of pendency of proceedings before the NCLT, parallel proceedings under the SARFAESI Act are not maintainable, needs to be rejected. Even otherwise Section 7 of the Insolvency and Bankruptcy Code has application against the corporate debtor. It cannot be said that there is bar for proceedings against the guarantor under the SARFAESI Act because of pendency of corporate insolvency resolution process against the corporate debtor. It is the solemn duty of the Court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be of the case falling under a defined exception, duly discussed after noticing the relevant law. In financial matters grant of ex-parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. Loans by financial institutions are granted from public money generated at the tax payers expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same. Petition dismissed.

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