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TMI Tax Updates - e-Newsletter December 13, 2021 Case Laws in this Newsletter: GST Income Tax Insolvency & Bankruptcy PMLA Service Tax Central Excise Indian Laws Articles TDS credit to be allowed to Employee even if not deposited by the Employer News Measures to Improve MSME Sector Exports Registration of Foreign Companies Under Atmanirbhar Bharat Mission Restricting FDI Inflows From China in The Strategic Sector Notifications GST - States 91/2020– State Tax - dated 10-12-2021 - Delhi SGST Seeks to amend Notification No. 35/2020- State Tax, dated the 24th March, 2021 15/2021– State Tax - dated 9-12-2021 - Delhi SGST Delhi Goods and Services Tax (Fourth Amendment) Rules, 2021. 07/2021 – State Tax(Rate) - dated 29-11-2021 - Jharkhand SGST Amendment in Notification No. 12/2017- State Tax (Rate), dated the 29th June, 2017 Income Tax 136/2021 - dated 10-12-2021 - IT Income-tax (33rd Amendment) Rules, 2021. - Conditions for the purpose of clause (4E) of section 10 SEZ S.O. 5137 (E) - dated 9-12-2021 - SEZ Central Government de-notifies an area of 0.242 hectare and notifies an area of 0.683 hectare thereby making the resultant notified area as 27.434 hectares at “Global Village”, Pattenagere/Mylsandra Villages, Off-Mysore Road, RVCE Post, Bangalore District in the State of Karnataka S.O. 5135 (E) - dated 3-12-2021 - SEZ Central Government de-notifies an area of 2.95 hectares, thereby making resultant area as 4.31 hectares at Bahadurpally Village, Ranga Reddy District, Hyderabad in the State of Andhra Pradesh Circulars / Instructions / Orders SEBI SEBI/HO/IMD-II/IMD-II_DOF10/P/CIR/2021/00677 - dated 10-12-2021 Publishing Investor Charter and disclosure of Investor Complaints by Mutual funds on their websites and AMFI website SEBI/HO/IMD/IMD-II_DOF7/P/CIR/2021/681 - dated 10-12-2021 Publishing of Investor Charter and disclosure of Investor Complaints by Portfolio Managers on their websites Highlights / Catch Notes GST Availability of ITC - GST charged by the contractor supplying service of works contract - Section 17(5) of the CGST/SGST Act - ITC cannot be availed on works contract services for construction of an immovable property except for erection of plant & machinery. - The applicant is eligible for ITC to the extent of machine foundation only. - AAR Visit to Get Source Classification of services - supply of space for advertisement in print media or not - where only space for advertisement and print media is supplied (SAC 998362) the rate of tax applicable is 2.5% under CGST & SGST respectively and where they are supplying ornate space it shall be treated as other advertisement space falling under item (ii) of serial no. 21 and accordingly will attract tax @9% under CGST & SGST respective - AAR Visit to Get Source Transitional Credit - mistake made while submitting a declaration electronically in form GST TRAN-1 - The petition is allowed by permitting the writ petitioner to make a specific request to the relevant Commissioner under Rule 120A of the said Rules of 2017 to extend the time for the petitioner to file a revised declaration upon correcting whatever mistake may be perceived to have been committed in the course of the initial filing. - HC Visit to Get Source Classification of supply - rate of tax - supply of pulp wood - This HSN code clearly covers poles, props and logs for pulping. The applicant is supplying logs for pulping therefore the commodity dealt by him HSN code 4403 which is enumerated at Sl.No.134 of Schedule-III and hence taxable at the rate of 9% under CGST & SGST respectively. - AAR Visit to Get Source Transfer of Credit under Rule 54(1A) of the CGST Rules to the ISD - issuance of Invoice or Debit/Credit Note - Outward Taxable Supplies or not - A combined reading of the provisions prescribed above clearly indicate that a registered person intending to transfer the credit on common input services to ISD shall file the details of such credit in Form GSTR-1. However, if an invoice is raised on an ISD with the same State code the credit of tax can be issued for CGST & SGST by utilizing the IGST credit as indicated under Sec 49 of the CGST Act, 2017. - AAR Visit to Get Source Income Tax Exemption from tax under Section 115-O - Tax on distributed profit / Dividend Tax - Once it is held that the amount distributed or paid by Petitioner by way of dividend falls in the category of profits under Section 50 of the SIDBI Act, on any income, profits, gains derived or any amount received, Petitioner shall not be liable to pay income tax or any other tax in the relevant years. Therefore Petitioner was not liable to pay additional income tax under Section 115-O of the said Act. - HC Visit to Get Source Disallowance of deduction expenditure u/s 40(a)(ia) - adhoc provision - It is ex-facie apparent that the contention of the assessee inasmuch as non-identification of the payees in the provisions and the disallowance of deduction expenditure under Section 40(a)(ia) has not been rightly appreciated by the Tribunal. - These factors necessarily requires to be addressed by the Tribunal keeping in mind the provisions of the Act as well as the legal principles enunciated by the Hon’ble Courts. - HC Visit to Get Source Disallowance on account of foreign exchange fluctuation loss - It is an undisputed fact that for the assessment year 2012-13, 2013-14 and 2016-17, the assessee declared loss on account of foreign exchange fluctuation which was accepted by the Assessing Officer; whereas for the assessment year 2015-16, there was a gain to the tune of ₹ 4.65 crores, which the assessee offered to tax. Having accepted the same for two assessment years earlier and two years subsequent to the current assessment year, it is not open for the Revenue to take an altogether different stand for the current year and the Revenue is expected to follow the rule of consistency - AT Visit to Get Source Non filling of Electronic appeal - appeals filed by the assessee filled physically - the revenue can not take the benefit of non functioning/ malfunctioning of its portal and deny the statutory right of the assesse. In any case the assessee can not be non suited for abrastion in the portal of the revenue. - CIT(A) is directed to decide the appeals filed by the assessee filled physically as well as electronically on merit - AT Visit to Get Source Exemption u/s 11 - rejecting the application filed for registration u/s 12AA - Section 12AA of the Act provides for procedure for registration as to how ld. CIT (E) will provide registration after getting satisfaction with the aims and objects of the society and not to sit on the chair of AO as all these facts ought to be taken care by the AO at the time of assessment. Declining the registration on the ground that medical research to be carried out in the hospital of settler company would convert the charitable activities into commercial activities is mere surmises, hence not sustainable in the eyes of law. - AT Visit to Get Source Penalty u/s 272A(2)(k) - assessee did not file its quarterly TDS returns within the prescribed time limit and there was a delay - In the given case, the assessee did not assess the liability under TDS provisions and subsequent to the survey, he blindly followed the instructions of the officers and remitted the liability in cash through SBI without taking any details of determination of liability. - Subsequently, the assessee could not comply with the filing of quarterly returns and made to pay the same amount again. The above situation clearly proves the reasonable cause. - AT Visit to Get Source Payment to related person u/s 40A - Addition on account of payment made by the assessee to quantum asset management company by way of research fee - A subsidiary company of the assessee is not a related person within the meaning of section 40A (2), the provisions of section 40A(2) do not attract in the present case - AT Visit to Get Source Penalty u/s 271AAB - the Ld. Assessing Officer was not aware as to on what basis he was levying the penalty. This action of AO in itself makes the penalty proceedings null and void, as assessee was not served with a correct notice u/s 274 of the Act to initiate the penalty proceedings. - AT Visit to Get Source Addition u/s 56(2)(vii)(b) - difference in the market value and issued value of shares - assessee had established through various evidences submitted during appeal proceedings that even if Guideline value of land is considered than also the valuation of land is very high. Even the Ld. AO in its remand report, admitted the same fact of high market valuation of land but further mentioned that the same is not a relevant evidence which is against the provisions of section 56(2)(viib). - AT Visit to Get Source IBC Initiation of CIRP - The learned Adjudicating Authority has taken an erroneous view of the matter and on evaluating the letter of the Managing Director of the Corporate Debtor as an acknowledgement of the debt - the said letter was not within limits so that the operational Creditor could claim the benefit of Section 18 of the Limitation Act. - AT Visit to Get Source Service Tax Refund of service tax paid - The department has directed to pay the tax again as their inhouse formalities does not allow adjustment of tax wrongly paid towards one Commissionerate to another. The appellant has again paid service tax mentioning the service tax registration of Ahmedabad Commissionerate on 26.09.2016. It is clear that the department has collected service tax twice from the appellant. This is not permissible under law. - The rejection of refund on the ground of limitation cannot be justified - AT Visit to Get Source Central Excise Time Limitation - suppression of fact of manufacture and clearance of excisable goods - It is found that satisfaction recorded initially by the Commissioner and then by the Tribunal as regards the intention of appellant to evade payment of central excise duty is without any supporting material on record - The substantial question of law as framed is answered by holding that the Tribunal was not justified in law and in facts in holding that the demand under the show cause notice was not barred by limitation. - HC Visit to Get Source Case Laws: GST 2021 (12) TMI 475 Seizure of goods alongwith the vehicle - contention is that the proceedings for confiscation are bad and are of harassment to the petitioner in carrying on its legitimate business - HELD THAT:- On perusal of Form GST MOV-9, GST MOV-11 and the appellate order dated 07.10.2021, the case of the petitioner, prima facie , appears bonafide. The matter requires consideration. Learned Standing Counsel appearing for the respondents prays for and is granted four weeks' time to file a counter affidavit. Two weeks thereafter is allowed to the learned counsel for the petitioner to file a rejoinder affidavit. 2021 (12) TMI 474 Seizure of goods alongwith the vehicle - undervlauation of goods - enhancement of value - best judgement assessment - sub-rule (5) of Rule 138 of the CGST Rules, 2017 - HELD THAT:- The matter requires consideration. Subject to the petitioners depositing the penalty and tax to the extent of 50% of the amount claimed, and furnishing security of the remaining 50% of penalty, other than cash and bank guarantee to the satisfaction of the authority in the prescribed manner and in terms of Section 129(1)(a) of the Act, within a period of two weeks from today, the goods and vehicle may be released in favour of the petitioners. 2021 (12) TMI 473 Availability of ITC - GST charged by the contractor supplying service of works contract - Section 17(5) of the CGST/SGST Act - HELD THAT:- Following conclusions are arrived with respect to the facts of the present case: 1. ITC cannot be availed on works contract services for construction of an immovable property except for erection of plant machinery. 2. ITC can be availed on plant machinery as defined in the explanation to Section 17 i.e., on apparatus, equipment machinery fixed to earth by foundation or structural support; which means plant machinery and machine foundation are eligible for ITC. 3. Plant machinery will not include building or other civil structures and pipelines laid outside factory premises. 4. ITC cannot be availed on goods or services or both received by a tax payer on his own account for construction of immovable property. The applicant is eligible for ITC to the extent of machine foundation only. 2021 (12) TMI 472 Levy of penalty erroneously - non-compliance of Rule 142(1A) of the CGST Rules, 2017 - non-reasoned order - no personal hearing had been afforded to the Petitioner - violation of principles of natural justice - HELD THAT:- Issue notice. Mr.Naushad Ahmed Khan, learned standing counsel accepts notice on behalf of the Respondent. He prays for and is permitted to file a counter-affidavit within four weeks. Rejoinder-affidavit, if any, be filed before the next date of hearing. List on 09th May, 2022. 2021 (12) TMI 471 Classification of services - supply of space for advertisement in print media or not - rate of GST at 5% GST on the invoices raised to the customers - N/N. 11/2017 - HELD THAT:- Selling of space for advertisement in print media (SAC 998362) is taxable at the rate of 2.5% under CGST SGST respectively. As against this the service for Sale of other advertising space or time is enumerated as 998366 in the SAC given in the annexure to the notification. This is not specifically mentioned in the serial no. 21 of the above notification. Clearly this service will fall under item (ii) of serial no. 21 i.e., other professional, technical business services taxable at the rate of 9% under CGST SGST respectively. The Notification makes a clear distinction between sale of mere advertisement space and Other advertisement space , which is having a separate SAC code i.e., 998366. The applicant is supplying (2) different services and each is attracting different tariffs under this notification. Therefore the question of deducing a composite supply from the combination of drafting a design and incorporating a space does not arise. Hence where only space for advertisement and print media is supplied (SAC 998362) the rate of tax applicable is 2.5% under CGST SGST respectively and where they are supplying ornate space it shall be treated as other advertisement space falling under item (ii) of serial no. 21 and accordingly will attract tax @9% under CGST SGST respectively. 2021 (12) TMI 470 Transitional Credit - mistake made while submitting a declaration electronically in form GST TRAN-1 under Rule 117 of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- The present matter is governed by Rule 117 of the said Rules of 2017. Thus, on plain reading of the Rule, a registered person who has submitted a declaration electronically in the relevant form is entitled to revise the declaration and file it afresh within the period stipulated in Section 117 of the said Rules of 2017. However, there is also a possibility of the time for filing the revised declaration to be enlarged by a general order or a specific order of the Commissioner as the expression or such further period as may be extended by the Commissioner suggests. It is possible that the period for filing the declaration under the relevant Rules, including under Rule 117 of the said Rules of 2017, is extended by a general order of the relevant Commissioner. In such an event, the time for filing a declaration under the relevant Rules, including under Rule 117 of the said Rules of 2017 which is relevant in the present case, would stand extended. The expression also permits the Commissioner to make a specific extension at the request of a registered person who had submitted a declaration electronically in the relevant form and then seeks to revise the declaration after the time for submitting the declaration has expired. It does not appear that the petitioner herein availed of such opportunity or requested the relevant Commissioner for a specific extension so that the petitioner could revise the declaration already furnished. The petition is allowed by permitting the writ petitioner to make a specific request to the relevant Commissioner under Rule 120A of the said Rules of 2017 to extend the time for the petitioner to file a revised declaration upon correcting whatever mistake may be perceived to have been committed in the course of the initial filing. If such request is made by the petitioner to the relevant Commissioner within a fortnight from date, the Commissioner will consider the matter in appropriate perspective and without reference to the order impugned dated August 12, 2021. 2021 (12) TMI 469 Application for pre-arrest bail - offence punishable under Sections 420, 406, 409 and 506 of the Indian Penal Code and Sections 132[1][d] and 132[2] of the Goods and Service Tax Act - HELD THAT:- Issue notice to the non-applicant, returnable on 07.01.2022. Learned A.P.P. waives notice for the non-applicant. In the meanwhile, in the event of arrest of the applicant/accused Shashikant Fakirchand Sureka in connection with Crime No.677/2021 registered with the non-applicant - Shivajinagar Police Station, Khamgaon, District Buldhana for the offence punishable under Sections 420, 406, 409 and 506 of the Indian Penal Code and Sections 132[1] [d] and 132[2] of the Goods and Service Tax Act, he be released on interim bail on his furnishing P.R. Bond in the sum of ₹ 1,00,000/- with one surety in the like amount. 2021 (12) TMI 468 Maintainability of petition - time limitation - failure to comply with the statutory time lime stipulated in under Section 107(13) of the GST Act - the date for fixing the hearing of the appeal has not been considered despite several inquiries where no response is compelled to approach this Court - HELD THAT:- Let the Appeal be listed within two weeks and be disposed of in accordance with law. The petitioner to cooperate also in this regard. Petition disposed off. 2021 (12) TMI 467 Classification of goods - coach work like switch board cabinet for railway coaches and locomotives - classified under HSN 8537 or not - HELD THAT:- As per the appellant, the product in question is specifically designed as per specifications of Indian Railways and they supply it to Indian Railways only and nowhere else. It is also observed that though the Advance Ruling Authority has classified the products under Chapter Heading 8537 but the fact that aforesaid product is specifically designed as per specification of Indian Railways and supplied only to the Indian Railways is not discussed by the Authority. Though the Advance Ruling Authority differs with the appellant in the classification of the product in question, however the Authority was in unison with the appellant that the said Switch Board Cabinet which are specifically designed for Indian Railways, would be used for coach work only and nowhere else - Switch Board Cabinet merits classification under Chapter Heading 8607. In the case of COMMISSIONER OF C. EX., BANGALORE VERSUS RAMSONS UDYOG (P) LTD. [ 1999 (9) TMI 284 - CEGAT, NEW DELHI] the Hon'ble Tribunal has observed that Sanitary wares are also designed for fitment into the coach and they would be classifiable under Heading 86.07 . The Switch Board Cabinet , specially meant for the Railways, as per the design and layout provided by them, are integral part of the coach and rightly classifiable under chapter heading 8607 of the Customs Tariff Act, 1975. 2021 (12) TMI 466 Classification of goods - Bellow Ducts - classified under HSN 8424 attracting GST @18% or not - supply of Bellow Duct to RDSO Ministry of Railways for use in Indian Railways Coaches - Advance Ruling Authority has classified the impugned product under HSN 8424 whereas as per the appellant the said product merits classification under Chapter Heading 8607 of the Customs Tariff Act, 1975, as parts of railways - HELD THAT:- It is observed that as per the appellant, the product in question is specifically designed as per specifications of Indian Railways and they supply it to Indian Railways only and nowhere else. It is observed that though the Advance Ruling Authority has classified the products under Chapter Heading 8537 but the fact that aforesaid product is specifically designed as per specification of Indian Railways and supplied only to the Indian Railways is not discussed by the Authority - Advance Ruling Authority was in unison with the appellant that the said Bellow Duct which are specifically designed for Indian Railways, would be used for coach work only and nowhere else. In the case of COMMISSIONER OF C. EX., BANGALORE VERSUS RAMSONS UDYOG (P) LTD. [ 1999 (9) TMI 284 - CEGAT, NEW DELHI] the Hon'ble Tribunal has observed that Sanitary wares are also designed for fitment into the coach and they would be classifiable under Heading 86.07 - Similarly, in the case of SUNFLEX AUTO PARTS VERSUS COMMISSIONER OF C. EX. (APPEALS) MUMBAI-II [ 2004 (5) TMI 398 - CESTAT, MUMBAI] , it was observed by the Hon'ble Tribunal that Parts made out of rubber and metal bonded together as per specification of Indian Railway and meant for use solely and exclusively for them, classification under Sub-heading 8607.00 of Central Excise Tariff. Thus, the Bellow Ducts , specially meant for the Railways, as per the design and layout provided by them, are integral part of the coach and rightly classifiable under chapter heading 8607 of the Customs Tariff Act, 1975. 2021 (12) TMI 465 Classification of supply - rate of tax - supply of pulp wood - classifiable in terms of Chapter 4401? - HELD THAT:- The HSN Code 4403 covers timber for sawing; poles for telephone, telegraph or electrical power transmission lines; unpointed and unsplit piles, pickets, stakes, poles and props; round pit-up-props; logs; whether or not quarter-split, for pulping; round logs for the manufacture of veneer sheets, etc; logs for manufacture of match sticks, wood ware, etc. - This HSN code clearly covers poles, props and logs for pulping. The applicant is supplying logs for pulping therefore the commodity dealt by him HSN code 4403 which is enumerated at Sl.No.134 of Schedule-III and hence taxable at the rate of 9% under CGST SGST respectively. 2021 (12) TMI 464 Transfer of Credit under Rule 54(1A) of the CGST Rules to the ISD - issuance of Invoice or Debit/Credit Note - Outward Taxable Supplies or not - HELD THAT:- Under rule 54(1A)(a), of the CGST rules inserted vide Notification No. 3/2018 dated: 23.01.2018, a registered person having same PAN and State code and having Input Service Distributor(ISD) may issue an invoice or, a credit note or a debit note in order to transfer the credit of the common input services to the ISD. And such invoice shall contain taxable value and rate and amount of credit to be transferred. Under clause (b) of this sub rule the taxable value in such invoice shall be the same as the value of common service - Further, under Sec 37(1) of the CGST Act, 2017 and Sec 14 of the IGST Act, 2017 read with rule 59(1) of CGST Rules, 2017 every registered person other than an ISD or Non-Resident Taxable Person (NRTP) or a person opting for composition or a person doing TDS TCS on the supplies received shall furnish details of outward supplies in Form GSTR-1. A combined reading of the provisions prescribed above clearly indicate that a registered person intending to transfer the credit on common input services to ISD shall file the details of such credit in Form GSTR-1. However, if an invoice is raised on an ISD with the same State code the credit of tax can be issued for CGST SGST by utilizing the IGST credit as indicated under Sec 49 of the CGST Act, 2017. Income Tax 2021 (12) TMI 463 Exemption from tax under Section 115-O - Tax on distributed profit / Dividend Tax - additional income-tax payable on profits of a domestic company under Section 115-O - Scope of Section 50 of the Small Industries Developments Bank of India Act, 1989 (hereinafter referred to as the SIDBI Act), which exempts Petitioner from payment of income tax on any income, profits or gains derived or any amount received by Petitioner - Whether amount declared, distributed or paid by Petitioner by way of dividend does not fall under the category of income, profits or gains derived or any amount received by Petitioner? - HELD THAT:- In the case of Petitioner, no total income is computed at all under the said Act, in view of the overall overriding effect of Section 50 of the SIDBI Act. The use of the expression no income- tax is payable in Section 115-O(1A) of the said Act also presupposes that the subject company is indeed chargeable to income-tax on its total under Section 4 of the said Act. Section 115-O(1A) of the said Act applies only to a case where the subject company is chargeable to income-tax u/s.4 of the said Act. Section 115-O(1A) of the said Act does not apply to a case where the subject company is not chargeable to income-tax due to an overriding non-obstante provision contained in Section 50 of the SIDBI Act. Dividend is defined in Section 2(22) of the IT Act to, inter alia, include any distribution by a company of accumulated profits, which entails releasing any assets by the company to its shareholders. In terms of Explanation 2 to Section 2(22) of the said Act, the expression accumulated profits includes all company profits up to the date of distribution or payment thereof. It appears that the transfer of profits of Petitioner to IDBI in terms of Section 29(2) of SIDBI Act entails payment by Petitioner to IDBI. This payment or distribution of Petitioner's liquid assets constitutes dividend distributed by Petitioner out of its accumulated profits as envisaged under Section 2(22)(a) of the IT Act. It needs to be noted that the charge under sub-section (1) of Section 115-O of the said Act is on the company's profits, more specifically on that part of the profits which is declared, distributed or paid by way of dividend. The charge under sub-section (1) of Section 115-O of the said Act is not on income by way of dividend in the shareholder's hands. Therefore, the additional income-tax payable on profits of a domestic company under Section 115-O of the said Act is not a tax on dividend. In our considered opinion, the amount distributed or paid by way of dividend falls in the category of income, profit or gains derived. Once it is held that the amount distributed or paid by Petitioner by way of dividend falls in the category of profits under Section 50 of the SIDBI Act, on any income, profits, gains derived or any amount received, Petitioner shall not be liable to pay income tax or any other tax in the relevant years. Therefore Petitioner was not liable to pay additional income tax under Section 115-O of the said Act. In the circumstances, Petitioner's payments under protest need to be refunded to the Petitioner 2021 (12) TMI 462 Addition u/s 14A r.w.r. 8D - Sufficiency of assessee own funds - HELD THAT:- As per the decision of South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT] issue decided is against the revenue. Disallowance of aircraft and maintenance charges including depreciation being 10% of the expenditure on running, repairs and maintenance of aircraft of which were used for the personal purposes of the Directors - HELD THAT:- We find that the issue is fully factual and the Tribunal had pointed out that such claim made by the assessee was allowed in the assessee's own case for the earlier assessment years [ 2018 (7) TMI 2238 - CALCUTTA HIGH COURT] Deemed short term capital gains computed under section 50 on long term depreciable assets set off against long term capital loss under section 74 - HELD THAT:- Tribunal followed the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax, Panji Vs. V. S. Dempo Company Ltd. [ 2016 (10) TMI 62 - SUPREME COURT] . Therefore, the question no.(iv) is not entertained. Appeal is admitted only on the following substantial questions of law: (i) Whether on the facts and in the circumstances of the case, the Learned Tribunal fell in error in excluding investment in subsidiaries and consider only such investment that had yielded only dividend income/exempt income for computing disallowance under section 14A of the Income Tax Act read with Rule 8D(iii) of the Rules? (ii) Whether on the facts and in the circumstances of the case, the Learned Tribunal fell in error in reversing the order passed by the Assessing Officer and upheld by the Dispute Resolution Panel holding that providing corporate guarantee by the assessee to its Associated Enterprise for the purpose of business amounts to international transaction as per the explanation to section 92B of the Income Tax Act and rightly applied the Arms Length Method (ALP) fixing the guarantee fee rate at 3%? (iii) Whether the Learned Tribunal committed substantial error of law in deletion of the addition of ₹ 2,56,49,228/- made by the Assessing Officer by holding that guarantee fee rate of 3% to the Arms Length for marking the transaction of receipts of corporate guarantee from the subsidiary? (iv) Whether the Learned Tribunal fell in error in disregarding that there was a clear benefit accrued to the Associated Enterprises by the guarantee provided accepted even by the assessee and when such benefit was passed on by the assessee to the AE's, guarantee commission should have been charged at the Arms Length Price? 2021 (12) TMI 461 Rejection of declaration filed by the petitioner under section 4 of the DTVSV Act, 2020 - HELD THAT:- Assessment orders for respective years were served on the petitioner on 12th January 2019. The petitioner on 7th April 2019, filed appeal along-with application for condonation of delay challenging said orders. The delay has been condoned vide order dated 24th February, 2021, meaning thereby that the appeals challenging assessment orders were pending on the specified date i.e.; 31st January 2020 in terms of the judgment of this Court in the case of Karan Ventakeshwara Associates [ 2021 (6) TMI 1008 - BOMBAY HIGH COURT] The respondent No.3, therefore, could not have rejected the declaration filed by the petitioner. The petitioner has also challenged the Circular No.21/2020 on the ground that the right conferred under Section 2(1)(a)(i) cannot be limited by a clarificatory order in the manner it has been done. The clarification cannot add new qualifications beyond the provisions of the DTVSV Act, 2020 and that clarification can only operate within contours specified in the DTVSV Act, 2020. Question No.59 in the said circular deals with the situation where time limit for filing appeal has expired during the period from 1st April, 2019 to 31st January, 2020 and appeal having been admitted prior to 31st January, 2020. The petitioner has challenged said clarification on the ground that filing appeal with application for condonation of delay is within the control of petitioner but, its decision is not. In the present case, the assessment orders were served on petitioner on 12th January 2019. The period of limitation for filing appeal is 30 days, therefore appeal ought to have been filed prior to 11th February, 2019. The said date 11th February, 2019 is prior to the period prescribed under Ques. No.59, being period from 1st April, 2019 to 31st January, 2020. These facts would raise a doubt about applicability of the circular dated 4th December, 2020 to the case of the petitioner. In any case, having found action of rejection of declarations by respondent No.3 being bad-in-law, we do not propose to examine this challenge now. The challenge therefore is kept open for decision in appropriate proceeding. It will have to be held that the rejection of declaration filed by the petitioner under section 4 of the DTVSV Act, 2020 is bad-in-law. Similarly, the impugned communication dated 29th January, 2020 is liable to be quashed and set aside.The petition is thus partly allowed. The action of rejection of the declarations filed by the petitioner under Section 4 of DTVSV Act, 2020 is held to be bad-in-law. 2021 (12) TMI 460 Disallowance of deduction expenditure u/s 40(a)(ia) - reasoning recorded by the Tribunal is that in the case on hand, the payees were identified and it is not an adhoc provision as the provisions contained odd figure also - Whether the order of the Tribunal is perverse in law as it failed to appreciate that the provisions were created on head-wise expenses and not with reference to any particular party and consequently such amounts of provisions did not attract the provisions of Section 194C, 194-I, 194-J and 194-H of the Act? - HELD THAT:- The said reasoning is wholly unjustifiable, as could be seen from the material available on record, in the provisions made, payees were not identified. The genuiness of the provision cannot be determined on the basis of the figures. The cryptic reasoning of the Tribunal is not suffice to support the findings arrived at. It is trite that proper reason is the essential ingredient of a valid order. It is ex-facie apparent that the contention of the assessee inasmuch as non-identification of the payees in the provisions and the disallowance of deduction expenditure under Section 40(a)(ia) has not been rightly appreciated by the Tribunal. In this scenario, the judgment of the Hon'ble Apex Court in the case of Shree Choudhary Transport Company [ 2020 (8) TMI 23 - SUPREME COURT ] would not be of any assistance to the Revenue unless the material aspects are considered with respect to Section 40(a)(ia) of the Act read with Sections 194C, 194H, 194I, 194J relevant Sections under which TDS was required to be deducted by the assessee. These factors necessarily requires to be addressed by the Tribunal keeping in mind the provisions of the Act as well as the legal principles enunciated by the Hon ble Courts. If the deduction is not claimed for the expenditures made in the provision even in the return submitted and the same is offered to tax in the subsequent year after reversing the entries pursuant to the receipt of the bills/invoices by the payees, the matter has to be analysed having regard to, whether income has accrued to the payees to deduct tax at source. In the given circumstances, we deem it appropriate to set aside the impugned order and remand the matter for fresh consideration by the Tribunal. Appeal is allowed. 2021 (12) TMI 459 Exemption u/s 11 - registration under section 12AA withdrawn - HELD THAT:- Commissioner has highlighted irregularities committed by the assessee-trust by utilization of its funds meant for fulfillment of charitable objects, for granting benefit to persons falling in the category to take undue advantage from these funds, because of their relationship. The assessee has not produced any detail before the ld.Commissioner as to how it has been fulfilled its objects. It has hardly carried out any activities towards charitable purpose, for which it was created. Therefore, after perusal of order of the ld.Commissioner, we do not find any error in it. It is upheld; appeal of the assessee is dismissed. 2021 (12) TMI 458 Validity of assessment u/s 144C - Period of limitation - whether the impugned assessment order is barred by limitation prescribed under the statutory provisions? - HELD THAT:- As per the mandate of sub-section (4)(b) of section 144C, the Assessing Officer was duty-bound to complete the assessment based on the draft assessment order on expiry of thirty days from the date of receipt of draft assessment order, since, by that time the assessee had not filed the objections before learned DRP. Whereas, it is a fact on record that the AO passed the final assessment order on 12.01.2021, i.e., much beyond the period of limitation prescribed under section 144C(4)(b) of the Act. Contention of DR that before the Assessing Officer could have passed the final assessment order, the assessee filed objections before learned DRP, i.e., on 27.01.2020 and the Assessing Officer had no other option but to wait for the directions of the DRP, in our view, is unacceptable and has to be rejected at the threshold. Combined reading of the provisions contained under Section 144C(1), (2), (3) and (4) makes it abundantly clear that there is no compulsion on the AO to wait beyond the period of limitation prescribed under the statute for completing the final assessment, anticipating that the assessee would be filing an objection before the DRP. The period of limitation prescribed under sub-sections (2) and (4) is sacrosanct and has to be strictly followed, both, by the assessee as well as the Revenue. Therefore, the final assessment order having been passed beyond the period of limitation prescribed under Section 144C(4)(b) of the Act, has to be declared invalid. Accordingly, we do so. The decisions relied upon by the learned counsel for the assessee are clearly in support of the view expressed hereinabove. Resultantly, the impugned assessment order dated 12.01.2021 is quashed. 2021 (12) TMI 457 Assessment in the name of company amalgamated - validity of assessment in name of a non-existent company - HELD THAT:- No fault with the Ld. CIT(A) in following the decision of the Hon ble Apex Court in the case of Saraswati Industrial Syndicate Ltd ( 1990 (9) TMI 1 - SUPREME COURT] wherein it was held that when two companies amalgamated merged into one, the transfer company loses its entity as it serious to have its business, and their respective rights are liable to be determined under the scheme of amalgamation, but the corporate entity of the transfer company ceases to exist with effect from the date of the amalgamation is made effective. In this matter the amalgamation was effective from 1/4/2011 under the order dated 17/08/2012 passed by the Hon ble Delhi High Court under section 391 (2) and 394 of the Companies Act, 1956. The decision of the Hon ble High Court in the case of Skylight Hospitality LLP [ 2018 (2) TMI 1093 - DELHI HIGH COURT] has no application to the facts of the case since in such case the notice issued on the amalgamating company was challenged. In this case, however, the assessee specifically brought it to the notice of the learned Assessing Officer that there was a merger of the companies, and there was a direction of the Ld. PCIT to issue notice and hear they correct the existing legal entity. However, there is failure on the part of the learned Assessing Officer to comply with the said direction inasmuch as he issued notices to the non-existent company and completed the assessment on it Under similar circumstances, in the case of a group company a coordinate Bench of this Tribunal in ACIT vs. M/s. Pride Redidency (P) Ltd ) [ 2019 (12) TMI 694 - ITAT DELHI] upheld the action of the Ld. CIT(A) in crashing the assessment order that was framed in case of the nonexisting company - Decided against revenue. 2021 (12) TMI 456 Disallowing claim u/s 80P(2)(a)(i) - assessee has earned income from the investment made with nationalized bank - CIT(A) has held that society would be allowed to claim expenses under section 57 to the extent of 5% of the impugned interest income - HELD THAT:- We find merit in the contention of the assessee that expenditure should be allowed in respect of interest income earned from the investments. If the component of income does not qualify for grant of deduction under section 80P(2)(a)(i), then such income should be computed on net basis; any expenditure relatable to earning of such income is to be allowed before calculating exclusion of such amount for the purpose of 80P(2)(a)(i) of the Act. Since interest income earned by the assessee was treated to be income from other sources under section 56, then, the assessee can claim deduction u/s 57 of the Act. Therefore, we direct the AO to allow expenditure for earning such interest income. In other words, the ld.AO has to determine the net interest income earned by the assessee after giving set off expenditure, and only thereafter that net income has to be excluded from the admissibility of deduction under section 80P(2) of the Act. Grounds of appeal of the assessee are thus partly allowed for the statistical purpose. 2021 (12) TMI 455 Disallowance on account of foreign exchange fluctuation loss - HELD THAT:- As the purpose of the assessee to borrow the amount from Standard Chartered Bank is concerned, there is no dispute that it was for acquiring 70% stake in Vimercati SPA, which also deals in auto spare parts. By purchase of 70% shares in Vimercati SPA, the assessee stood to benefit in the shape of enhancement of export. It, therefore, establishes the fact that the purchase of shares of Vimercati SPA by the assessee was for commercial expediency and in view of the decision of Hon ble Supreme Court in the case of SA Builders [ 2006 (12) TMI 82 - SUPREME COURT] , such expense shall be deemed to have been incurred for the business purpose and the assessee has got right to decide their affair. So long as the method of repayment does not impact the cost of the asset, which would enhance the benefit in revenue field, we find it difficult to hold that such an expense is not allowable u/s. 37 Even if a capital asset is acquired, the interest or for that matter reinstatement of foreign exchange fluctuation loss could have been capitalized only till the acquisition of capital asset, i.e., acquisition of shares in this case. In the instant case, admittedly the shares were acquired in the financial year ended 31.03.2012 and therefore, the capitalization of the foreign exchange fluctuation loss could, at the most, be relevant for the financial year 2011-12 relevant to assessment year 2012-13 and there is no occasion to treat any part of the interest or for that matter exchange rate fluctuation gain or loss to treat the same as in the capital field during the year under consideration. It is an undisputed fact that for the assessment year 2012-13, 2013-14 and 2016-17, the assessee declared loss on account of foreign exchange fluctuation which was accepted by the Assessing Officer; whereas for the assessment year 2015-16, there was a gain to the tune of ₹ 4.65 crores, which the assessee offered to tax. Having accepted the same for two assessment years earlier and two years subsequent to the current assessment year, it is not open for the Revenue to take an altogether different stand for the current year and the Revenue is expected to follow the rule of consistency - we hold that the loss incurred by the assessee on account of foreign exchange fluctuation is allowable as revenue expenditure and we direct the Assessing Officer to delete the same. Disallowance u/s. 14A read with Rule 8D - Suo moto addition made by assessee - HELD THAT:- No borrowed fund on which interest was paid was utilized for purchase of shares, inasmuch as, the own funds of the assessee including the share holding funds, reserves and surplus were to the tune of ₹ 92.62 crores far exceeding the investments during the year, as observed by the ld. CIT(A). It is, therefore, clear that the assessee did not incur any interest expense for investing the amounts in shares so as to earn the exempt income - where the interest component u/r. 8D(2)(ii) has to be deleted straight by restoring only the disallowance u/r. 8D(2)(iii), which is ₹ 1,65,703/- both according to the assessee and the Assessing Officer. In this scenario, the question of restricting the disallowance to the amount of dividend earned does not arise. In such case, instead of restriction, it amounts to expansion which is not permissible under law. We, therefore, hold that the entire addition is liable to be deleted. By observing so, we allow ground of assessee s appeal Disallowance of interest paid on borrowings - According to the Assessing Officer the assessee borrowed loans from its directors, share holders by paying interest at 9% - HELD THAT:- There is no dispute and the Revenue did not prove before us that the own funds of the assessee for the relevant year are falling short of the funds lent to its subsidiary. Further in the preceding paragraphs, we held that the subsidiary is also in the same business and the business interests of the assessee are deep in the conduct of business of subsidiary. Therefore, disallowance of interest expense does not appear to be sound and as a matter of fact the findings of the ld. CIT(A) are firmly entrenched into the facts. Inasmuch as the assessee advanced loans to its subsidiary, out of its surplus funds, that too after business expediency, we find that the conclusions reached by the ld. CIT(A) are legal and does not warrant any interference. Addition u/s. 40A(3) - Payment to a person in a day exceeding ₹ 20,000/- -HELD THAT:- Since the payment or aggregate of payments made to any person in cash in a day does not exceed ₹ 20,000/-, ld. CIT(A) held that no disallowance u/s. 40A(3) was called for. There is no material contrary to this finding of the ld. CIT(A) and there is no reason for us to take a different view from the view taken by the ld. CIT(A). We, therefore, confirm the same. Consequently, this ground of Revenue s appeal is dismissed. 2021 (12) TMI 454 Deduction u/s 80IC - CIT(A) confirming the order of the AO who allowed the claim at 25% instead of 100% - HELD THAT:- As relying on M/S. AARHAM SOFTRONICS [ 2019 (2) TMI 1285 - SUPREME COURT] we direct the Assessing Officer to allow claim of deduction @ 100%. - Decided in favour of assessee. 2021 (12) TMI 453 Order passed under section 201(1)/201(1A) - Period of limitation - applicability of the amendment - HELD THAT:- The assessee has made the payments on 18.05.2009 01.09.2009 and filed the statements in FY 2009-10 itself and accordingly, the order under section 201 (1)/201 (1A) of the Act could not be passed beyond 31.3.2012 but, however, the order was passed on 29.12.2016 which is beyond the limitation date. Regarding the applicability of the amendment by Finance Act, 2014 wherein the distinction between cases where statement has been filed and such statements was not filed was removed and the amendment prescribed a common period of limitation i.e. seven years from the end of financial year in which payment was made, it is submitted that the said amendment is not from retrospective date nor does it specifically say that it is from retrospective effect as it was said at the time of amendment by Finance Act, 2014. Therefore, the said amendment as on 01/10/2014 is with prospective effect. With this view of the matter we are of the considered opinion that the impugned order passed under section 201(1)/201(1A) of the Act is barred by limitation. Since the assessee succeeds on technical ground, any discussion on merits would only be academic and, therefore, we avoid the same. Appeal of assessee allowed. 2021 (12) TMI 452 Eligibility of registration u/s 12AA - Charitable activity u/s 2(15) - assessee submitted that it has registered u/s. 25 of the Companies Act, 1956 as a non-profit organization - HELD THAT:- On perusal of main objects of the assessee, there is no doubt whatsoever with regard to nature of objects of the assessee, because main object of the assessee is to conserve and enhance the natural environment and biodiversity so as to derive sustainable benefits for human kind from the mother nature, and said objects are falls under 5th limb of definition of charitable purpose, preservation of environment as defined u/s. 2(15) - As regard other observations of the ld. CIT(E) with regard to extending activities of the trust outside India, we find that there is no restriction under the Act to carry out charitable activities beyond the boundaries of India, but such activities can be carried out with special or general approval of the CBDT. Since, the assessee has not started its activities, the question of looking into the violation of section 11(1)(a) and necessary approval, if any required for that purpose does not arise. If at all any violation is reported, then the AO is very much empowered to reject exemption claimed u/s. 11 of the Act. As regards other observations made with regard to ancillary objects and they are in commercial nature, we find that predominant objects of the assessee is preservation of environment. The ancillary objects are provided to achieve the main objects and no commercial stamp shall be made, if such objects are achieved by carrying out certain activities. If at all the assessee carry out some objects which are commercial in nature, then the AO shall verify such activities in light of provisions of section 2(15) of the Act and examine entitlement of benefit of exemption u/s. 11A of the Act. But, for this reason registration u/s. 12AA cannot be denied to the assessee. Once, the objects of the assessee are charitable in nature, and it is proposed to carry out its activities in accordance to its objects, then the CIT(E) cannot reject application filed by the assessee for registration of the trust u/s. 12AA of the Act. we are of the considered view that objects of the assessee are charitable in nature and the assessee is proposed to carry out its activities in accordance with its objects and thus, the assessee is entitled for registration u/s. 12AA of the Act. Hence, we direct the CIT(E) to grant registration u/s. 12AA of the Act, to the assessee. - Decided in favour of assessee. 2021 (12) TMI 451 Levy of fee u/s 234E for belatedly filing the quarterly TDS returns - HELD THAT:- Returns on Form 24Q for Quarter 2 of fianancial year 2012-13 and Form 24Q and 26Q for Quarter 4 (financial year 2012-13), the date of filing of return was 15.01.2013, 30.06.2014 and 30.06.2014 respectively and the due date of processing the return as provided under proviso to section 200(A), i.e., one year from the end of the financial year in which the statement is filed, was 31.03.2014, 31.03.2016, and 31.03.2016. The date of passing of the order u/s 200(A) for the alleged three Quarters is 29.08.2016, 05.12.2016 and 04.12.2016. Since there is no dispute to the facts mentioned hereinabove, it is crystal clear that all these three orders passed on 29.08.2016, 05.12.2016 and 04.12.2016 are time barred by limitation. We therefore find merit in the submissions made by the Ld. Counsel for the assessee and hold that the levy of fee u/s 234E of the Act at ₹ 18,400/- 42,000/- and 6820/- challenged before us deserves to be deleted as the order passed u/s 200(A) levying such fees are time barred by limitation and deserves to be quashed. Thus the assessee s appeal allowed. Levy of fee u/s 234E of the Act prior to 1st June, 2015 - Orders u/s 200A of the Act as processed on 27th March, 2015 - HELD THAT:- Only w.e.f. 1st June, 2015 that the Assessing Officer was enabled with the power to determine fee u/s 234E and levy the same in the return process u/s 200(A) of the Act. Since no such levy could be made in an order passed u/s 200(A) of the Act towards levy of fee u/s 234E of the Act prior to 1st June, 2015, we respectfully following the above stated decision held that no such fee could be levied in the case of assessee at ₹ 14,610/- and 62,600/- for the returns filed for from 26Q 4 to 24Q, for quarter 4 of financial year 2013-14, as the orders processed u/s 200(A) of the Act were passed prior to 1st June, 2015, i.e., 27.02.2015. Thus assessee succeeds and the fee levied u/s 234E stand deleted. 2021 (12) TMI 450 Taxation of charitable or religious trust/institution as codified u/s 11, 12 and 13 - excess application of income/funds of the trust - assessee s claim of carry forward of current year s loss and set-ff of excess deficit pertaining to earlier years - HELD THAT:- CIT(A) in the year under consideration as well as the Tribunal in assessment year 2013-14 .has allowed the ground of the assessee relying on the precedent of jurisdictional High Court. In view of the above, we do not find any infirmity in the order of the Ld. CIT(A) on the issue in dispute and accordingly, we dismiss the ground No.1 of the appeal. Deduction of depreciation in case of trust - CIT(A) has deleted the addition relying on the decision of Hon ble Supreme Court in the case of Rajasthan and Gujarat the charitable foundation Poona [ 2017 (12) TMI 1067 - SUPREME COURT] - HELD THAT:- As section 11 (6) of the Act has been inserted by way of Finance Bill 2014, which has restricted deduction of depreciation in case of trust etc. We note that the section 11(6) has been made effective from 01/04/2015 i.e. assessment year 2015-16 onwards and hence, same is not applicable for the year under consideration i.e. for A.Y.2014-15. In view of the above, we do not find any error in the order of the Learned CIT(A) on the issue in dispute and accordingly, the ground No.2 of the appeal of the Revenue, is dismissed. 2021 (12) TMI 449 Non filling of Electronic appeal - appeals filed by the assessee filled physically - demise of late RR Mehta - As submitted non filing of the electronic appeal was on account of the inaccessibility of the Income tax portal to the estate of Shri Ramniklal R.Mehta - HELD THAT:- As the appeal was filed in physical form , though was required to be filed in electronic form before the appellant authority. Needful was not done and sufficient reasons were given before us for not preferring the appeal in electronic form by the estate of Shri Ramniklal R. Mehta. Board framed the rules to achieve the ends of Justice and not to put impediments in the path of Justice. The assessee can not be asked to manage the portal of the revenue and forcibly file the appeal electronically. In our view,the assessee made sufficient and sincere efforts to file the appeal in electronic forms, albeit the assessee failed in his efforts for the reasons recorded in the order.In our considered opinion, the non filing of the electronic appeal was on account of the inaccessibility of the Income tax portal to the estate of Shri RamniklalR.Mehta and assessee was forced to file the appeal in physical form . The assessee had preferred the appeal in electronic form on 12/03/2021 against the same assessment order dated 28/12/2018. In our view the revenue can not take the benefit of non functioning/ malfunctioning of its portal and deny the statutory right of the assesse. In any case the assessee can not be non suited for abrastion in the portal of the revenue. CIT(A) is directed to decide the appeals filed by the assessee filled physically as well as electronically on merit - Appeals of the assessee are allowed for statistical purposes . 2021 (12) TMI 448 Exemption u/s 11 - rejecting the application filed for registration u/s 12AA - CIT not granting the registration for the reason that the appellant is pursuing only Medical Research - assessee argued that Medical Research is a charitable activity as defined u/s.2(15) of the Income Tax Act and hence the registration ought to have been granted - HELD THAT:- Application moved u/s 12A of the Act cannot the throttled merely by relying upon selective aims and objects by making observation that there is a possibility that researches being carried out by the applicant within the premises of the settler company would in turn further enhance the commercial potential of the hospital. These are mere perceptions entirely based upon surmises, particularly in view of the undisputed fact that applicant research foundation is inextricably linked with the Artemis Hospital to carry out its research. When it is a harsh reality that medical research being one of the aims and objects of the applicant is to be carried out in the hospital/settler company merely declining the registration u/s 12A of the Act on the ground only does not augur well with the intent and purpose of the Act. Because of all these factors, if applicant is being used for accelerating its commercial activities of the Hospital, the same are to be separately and independently examined by the AO at the time of assessment in the light of the provisions contained u/s 11 12 Section 12AA of the Act provides for procedure for registration as to how ld. CIT (E) will provide registration after getting satisfaction with the aims and objects of the society and not to sit on the chair of AO as all these facts ought to be taken care by the AO at the time of assessment. Declining the registration on the ground that medical research to be carried out in the hospital of settler company would convert the charitable activities into commercial activities is mere surmises, hence not sustainable in the eyes of law. Not only this, sub-section (3) of section 12AA empowers the ld. CIT(E) to cancel the registration of the Trust if activities of Trust are not in consonance with its charitable aims and objects enshrined in the constitution. So, at the stage of according registration u/s 12AA of the Act examining the aims and objects like AO is not permissible. Intention to create global infrastructure is in contravention of section 11(1)(a) of the Act and even after 4 years of incorporation, applicant has not carried out any research/outcase - When applicant has come up with specific aims and objects to carry out medical research as one of the aims and objects which can only be carried out within the premises of the hospital, creating infrastructure is a sine qua non to carry out the research in the medical field. Medical research can always be carried out in the infrastructure created within or near to the hospital which cannot always lead to the conclusion that it is for the purpose of pursue the commercial activities. Because there are numerous aims and objects sought to be pursued by the applicant in order to carry out its charitable activities. Question of carrying out any activities within four years of its incorporation as put forth by the ld. CIT(E) - Applicant has brought on record details of funds in and out since its inception showing that the applicant is at the initial stage and carrying out research activities might not have taken place at full swing because of rejection of the application by the ld. CIT (E) u/s 12A of the Act. Receipt of donations and appropriation of funds show that the applicant Trust is not merely on the paper but keeping its activities alive for further carrying out the charitable activities enshrined in its aims and objects. So, the reason recorded by the ld. CIT (E) is not sustainable to reject the application moved by the applicant. Applicant has failed to bring on record how its activities are meant to percolate down to the public at large - As in the instant case, applicant Trust is not pursuing one activity rather many of charitable aims and objects are there on its Board as enshrined in its constitution. Again, all these facts and queries raised by the ld. CIT(E) are to be taken care of at the time of examining Income-tax return filed by the applicant in due course in the light of sections 11 12 Reject applicant u/s 12A that there is possibility that researches which would be carried out in future within the premises of settler company would in turn further enhance commercial potential of the hospital - again we are of the considered view that all these findings are based on surmises because at this stage commercial angle of any activities can only be assumed but can only be decided during the assessment proceedings. It is a matter of fact that medical research has to be carried out in the premises of Artemis Hospital/settler company and any such medical research would otherwise facilitate the general public to have a specialized treatment in the hospital of their choice. We would like to record that medical research cannot be branded as a mode of advertisement to enhance the profitability of the hospital because both are existing in entirely separate domain. When we examine the issue of delay in the light of the fact that the appeal challenging the order passed by the ld. CIT (E) u/s 12AA of the Act has been filed well within time it can be taken as a bonafide mistake that challenging the rejection of approval u/s 80G is automatic. Even otherwise negligence or indolence on the part of a trained practitioner who has been hired to protect the interest of the applicant, cannot be attributed to the litigant by declining the relief in the interest of justice. So, we find it a reasonable ground to condone the delay and appeal against the order passed u/s 80G is ordered to be registered to be put up for hearing. We are of the considered view that ld. CIT (E) has erred in rejecting the application for registration u/s 12AA of the Act and consequent approval u/s 80G of the Act filed by the applicant, hence ld. CIT(E) is directed to grant registration u/s 12AA of the Act to the assessee/applicant forthwith with approval u/s 80G of the Act. - Decided in favour of assessee. 2021 (12) TMI 447 Revision u/s 263 - As per CIT A.O had not deliberated on the provisions of Sec.79 and not conducted any inquiry qua the set-off of the brought forward losses of the previous year against its income for the year under consideration - HELD THAT:- As decided in Amco Power Systems ltd.[ 2015 (10) TMI 2385 - KARNATAKA HIGH COURT] as the control of the assessee company before them remained with the holding company as the change in the shareholding had not resulted in reduction of its voting power to less than 51%, therefore, the provisions of Sec.79 denying the benefit of carry forward of losses to the assessee company would not come into play. As held by the Hon ble High Court of Bombay in the case of K. Subramanian Anr. [ 1983 (4) TMI 3 - BOMBAY HIGH COURT] the A.O was obligated to take a view which was in favor of the assessee and not against him. Backed by the aforesaid facts involved in the case of the assessee before us read a/w the aforesaid position of law, we are of the considered view that no infirmity arises from the order of the A.O whose view qua the issue in question is in conformity with the judgment of Amco Power Systems ltd.[ 2015 (10) TMI 2385 - KARNATAKA HIGH COURT] which being a view favourable to the assessee, he was obligated to follow as per the judgment of the Hon ble jurisdictional High Court in the case of Siemen s India Ltd. Anr. [ 1983 (4) TMI 3 - BOMBAY HIGH COURT] . Thus we are of a strong conviction that as the A.O while framing the assessment had taken a possible and a plausible view with respect to the issue under consideration i.e the entitlement of the assessee company to set-off its brought forward losses of the previous years as against its profits for the year under consideration, therefore, on the said count itself the CIT was divested of his jurisdiction to have revised the assessment order u/s 263 of the Act. We, thus, in terms of our aforesaid deliberations are unable to sustain the order passed by the CIT u/s 263 - Decided in favour of assessee. 2021 (12) TMI 446 Penalty u/s 272A(2)(k) - assessee did not file its quarterly TDS returns within the prescribed time limit and there was a delay in filing quarterly statement of TDS u/s 200(3) as provided under Rule 31A of the Income Tax Rules - Reasonable cause of delay - As submitted Assessee paid the TDS payable subsequent to the survey conducted by the Department. The assessee complied with the directions of the Department but failed to file the relevant TDS quarterly returns due to non-availability of party wise details - HELD THAT:- The imposition of penalty u/s 272A falls u/s 273B, as per which no penalty shall be imposable for any failure if the assessee proves that there was reasonable cause for the said failure. In the given case, the assessee did not assess the liability under TDS provisions and subsequent to the survey, he blindly followed the instructions of the officers and remitted the liability in cash through SBI without taking any details of determination of liability. Subsequently, the assessee could not comply with the filing of quarterly returns and made to pay the same amount again. The above situation clearly proves the reasonable cause. Further, the Ld. CIT(A) observed that in view of malafide intention on the part of the appellant as per the facts mentioned in the preceding paragraphs, appellant does not deserve any mercy. We failed to understand this observation when the assessee had followed the instruction of the officer by remitting the TDS dues immediately and also paid the same amount twice and also demonstrated the intricacies in collecting information from Department as well as from suppliers of Karnataka area. In our view, the assessee has proper reasonable cause in this issue of failures to comply in filing the quarterly returns. Therefore, we direct the AO to delete the penalty imposed u/s 272(2)(k) of the Act. - Decided in favour of assessee. 2021 (12) TMI 445 Payment to related person u/s 40A - Addition on account of payment made by the assessee to quantum asset management company by way of research fee - HELD THAT:- Issue decided in favour of assessee as relying on own case [ 2016 (10) TMI 1 - ITAT MUMBAI ] as held assessee has brought on record the facts that the subsidiary company QAMC generated an aggregate income by way of research fees during the previous year, which includes the fees paid by the assessee. QAMC has offered the entire amount of research fees, to tax and paid the same rate of tax as was applicable to the assessee. On the other hand, the revenue has failed to point out as to how the assessee evaded payment of tax by making unreasonable payment to its subsidiary for research services - A subsidiary company of the assessee is not a related person within the meaning of section 40A (2), the provisions of section 40A(2) do not attract in the present case - Decided in favour of assessee. Addition of marketing and distribution fees paid to QIEF Management LLC - HELD THAT:- As decided in own case [ 2016 (10) TMI 1 - ITAT MUMBAI ] invoking of section 40A(2)(b) of the Act to disallow a portion of the expenditure is an altogether different dimension than invoking section 37(1) of the Act to say that the expenditure is not laid out wholly and exclusively for the purposes of business. In fact, under such a situation, it was all the more onerous on the part of the CIT(A) to demonstrate as to why the entire expenditure was disallowable under section 37(1) of the Act, having regard to the stand of the Assessing Officer in the remand report as well as in the assessment for assessment year 2012-13. The said burden, in our view, has not been discharged by the CIT(A) in the present case and, therefore, we are unable to acquiesce to the same. As a consequence, we hereby set-aside the order of the CIT(A) on this aspect and direct the Assessing Officer to delete the addition representing payment made to QIEF for marketing support services. Thus, on this aspect assessee succeeds. Additional claim of expenditure on account of education cess payable on the income tax which was not claimed in the return of income and was being claimed for the 1st time before the Tribunal by way of this additional ground of appeal - HELD THAT:- Undisputedly the issue of claim of education cess was claimed for the first time before us. The issue being purely legal and also covered by the jurisdictional high court in favour of the assesse. In our opinion all the facts qua this issue are available on records and no new facts or independent verification of facts are required. Moreover the assessee can raise the legal issue at any appellate stage even if not raised before the authorities below. Besides the issue is squarely covered by the decisions of the Apex Court as well as Jurisdictional High Courts relied by the Ld. A.R. as stated above. Therefore we are inclined to admit the same for adjudication. The issue raised in the additional ground is squarely covered by the recent order in the case of Sesa Goa Limited [ 2020 (3) TMI 347 - BOMBAY HIGH COURT ] - as the aforementioned claim had been raised by the assessee for the very first time before us, we, therefore, in all fairness restore the matter to the file of the A.O for considering the said claim of the assessee in the backdrop of our observations recorded hereinabove, though, subject to verification of the factual position as had been claimed by the assessee before us. The additional Ground is allowed for statistical purposes in terms of our observations recorded hereinabove. 2021 (12) TMI 444 Depreciation u/s 32 on toll road(carriage way) - real ownership - AO disallowed the depreciation claimed by the assessee on the toll road under the block Buildings or Plant Machinery as the assessee is not the owner of the project - AO held that the assessee is not entitled to claim depreciation on the roll road as intangible asset due to the fact that the right to collect toll does not fall under any of the categories of intangible assets specified in section 32(1)(ii) - HELD THAT:- As relying on NORTH KARNATAKA EXPRESSWAY LTD. THE IL FS FINANCIAL CENTER 2014 (11) TMI 351 - BOMBAY HIGH COURT] assessee is the owner of the toll road and consequently entitled to claim depreciation on toll road under the provisions of section 32 of the Act. The grounds raised by the assessee are accordingly allowed. 2021 (12) TMI 443 Nature of expenses - expenses on advertisement, publicity and business promotion incurred on brand building of E-commerce portal Snapdeal - revenue expenditure or capital expenditure for brand building on e-commerce portal - HELD THAT:- Assessee is operating in online marketing business as aggregator which is a highly competent consumer market the assessee had to stay ahead of its competition and thus engage itself in brand promotional activities and has necessarily to incur these expenses. AO having accepted the fact that the assessee could spend amounts for these activities to the extent of 50 % as revenue expenditure the ld AO could not have held that 50 % of such expenses are capital in nature, in absence of any contrary evidence. In view of this, we do not find any infirmity in the order of the ld. CIT (Appeals) in deleting the above disallowance. Further before us no evidence was placed on record to show that assessee has created any intangible asset and even after the details of expenses are placed before the ld. Assessing Officer, he held that ad-hoc percentage of certain expenditure are capital expenditure without pointing out that which nature of expenditure has resulted into creating an intangible asset. Accordingly, we find that the expenditure incurred by the assessee are purely revenue in nature and cannot be considered as capital expenditure. Assessing Officer also did not bring on record any evidence to prove his findings. In view of this, all the grounds raised in appeal by the ld. Assessing Officer are dismissed. 2021 (12) TMI 442 Disallowance of certain expenses claimed for the business purpose - assessee is an individual and engaged in the business of hospitality services - HELD THAT:- As admitted that assessee has maintained regular books of accounts and complete bills and vouchers and other related details regarding the expenses which were filed by the assessee. Simply because assessee has not maintained separate ledger account and too for personal expenses, it does not mean that the expenses cannot be verified or are personal in nature. No discrepancy or any particular expenses have been pointed out as these are for personal nature or the expenses incurred are not for the purpose of business. Such adhoc disallowance cannot be sustained and the same is directed to be deleted. - Decided in favour of assessee. Refund on self assessment tax and advance tax u/s 244A - Disallowing the interest u/s 244A - Scope of amendment - HELD THAT:- . The Finance Bill 2016, considered the Equity and justice amended The Act, introduced a Sec. 244A(1aa) - amendment provides that assessee shall be eligible to interest on refund of self-assessment tax for the period beginning from the date of payment of tax or filing of return, whichever was later, to the date on which the refund is granted. This amendment though has been brought w.e.f. 1.6.2016, but it is curative and declaratory provision therefore, same should be applied retrospectively. It has been held so by the Hon ble High Court in the case of CIT vs. Ansal Land Mark Township (P) Ltd [ 2015 (9) TMI 79 - DELHI HIGH COURT] that if the amendment was declaratory and curative in nature, the same should have been on retrospective basis specially when this amendment has been brought to bring fairness and equity and proposed to pay interest in the case where the refund is a result of self assessment tax. Such a benefit has to be extended to all and not only from a particular date i.e. 1.6.2016. Accordingly we direct the AO to allow the interest u/s 244(A). Appeal of the assessee is allowed. 2021 (12) TMI 441 Non deduction of TDS on interest payable to Prasar Bharti - whether as per the provisions of section 196 of the Act, no tax is required to be deducted on the payments being made to a Corporation and M/s Prasar Bharti is a corporation created under a statute enacted by Central Government - HELD THAT:-As regards Ground No. 1, 1.1 1.2, the same is covered against the assessee, hence, dismissed Disallowance towards leave encashment in view of provisions of section 43B (f) - HELD THAT:- Hon ble Apex Court in case of Exide Industries [ 2007 (6) TMI 175 - CALCUTTA HIGH COURT] held that the claim with regard to leave encashment has to be allowed on cash basis i.e. actual payment basis and not on accrual basis. It is pertinent to note that the payments with regards to the leave encashment have been made in subsequent assessment year i.e. 2013-14 and thus, we direct the Assessing Officer to verify and allow the deduction u/s 43B on actual payment basis as held in the decision of the Hon ble Apex Court. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Hence, Ground No. 2, 2.1 2.2 2.3 are partly allowed. Addition u/s 14A r.w.r. 8D - HELD THAT:- As the assessee has earned only ₹ 2,34,585/- as exempt income. The assessee also disallowed a sum of ₹ 29,04,491/- u/s 14A. The Ld. AR at the time of hearing contended that the said disallowance was erroneously made by the assessee. This issue needs to be verified. Therefore, we are remanding back this issue to the file of the Assessing Officer and decide the same afresh - Ground No. 3 is partly allowed for statistical purpose. 2021 (12) TMI 440 Penalty u/s 271AAB - surrendered income was declared in return filed after issue of notice u/s 153C - CIT-A deleted penalty levy - HELD THAT:- Assessee s father was subjected to search u/s 132 of the Act. In the statement recorded u/s 132(4) assessee s father admitted that various gifts were accepted by his daughter Ku. Nishita Singhal i.e. the assessee which was utilized for giving loans to different borrowers on interest. Thereafter assessee was served with a notice u/s 153C of the Act. Return of income was filed on 31.08.2015 and income from gifts of ₹ 2 crore was offered to tax. From perusal of the above finding of Ld. CIT(A) as well as the decision of Coordinate Bench Panji in the case of Volga Dresses [ 2017 (3) TMI 1783 - ITAT PANAJI] which stands uncontroverted by the Ld. DR being unable to place any decision favouring revenue on this issue, we are of the view that since no search was conducted in the case of assessee and since assessment has been made u/s 153C of the Act, penalty proceedings cannot be initiated u/s 271AAB. Even otherwise in the penalty notice Ld. Assessing Officer though has levied the penalty u/s 271AAB of the Act but has not calculated the penalty under the provision of section 271AAB - CIT(A) states that the penalty under this section can be levied either @ 10% of the undisclosed income u/s 271AAB(1)(a) of the Act, or 20% of the undisclosed income if the case of the assessee falls u/s 271AAB(1)(b) of the Act or 60% of the undisclosed income if the case of the assessee falls under the provision of section 271AAB(1)(c) of the Act but the alleged penalty amount does not fall in either of the three cases. This in itself shows that the Ld. Assessing Officer was not aware as to on what basis he was levying the penalty. This action of AO in itself makes the penalty proceedings null and void, as assessee was not served with a correct notice u/s 274 of the Act to initiate the penalty proceedings. We, thus, find no infirmity in the finding of Ld. CIT(A) deleting the penalty levied u/s 271AAB of the Act. Accordingly grounds raised by the revenue stands dismissed. 2021 (12) TMI 439 Addition u/s 56(2)(vii)(b) - difference in the market value and issued value of shares - HELD THAT:- Explanation (a) (ii) of section 56(2)(viib) leads to a conclusion that any competent evidence that proves the market value of the assets is sufficient to satisfy the requirements of the section. Thus, the said valuation report submitted during the assessment proceedings was a relevant evidence which was ignored by the Ld. AO in the valuation of shares. Assessee had relied on the valuation report of the land in Gram Khajrana to substantiate the value of shares. The valuer is Government approved valued and an expert and Property valuation depends upon many factors which an expert after considers and then come to his conclusion. Also, the valuation was conducted by bank empaneled valuer for the purpose of granting loan to assessee due to which it has high credibility - assessee had established through various evidences submitted during appeal proceedings that even if Guideline value of land is considered than also the valuation of land is very high. Even the Ld. AO in its remand report, admitted the same fact of high market valuation of land but further mentioned that the same is not a relevant evidence which is against the provisions of section 56(2)(viib). See UNNATI INORGANICS PVT. LTD. [ 2019 (9) TMI 553 - ITAT AHMEDABAD] and ASG LEATHER PVT. LIMITED, C/O. SUBASH AGARWAL ASSOCIATES [ 2018 (6) TMI 1114 - ITAT KOLKATA] We are of the view that the addition on account of section 56(2)(viib) of the Act was based on wrong interpretation of the provisions of law ignoring the evidences directly relevant to the facts of the present case - Decided against revenue. 2021 (12) TMI 438 Revision u/s 263 by CIT - Reopening of assessment u/s 147 - LTCG u/s 45(1) - As per CIT during the assessment proceeding the AO did not examine all the material facts of the case particularly regarding liability of the assessee for paying long term capital gain as per Sec. 45(1) of the Act in entering into a Joint Venture Agreement - HELD THAT:- Considering the entire aspect of the matter the Ld. AO in the reopening proceeding under Section 143(3) r.w.s. 147 concluded the proceeding on the premise that the long term capital gain does not arise in the year under consideration i.e. when the agreement was executed but it arose later on when the assessee took possession of two flats against Joint Venture Agreement and sold the same to the third party in A.Y. 2015-16. This particular fact was ascertained from the return of income filed by the assessee for A.Y. 2015-16. Therefore, when the issue has already been decided by the Ld. AO in the previous occasion upon making enquiry and/or verification of the relevant documents in support of the submissions made by the assessee as regards the benefit of long term capital gain the same cannot be reopened under the Explanation 2 of Section 263 declaring the order passed by the Ld. AO erroneous and prejudicial to the interest of the Revenue on the plea of no enquiry and/or verification done by the AO We are fortified by the order passed by the Hon ble High Court at Calcutta in the case of PCIT vs. Infinity Infotech Parks Ltd. [ 2018 (9) TMI 111 - CALCUTTA HIGH COURT] on this issue that has already discussed hereinabove which further approves the order passed by the Ld. AO on the count that there can be no tax payable unless there is any profit or gain has arisen. Hence, we do not support the order passed by the Ld. PCIT under Section 263 of the Act for reopening of assessment for the reason already discussed hereinabove and, thus, the same is hereby quashed. Appeal filed by the assessee is allowed. 2021 (12) TMI 437 Unexplained investment u/s 68 - admission of additional evidences - HELD THAT:- On perusal of the bank statement of Rajneesh Dhawan it is observed that he was having sufficient fund available in the bank account by way of encashment of fixed deposits to advance loan to the assessee. It is also observed that the assessee has availed the loan of ₹ 1 crore from Rajneesh Dhawan on interest chargeable @0.75% p.m and the assessee, while paying such interest has also deducted tax at source - Yamini Bhat has filed her return of income for assessment year 2016-17 on 23-01-2017 - it is a fact on record that the bank statement of Rajneesh Dhawan and the tax credit certificate in Form 26AS as well as the income-tax return copy of Smt. Yamini Bhat are being filed for the first time before this Tribunal as additional evidence. Though, prima facie, it appears that both the loan creditors are having creditworthiness and are capable of advancing the loans to the assessee; however, the additional evidences require factual verification. Considering the fact that the additional evidences sought to be furnished before us will have a crucial bearing on deciding the disputed issue, we are inclined to admit them. However, since the departmental authorities did not have an opportunity to verify them, adhering to the rules of natural justice, the departmental authorities have to be given an opportunity to verify them - we are inclined to restore the issue to the file of learned Commissioner (Appeals) for not only considering the additional evidences filed before him but also before us, as well - appeal is allowed, for statistical purpose. 2021 (12) TMI 436 Low GP on estimation basis - assessee has submitted the complete quantitative tally of two wheelers which is available on record. comparative chart placed on record shows that the assessee s gross profit is progressive - HELD THAT:- CIT(A) in his findings has observed that AO has not made any enquiry to ascertain the margin on sale of vehicles - estimation of GP rate on the basis of margin on sale of spares and accessories cannot be the yard stick for applying profit rate on total sale. Since, the authorities below have not conducted any enquiry to ascertain the margin on sale of vehicles, the addition made on estimation basis is not sustainable in law - authorities below have not assigned any cogent reason for making addition in in this AY, whereas no such addition was made in the AY 2011-12 in which the assessee had shown GP rate of 2.02%. As in the case of Pr. CIT vs. Bhiwani Silicate Industries [ 2015 (8) TMI 1098 - RAJASTHAN HIGH COURT ] as held that once stock register had been found to be properly maintained no trading addition could have been made. In the present case, since the authorities below have not rejected the books of account of the assessee, the action of sustaining trading addition is contrary to the ratio laid down by the Hon'ble High Court in the case discussed above. Hence, we allow this ground of appeal and direct the AO to delete the addition Disallowance of interest on the opening debit balance - counsel submitted that the closing balance of capital as on 31.03.2011 is the opening balance of assessment year 2012-13, therefore, no addition is warranted on the said amount - HELD THAT:- CIT(A) has deleted the identical addition in assessee s appeal against the assessment order for the assessment year 2011-12 following the decision of the Amritsar Bench of the Tribunal in the case of ITO vs. Euro Infrastructure Power Ltd. [ 2015 (6) TMI 766 - ITAT AMRITSAR ] The department has not challenged the findings of the Ld. CIT(A). Since, the authorities below have not assigned any cogent reason for making addition in the assessment year under consideration, we find merit in the contention of the Ld. counsel for the assessee. Hence, we allow this ground of appeal. Addition of interest disallowance on advances made to M/s Orchid Resorts - assessee submitted that CIT(A) has made addition of the said amount without appreciating the fact that advances have been made to the sister concern M/s Orchid Resorts, in which the assessee was a partner and that the advances have been made out of commercial expediency - HELD THAT:- Since the capital account was debited out of the commercial expediency, the Ld. CIT(A) has wrongly confirmed the interest expenditure disallowance made by the AO. The authorities below have not pointed out any material on record to rebut the contention of the assessee. Further, as pointed out by the Ld. counsel, AO did not make any addition in assessee s case having the identical set of facts in the assessment year 2017-18. The Ld. DR did not point out any valid reasons for making interest disallowance @ 12% of the total advance made during the year relevant to the assessment year under consideration. Hence, we do not find any reason to sustain the addition on account of interest disallowance. We accordingly, allow this ground of appeal and set aside the findings of the Ld. CIT(A). Disallowance of miscellaneous expenses claimed - disallowance/ sustained the addition in question for the reason that the assessee has failed to produce evidence to substantiate its claim - contention of the Ld. counsel is that since these expenses were incurred in connection with the business of the assessee, the Ld. CIT(A) has wrongly sustained the disallowance - HELD THAT:- CIT(A) has not denied the contention of the assessee that the expenses were incurred for the purposes of business, however, sustained the addition to the extent of 10% of the total amount of expenses claimed holding that the disallowance made by AO is on higher side. So, in our considered view, the action of the Ld. CIT(A) in sustaining 10% disallowance without any cogent reason is arbitrary, therefore bad in law. Hence, we allow this ground of appeal of the assessee and set aside the findings of the Ld. CIT(A). Accordingly, we direct the AO to delete the addition. 2021 (12) TMI 435 Rejection of books of accounts - GP Estimation - non-production of the VAT return of the creditors - assessee has failed to produce any credible evidence with respect to the three major creditors earlier - HELD THAT:- We do not approve the finding of the learned assessing officer that though the creditors have filed the confirmation of the account, but the learned assessing officer has rejected the same stating that so-called creditors on the address given by the assessee are not available. It could also not have been the reason that the nonproduction of the VAT return of the creditors can result into rejection of the books of accounts. It is merely because on report of the inspector it was found that the creditors were not available at the address given by the assessee, the learned assessing officer has rejected the books of accounts and estimated the profit comparing the results of three different entities. Merely because the VAT return of the suppliers were not produced assessee cannot be burdened with additional tax liabilities when the quantitative details of material purchased and sold which included the material purchased from the suppliers are also accounted for. Undisputedly the accounts of the assessee are audited Under the provisions of Section 44AB of the act. For the subsequent years the learned assessing officer has assessed the assessee Under the provisions of Section 143 (3) of the act and the books of accounts were accepted.In view of this we do not approve the order of the lower authorities rejecting the books of accounts of the assessee and estimating the profit by taking three different entities though in the similar line of business for estimating the income of the assessee. - Decided in favour of assessee. Insolvency & Bankruptcy 2021 (12) TMI 434 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The Ld. Adjudicating Authority has failed to appreciate that there is no promise to pay within the meaning of Section 25 (3) of the Indian Contract Act, 1872, which will be evident from the letter dated 14th December 2017. On perusal of the impugned order, it is clear that the Adjudicating Authority relying on the judgement of the Hon'ble Bombay High Court in the case of South Eastern Roadways [1992 (11) TMI 293 - BOMBAY HIGH COURT], has considered the letter issued by Corporate Debtor dated 14th December 2017 as an acknowledgement of debt in the form of a promise to pay the debt amount and given a finding that the Application filed by the Operational Creditor is beyond the given period of limitation. Section 25 of the Indian contract act provides that agreement without consideration is void unless it is in writing and registered or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law - based on the statutory provision of Section 25(3) of the Contract Act, it is clear that there could be a valid contract to pay wholly or in part a time-barred debt. This can be treated as an exceptional general principle of the Contract Act, which provides that agreement without consideration is void. Illustration (e) of Section 25 of the Contract Act provides that if A owes B ₹ 1,000, but the debt is barred by the Limitation Act. A signs a written promise to pay B ₹ 500 on account of the debt. This is a contract. The learned Adjudicating Authority has taken an erroneous view of the matter and on evaluating the letter of the Managing Director of the Corporate Debtor as an acknowledgement of the debt - the said letter was not within limits so that the operational Creditor could claim the benefit of Section 18 of the Limitation Act. Appeal allowed. 2021 (12) TMI 433 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is a bonafide claim of the Corporate Debtor that the Input Tax Credit paid must be assessed undisputedly. The Corporate Debtor had, in its letter received by the Operational Creditor on 22.07.2019, has admitted the debt and was ready to pay the due amount on providing the Bank guarantee till the assessment. Though the letter in respect to the dispute of ITC was received by the operational creditor after 10 days after the i.e. statutory period of reply to the demand notice as per section 8 of IB Code, the dispute seems to real and genuine. It is the bonafide right of the Corporate Debtor that the amount paid for GST must be assessed without any complication. The objection of the Operational Creditor in respect that no such agreement was made by and between the Operational Creditor and Corporate Debtor for giving the Bank guarantee for GST dispute is not well founded. Such a situation arose after Rathank Retails Private Limited was declared as a fictitious company. Such situation was not in picture since the inception of the business relations with the Operational Creditor. The apprehension of the Corporate Debtor is genuine, as if the transactions of the Operational Creditor prove to be non-genuine, the Corporate Debtor would have bear to the additional GST along with interest and penalty - pre-existing dispute under section 8 (2) (a) of Ib Code fully established. The petition of the Operational Creditor for initiation of CIRP under section 9 of IB Code is rejected. Petition dismissed. PMLA 2021 (12) TMI 432 Money Laundering - provisional attachment of property - proceeds of crime - scheduled offences - offences under Section 45 read with Sections 70 and 8(5) of the Prevention of Money-Laundering Act, 2002 - HELD THAT:- The complaint by the Authorised Officer is akin to a private complaint under Section 200 of Cr.P.C. and it is not a final report by Police Officer under Section 173(2) of Cr.P.C. It is clearly stated in the complaint that it is filed by the Officer, who is duly authorized by the Central Government to file complaint in writing in tune with the second proviso to Section 45(1) of the PMLA. Both the Sections 44 and 45 of the PMLA commence with the non-obstante clause, indicating the complaint in writing by a duly Authorised Officer to be taken cognizance by the learned Special Judge without the accused being committed, notwithstanding anything contained in the Cr.P.C. - this Court has no hesitation to hold that the plea of the petitioner/A3 regarding locus of the respondent to file the complaint without registering F.I.R. under Section 154 of Cr.P.C. is unfounded and held against the petitioner. In the subject complaint, the respondent herein pray for two reliefs. One to proceed against the accused persons for money-laundering and second to confiscate the proceeds of crime. As far as the punishment for money-laundering is concerned, Section 4 of the Act prescribes rigorous imprisonment for a period of not less than three years, but which may extend to seven years and shall also be liable to fine. Provided the proceeds of crime involved in money-laundering relating to offences under the Narcotic Drugs and Psychotropic Substances Act, the period of imprisonment may extend to ten years. The finding of the adjudicating authority is not a clean chit to the petitioner herein for the offence of money-laundering. In the opinion of this Court a prima facie satisfaction of the adjudicating authority in a preventive proceedings regarding certain properties, no way stand in the way of prosecuting the person accused of the offence of money-laundering, which covers not only possession but also use or concealment - even assuming the finding of the adjudicating authority has reached finality, the summons issued to the petitioner herein cannot be treated as premature or illegal, since the petitioner is liable to face the trial both in his individual capacity as well as a person in-charge and responsible for the conduct of the business of A1 Company, which has alleged to have contravened the provisions of the PMLA. Petition dismissed. 2021 (12) TMI 431 Money Laundering - Validity of search operation held in the premises of the petitioner - pendency of investigation relating to the proceedings - main grievance projected by the petitioners is that the motive behind the search of their premises is to implicate them in some false case under the provisions of the Prevention of Money Laundering Act, 2002 - HELD THAT:- The FEMA Act, which is a legislation for regulating the economic aspect, has been passed to consolidate and maintain law relating to foreign exchange, external trade and payments and for promoting orderly development of foreign exchange. Concededly, the petitioners have knocked the doors of this court by filing these writ petitions, against the proceedings initiated under section 37 of the FEMA Act and consequential action of investigation conducted by the third respondent. As regards the allegation of violating the fundamental rights, etc, it is the categorical stand of the respondents that on the basis of credible information, summons were issued to the petitioners and the same were followed by search of their premises. The petitioners were neither arrested nor taken into custody by the respondents. Therefore, the question of infringement of their rights under any provision of law, will not arise - The Supreme Court in C.Sampath Kumar v. Enforcement Officer [1997 (9) TMI 458 - SUPREME COURT] , while deciding the case in respect of Section 40 of the FERA, held that when a person is summoned and examined under Section 40, it cannot be presumed that a statement will be obtained under pressure or duress and such a statement obtained does not infringe the constitutional guarantee of protection against self-incrimination under Article 20(3) of the Constitution. Therefore, the concept of applying the theory of self-incrimination even at the stage of investigation in case of violation of FEMA Act cannot be raised to the level of an investigation of a criminal offence protected by Articles 20(3) and 21 of the Constitution. It is settled law that the summons issued under Section 37 of the FEMA Act, by the officers of the Enforcement Directorate, cannot be questioned by way of a writ. When there is suspicion with regard to the involvement of the petitioners in any of the transactions which are prohibited under the FEMA Act, it is open to the respondent authorities to summon them for enquiry. Since the documents are pertaining to them, it cannot be said that the investigation has no nexus with the documents called for from the petitioners. When an investigation is commenced, it is not possible for the authorities to come to the conclusion with regard to the involvement or the non-involvement of any person until the enquiry is completed - According to the petitioners, they were ill-treated and humiliated an subjected to harassment; and the statements obtained from them during the course of search, were under threat and coercion and the same would be used as material evidence, in the proceedings initiated against them; and hence, they have come up with these writ petitions for the larger reliefs as stated supra. However, it is reiterated on the side of the respondents that the entire search operations conducted in the premises of the petitioners on 02.09.2021 and 03.09.2021 were recorded and the statements were obtained from the petitioners without any threat or coercion; and in connection with the said proceedings, the petitioners were neither arrested nor taken into the custody by the respondent officials. Therefore, this court is of the opinion that the submissions so made on the side of the respondents would be sufficient enough to meet the grievance expressed by the petitioners. Having regard to the settled legal proposition that 'fair and just investigation is a hall mark of any investigation and it is not the duty of the investigating officer to strengthen the case of the prosecution by withholding the evidence collected by him; and an impartial and fair opportunity in the proceedings initiated, is the legal right of the accused and justice can be ensured only if the rules of procedure are diligently adhered to'. Petition disposed off. Service Tax 2021 (12) TMI 430 Refund of service tax paid - applicability of time limitation - Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - HELD THAT:- The service tax has been paid twice by the appellant for the very same taxable value. Though the department agrees that the earlier payment made by challan dated 05.01.2015 on the service tax registration number of the Tirupur Commissionerate is incorrect, they have neither adjusted the amount nor refunded the amount. Instead, vide letter dated 23.09.2016, the appellant has been directed to make the payment once again. The department has directed to pay the tax again as their inhouse formalities does not allow adjustment of tax wrongly paid towards one Commissionerate to another. The appellant has again paid service tax mentioning the service tax registration of Ahmedabad Commissionerate on 26.09.2016. It is clear that the department has collected service tax twice from the appellant. This is not permissible under law. The rejection of refund on the ground of limitation cannot be justified - Appeal allowed - decided in favor of appellant. 2021 (12) TMI 429 Classification of services - construction services rendered by the appellant are involving both supply of material as well as rendering of service - Commercial or Industrial Construction Services - period 2008-09 to 2010-11 - time limitation - HELD THAT:- In the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] similar issue was analysed wherein the Tribunal held that after 01.06.2007 for services rendered in the nature of composite indivisible contracts, the levy of service tax has to be under Works Contract Service under Section 65 (105) (zzzza) - the demand of service tax under Commercial or Industrial Construction Services cannot sustain for contracts which are composite in nature and involve both supply of material and rendering of service. Time Limitation - HELD THAT:- The department has not put forward any evidence to establish any positive act of willful suppression or mis-statement against the appellant. Further, the issue is interpretational in nature, and was under litigation during the disputed period. The question as to whether service tax is leviable on Work Contract Services was under litigation and travelled up to Supreme Court which was settled by the decision rendered in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] . For these reasons, the appellant has made out a case on the ground of limitation also. The demand of service tax cannot sustain - Appeal allowed - decided in favor of appellant. 2021 (12) TMI 428 Demand of credit - reversal of availability of excess credit irregularly on the capital goods - extended period of limitation - HELD THAT:- The Ld.AR relied on decision of Hon ble Supreme Court in the case of UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. [ 2011 (2) TMI 6 - SUPREME COURT] to say that they are liable to pay interest. That issue was examined by the Hon ble Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] in which case the Hon ble High Court has examined the issue and held that although the credit taken but the same remained unutilized, in that circumstance, no interest is payable. But the said issue has been considered in the case of THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. SUNDARAM FASTENERS LIMITED [ 2014 (2) TMI 551 - MADRAS HIGH COURT] to say that the interest is payable. As there are contradictory decisions of the Hon ble High Courts after the decision of Hon ble Apex Court. In that circumstance, the issue is to be decided by this Tribunal independently. This Tribunal in the case GTL INFRASTRUCTURE LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [ 2014 (9) TMI 647 - CESTAT MUMBAI] has taken a view that in case where the credit is taken earlier has been reversed without utilizing the same, in that circumstance, no interest is payable. Therefore, in view of the decision of this Tribunal, it is held that the appellant is not liable to pay interest. Although the appellant has paid interest, he has made request for dropping proceedings initiated by show cause notice. The facts of the case of Sundaram Fasteners is not applicable to the facts of this case - no interest is paybale and no penalty can be imposed on the appellant. Appeal allowed - decided in favor of appellant. Central Excise 2021 (12) TMI 427 Time Limitation - suppression of fact of manufacture and clearance of excisable goods - exemption Notification No.74/1993 dated 28.2.1993 - HELD THAT:- The facts on record indicate that prior to 1996 the appellant was engaged in the manufacture of gates and hoists that were supplied to the Irrigation Department. By virtue of exemption Notification No.74/1993 dated 28.2.1993 the goods falling under the heading 73 and 84 of the Schedule were exempted from payment of central excise duty. On 1.4.1986 the Corporation came to be established and it is thereafter that the demand of central excise duty from 1997-1998 to 1999-2000 came to be raised by issuing show cause notice dated 30.3.2001. In the show cause notice it has been stated that the appellant suppressed the fact of manufacture and clearance of excisable goods with a view to evade payment of central excise duty. In view of the fact that the appellant had not obtained necessary registration, the Directorate found it sufficient to invoke the proviso to Section 11A(1) of the said Act. When the material on record is perused it becomes clear that in the reply to the show cause notice itself the appellant had stated that in view of exemption Notification No.74/1993 which was applicable to it till 31.3.1996, the appellant was not aware of the procedure as regards charging and paying excise duty. It became a statutory Corporation and there was no intention to evade the payment of central excise duty in any manner whatsoever. While admitting that it was liable to pay central excise duty it was stated that the penalty or interest may not be imposed upon the appellant. The Tribunal while considering the aforesaid material has stated that the explanation furnished by the appellant was not sufficient and the plea of bona fide belief was not accepted. It is thus found that satisfaction recorded initially by the Commissioner and then by the Tribunal as regards the intention of appellant to evade payment of central excise duty is without any supporting material on record - The substantial question of law as framed is answered by holding that the Tribunal was not justified in law and in facts in holding that the demand under the show cause notice was not barred by limitation. Appeal allowed - decided in favor of appellant. 2021 (12) TMI 426 CENVAT Credit - stock transfer - credit of duty paid on inputs received from their sister concern under stock transfer invoices - Rule 7(4) of the Cenvat Credit Rules, 2001/2002 - HELD THAT:- Rule 3 of Cenvat Credit Rules which provides for eligibility criteria of Cenvat credit does not discriminate between purchase and procurement. The only pre-condition appears to be receipt of input or capital goods in the factory of manufacture. Karnataka High Court in the case of KARNATAKA SOAPS AND DETERGENTS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2010 (2) TMI 524 - KARNATAKA HIGH COURT] has upheld the view that Rule 7 which is more towards laying down the procedure cannot take precedence over Rule 3. The impugned order does not stand the scrutiny of law - Appeal allowed - decided in favor of appellant. 2021 (12) TMI 425 CENVAT Credit - exempt services - demand of an amount at the rate of 5%/6%/7% of the value of exempted services in terms of rule 6 of Cenvat Credit Rules, 2004 - HELD THAT:- The Show cause notice alleges that the appellant has availed input credit of common services namely Banking and Financial Services, Professional Services, Telephone Services, Credit Rating Services and Membership of CAPEXILE. The Show cause notice as well as orders of the lower authority do not identify the exact amount of credit taken and the exact nature of common services on which the credit was availed. The matter needs to be remanded - Appeal allowed by way of remand. 2021 (12) TMI 424 Refund of excess duty paid - non-inclusion of freight in the assessable value - N/N. 1/10 dated 06.02.2010 - HELD THAT:- It is a fact on record that at the time of clearance of goods, the appellant paid duty and claim refund thereof only, there is a Cenvat credit relying in Cenvat credit account unutilized due to return of goods already cleared by the appellant on payment duty. In these circumstances, the appellant is entitled for refund of duty paid in cash at the time of clearance of goods as held by this Tribunal in the case of SHREE NATH INDUSTRIES VERSUS C.C.E., JAMMU [ 2018 (5) TMI 195 - CESTAT CHANDIGARH] . Refund of duty paid on transportation charges as the appellant is produced only of the sample invoices, but it is found that it is a fact on record that appellant has submitted invoices before the adjudicating authority as well as with the Commissioner (Appeals), in these circumstances, it is not required further re-examination. Further it is a claim of the appellant that they have not included the transportation charges in the assessable value which is evident from the invoices. The appellant is entitled to claim refund of duty paid on service tax paid on transportation charges - appeal allowed - decided in favor of appellant. 2021 (12) TMI 423 CENVAT Credit - requirement to reverse and/or pay duty on removal - conveyor belt - scrap - Rule 5A of Rule 3 of CCR - HELD THAT:- In absence of any allegation that the appellant have removed the scrap, on which cenvat credit was taken, the show cause notice is bad for demand of duty on the value of scrap removed. The show cause notice lacks the satisfaction of the condition precedent that the assessee has or had taken credit on the relevant capital goods. The appeal is allowed - decided in favor of appellant. 2021 (12) TMI 422 CENVAT Credit - input services - outward transport where the appellant delivered the goods on FOR destination basis to the factory/ plant side of the buyer - rate is inclusive of transportation, but excluding excise duty and education cess - place of removal - HELD THAT:- The place of removal is not the factory gate, but the premises of the buyer. Admittedly the goods have been sold on FOR destination basis and sale price includes element of transportation. The appellant is entitled to cenvat credit on the outward freight / transportation - appeal allowed - decided in favor of appellant. Indian Laws 2021 (12) TMI 421 Seeking refund of recovered amount from post office - procedural irregularity or not - premature withdrawals of monthly income scheme account - HELD THAT:- The respondent was working as a postal assistant at the Purulia Head Post Office. The process of making payments at the post office comprised of the following steps. After an MIS pass book was presented to the counter, the signature was to be tallied by the ledger clerk. Thereafter, the Assistant Post Master signed the vouchers. Only then could the respondent pay any sum of money to the messenger or payee concerned in cash. Therefore, quite clearly the respondent was not the disbursing authority - once the Assistant Post Master signed the vouchers and sanctioned the payment, it was not open to the respondent to stop such payment. As such, no liability for any purported illegality in making such payment in cash could be attributed to the respondent. Besides, although the respondent had clearly disputed the allegations in the charge sheet issued to him, no enquiry was conducted in this case. In O.K. BHARDWAJ VERSUS UNION OF INDIA (UOI) AND ORS. [ 1996 (10) TMI 522 - SUPREME COURT] , the Hon'ble Apex Court, inter alia, held that if the charges were factual and if they were denied by the delinquent employee, an enquiry should be called for. However, in the present case, no such enquiry was undertaken although the delinquent respondent/employee disputed the allegations levelled against him. The implication of the respondent in the alleged irregular disbursement of money on Monthly Income Scheme account of a depositor to a messenger does not appear to be tenable either on facts or in law - Application dismissed.
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