TMI Tax Updates - e-Newsletter
December 14, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

• Analysis of S.115BAA- tax @ 22% optional for companies OPTION IS SUBJECT TO SO MANY CONDITIONS AND CONTIGENCIES lot of care and considerations are required.
• DISPOSAL OF UNCLEARED GOODS - CUSTOMS ACT, 1962 vis-à-vis INSOLVENCY AND BANKRUPTCY CODE, 2016

News

• One arrested for fraudulently availing ITC of around ₹ 45 crore

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• Handicraft and GI Toys exempted from Quality Control Order

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• 27 States avail benefits of the “Scheme for Special Assistance to States for Capital Expenditure”

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Notifications

Customs

• 111/2020 - dated 11-12-2020 - Cus (NT)
  Notification in relation to new Land Customs Stations and/or routes with respect to Bholaganj, Nalikata, Ryngku, Jogighopa, Badarpur, Kolaghat, Dhulian, Jayanagar and Nagarkata by amendment of Principal Notification No. 63/1994-Customs (N.T.) dated 21st November, 1994.

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GST - States

• 68/2020 – STATE TAX - dated 7-12-2020 - Jharkhand SGST
  Seeks to grant waiver/reduction in late fee for not furnishing FORM GSTR-10, subject to the condition that the returns are filled between 22.09.2020 to 31.12.2020

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• 67/2020 – STATE TAX - dated 7-12-2020 - Jharkhand SGST
  Seeks to grant waiver/reduction in late fee for not furnishing FORM GSTR-4 for 2017-18 and 2018-19, subject to the condition that the returns are filled between 22.09.2020 to 31.10.2020

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• 66/2020 – STATE TAX - dated 7-12-2020 - Jharkhand SGST
  Seeks to amend Notification No. 35/2020-State Tax, dated the 17th August, 2020

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• 65/2020 – STATE TAX - dated 7-12-2020 - Jharkhand SGST
  Amendment in Notification No. 35/2020-State Tax, dated the 17th August, 2020

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• 64/2020 – STATE TAX - dated 7-12-2020 - Jharkhand SGST
  Amendment in Notification No. 21/2019- State Tax, dated the 28th June, 2019

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• 63/2020 - STATE TAX - dated 7-12-2020 - Jharkhand SGST
  Appoints the 1st day of September, 2020, as the date on which the provisions of section 10 of the Jharkhand Goods and Services Tax (Amendment) Ordinance, 2019, shall come into force

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• 62/2020 – STATE TAX - dated 7-12-2020 - Jharkhand SGST
  Jharkhand Goods and Services Tax (Tenth Amendment) Rules, 2020

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• FIN/REV-3/GST/1/08 (Pt-1) (Vol II)/8 - dated 15-10-2020 - Nagaland SGST
  Seeks to notify the number of HSN digits required on tax invoice

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SEZ

• S.O. 4503(E) - dated 8-12-2020 - SEZ
  Constitutes the Visakhapatnam Special Economic Zone Authority - Amendment in Notification No. S.O. 2060(E) dated 16th May, 2018

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Highlights / Catch Notes

GST

• Validity of SCN - Jurisdiction - Without expressing any opinion on the merits of the case, we deem it proper to dispose of this writ petition, at this stage, reserving liberty to the petitioner-Company to file detailed reply to the show cause notice in question, enabling the respondents to determine the tax under the GST Act. - HC
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Income Tax

• Exemption u/s 11 - Denial of carry forward of the deficit of excess of expenditure over income - there is no bar in law and there is no specific provision in the Act which says that deduction of 15% for accumulation will not be allowed in case of deficit to such 15% accumulation is allowable irrespective of whether 15% of income have been applied or not. - AT
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• Levy of penalty u/s 271(1)(c) - Even if some discrepancies were found during the survey resulting in surrender of income by the assessee, once the assessee has declared the said income in the return of income filed under section 139(1) of the Act, then the penalty cannot be levied on the surmises, conjectures and possibilities that the assessee would not have disclosed the income but for survey. - AT
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• Assessment u/s 153A - Addition u/s 69 - on money payment made by the assessee - As noted by the learned CIT(A) despite extensive search no other material of on money was seized except for the admission of the assessee for the amount paid for the amenities, which were duly offered to tax in the hands of the assessee’s company in which he was director - when the addition is solely based upon builder’s employee statement, which has been retracted and without any corroborative material brought on record, the same is not sustainable. - AT
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• Book profit computation u/s. 115JB for capital receipt inform of interest subsidy - After considering the finding of the judicial pronouncement on this issue, the assessing officer is directed to treat the aforesaid amount of subsidy as capital receipt under Technology Upgradation Fund Scheme for Textile and Jute Industries. - AT
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• Disallowance of business expenditure - very businessman have a right to acquire knowledge and special skills in management for implementation of systems and new techniques. - Simply because the turnover has fallen down and further granting license is pending before the Government are not at relevant factors to deny the business expenditure claimed by the Assessee. - AT
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• Reopening of assessment u/s 147 - non-deduction of TDS as mentioned in the Form no. 3CD Tax Audit Report u/sec. 44AB - the assessee has filed the details and disclosed fully and truly all material facts relevant to the assessment year in consideration. - the assessment was reopened beyond a period of four years and cannot be sustained. - AT
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Customs

• Smuggling - Foreign Origin Gold Bars - It is also surprising that even though the Revenue is believing and relying upon the initial statement of Shri Karan Soni (employee who were carrying gold), detailing the name and address of the persons at Kolkata from whom the gold in question was received by him, they have not bothered to make any investigation at their end. There is no explanation coming from the Revenue for the said lapse on their part - Once the names of the alleged supplier of the goods were disclosed, it was the duty of the Department to approach them and to investigate at their end so as to collect the evidence and to corroborate the statement - Order of confiscation and penalty set aside - AT
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Indian Laws

• Dishonor of Cheque - summon of accused - Application under Section 145 of NI Act was entertained at wrong stage whereas such application is permissible after closure of or during leading of evidence of complainant, at a stage when complainant would have been given opportunity to lead and complete his evidence after recording substance of accusation or putting notice of accusation or framing of charge but not before that. Therefore, the application should not have been permitted to be filed at wrong stage and in any case, if it had been permitted to be filed at wrong stage, then the same should have been kept pending for consideration at appropriate stage. - Serious mistake committed by the trial Court is not mere irregularity but illegality - HC
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• Dishonor of Cheque - existence of debt or not - When the petitioners categorically called upon the respondent to refrain from presenting the cheques and also return the same, the petitioners would not have instructed the respondent to present those cheques for collection. That apart, those cheques admittedly are post-dated one. When there is a dispute in respect of quality of the garments, the petitioners stopped the payment of those cheques. - All the impugned complaints filed as against the petitioners are liable to be quashed - HC
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IBC

• Liquidation of Corporate Debtor - once CIRP is initiated under IBC, the management vests in IRP/RP and if Liquidation Order gets passed the Powers and Duties of the Liquidator as in Section 35 of IBC vest with Liquidator. Without liquidator taking steps no such application to obtain Certificate of MSME could have been filed by the Appellant. - Applicant/Appellant could not have moved the Authorities for Certificate under MSME by-passing the Liquidator and such action must be held as illegal. - AT
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• Cancellation of shares - Petitioners have contended that the cancellation of shares were done without obtaining consent and without giving opportunity to the petitioners - Since it has been held by this Tribunal that the removal of the petitioners as board of directors is also invalid, it is considered that the continuation of the clauses 31(a), 32 and 39(b) are totally against the interest of the majority shareholders and hence it is ordered that the above mentioned clauses may be deleted and the Articles of Association thus stand amended of the R1 company. - Tri
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Service Tax

• Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - failure to make payment by 30th June 2020 - the error is at the end of the petitioner’s agent i.e. petitioner’s bank. - the decision taken by the Designated Committee is in accordance with Section 127 (5) of the Finance Act 2019 read with section 7(iv) of the Taxation and Other Laws ordinance, 2020 - If the petitioner has any grievances with its bank, it shall be at liberty to proceed against the same in accordance with law. - HC
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Central Excise

• Refund of CENVAT Credit - export goods or not - goods were cleared by the appellant, not for physical exports, but were cleared by them to their sister concern, who is an 100% Export Oriented Unit - Since these goods were not cleared for physical exports by the applicant, in view of the definition of “export goods”, as per explanation (1A) inserted in Rule 5 of CENVAT Credit Rules, 2004, they do not qualify to be included in the export turnover of the appellant for the purpose of computing the refund under rule 5. - Amount debited from Cenvat Credit account allowed to be restored / re-credited - AT
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• Recredit of amount already reversed - It is a fact on record that when the appellant filed the refund claim of cenvat credit reversed by them, it was not the issue but with the introduction of CGST Act 2017, the issue of re-credit was arise in terms of Section 142 (3) of the CGST Act 2017 and the appellant was having no occasion to raise the issue of the re-credit before the adjudicating authority - The appellant is entitled to recredit of the amount already reversed before introduction of CGST Act 2017 - AT
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Case Laws:

• GST

• 2020 (12) TMI 453
  Sealing of residential premises and godown - HELD THAT:- It is agreed between the parties that the petitioner s residence and godown shall be searched on 10th December, 2020 at 11:00 AM in presence of an authorized representative of the petitioner or the petitioner himself. - It is further agreed that after preparation of panchnama, the residential premises and godown shall be de-sealed and the possession of the same shall be handed back to the petitioner. Petitioner shall continue to appear and cooperate in investigation as and when directed by the Deputy Director. This Court directs that till the next date of hearing the petitioner shall not be arrested - List on 22nd December, 2020.

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• 2020 (12) TMI 452
  Principles of Natural Justice - Cancellation of GST Registration - grievance of the writ petitioner is the cancellation of its registration made by the Department which is alleged to be in violation of the provisions of the Central GST Act, 2017 and that the action of the respondents authorities besides being violative of the provisions of the Act is also violative of principles of natural justice - HELD THAT:- Upon hearing the learned counsels for the parties, issue Notice of motion, returnable after 4(four) weeks. List this matter again after the returnable period on a date to be fixed by the Registry.

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• 2020 (12) TMI 451
  Validity of SCN - petitioner-Company has challenged the SCN in the present writ petition on various grounds including that the respondents do not have jurisdiction to pass impugned detention order/notice - Section 129(3) of the CGST Act, 2017 read with Section 20 of the IGST Act, 2017 - HELD THAT:- In the instant writ petition, it is apparent that by the medium of this writ petition, only a show cause notice has been challenged by the petitioner-Company. Though the petitioner- Company has filed reply to the said show cause notice, but it intends to file a detailed reply to the said show cause notice. Without expressing any opinion on the merits of the case, we deem it proper to dispose of this writ petition, at this stage, reserving liberty to the petitioner-Company to file detailed reply to the show cause notice in question, enabling the respondents to determine the tax under the GST Act. In the event of filing reply to the show cause notice by the petitioner- Company, the respondents are directed to consider the same and pass appropriate order. In the meantime, the respondents are directed not to finalize the imposition of penalty. Petition disposed off.

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• 2020 (12) TMI 450
  Principles of Natural Justice - grant of one opportunity to the petitioner to rectify the inadvertent human error having taken place in filling up the declaration from TRAN-1 filed under section 140 of the Central Goods And service Tax Act, 2017 - HELD THAT:- The petition is disposed of reserving liberty to the petitioner to file a representation before the authorities concerned within a period of four weeks from today, whereafter the same shall be considered and decided by the authorities concerned, as per law, expeditiously and preferably within a period of four weeks thereafter. Petition disposed off.

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• Income Tax

• 2020 (12) TMI 449
  Penalty u/s 271(1)(c) - HELD THAT:- Hon ble jurisdictional High Court in the case of CIT v. Dr.Harsha N.Biliangady [ 2015 (3) TMI 1146 - KARNATAKA HIGH COURT ] had held that when substantial question has been admitted on quantum assessment, penalty u/s 271(1)(c) cannot survive since the additions made were apparently debatable / doubtful. Penalty imposed u/s 271(1)(c) of the I.T.Act in given facts and circumstances of the case need to be deleted. Accordingly, we delete the penalty u/s 271(1)(c) - Decided in favour of assessee.

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• 2020 (12) TMI 448
  Depreciation on computer hardware - whether Depreciation as section 43 does not require establishing any direct relationship between the assistance received under (*) utilization of the same in purchase of assets? - CIT(A) was of the view that the amount was given by the GoI for recapitalization, Further, that the same had been utilized for purchasing computers was also not established - HELD THAT:- We are unable to place much store on the contention that the amount received being neither a subsidy nor grant nor reimbursement , the section is inapplicable. The argument as to the provision being applicable only when the unit is set-up and not to a running concern, is without any basis either on facts or in law. We have already clarified that it is the nature of the sum, determined by the purpose for which it is given, that is relevant and determinative of the matter. As long as it is for meeting the cost of an asset, directly or indirectly, it is irrelevant whether the asset purchased or setup is at the commencement of the operations or by way of a substantial expansion or even in the regular course of business; a business enterprise being required to constantly upgrade itself as well as to replace the assets which have over time become obsolete, technologically or functionally, or otherwise worn out through user. The argument is de hors the express provision of law and, consequently, without reference to any judicial precedent. We do not consider the provision of s. 43(1) as applicable in the facts and circumstances of the case. There is nothing to show of any proposal for the acquisition of fixed assets. Rather, the capital infusion is a part of an all India exercise, undertaken covering all RRBs across India, under the aegis of RBI NABARD, under whose administrative control the RRBs function, to improve their capital adequacy. The non-issue of shares would have no material bearing in the matter as it does not, in view of contributions proportionate to their respective shareholdings, disturb the ratio of either their voting rights or the proportion of the risk borne by the promoters, the providers of the risk capital. While, therefore, it is not correct to say that the funds were not meant for computers, being an eligible asset of the business, acquired for its purposes, it also cannot be said that the same is for meeting their cost, even as we have found that the same is not a relevant consideration in the instant case inasmuch as the same do not qualify to be a subsidy, grant, reimbursement, or the like. Raising funds to finance the acquisition of the assets, it cannot be said to be toward meeting the cost of the asset to be acquired therefrom, whether directly or indirectly, i.e., within the meaning of the same u/s. 43(1), and for which we may also advert to the word context referred to in s. 43, i.e., prior to sub-section (1), so that it is only where the context admits thereof that the definition provided therein is to be adopted. The occasion to examine the scope of word indirectly , appearing both in section 43(1) as well as in Explanation 10 thereto, therefore, does not arise for consideration in the facts of the case. Cost , it attributes, as well as whether the same has been met directly or indirectly, in the facts of the case, by any person or authority, are essentially questions of fact. Qua the law in the matter, Explanation 10 read with proviso thereto clarifies that even where the grant, etc., is not specifically provided for that purpose, if it results in or leads to the cost of the asset being met by another, the same has to be given effect to. Surely, the same is not applicable in the facts and circumstances of the case. No portion of the cost of the computer hardware (i.e., ₹ 1779.09 lacs) can be said to be, in law or on facts, met by the capital contribution of ₹ 20 cr. to any extent, for its actual cost to the assessee-bank being reduced with reference to it. Decided against revenue.

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• 2020 (12) TMI 447
  Exemption u/s 11 - Denial of carry forward of the deficit of excess of expenditure over income - Application of income - assessee is a Section 25 company under the Companies Act 1956 duly registered with Registrar of Companies, Maharashtra AND also registered u/s.12A in the status of public charitable trust - Whether the assessee is entitled for exemption u/s.11(1)(a) for the 15% of gross income towards accumulation as a standard deduction? - deficit being excess of expenditure over income need to be worked out after reducing the said standard deduction? - HELD THAT:- We find that the Co-ordinate Bench of Surat Tribunal in its recent judgment in the case of Udhna Academy Education Trust [ 2020 (12) TMI 411 - ITAT SURAT ] for A.Y.2011-12 had observed that the decision relied by the ld. CIT(A) on Mumbai Tribunal order in Dawat Institute of Dawoodi Bohra Community has been recalled by Mumbai Tribunal [ 2013 (3) TMI 849 - ITAT MUMBAI ] We find that the Surat Tribunal by placing reliance on the decision of Mumbai Tribunal in the case of Lalji Velji Charitable Trust [ 2018 (3) TMI 1192 - ITAT MUMBAI ] and also Gnyan Dham Vapi Charitable Trust [ 2020 (10) TMI 238 - ITAT AHMEDABAD ] had ultimately held that there is no bar in law and there is no specific provision in the Act which says that deduction of 15% for accumulation will not be allowed in case of deficit to such 15% accumulation is allowable irrespective of whether 15% of income have been applied or not. Appeal of the assessee is allowed.

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• 2020 (12) TMI 446
  Levy of penalty u/s 271(1)(c) - assessee has not stated the manner of earning the income in statement u/s 132(4) - As argued assessee has declared the income on which penalty is imposed in the original return filed u/s 139(1) - HELD THAT:- The legislature in its wisdom has chosen to segregate the search and requisition proceedings and at the same time, provided for certain provisions which apply equally to both search and requisition proceedings as so provided in sub-section (3) to section 132A where it is stated that the provisions of sub- sections (4A) to (14) (both inclusive) of section 132 shall, so far as may be, apply to proceedings under section 132A also, as if such books of account, other documents or assets had been seized under section 132(1) by the Requisitioning Officer - said deeming provision cannot, however, apply and extend to another deeming provision contained in Explanation 5 to section 271(1)(c). In absence of any specific mandate of the legislature, the scope of explanation 5 to section 271(1)(C) cannot be enlarged so to read and understood the same in context of requisition proceedings u/s 132A where it is specifically restricted in respect of search initiated u/s 132 of the Act. Therefore, following the consistent view taken by the Coordinate Benches and in absence of any contrary authority brought to our notice and keeping in view the strict construction of penalty provisions, the matter relating to levy of penalty in situation of requisition of assets u/s 132A shall continue to be governed by the main provisions of section 271(1)(c) and explanation 5 cannot be invoked in such cases. Even if some discrepancies were found during the survey resulting in surrender of income by the assessee, once the assessee has declared the said income in the return of income filed under section 139(1) of the Act, then the penalty cannot be levied on the surmises, conjectures and possibilities that the assessee would not have disclosed the income but for survey. In the instant case, the assessee had filed his original return of income u/s 139(1) of the Act for the impugned assessment year 93-94 on 26.04.93 declaring total income of ₹ 6,09,620/- including cash seized of ₹ 5,92,340/-/ and the said return of income has been accepted by the Assessing officer. The seizure and requisition of cash u/s 132A may have occasioned the filing of the return of income, however, where the return of income has been filed at the beginning of the assessment year itself well within time allowed u/s 139(1) and has been accepted by the Assessing officer and there is no adverse findings vis- -vis cash seized and offered in the return of income, following the settled legal proposition as laid down by the Courts, there is no basis for levy of penalty u/s 271(1)(C) of the Act and the same is hereby directed to be deleted. - Decided in favour of assessee.

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• 2020 (12) TMI 445
  Penalty u/s 271(1)(c) - Defective notice - absence of any specific charge levelled in the said notice - HELD THAT:- Initiation of the penalty proceedings by the authorities below under section 271(1)(c) on the ground that in the absence of any specific mention in the show-cause notice issued under section 274 for the year under consideration by the authorities below as to whether the assessee is guilty of having furnished inaccurate particulars of income or of having concealed particulars of such income , the initiation of penalty proceedings itself was bad in law and the penalty order passed in pursuance thereof is liable to be quashed being invalid. Relevant penalty notice to point out that the irrelevant portion, viz. furnished inaccurate particulars of income or concealed particulars of such income was not struck off by the Assessing Officer. - Decided in favour of assessee.

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• 2020 (12) TMI 444
  Assessment u/s 153A - Addition u/s 69 - on money payment made by the assessee - AO has failed to allow cross examination of key witness Shri Praveen Mishra, an employee of the builder before making addition - HELD THAT:- In this case for on money payment for the booking of flat is solely based upon the pendrive drive and the statement of the employee of the builder. The same has been retracted. Apart from the above there is no other corroborative material. Assessee during the course of search has admitted to have paid ₹ 2.08 crore for amenities in cash. This was duly offered for assessment in the case of the company of the assessee where he was director and the same has been accepted by the Department. No addition on this account has been done by the assessing officers also. As regards the addition based upon the statement of the employee of the builder proposed by the assessing officer, the assessee has duly explained that if the same is accepted as correct then the rate of flat in October 2010 would be ₹ 51,500 As noted by the learned CIT(A) despite extensive search no other material of on money was seized except for the admission of the assessee for the amount paid for the amenities, which were duly offered to tax in the hands of the assessee s company in which he was director - there is no other material on record to suggest that the value of the flat would be at that rate assigned by the assessing officer. It is also not the case that assessing officer had sent the matter for valuation by the DVO. In similar circumstances when there was allegation of on money paid, honourable Madras High Court in the case of P.V. Kalyansundaram [ 2006 (2) TMI 79 - MADRAS HIGH COURT] found that non-reference to DVO is fatal. In the said case on money/addition solely based upon scribblings/jottings was found to be non- sustainable. The honourable Supreme Court had duly affirmed the said decision reported in the case of Commissioner of Income Tax vs. P.V. Kalyanasundaram ([ 2007 (9) TMI 25 - SUPREME COURT] The other case laws referred by learned CIT(A) are also germane and support the case of the assessee. Hence in our considered opinion on the facts and circumstances of the case when the addition is solely based upon builder s employee statement, which has been retracted and without any corroborative material brought on record, the same is not sustainable. The case laws cited above duly support this proposition. As already noted above the assessing officer having not referred the matter to the DVO for valuation has committed a fatal error. - Decided against revenue.

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• 2020 (12) TMI 443
  Exemption u/s 11 - disallowance of salary/honorarium paid to the qualified trustees u/s 13 (l)(c) r.w. section 13(3) and 164(2) - remuneration/salary paid by the assessee to the members of the society for the reason that no service was provided by them - HELD THAT:- Payments made to the specified persons was reported by the Tax Auditor and thus said payment was not in dispute and no comparable case has been cited by the AO to substantiate that how and in what manner the payment made to the members of the society was excessive while invoking the provisions of Section 13(1)(c).when the assessee society was availing the services of the members of the society and if they have not provided those services to assessee society, it would have engaged the person from outside to whom salary was required to be paid. Therefore, the disallowance made by the AO and sustained by the Ld. CIT(A) was not justified particularly when nothing is brought on record to substantiate that the salary paid to them was excessive. AO himself admitted that the specified persons were having the higher qualification and no comparable case was brought on record to substantiate that the salary / remuneration paid to them was excessive. Therefore, the disallowance made by the AO and sustained by the Ld. CIT(A) was not justified. Also noticed that the remuneration / salary paid to the same persons in the earlier years had been accepted while framing the assessment orders under section 143(3) of the Act. Therefore, by keeping in view the principles of consistency no disallowance is to be made for the year under consideration if the facts are identical in the preceding years wherein the similar payments have been accepted by the Department. Payment on account of salary / remuneration to the same specified persons had been accepted by the Department in the preceding years therefore keeping in view the principles of consistency the disallowance made by the AO and sustained by the Ld. CIT(A) for the year under consideration was not justified. - Decided in favour of assessee.

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• 2020 (12) TMI 442
  Disallowance u/s 43B - expenditure debited to pre-operative expenses - HELD THAT:- In this case, the facts brought out by the lower authorities which clearly indicate that the assessee has failed to justify the genuineness of expenditure with necessary evidence. Although the assessee claimed that it has deducted tax at source u/s. 194J of the Act on such expenditure while making payment, but mere making a TDS on said payment does not automatically prove the genuineness of expenditure - the assessee itself has claimed said expenditure as revenue in nature in the previous financial year and debited to pre-operative expenses. But, during the current financial year, it has changed its stand and capitalized to said plant and machinery as part of cost of asset. We are of the considered view there is no clarity in the accounting terms given by the assessee in so far as particular expenditure is concerned because it has given differential treatment for different financial years - we are of the considered view that the issue needs to be re-examined by the AO in the light of the claim of the assessee that said expenditure is part of cost of capital asset which is incurred in connection with acquisition/installation of plant and machinery. In case, it is part of acquisition of asset, then the AO is directed to verify and allow depreciation as per law. Disallowance of depreciation of fixed asset acquired during financial year 2012-13 and put to use during financial year 2013-14, according to AO - the assessee has acquired asset during financial year 2012-13 and claimed depreciation during financial year 2013-14. No doubt, there is no bar under the Act to claim depreciation on any asset which was acquired in earlier financial year, but the only point needs to be examined is when the particular asset is installed and put to use in the premises of the assessee. It was the claim of the assessee before the lower authorities that although the asset was acquired in financial year 2012-13 but the same was put to use on 01.01.2014 relevant to assessment year 2014-15. If the claim of the assessee is correct then the assessee is entitled for depreciation on particular asset from the date the said asset is put to use in the business of the assessee. But fact with regard to date of acquisition and date of asset put to use in the business needs verification from the AO - we are of the considered view that this issue also needs to be go back to the file of the AO for fresh consideration to examine the claim of the assessee and allow depreciation in accordance with the provisions of Section 32. Appeal of the assessee is allowed for statistical purposes.

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• 2020 (12) TMI 441
  Revenue expenditure or capital expenditure - Interest paid on loans from HUDCO - temporary deployment of HUDCO loan funds - Amount of loan disbursed by HUDCO, till its utilisation for purpose of construction of bridges, were temporarily invested in fixed deposits - HELD THAT:- Admittedly, there is no difference in factual background in respect of this issue for years under consideration as well as the preceding assessment years the orders of which has been placed before us. There are no contrary evidences placed before us by Ld. CIT.DR in order to deviate from consistent view taken by coordinate bench of this Tribunal on this issue in preceding years. Respectfully following the same, we allow alternate claim raised by Ld. AR. We thus direct entire interest paid on loans from HUDCO as revenue expenditure. Interest on grants received from Government of Karnataka set of against advances recoverable from contractor's - CIT(A) observed that, assessee filed working of such interest income relating to projects other than package bridge projects and that the interest earned on deployment of grant funds in FD's and are creation to such grant and not income in the hands of assessee - HELD THAT:- Assessee received Grant for Government of Karnataka for carrying out construction activities. It is also not disputed that assessee was a nodal agent for Government of Karnataka. And that assessee had parked the Grants so received in FD till such monies were utilized, against which interest was earned. Hon'ble Karnataka High Court on identical facts has held that such interest income earned was inextricably linked with the business activity of assessee. Revenue has not brought before us any evidence to establish that these grants were used for any other purpose other than for construction activities on behalf of Government of Karnataka. Admittedly, there is no difference in factual background in respect of this issue for years under consideration as well as facts considered by Hon'ble High Court in case of CIT vs Karnataka State Agricultural Produce Processing and Export Corporation Ltd. 2015 (11) TMI 391 - KARNATAKA HIGH COURT] There are no factual differences brought out by Ld. CIT.DR in the present case. Therefore no reason to interfere with the view taken by Ld. CIT(A). Proportionate deduction of interest earned on temporary deployment of HUDCO loan funds and interest earned on mobilisation advances out of capital work in progress of bridges during the years under consideration - AO added the said amount by holding that assessee has deposited spare funds arising from mobilisation advance received in fixed deposits - HELD THAT:- No dispute that interest on advances made to contractors by assessee is not in connection with construction activities. Admittedly, these advances have been made by assessee to contractors for facilitating the work of construction. We note that the facts before Hon'ble Supreme Court in one of the issue are on identical nature of advance made by assessee there. Assessee in the present case has advanced money to the contractor's thereby avoiding a third-party involvement. Against such advances, assessee has earned interest. Such interest along with advance was reduced in capital work in progress and final bill of payment made to contractors. As decided in BOKARO STEEL LIMITED [ 1998 (12) TMI 4 - SUPREME COURT] such kind of arrangement facilitates the contractor's towards the work of construction on behalf of assessee and therefore any interest earned from such advances cannot be held as revenue receipts in the hands of assessee. Deduction u/s 43B on Royalty payments - as submitted royalties are in connection with deduction made on contractor's bills, who carried out the construction of bridges and other infrastructure and assessee was required to remit the same to the Government of Karnataka - AO disallowed the same as such payment has not been made by assessee to the government of Karnataka - CIT(A) deleted the addition by holding that these were not considered by assessee in the profit and loss account and therefore did not form part of any deduction claimed as expenses - AR alternatively submitted that, in the event payments are added back, it must be allowed in the assessment year when the amount has been deposited with the Government - HELD THAT:- Phrase, 'actually paid , has been used in this section, only to emphasize that, the payment should be real and a payment in point of fact and not something which is a pretence or a fiction. In the present facts of the case assessee has collected certain payments by in the form of royalties from the contractor's however did not deposit it. In case of labour welfare cess the same has been deposited beyond the due date in certain years. We find force in the alternative argument advanced by Ld. AR. We are therefore remanding the issue back to Ld. AO. Ld. AO shall call for all necessary details and information is in order to verify the contentions/submissions of assessee. Assessee shall file all requisite information in support of its claim of having paid the statutory dues to the Government of Karnataka. Ld. AO shall then consider the claim of assessee to the extent of actual payment made in the relevant assessment year.

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• 2020 (12) TMI 440
  Addition u/s. 14A r.w.r. 8D(2)(iii) - HELD THAT:- Opinion of the assessing officer in the latter part [of Section 14A(2)] is to be based upon an appraisal of objective material relating to the assessee's voluntary disallowance of amount/amounts. Not only that, if in the course of assessment, the AO enquires from the assessee about the amounts spent, which are to be disallowed, and the assessee in fact discloses a larger amount (than the one given in the return), it is still incumbent upon the AO to enquire into such larger amounts and determine whether it has nexus with expenditure relatable to exempt income to attract Section 14A(1). Section 14A would be reduced to a mere formality which it appears to have become in the circumstances of the case. Holding this the Hon'ble Jurisdictional Court has dismissed the appeal of the revenue wherein the non-satisfaction as required u/s. 14A has not been drawn/specified. Matter has been fairly brought to the notice of the AO who however failed to draw any dissatisfaction as to how the voluntarily disallowance was unreasonable and non-satisfactory with regard to the correctness of the claim of the assessee. Hence, we hereby hold that the disallowance which has been made in contravention with the prescribed mode, methodology and steps for calculation envisaged u/s. 14A(2) is liable to be deleted. Loss transaction with regard to NSEL - Deduction under two specific section namely Section 28 and Section 36 and 37 - HELD THAT:- Assessee paid amount to Philip Commodities India Pvt. Ltd. in the month of June 2013 of ₹ 1,50,66,407/- and also got the amounts till March 2014 and could not receive money of ₹ 47,58,533/- owing to crash of NSEL. This gives rise to a situation where the assessee incurred business loss owing to his transaction with M/s. Philip Commodities India Pvt. Ltd. Hence, the loss will have to be allowable at loss incidental to the business while computing the income u/s. 28. It is not an expenditure, the provisions u/s. 30 to 37 are not attracted in this case. We hold that loss must be during the course or of incidental to business. It is the nexus with the business which is more relevant to claim the loss (CIT Vs. Textool Co. Ltd. - 1981 (9) TMI 92 - MADRAS HIGH COURT ) . The loss must have a direct and proximate nexus with the business operations and the loss is incidental to it, then such loss is deductible as, without business operations, no profit can be earned. If profit is earned in such an endeavour it is to be taxed and if loss is earned it is to be allowed. Without going into the grammatical issue of debt or bad debts or receivables, since the facts clearly prove that the assessee has incurred loss by the way of his business with M/s. Philip Commodities India Pvt. Ltd. and the loss has been in the current year itself, in the peculiar facts and circumstances of the case, such loss incurred in such transaction with regard to NSEL is allowable. Any subsequent recovery needs to be taken into consideration in computation of total income. Appeal of the assessee is allowed.

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• 2020 (12) TMI 439
  Book profit computation u/s. 115JB for capital receipt inform of interest subsidy - additional ground of appeal - HELD THAT:- Additional ground of appeal on the issue to reduce the book profit computed u/s. 115JB by capital receipt inform of interest subsidy is admitted. After considering the finding of the judicial pronouncement on this issue, the assessing officer is directed to treat the aforesaid amount of subsidy as capital receipt under Technology Upgradation Fund Scheme for Textile and Jute Industries. Since the additional ground of appeal of the assessee is allowed therefore, there is no need to consider the other grounds of appeal filed by the assessee on merit. Therefore such ground of appeal 1 to 1.3 can dismiss. Deduction for education cess as allowable expenditure u/s. 40(a)(ii) - HELD THAT:- As noticed that the claim of the assessee regarding deduction for education cess and her education cess as allowable expenditure u/s. 40(a)(i) of the Act 1961 has not been discussed in the order of assessing officer and Ld. CIT(A). After considering the judicial pronouncement referred by the Ld. Counsel in the case of Hon'ble Bombay High Court in the case of Sesa Goa Ltd. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] . And Circular of the CBDT Circular No. 91/58/66-ITJ(19) DT. 18th May, 1967. This issue is restored to the file of the Assessing Officer for deciding afresh after considering the direction laid down in the above referred judicial pronouncement and Circular of the CBDT. Therefore, this ground of appeal of the assessee is allowed for statistical purposes.

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• 2020 (12) TMI 438
  Disallowance of business expenditure - expenditure incurred by the Assessee for attending two separate training courses - HELD THAT:- Expenditure incurred by the Assessee is a genuine expenditure and the training undergone by the Assessee is also a genuine one and that it relates to business. Though, it may not be directly connected to the business of the Assessee but it relates to the Assessee to run the business with better management skills for his business and also in implementing the systems process in his manufactures. In our opinion, every businessman have a right to acquire knowledge and special skills in management for implementation of systems and new techniques. In the present case, the Assessee has did the same thing. Simply because the turnover has fallen down and further granting license is pending before the Government are not at relevant factors to deny the business expenditure claimed by the Assessee. We are of the opinion that the entire expenditure incurred by the Assessee for attending two separate training courses for acquiring knowledge and technical expertise for better management of the process are directly connected to the business of the Assessee. Therefore, the same has to be allowed. Allow the appeal filed by the Assessee.

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• 2020 (12) TMI 437
  Bogus labour expenses - Profit estimation - HELD THAT:- AO has not held that labour expenses so claimed by the assessee were not incurred by the assessee for the purpose of business. Apart from this, we note that assessee is engaged in labor oriented industry and ld. Counsel submitted before us labour expenses ratio to justify the assessee`s claim, therefore considering the nature of assessee`s business, we find some merit in the contentions of the ld. Counsel. While the case of the assessee merits some relief, at the same time entire relief cannot be permitted to the assessee. In our opinion the end of justice would be met if the estimated profit rate of 10% [instead of 12% taken by ld. CIT(A)] is adopted since the same would take care of the bogus labour expenses and other discrepancies. Disallowance of expenditure u/s 40(a)(ia) - non-deduction of TDS - Assessee has shown expenditure to Shri Ghanshyambhai Vekariya under the head account charges which was subsequently paid on 01.01.2011 - assessee stated that the expense was in the nature of accounting salary - HELD THAT:- Counsel has failed to demonstrate the relationship between payer and payee as a master and servant. The ld. Counsel did not file any document/evidence, before the Bench which can show that said payment is on account of accountant`s salary. We find merit in the submissions of Ms. Anupama Singla, ld. DR for the Revenue, as she pointed out before the Bench that in order to constitute salary expense, the ld. Counsel should. demonstrate master and servant relationship between payer (assessee) and payee. Considering this factual position, we confirm the addition sustained by the ld. CIT(A) - Decided against assessee.

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• 2020 (12) TMI 436
  Disallowance u/s 14A - Addition of interest - HELD THAT:- We respectfully follow the decision of the Coordinate Bench of this Tribunal rendered for A.Ys. 2012-13 and 2013-14 by following the ratio of the decisions of the in the case of Reliance Utilities Power Limited [ 2009 (1) TMI 4 - BOMBAY HIGH COURT ] and HDFC Bank Limited [ 2014 (8) TMI 119 - BOMBAY HIGH COURT ] and uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the Assessing Officer on account of interest under section 14A read with Rule 8D(2)(ii). Addition on account of common administrative expenses under section 14A read with Rule 8D(2)(iii) - Hon'ble Delhi High Court in the case of Joint Investment Pvt. Limited [ 2015 (3) TMI 155 - DELHI HIGH COURT ] wherein it was held that the disallowance under section 14A cannot exceed the actual amount of exempt income earned by the assessee during the relevant year. Respectfully following these judicial pronouncements cited on behalf of the assessee as well as relied upon by the ld. CIT(Appeals) in his impugned order, we find no infirmity in the impugned order of the ld. CIT(Appeals) restricting the disallowance made on account of the common administrative expenses under section 14A read with Rule 8D(2)(iii) being the exempt dividend income actually earned by the assessee during the year under consideration and upholding the same, we dismiss this appeal of the Revenue.

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• 2020 (12) TMI 435
  Reopening of assessment u/s 147 - non-deduction of TDS a s mentioned in the Form no. 3CD Tax Audit Report u/sec. 44AB - Reopening after four years - HELD THAT:- Assessee has produced bills and vouchers for expenditure, prima facie, the Assessing Officer has not verified the facts of TDS/material filed on record, therefore the mistake on the part of assessing officer in the original assessment cannot be a reason for reopening of assessment. Assessment is reopened beyond the time limit prescribed under Section 149(1)(a) of the Act. We find that the assessment order u/sec. 143(3) of the Act was passed on 13-12-2010 for the Asst Year 2008-09 and whereas notice u/sec. 148 of the Act dated 21-01-2014, was issued, which is beyond the expiry of four years from the end of assessment year 2008-09 and the assessee has filed the details and disclosed fully and truly all material facts relevant to the assessment year in consideration. We considering the facts and provisions of law, observe that the assessment was reopened beyond a period of four years and cannot be sustained. Accordingly, we quash the reassessment order and allow the appeal of the assessee.

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• 2020 (12) TMI 434
  Correct head of income - profit on sale of investments - Income from Capital Gain or income from other sources - claim of exemption u/s 10(38) on the profit on sale of investments - HELD THAT:- As decided in own case [ 2019 (11) TMI 1544 - ITAT MUMBAI] CIT(A) was right in law and the facts of the assessee in allowing the assessee s claim of exemption u/s 10(38) on the profit on sale of investments. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Provisions of Sec. 14A has no applicability in the cases of General Insurance Companies, which are governed by the special provisions laid down in Sec. 44. Disallowance of amortization of premium on securities - HELD THAT:- As relying on assessee's own case [ 2019 (11) TMI 1544 - ITAT MUMBAI] no infirmity in the vacation of the disallowance of amortization of premium on securities. Provisions of Sec. 115JB not applicable in the case of the assessee company

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• 2020 (12) TMI 411
  Disallowance of depreciation to assessee trust - HELD THAT:- In assessee s own case for A.Y. 2005-06 and 2010-11 the assessing officer made similar additions, however on appeal before Ld. CIT(A) the disallowances were deleted. On further appeal before Tribunal the order of Ld. CIT(A) was upheld. Disallowance of claim under section 11(1)(a) of the Act i.e. 15% of the total income before application of expenses - HELD THAT:- There is no bar in law and there is no specific provision in the act which says that such deduction of 15% for accumulation will not be allowed in case of deficit but such 15% accumulation is allowable irrespective of whether 15% of income have been applied or not - See Gnyan Dham Vapi Charitable Trust [ 2020 (10) TMI 238 - ITAT AHMEDABAD].

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• Customs

• 2020 (12) TMI 429
  Validity of summoning order / discharge rejection order - Offence under Sections 132, 135 (1) (a) 135 (1) (b) of Customs Act, 1962 - import of fabrics from China - Confiscation - penalty - HELD THAT:- It is admitted that the proceedings has been quashed by the CETSAT, on merit, after considering all material on record. Once the proceeding has been dropped on the similar set of fact, the Apex Court in the case of Radheshyam Kejriwal [ 2011 (2) TMI 154 - SUPREME COURT ] where it was held that the yardstick would be to judge as to whether allegation in the adjudication proceeding as well as proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceeding is on merits. In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceeding, the trial of the person concerned shall be in abuse of the process of the court. Matter requires consideration - List this case on 7.1.2021 .

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• 2020 (12) TMI 428
  Maintainability of appeal - Smuggling - Foreign Currency - Baggage Rules - Absolute Confiscation - release on payment of redemption fine or not. Maintainability of appeal - HELD THAT:- Since the issue is of export of currency which is nothing but goods, this tribunal does have jurisdiction to entertain the present appeals - Reliance can be placed in the case of VIJAY HEMANDAS JAVA VERSUS COMMISSIONER OF CUSTOMS (AIRPORT), MUMBAI [ 2005 (9) TMI 361 - CESTAT, MUMBAI ]. Absolute Confiscation - redemption of goods or not - HELD THAT:- There is no dispute of the fact that both the appellants were taking out foreign currency of USD UAE Dirhams. The confiscated currencies were attempted to export without the approval of RBI - As per Rule 5 of FEMA Regulation, 2000 it is clear that export of foreign currency can be made only by the permission of the Reserve Bank of India. It is also found that the appellant could not prove the authorized source of procuring the foreign currency therefore, the foreign currency seized from the appellants are liable for confiscation. Redemption Fine - HELD THAT:- The discretion is provided for payment of fine in lieu of confiscation. Therefore, it is not mandatory that in all the cases the absolute confiscation should be made. In the present case, the appellants are engaged in the business and as per their statement which is undisputed fact that they are running a manufacturing unit for manufacture of PP/HDPE woven bags. They have also stated in their statement that the foreign currency were being taken for the business purpose. Also, the export of foreign currency is allowed subject to permission of RBI. The issue that whether confiscation of goods should be made absolute or conditional such as redemption on payment of fine has to be decided on the basis of facts of each case. It is also not in dispute that the judgments cited by the learned counsel hold that the foreign currency can be released on payment of fine in lieu of confiscation. Therefore, considering the facts and circumstances of present case the appellant is entitle for release of foreign currencies on payment of fine. The confiscated foreign currencies has to be released on payment of fine - the penalty imposed on both the appellants are very harsh and deserves to be reduced substantially - Appeal allowed in part.

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• 2020 (12) TMI 427
  Smuggling - Foreign Origin Gold Bars - entire case of the Revenue is based upon the initial statement of Shri Karan Soni which was also retracted by him on the next day itself, when he was produced before the Judicial Magistrate - legality of conversion of absolute confiscation into an option for redemption of gold - HELD THAT:- It is well settled law that for upholding the charge of smuggling, the goods have to be first established to be of foreign origin. It is required to be done by concrete and positive evidence. The retracted statement of deponent without any further corroboration from independent source, cannot be considered to be legal proof for holding the gold to be of foreign origin. It is further seen that the observation of the Adjudicating Authority that mere no marking and purity of gold cannot be taken as a proof of fact that gold was not of foreign origin, cannot be appreciated inasmuch as the onus to show that the gold was of foreign origin lies upon the Revenue. The Adjudicating Authority has also not disputed the fact that Shri Karan Soni retracted from his statement before CJM, Varanasi immediately on the next date. However, he has not given any weightage to the said retraction only on the ground that Shri Karan Soni never bothered or never felt the need to bring to the notice of the immediate Superior of the investigating officer. As such, he observed that the case is not based merely on statement of the appellant but is corroborated in intimate details by the statement of Shri Karan Soni from whose possession the gold was seized - the Adjudicating Authority has not referred to any of the evidence corroborating the said statement. It is merely an observation simplicitor without any reference on record. Apart from the fact that gold in question was not carrying any marking of foreign origin, it is also seen that there is virtually no evidence of smuggled nature of said gold in question, except for the retracted statement of Shri Karan Soni. Gold can be imported on payment of duty and is not prohibited item. Even if it is assumed that for a second, that gold in question was of foreign origin, same could have been imported on payment of duty. Shri Karan Soni, in his statement has no where revealed as to how the gold in question was smuggled and by whom. In these circumstances, to conclude against the appellants is neither justified nor warranted. Further, admittedly the gold in question was seized by the Police Officer, in which case the presumption under section 123 of the Customs Act, 1962 is not available to the Customs Authorities - It was also observed that when the goods are not totally prohibited from importation and can be imported, the seizure of the same on the ground that they were smuggled cannot be upheld. It may not be out of place to observe that in that case, the seized watches were having foreign marking on them whereas in the present case, there was no foreign marking on the gold bars. It is also surprising that even though the Revenue is believing and relying upon the initial statement of Shri Karan Soni, detailing the name and address of the persons at Kolkata from whom the gold in question was received by him, they have not bothered to make any investigation at their end. There is no explanation coming from the Revenue for the said lapse on their part. Once Shri Soni discloses the names of the alleged supplier of the goods, it was the duty of the Department to approach them and to investigate at their end so as to collect the evidence and to corroborate the statement of Shri Karan Soni. Such non-action on the part of the Revenue, creates doubt against them and compels one to conclude that such an effort might have been done by Revenue and found to be untrue, thus making the statement unworthy of reliance. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2020 (12) TMI 426
  Restoration of name of the company in the Register of Companies - Section 252(1) of the Companies Act, 2013 - HELD THAT:- The Appellant has submitted sufficient evidence that it has been in operation during the period preceding strike off, therefore it could not be termed as a defunct company as per section 252 of the Act. Thus, taking into consideration the provisions of Section 252(1) of the Companies Act, 2013, which vests this Tribunal with a discretion where the Company, whose name has been struck off, and such Company is able to demonstrate that it is just to do so, can restore the name of the Company, in the Register and in the interest of all stakeholders, including the Appellant itself, who seeks restoration of the name of the Company in the register maintained by Registrar of Companies, the company deserve to be restored. The restoration of the company s name to the Register of Registrar of Companies is ordered subject to its filing of all outstanding documents with proper filing fees along with additional fees required under law and completion of all formalities - Appeal allowed.

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• 2020 (12) TMI 425
  Sanction of Scheme of Arrangement by way of Amalgamation - section 230-232 of Companies Act, 2013, and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various notices issued with regard to convening and holding of various meetings as well as for issuance of notices of such meetings - the scheme is sanctioned. Application allowed.

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• 2020 (12) TMI 424
  Sanction of Scheme of Arrangement by way of Amalgamation - section 230-232 of Companies Act, 2013, and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions with respect to calling, convening and holding of the meetings of the Shareholders, Secured and Unsecured Creditors or dispensing with the same as well as issue of notices including by way of paper publication are issued. The scheme is sanctioned - application allowed.

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• 2020 (12) TMI 423
  Sanction of scheme of amalgamation - Sections 230 to 232 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 2013 R/w Companies (Compromises, Arrangements and Arrangements) Rules, 2016 - HELD THAT:- The Companies have followed extant provisions of Companies Act in framing the Scheme in question, which are duly approved by the Board of Directors of the Companies involved. The Statutory Auditors/ Chartered Accountants of the Company have also issued respective Certificates by inter-alia certifying that the details of shareholders, creditors, and compliance of accounting treatment as prescribed U/s 133 of the Companies Act, 2013 with reference to the Scheme in question. The Applicant Companies have disclosed all the material facts relating to the Scheme in question and filed necessary documents along with the Application. It is hereby dispensed with convening and holding the meetings of the Shareholders and Unsecured Creditors of the Applicant Companies. The scheme is approved - application allowed.

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• 2020 (12) TMI 422
  Restoration of name of Respondent in the Register of Companies maintained by the office of ROC - Section 252(3) of the Companies Act, 2013 - HELD THAT:- On perusal of the record, it is found that the appeal is filed under section 252(3) of the Companies Act, 2013. While, going through the section 252(3) of the Companies Act, it is found that the instant provision is made when the company is struck of voluntarily on the behest of the Promoter(s)/Director(s), whereas, section 252(1) of the Companies Act, provides that, when the company is struck of by the Registrar of Companies on the failure in filing of statutory returns by the Company. The instant application would not lie under section 252(3) of the Companies Act, 2013; rather, it would lie under section 252(1) of the Companies Act, 2013 - However, while referring to the judgment of Hon'ble Supreme Court in V. NANTHAGOPAL VERSUS UNION OF INDIA, THE REGIONAL DIRECTOR, THE REGISTRAR OF COMPANIES, P. SELVARAJ, MRS. S. MYTHILI, ACCURA WELDRODS INDIA PRIVATE LIMITED, ACCURA ELECTRODS INDIA PRIVATE LIMITED, [ 2010 (2) TMI 1283 - MADRAS HIGH COURT] wherein, the Hon'ble Supreme Court has observed that Hon'ble Supreme Court on several occasions held that quoting a wrong provision of law will not dis-entitle the party to the relief - Under such circumstances, the instant application is being treated under section 252(1) of the Companies Act, 2013. The present appeal is allowed to the extent of revival of the Company and the ROC Gujarat, Ahmedabad is hereby directed to restore the name of Company viz. M/s. Navyug Consultancy Pvt. Ltd. in the Registrar of Companies.

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• Insolvency & Bankruptcy

• 2020 (12) TMI 454
  De-reserving/ reopening the matter for further hearing - Section 10 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is manifestly evident that the procedure adopted by the Adjudicating Authority does not conform to the provisions of law under the I B Code . Applications under Sections 7, 9 10 are required to be disposed of by admitting or rejecting the same within 14 days of filing. It appears that the Adjudicating Authority has adopted the procedure which runs parallel to the statutory provisions and despite reserving the order, the matter has been practically reopened on the ground of further clarification. The impugned order is couched in ambiguous terms as it does not specify what clarification is to be sought from the Appellant. The matter has been adjourned for 17th December, 2020 overlooking the statutory requirements of passing an order of admission or rejection of application within the prescribed time limit of 14 days. Appeal disposed off.

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• 2020 (12) TMI 433
  Approval of Resolution Plan - Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is found that the COC has approved the plan with 91.28% voting in favour of the approval of the plan. More so, the Resolution Applicant fulfils the mandatory contents of the Resolution Plan as provided under Regulation 38 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016. The Supreme Court in the matter of K. Sashidhar Vs. Indian Overseas Bank Ors. [ 2019 (2) TMI 1043 - SUPREME COURT ] has observed that National Company Law Tribunal has no jurisdiction and authority to analyze or evaluate the commercial decision of the Committee of Creditors (CoC) to enquire into the justness of the rejection of the Resolution Plan by the dissenting Financial Creditors. Keeping in view such object behind the enactment of the Code, intention of the Legislature, that the priority is to be given to the resolution than liquidation in the larger interests of the public, workmen, stakeholders and the other employees of the corporate debtors in the interest of justice and in order to achieve the object of the Code and liquidation of a company can be only as a last resort, wherein, all efforts for brining Resolution Plan were failed or it cannot be found workable in the larger public interest. Hence, now the approval of Resolution Plan by this Adjudicating Authority is rule as per the apex court's decision in the matter of K. Sashidhar Vs. Indian Overseas Bank Ors. - On the backdrop of the decision taken by Hon'ble Supreme Court, it is pertinent to note herein that in the instant case, there is no interference with commercial wisdom of CoC with regard to the implementation of the Resolution Plan. The Adjudicating Authority, is of the considered opinion and also being satisfied that the Resolution Plan as approved by the Committee of Creditors (CoC) meets the requirements as referred to under section 30(2) of the Code - Application allowed.

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• 2020 (12) TMI 432
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The total debt due and payable to the Financial Creditors is ₹ 38,07,300 - Upon perusal of the Rule Book, Application Form, certificates and receipts issued by the Corporate Debtor under its CIS, we are satisfied that this is a case of assured return or interest, which is a 'financial debt' within the meaning of section 5(8) of the IBC. It may be usefully noted that in the case of Nikhil Mehta Sons HUF others v AMR Infrastructures Limited, [ 2017 (8) TMI 1017 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] the Hon'ble NCLAT has held that those who have commitment to pay 'assured return,' 'interest,' etc. are covered by the expression financial creditor. Order of the Ld. MPID Court, auction of the properties by the Regulatory Authority in coordination with the officials of the State Government and reports of attachment of properties worth several crores of Rupees by the Enforcement Directorate, we are of the considered view that at this advanced stage no meaningful purpose would be served by admitting the petition for initiating CIRP against the Corporate Debtor, imposing moratorium and appointing an Interim Resolution Professional etc. In terms of section 7(5)(b) of the IBC, the Registry is directed to communicate this Order to the Financial Creditors and the Corporate Debtor by Speed Post and email immediately, and in any case, not later than two days from the date of this Order.

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• 2020 (12) TMI 421
  Liquidation of Corporate Debtor - Scheme of Settlement - Valuation of Plant and Machinery - Applicant application for MSME registration showing the value ₹ 2 Lakhs while the schemes proposed itself stated the value of the property itself to be around ₹ 67 crores. - the Appellant is only a facilitator of the development of the property - HELD THAT:- There is no substance in the submissions made by the Learned Counsel for Appellant that the Appellant was merely facilitator of the two schemes as stated. Having gone through the contents of the schemes, it is quite clear that the Appellant was to remain in command. We do not find it can be said that the Appellant is only a mere facilitator. The Schemes were of Appellant and were fully centered and linked with Appellant who was ineligible under Section 29-A of IBC. We find substance in the submissions of the Learned Sr. Counsel for the Liquidator that when Order of Liquidation is passed it would amount to discharge the officers/employees/workmen of the Corporate Debtor, except when and to the extent of the business of the Corporate Debtor to be continued during the Liquidation Process by the Liquidator. Apart from this once CIRP is initiated under IBC, the management vests in IRP/RP and if Liquidation Order gets passed the Powers and Duties of the Liquidator as in Section 35 of IBC vest with Liquidator. Without liquidator taking steps no such application to obtain Certificate of MSME could have been filed by the Appellant. The Learned Counsel for the Appellant has submitted that this was not the reason for the Adjudicating Authority to hold against the Appellant. If just by filing application Certificate is obtained and there are no verifications or checks, it would be matter of concern. We find that it is a matter of record in the present matter and matter of applying the law. We find that the Applicant/Appellant could not have moved the Authorities for Certificate under MSME by-passing the Liquidator and such action must be held as illegal. Appeal dismissed.

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• 2020 (12) TMI 420
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code. The Hon'ble Supreme Court in the case of Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited [2017 (9) TMI 1270 - SUPREME COURT], has inter alia, held that I B Code, 2016 is not intended to be substitute to a recovery forum. The operational creditor cannot use the Code prematurely or for extraneous considerations or reasons as a substitute for debt enforcement procedures. It is also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked. The Respondent has throughout denied/disputed the claims of the Petitioner, much before the demand notice sent on 02.01.2020. The Respondent contends that whatever demands were raised by the Petitioner for the services rendered by it, were either paid or adjusted long back by the Respondent against payments due from the Petitioner, as also borne out from the various emails exchanged between the two sides. In its mail of 10.04.2010 the Petitioner had accepted that all the demands had been paid. Subsequent dues were also cleared. No case has also been made out that the Respondent is an insolvent entity that has lost its ability to run its business, generate revenue or repay its debts. This is not a case where the insolvency of the Corporate Debtor needs to be resolved by initiating CIRP, which is the objective of the Code in inserting the provisions contained in sections 7 and 9. Recourse to the Code does not entail or intend pushing viable units into insolvency. There is no clear and undisputed debt, there is a pre-existing dispute, that this Tribunal cannot be used as a recovery forum, and that no case has been made out to our satisfaction that the Respondent is insolvent and is unable to pay its debts, the petition is liable to be dismissed - Petition dismissed.

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• 2020 (12) TMI 419
  Cancellation of shares - Petitioners have contended that the cancellation of shares were done without obtaining consent and without giving opportunity to the petitioners to place their arguments as against such cancellation and such a reduction of share capital did not have the approval of the Hon'ble High Court of Madras as the provisions of Section 100 of the Companies Act, 1956 were not followed - HELD THAT:- FIPB and RBI have categorically stated that there has been no violation in the acquisition of shares as there was no infusion of foreign exchange for the purchase of the same and also in view of the fact that the shares were held on non-repatriation basis. The adjudicating authority of FEMA has also categorically stated that the onus to adhere to the provisions of rules and regulations of FEMA while issuing shares of the amalgamated company to non-resident shareholders, laid on the company issuing such shares and not on the individual shareholders and therefore it has been stated that the adjudicating authority does not order for the confiscation of 3,32,640 shares/securities of Kumudam Publications Private Limited allotted to Noticee No. 3 (Shri A. Jawahar Palaniappan). After imposing penalties as above, the adjudicating authority also dropped the Charge of Regulation 5(1) of FEM (transfer or issue of security by a person resident outside India) Regulation 2000 r/w clause (b) of sub-section (3) of Section 6 Section 47 of FEMA, 1999 against all the three noticees. All these orders of the adjudicating authority, FIPB and RBI have held that there has been no violation on the part of the 1st petitioner and the adjudicating authority has not confiscated the shares issued to the 1st petitioner. However, AA has imposed penalties under Section 13, Sub-Section 1 of the FEMA for violation of Regulations. The respondents have stated that the adjudicating authority did not order for the confiscation of shares as it has already been cancelled/nullified by the respondents and therefore nothing is left to be confiscated. Such interpretation is somewhat inconsistent with the findings of the adjudicating authority that the responsibility to adhere to the provisions of rules and regulations of FEMA laid on the company issuing such shares and not on the individual share holders. Such an interpretation, as contended by the respondents, would deprive the property rights of the 1st petitioner and in such an eventuality, the adjudicating authority would have ordered for the amount which has been kept in the escrow account to be paid to the 1st petitioner on a non-repatriation basis. It is hereby declared that the Form-32 filed by R2 with RoC, Chennai regarding the intimation of cessation of petitioners as directors of the R1 Company with effect from 02.01.2012 is invalid and non-est in law. It is seen that even though the board of the R1 Company was functioning, there had been no Extraordinary General Meeting/AGM from 2010 to the present day. Hence the petitioners who are the majority shareholders could not express or participate in the affairs of the company in any effective manner. As directed in paragraphs 17 23 of the Order of this Tribunal, the Register of Members of R1 company has to be rectified to restore 3,32,440 shares of ₹ 100/- each in the name of the 1st petitioner. Since it has been held by this Tribunal that the removal of the petitioners as board of directors is also invalid, it is considered that the continuation of the clauses 31(a), 32 and 39(b) are totally against the interest of the majority shareholders and hence it is ordered that the above mentioned clauses may be deleted and the Articles of Association thus stand amended of the R1 company. This Tribunal holds that the resolutions passed by the Board Meeting held on 28.09.2011 of the respondents without the presence of the petitioners is invalid and hence the cancellation of 3,32,400 equity shares of ₹ 100/- each held by the 1st Petitioner has been held as illegal, invalid and non-est in law. In the same analogy, subsequent cancellation of 200 shares of the 1st Petitioner is held to be invalid and illegal - his Tribunal holds that the resolutions passed by the Board Meeting held on 28.09.2011 of the respondents without the presence of the petitioners is invalid and hence the cancellation of 3,32,400 equity shares of ₹ 100/- each held by the 1st Petitioner has been held as illegal, invalid and non-est in law. In the same analogy, subsequent cancellation of 200 shares of the 1st Petitioner is held to be invalid and illegal. Petition allowed.

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• Service Tax

• 2020 (12) TMI 418
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - failure to make payment by 30th June 2020 - Section 127 (5) of the Finance Act 2019 read with section 7(iv) of the Taxation and Other Laws ordinance, 2020 - HELD THAT:- This Court finds that the error is at the end of the petitioner s agent i.e. petitioner s bank. No fault can be attributed to the respondent no. 3/Designated Committee. Accordingly, the decision taken by the Designated Committee is in accordance with Section 127 (5) of the Finance Act 2019 read with section 7(iv) of the Taxation and Other Laws ordinance, 2020 - If the petitioner has any grievances with its bank, it shall be at liberty to proceed against the same in accordance with law. This Court clarifies that it has not expressed any opinion with regard to the said controversy. The rights and contentions of all the parties are left open.

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• 2020 (12) TMI 417
  Maintainability of petition - alternative remedy of appeal available - Petitioner did not prefer any appeal before that Appellate Authority, but has instead filed this Writ Petition challenging the order passed by the Respondent - HELD THAT:- There is no acceptable explanation from the Petitioner for not having resorted to that alternative remedy provided under the statute. Reliance can be placed in the case of ASSISTANT COLLECTOR OF CENTRAL EXCISE, CHANDAN NAGAR VERSUS DUNLOP INDIA LIMITED AND OTHER [ 1984 (11) TMI 63 - SUPREME COURT ] where it was held that Article 226 is not meant to short-circuit or circumvent statutory procedures. It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article226 of the Constitution. But then the Court must have good and sufficient reason to bypass the alternative remedy provided by statute. Surely matters involving the revenue where statutory remedies are available are not such matters. This Court does not express any view on the correctness or otherwise on the merits of the controversy involved in the matter - Petition dismissed.

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• 2020 (12) TMI 416
  Distribution of Cenvat Credit including Education Cess and SHE cess taken - Research Development services received to their manufacturing units - Rule 7 of Cenvat Credit Rules, 2004 - HELD THAT:- The issue decided in the case of [ 2019 (11) TMI 1330 - CESTAT HYDERABAD ] where it was held that Demand cannot sustain - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (12) TMI 431
  Refund of CENVAT Credit - Restoration / re-Credit if amount is not refunded - export goods or not - goods were cleared by the appellant, not for physical exports, but were cleared by them to their sister concern, who is an 100% Export Oriented Unit - Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No 27/2012-CE (NT) dated 18.06.2012 - HELD THAT:- Tribunal in the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE-III VERSUS TRIMURTI PLAST CONTAINERS PVT LTD [ 2018 (3) TMI 325 - CESTAT MUMBAI] has after taking the note of Explanation (1A) inserted in Rule 5 of CENVAT Credit Rules, 2004 vide notification No 06/2015-CE(NT) dated 01.03.2015, have held that refund in terms of the Rule 5 of CENVAT Credit Rules, 2004 is admissible only in respect of the goods cleared for physical exports by the applicant, and is not admissible in respect of the goods that are cleared as deemed exports. In the present case admittedly the goods were cleared by the appellant, not for physical exports, but were cleared by them to their sister concern, who is an 100% Export Oriented Unit. Since these goods were not cleared for physical exports by the applicant, in view of the definition of export goods , as per explanation (1A) inserted in Rule 5 of CENVAT Credit Rules, 2004, they do not qualify to be included in the export turnover of the appellant for the purpose of computing the refund under rule 5. It is requirement in law for claiming the refund under Rule 5, the claimant has to make a debit of the amount claimed as refund from the CENVAT Account. In case the refund is allowed in his favour the amount of debited from the CENVAT Account gets adjusted against the refund paid in cash, and in case the refund is rejected or even rejected in part, then the amount of refund which is rejected either in toto or in part, which was earlier debited from the CENVAT Account gets restored in the CENVAT Account of the claimant. Appeal disposed off.

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• 2020 (12) TMI 415
  Recredit of amount already reversed - Section 142(3) of the CGST Act 2017 - HELD THAT:- It is a fact on record that when the appellant filed the refund claim of cenvat credit reversed by them, it was not the issue but with the introduction of CGST Act 2017, the issue of re-credit was arise in terms of Section 142 (3) of the CGST Act 2017 and the appellant was having no occasion to raise the issue of the re-credit before the adjudicating authority as the adjudicating authority itself has passed the impugned order after introduction of CGST Act 2017. Moreover, the issue of entitlement of re-credit is a legal issue and the same may be raised in the case proceedings. The appellant is entitled to recredit of the amount already reversed before introduction of CGST Act 2017 - Appeal allowed - decided in favor of appellant.

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• Indian Laws

• 2020 (12) TMI 430
  Dishonor of Cheque - effect of insertion of Section 143A of the N.I. Act - Whether the insertion of Section 143A of the N.I. Act is having a prospective effect or can also be given retrospective effect? HELD THAT:- It is well settled proposition of law that always the substantive law which affects the rights of the parties will have prospective effect unless it has been given a retrospective effect expressly in the statute itself. Though the learned counsel for the respondent- complainant has relied upon the decision in the case of Surinder Singh Deswal @ Colonel S.S.Deswal Others Vs. Virender Gandhi [ 2019 (5) TMI 1626 - SUPREME COURT ], the question before the Hon'ble Apex Court was with reference to Section 148 of the N.I. Act which has been amended and inserted w.e.f. 1.9.2018 and Section 148 of the N.I. Act is applicable to appeals against the order of conviction for the offence punishable under Section 138 of the N.I. Act even where the complaints under Section 138 of the N.I. Act were filed prior to amendment of the N.I. Act. In that light, the Hon'ble Apex Court has given effect by holding that the appellant has to deposit a sum which is not less than 20% of the fine or compensation amount - But in the said decision Section 143A of the N.I. Act has not been interpreted. In the case of G.J.Raja Vs. Tejraj Surana [ 2019 (8) TMI 91 - SUPREME COURT ], the issue came up before the Court directly with regard to interpretation of Section 143A of the N.I. Act and the Hon'ble Apex Court has held that Section 143A of the N.I. Act is having prospective effect in nature and confined to the cases where the offences were committed after the introduction of Section 143A of the N.I. Act - When the Hon'ble Apex Court has interpreted and laid down the ratio holding that Section 143A of the N.I. Act is to be prospective in operation and is made applicable only in the cases where the offence under Section 138 of the Act was committed after insertion of Section 143A in the statute. The trial Court as well as revisional Court without going into the said aspect have passed the impugned orders - Petition allowed.

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• 2020 (12) TMI 414
  Dishonor of Cheque - summon of accused - rejection of request of petitioner/accused to summon and examine the witnesses - Section 145(2) of Negotiable Instrument Act - HELD THAT:- The trial Judge has also ventured in discussing the merits of case on the basis of plea taken by accused in the application, despite the fact that there was no occasion to discuss the same at this stage that too in an application filed under Section 145(2) of NI Act. It is also noticed that on 27.08.2018 on request of accused, without resorting to record substance of accusation or putting Notice of Accusation or framing the charge, and recording response of accused thereto, the Magistrate had granted time to the accused to file an application under Section 145 of Negotiable Instrument Act that too without giving an opportunity to the complainant to file/lead any further evidence, if any, which he would have intended to bring on record after commencement of trial. Thus the trial Court has committed a mistake of law. In present case, there is another issue which requires consideration. Application under Section 145 of NI Act was entertained at wrong stage whereas such application is permissible after closure of or during leading of evidence of complainant, at a stage when complainant would have been given opportunity to lead and complete his evidence after recording substance of accusation or putting notice of accusation or framing of charge but not before that. Therefore, the application should not have been permitted to be filed at wrong stage and in any case, if it had been permitted to be filed at wrong stage, then the same should have been kept pending for consideration at appropriate stage. It would be clear from discussions recorded hereinafter. It is evident from record that on the very first day of appearance of accused neither charge was framed nor Notice of Accusation was put to him and it was also not recorded that substance of accusation was communicated to him for his response as to whether he pleads guilty or has any defence to make. After putting the substance of accusation/Notice of Accusation to the accused, in case of not pleading guilty by him, the Magistrate would have either recorded substance of accusation to follow the procedure in summary trial or would have followed procedure for regular trial after putting notice of accusation or framing the charge as the case may be and thereafter would have asked the complainant to lead any further evidence, if any, in support of his case and thereafter occasion to entertain application under Section 145(2) of NI Act would have arisen to pray for summoning and examining the persons who might have given evidence on affidavit i.e. only after filing/leading any other further evidence or opting for not to lead further evidence by the complainant not prior to that. The trial Court has committed patent illegality in in impugned order. Serious mistake committed by the trial Court is not mere irregularity but illegality - the impugned order rejecting the application filed under Section 145 of NI Act is set aside with direction to the trial Court to consider this application after putting Notice of Accusation to accused, at the stage of or after calling for further evidence of complainant, if any, to be filed/led on behalf of complainant in support of his case. Petition allowed.

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• 2020 (12) TMI 413
  Dishonor of Cheque - blank cheques were issued to the complainant in repayment of the loan transaction - legally enforceable debt or not - rebuttal of presumption - burden of prove not discharged - HELD THAT:- It is well settled law that a revision against concurrent findings of conviction and sentence, the High Court does not, in the absence of perversity upset factual findings arrived at by the trial court. It is not for the revisional court to re-analyse and re- interpret the evidence on record in a case where the trial court and appellate court have come to a probable conclusion. On going through the concurrent findings, this Court is of the view that the both the trial court and appellate court concurrently construed the presumptions under Section 139 of the Act in accordance with law. Unless the contrary is proved, it is presumed that the holder of a cheque received the cheque of the nature referred to in Section 138 of the Act for the discharge, in whole or in part, of any debt or other liability. In the case at hand, the accused has no case that he has not signed the cheque or parted with under any threat or coercion. That apart, the accused has no case that unfilled cheque had been lost irrecoverably or stolen. Although DW1 was examined before the trial court, he had no direct knowledge regarding the transaction between the parties. The accused failed to prove in the trial by leading cogent evidence that there was no debt or liability. In Bir Singh v. Mukesh Kumar [ 2019 (2) TMI 547 - SUPREME COURT ] the Supreme Court held that in view of Section 139 of the Act read with Section 118 of the Act thereof, the Court has to presume that the cheque has been issued for discharging a debt or liability. The burden was on the accused to prove that the blank cheques were issued to the complainant in repayment of the loan transaction. The burden has not been discharged. It has come out in evidence that the prosecution was initiated against the accused by the complainant in accordance with the scheme of the N.I.Act - the complainant has succeeded in proving that the accused borrowed an amount of ₹ 2,00,000/- from the complainant and issued Ext.P1 cheque for a legally enforceable debt. This Court is of the view that the trial court rightly convicted the accused for the offence punishable under Section 138 of the N.I.Act - Revision allowed in part.

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• 2020 (12) TMI 412
  Dishonor of Cheque - existence of debt or not - discharge of vicarious liability - suppression of notice - legally enforceable debt or not - restraint from presenting the cheques for collection - Sections 138, 141 and 142 of NI Act - HELD THAT:- On perusal of the complaint, there are totally four accused, in which the first accused is the company and the accused 2 to 4 are its Directors. Admittedly, the first accused is not represented by its Managing Director and represented by all of its Directors. All the cheques were issued by all the Directors separately. There is no averment to the effect that who is the signatory of the cheque and who issued cheque on behalf of the first accused. There is no specific averment as against the accused 2 to 4 to the effect that they are in charge of and responsible for the conduct of the business of the first accused company. In the absence of specific allegation in the complaint in respect of the role played by the Directors and their responsibility in the conduct of the first accused business at the relevant point of time and that the offence was committed by their consent or connivance. Receipt of the statutory notice - HELD THAT:- It is seen from the notice dated 15.10.2018, the petitioners called upon the respondent to refrain from presenting the alleged cheques for payment and return those cheques. On receipt of the same, the respondent did not send any rejoinder to the reply notice dated 26.12.2018. They also failed to deny the averments made in the notice dated 15.10.2018 in the complaint. It amounts to suppression of fact - In fact, in the complaint the respondent averred that the said cheques were fraudulently issued to cheat the respondent and instructed the respondent to present the same for collection. When the petitioners categorically called upon the respondent to refrain from presenting the cheques and also return the same, the petitioners would not have instructed the respondent to present those cheques for collection. That apart, those cheques admittedly are post-dated one. When there is a dispute in respect of quality of the garments, the petitioners stopped the payment of those cheques. All the impugned complaints filed as against the petitioners are liable to be quashed - Petition allowed - decided in favor of petitioner.

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