Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 16, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Customs
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109/2022 - dated
15-12-2022
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Cus (NT)
Exchange of Foreign Currency - Rate of exchange of one unit of foreign currency equivalent to Indian rupees - Supersession Notification No. 101/2022-Customs(N.T.), dated 1st December, 2022
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108/2022 - dated
15-12-2022
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Cus (NT)
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver
GST - States
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13/2022-TNGST - dated
13-12-2022
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Tamil Nadu SGST
Goods and Services Tax - Tamil Nadu Goods and Services Tax Act, 2017 - Time limit for filing Form GSTR-1 for the tax period November 2022, for the registered persons whose principal place is in the districts of Chennai, Tiruvallur, Chengalpattu, Kancheepuram, Tiruvannamalai, Ranipet, Vellore, Villupuram, Cuddalore, Tiruvarur, Nagappattinam, Mayiladuthurai and Thanjavur shall be extended till the thirteenth day of the month succeeding the said Tax period.
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12/2022-TNGST - dated
8-12-2022
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Tamil Nadu SGST
Notification issued by Commissioner of State Tax under T.N.G.S.T Act 2017 & T.N.G.S.T Rules 2017 in exercise of the powers conferred under sub-section (1) of Section 5 read with sub-section (3)- Regarding.
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11/2022-TNGST - dated
8-12-2022
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Tamil Nadu SGST
Notification issued by Commissioner of State Tax under T.N.G.S.T Act 2017 & T.N.G.S.T Rules 2017 in exercise of the powers conferred under sub-section (3) of Section 5-Regarding.
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Period of limitation for retaining the seized goods - Seeking return of his laptop, computer, documents and other things which were seized during search proceedings - various allegations of IGST refund - the ‘documents or book or things’ can be retained for a maximum period of four and half years, within which period the notice has to be issued, plus thirty days from the date of erroneous refund. In the present case, the said period had not yet lapsed. - HC
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Blocking the Input Tax Credit (ITC) - Scope of Section 16(2) read with Rule 37 - Non payment of consideration within 180 days u/s 16(2)(d) of CGST Act - The respondents have completely misdirected themselves in proceeding on the basis that unless a taxpayer pays the supplier, he is ineligible to avail of the ITC lying to his credit in the ECL. - The action of the respondents to continue blocking the ITC available in the ECR of the petitioner for such extended period is without the authority of law. - HC
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Cancellation of registration - non filing of GST Returns - Petitioner contended that, since he was out of business, the return after September, 2018 could not be filed. - the petitioner appears to be someone, who is keen to continue his business and the State’s obligation is to ensure the implementation of the law, but at the same time not to thwart, in any manner, the business prospects of the citizens and, therefore, acceding to the request, we are required to allow this petition. - HC
Income Tax
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Short payment of TDS u/s 195 - error in depositing TDS under the wrong challan - office of DCIT (OSD) TDS has escalated the issue to CPC – TDS for either necessitating the required changes in the challan from the backend or enabling the system to allow the TDS–AO to do the same from his login at TRACES AO – Portal. Therefore, we deem it appropriate to direct the concerned authority to make every possible endeavour of carrying out the necessary correction in the challan within a period of 2 months - AT
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Disallowance u/s 40(a)(ia) for non-deduction of tax at source (TDS) - assessee in default - Assessee has paid interest u/s 201(1A) for non-deduction/short deduction of tax - the assessee having paid the interest, the assessee cannot be construed as an assessee in default. Therefore, the provision of Section 40(a)(ia) cannot be applied in assessee’s case. - AT
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Exemption u/s 11 - charitable activity or not - medical aid / facilities to the poor / needy persons - running the activities on commercial basis - The assessee had only provided the treatment to 65 indoor patients for an amount of Rs.84,48,709/- and 5,569 outdoor patients for Rs.39,65,102/- on concessional rates and the said amount is a meagre amount when compared to its total revenue collection of the assessee i.e., Rs.141.90 crore for the period under consideration. By that standard alone the activities of the assessee cannot be said to be charitable activities. AT
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Addition of the net benefit accruing to the assessee on account of CCM - shifting of profit to loss - Client Code Modification (CCM) - It is settled principle of law that concurrent findings of the authorities cannot be interfered with without sufficient and just reason or any material irregularities in the finding being pointed out by other side. - AT
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Assumption of jurisdiction under 153C - assessment in search cases - Even as per the pre-amended provisions of Section 153C, AO has to record satisfaction to the effect that seized material "belongs" or "belongs to" other person. In this case, the A.O. has not put on record that any material seized during the course of search does belong to the assessee. However seized materials related to other third party. Therefore in our considered view, the invocation of proceedings u/s. 153C is against the provisions of law. - AT
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Penalty u/s 271(1)(c) - bonafide belief - interest income earned during the year on fixed deposits and savings bank accounts were not offered to tax - Assessee contended that, the TDS figure and the corresponding income relating to second, third and fourth quarter of the relevant financial year were made available on the 26AS site only in September, 2017 by ICICI Bank. The aforesaid explanation of the assessee appears to be believable in view of the certificate issued by the concerned bank on 28th April, 2018. - there was reasonable cause in terms with section 274 - AT
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Addition u/s 56(2)(vii)(b) - AO referred the valuation of property to Valuation Cell and DVO - difference between the DVO value and consideration paid for purchase of property should be assessed as income of the purchasers in terms of s 56(2)(vii)(b) - AO after considering relevant facts has rightly made addition towards differential consideration u/s 56(2)(vii)(b) - AT
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Income accrued in India - income from rented properties held by the appellant in Australia and UK - right of the resident country to tax its residents - the expression “may be taxed” cannot be construed to mean “shall be taxable only in the resident state”, unless it is expressly stated. Provisions of Section 90(1)(a)(i) is clearly applicable to the facts of the case. - AT
Customs
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Rejection of request for waiver of interest while granting immunity from penalty and prosecution - order of Settlement Commission - the liability of the Petitioner to pay interest in this case originated from the bond furnished by it and it was rightly held by the Settlement Commission as being contractual. The Commission has rendered the finding that liability of the Petitioner to pay interest was under the bond; therefore, Settlement Commission has no jurisdiction to waive interest liability - HC
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Increase in rate of customs duty on import of dry dates - Effective date - Filing of Bill of Entry prior to the issue of notification - Revenue is not in a position to controvert that the petitioner has placed the import orders prior to 16.02.2019 and has also received goods on or before 16.02.2019 and in any case prior to issuance of the impugned notification which was uploaded on 16.02.2019 at 8.45 p.m. - writ petition is allowed - HC
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Levy of penalty - Mis-declaration of goods - Self assessment of Bill of entry - While the importer is required to subscribe to the truth of the contents of the Bill of Entry, it refers to facts and not opinions - Self-assessment is subject to any reassessment by the proper officer. Self-assessment can also be appealed against to the Commissioner (Appeals). They can assess duty as per their understanding and the officers are free to reassess it as per Section 17(4). - Mis-classification or incorrect assessment of duty does not amount to mis-declaration in the Bill of Entry nor does it attract any penalty. - No penalty - AT
Corporate Law
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NCLT - reappointment of the petitioner - judicial member of the National Company Law Tribunal - Merely because the petitioner has shown her willingness to be considered, merely because she is liable to be considered and merely because she has opted for reappointment, could not be ground to seek writ from the Court that her appointment process may be completed. The petitioner's case could be at the best considered along with other aspiring candidates in accordance with law and on its own merits. - HC
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Disqualification of the Petitioners - Deactivation of Director Identification Number (DIN) and the Digital Signature Certificate (DSC) of the Petitioners - introduction of the CFSS scheme - In furtherance of the purpose of this scheme, directors of struck off companies who seek to be appointed as directors of other/new companies, ought to be provided an opportunity to avail of this scheme, provided that they have undergone a substantial period of their disqualification. - HC
Indian Laws
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Dishonor of cheque - accused was acquitted - Preconditions for a valid cheque - The complainant unilaterally has put in dates on the cheques without the authority of the accused and even by not informing him. So, it amounts to material alterations. - If it is so such negotiable instrument becomes void. - HC
IBC
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Initiation of CIRP - Period of limitation - approval of Resolution Plan - Distribution of the amount to the Financial Creditors as per the decision of the CoC cannot be permitted to be challenged. - AT
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CIRP - Fairness of Resolution plan - appellant being Association of the ‘Homebuyers’ - plan challenged on various issued including, the ‘Resolution Plan’ amount being lower than the ‘Liquidation Value’, ‘exorbitant interest charges’ by the ‘Financial Creditors’ in their claims, denial of claims of the ‘Appellant’ etc. - This ‘Appellate Tribunal’, does not find ‘any material irregularity’ or ‘patent illegality’, in the ‘impugned order’ - AT
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Initiation of CIRP - Demand Notice on unpaid Operational Debt - existence of dispute - When we look into the contents of allegations made in the Reply Notice, it is clear that Reply notice raises substantial and genuine issues to oppose the claim of the Operational Creditor’s amount due. - Present is a case where it cannot be said that defence taken by the Corporate Debtor in Reply Notice is a moonshine defence unsupported by any evidence. - NCLT ought not to have admitted the Section 9 Application. - AT
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CIRP - bonafide nature of the transactions or not - recovery from the ex-directors of the corporate debtor - forensic and transaction audit of the corporate debtor was conducted - The transaction was done in the normal course of business to let the corporate debtor function in the changed business environment. Such an arrangement, even though with related party, cannot be termed as preferential transactions done to defraud the creditors of the corporate debtor. - AT
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CIRP proceedings - Infirmities and illegalities committed by the RP - it is evident that the RP had not taken any reasonable step to get the CD as going concern which is mandated as per Section 25(2)(h) or he acted in accordance with Section 24 of the Code and as such there is no reason to allow the impugned order to further continue. - the holding of the CoC Meeting in the premises of the Financial Creditor and also joint filing of the reply by RP and financial creditor also reflects that something was going on in between the parties. - AT
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Initiation of CIRP - inter corporate deposit - Proof of debt - Appellant failed to produce any proof of the RTGS by way of bank statement indicating that the amount has in fact been transferred from its account to the account of the Corporate Debtor - the intercorporate deposit is a loan is not substantiated by the Appellant - NCLT rightly dismissed the application - AT
PMLA
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Provisional attachment - Expiry of 80 days mandatory period for confirmation of the provisional attachment u/s 5 of PMLA - Applicability of decision of Supreme Court for exclusion of certain period on account of COVID-19 pandemic - By virtue of Section 5(3) of the PMLA, the order of attachment under Section 5(1) ceases to have effect on expiry of the prescribed period. Thus, for such a provision, the order of the Hon’ble Supreme Court passed in SMW (C) No. 3 of 2020 extending the period for filing the pleading will not apply. - HC
Service Tax
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Rejection of SVLDRS declaration - quantification qualifies as quantification before 30.6.2019 under SVLDRS, 2019 or not - Claim of quantification based on letter issued by the Audit Team or Investigation team - it is not the self declared quantification of a Declarant of “tax dues” which will entitle the benefit of the aforesaid scheme. The scheme brings a closure to the tax dispute with issuance of certificate under Section129 of SVLDRS, 2019. It has to be a quantification which ought to have been accepted by the Investigating Wing or Audit Wing of the Department. - HC
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Demand of service tax - providing real estate agent services - self service or not - Extended period of limitation - It is clear that the amount received by the appellant as development charges which are nothing but in the form of profit, which will not get covered under the category of real estate agent services. - AT
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Refund of service tax wrongly / under a mistake of law - Period of limitation - Club or Association Services - principle of mutuality - Since Service Tax received by the concerned authority is not backed by any authority of law, in view of the provisions of Article 265 of the Constitution, the authority concerned has no right to retain the same. - AT
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Demand of services on ‘surrender charge’ retained by the appellant upon withdrawal of ‘insured’ from ‘unit linked insurance policies (ULIP)’ - voluntary withdrawal from coverage under ‘unit linked insurance policy (ULIP)’ - The ‘surrender value’ so retained had already been subjected to tax as ‘premium’ for rendering of taxable service and not liable to be taxed again for that very reason upon ceasing to be provision service - AT
VAT
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Purchase of gold for manufacturing of jewellery and ornaments - The assessing authority disallowed the claim for exemption on the sole ground that the purchasing dealer namely the writ petitioner did not manufacture the jewellery in the State of West Bengal but had manufactured the same at Coimbatore in Tamil Nadu state. - The intention, the object and the purpose of such exemption cannot be interpreted by referring to Rule 26A which operates in entirely different field. - Benefit rightly denied - HC
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Exemption from central sales tax (CST) - transit sale - Petitioner had effected sales by transfer of documents of title of the goods during their movement from one State to another - Section 6(2) of the CST Act. - the law is now well settled that the tribunal was not supposed to decide an issue which was not the case of the revenue. - HC
Case Laws:
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GST
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2022 (12) TMI 654
Period of limitation for retaining the seized goods - Seeking return of his laptop, computer, documents and other things which were seized during search proceedings - various allegations of IGST refund - According to the DGGI, further investigation revealed that a total number of 23 fake firms were opened in the names of persons who were found to be labourers, drivers, cooks, street hawkers, etc. The fraudulent refunds of IGST of more than Rs. 63 crores is stated to have been siphoned off by these persons/firms. HELD THAT:- There is a clear distinction brought about in the CGST Act, 2017 in case of inspection, search and seizure of documents or books or things in contrast to seizure of goods . A perusal of sub-section 67(2) of the CGST Act, 2017 makes it clear that whereas the first proviso would apply qua seizure of goods, the second proviso would apply in respect of documents or books or things. In the case of documents or books or things, the same can be retained by the officer for so long as it is required for examination and for inquiry of proceedings under the CGST Act, 2017. This is in contrast with Section 67(7) as per which when goods are seized, the said seized goods have to be returned to the person who whom they were seized within six months of the seizure of goods, unless and until, the proper officer, on sufficient cause, extends the same for a further period of not exceeding then six months. By a conjoint reading of sections 67(2) second proviso, 67(3), 74(2), 74(10) the documents or book or things can be retained for a maximum period of four and half years, within which period the notice has to be issued, plus thirty days from the date of erroneous refund. In the present case, the said period had not yet lapsed. Accordingly, at this stage, this Court does not deem it appropriate to direct release of the computer, laptop, documents and other things seized vide punchnama dated 28th August, 2019. Writ petitions dismissed.
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2022 (12) TMI 653
Blocking the Input Tax Credit (ITC) - Electronic Credit Ledger (ECL) - Non payment of consideration within 180 days u/s 16(2)(d) of CGST Act - scope of the expression in as much as under Rule 86A - ITC was blocked without informing the petitioner or without affording the petitioner any opportunity to be heard. - in terms of Rule 86A, it was impermissible to block the ECL for a period exceeding one year. HELD THAT:- The words inasmuch as as used in Rule 86A(1) of the CGST Rules qualify the word ineligible . The expression inasmuch as is not of a wide import; it is used in a restrictive sense to qualify the subject. If the expression inasmuch as is considered as synonymous with because or since , the sub clauses of Rule 86A(1) of the CGST Rules would qualify the word ineligible and exclude the possibility of expanding the import of the said word. - the expression inasmuch as cannot be considered as an expression that is used in an expansive sense, it qualifies the subject and restricts the provision that it qualifies. The use of the expression inasmuch as restricts the scope of ineligibility to the conditions as set out in sub clauses of Rule 86A(1) of the CGST Rules. It is only if any of these conditions are satisfied that the restriction under Rule 86A(1) can be imposed in respect of ITC on the ground that the ITC available in the taxpayer s ECL is ineligible . Scope of Section 16(2) of the GST Act read with Rule 37 of CGST Rules - It is, clearly, not the scheme of the CGST Act to restrain a person from availing the ITC till he has paid the supplier for such goods/services. A recipient of goods/services who receives goods and services on supplier s credit is also entitled to avail the ITC. However, if he fails to discharge his liability within a period of 180 days (one hundred and eighty days), he is liable to disgorge the benefit of the ITC along with interest. The taxpayer s liability to account for the ITC availed without paying for the same within the period of 180 days, is required to be assessed as a part of his output liability. If the taxpayer does not discharge his liability to the supplier within a period of 180 days, he is required to account for the benefit of the ITC availed by the taxpayer along with interest as a part of the output liability. In terms of the third proviso to Section 16(2) of the CGST Act, the taxpayer would be entitled to avail of the ITC once again on payment being made to the supplier. The respondents have completely misdirected themselves in proceeding on the basis that unless a taxpayer pays the supplier, he is ineligible to avail of the ITC lying to his credit in the ECL. The action of the respondents to continue blocking the ITC available in the ECR of the petitioner for such extended period is without the authority of law. Decided in favor of assessee.
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2022 (12) TMI 652
Cancellation of registration - non filing of GST Returns - Petitioner contended that, since he was out of business, the return after September, 2018 could not be filed. The person engaged by the petitioner also was under the impression that since outward supply is zero, there was no need for filing the return. HELD THAT:- the order for cancellation of registration dated 22.06.2020 is quite cryptic. It hardly gives any detail, which is otherwise necessary. The effective date of registration is 18.03.2021. It is understandable that the tax payer has not responded to the cancellation proceedings initiated by the respondent nor had he filed his due GST returns and the GSTIN, therefore, was cancelled under section 29(2) of the CGST Act. Considering the fact that there are no returns filed, we are not dilating this issue. As has been noted that from the month of September, 2018, the petitioner has not filed his return and his registration has been cancelled in the month of March, 2021, the adjudicating authority has power to recover the Government dues upto the date of cancellation of registration. The petitioner has already filed the returns from September, 2018 till March, 2021. Correspondingly, the challan of the late fee totalling to Rs.2.94 lakhs (rounded off) has been deposited by him after self-assessing himself. Under the circumstances, when all kinds of readiness is expressed, there is no reason as to why this Court should not permit at this stage, filing of GSTR-1. It is not only not going to prejudice the interest of revenue, but, on the contrary, would facilitate the process of adjudication with all the datas made available online. Moreover, the petitioner appears to be someone, who is keen to continue his business and the State s obligation is to ensure the implementation of the law, but at the same time not to thwart, in any manner, the business prospects of the citizens and, therefore, acceding to the request, we are required to allow this petition. The order of cancellation of registration is quashed and set aside.
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Income Tax
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2022 (12) TMI 656
Deduction u/s 54 - At residential plots that no construction was carried out till date and the plots were vacant - CIT(A) observed that the fact remains that the appellant could not complete the construction of residential houses upon the said plots within specified period of three years as the investment was made by the appellant in the plots which were not having approvals from the concerned government departments for the construction ab initio - HELD THAT:- Objective of Section 54 is that the capital gains to be reinvested in another residential house. The provision emphasizes the investment of amount in new property within the timelines as per Section 54, but not completion of the property so as to be occupied or become habitable even. There may be many intervening factors which make it unreasonable and against the rules of prudence to expect the investor to also have completed the construction in three years. But then the law requires the gain to be statutorily invested. Here in the case in hand total capital gain exemption was 1,62,76,703/- and which now has been restricted to the claim to the extent of investment of sum of Rs. 78,60,000/- in first property and the investments in two other properties have not been pressed for exemptions. Admitted case of assessee that income had accrued in FY 2014-15 and after the developer got approved zonal plan, the assessee obtained physical possession of the plot vide letter dated 18.08.2022 and though before that the assessee got approved the construction plan by making application with competent authority. However, construction has not begun. There is no evidence of any construction activity or of the fact that assessee has invested the proceeds in statutory deposits and then spent any proceeds of the sales consideration of two properties he had sold, into the construction over this plot. Thus the property in which part investments of capital gains was done continued to be plot for all purposes and intent, for the assessee in the period when construction was to atleast to be started, if not completed. That being so, there is no error in the determination of issue against the assessee by Ld. tax Authorities below and no merits in the grounds as raised here. The appeal is dismissed.
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2022 (12) TMI 651
Disallowance u/s 14A - respondent/assessee had not earned income which was exempt from imposition of tax - Scope of amendment which was brought about in Section 14A - HELD THAT:- Revenue as fairly placed before us a judgment M/s Era Infrastructure (India) Ltd [ 2022 (7) TMI 1093 - DELHI HIGH COURT] which has ruled on the amendment which was brought about in Section 14A of the Act via Finance Act 2022. The coordinate bench has ruled that the amendment will not operate retrospectively. It appears that the coordinate bench in judgment has referred to judgments passed by other coordinate benches rendered in PCIT v. IL FS Energy Development Company Ltd. [ 2017 (8) TMI 732 - DELHI HIGH COURT] and Cheminvest Limited [ 2015 (9) TMI 238 - DELHI HIGH COURT] As informed that the decision rendered by the Division Bench of this court in PCIT v. IL FS Energy Development Company Ltd. has been assailed by the appellant/revenue by instituting a special leave petition (SLP), which is pending adjudication. Given these circumstances, since no substantial question of law arises in the present case, at this juncture, the appeal is, accordingly, disposed of.
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2022 (12) TMI 650
Attachment of the HSBC Bank and DBS Bank accounts of the petitioner u/s 132(9B) - bank account of DBS Bank was released and the balance fund as on 18.11.2021 remained under attachment u/s 281(B) until further order - whether in absence of any material and any reasons recorded in writing that such a harsh step of attachment of the property of the petitioner had been taken and that shall need to be straightway answered in negation? - HELD THAT:- As held that permitting the department to provisionally attaching the petitioner s refund for the current year on the ground that in the final assessment, the demands are likely to be confirmed, would amount to ignoring the hard fact that for the earlier assessment years, Tribunal has suspended the recoveries arising out of the demands made by the assessing officer on similar issues. As held that looking it from any angle, the occasion for the competent authority to exercise the drastic power u/s 281(B) has not arisen, therefore, there was no justification to exercise such powers. Going by the decision of Vodafone Idea Limited [ 2019 (9) TMI 447 - BOMBAY HIGH COURT] . we can surely say that the assessing officer, for the purpose of protecting interest of the Revenue, in the instant case, with the prior approval of the higher authority has passed an order in writing recording the reasons and provisionally attaching the property belonging to the assessee. These are though drastic powers in a given circumstances, we are satisfied that for the petitioner assessee to continue its business, the continuation of provisional attachment is not necessary and even otherwise, the interest of the Revenue can be safeguarded by directing a particular amount to be furnished by way of a bank guarantee to the authority concerned, that would sub-serve the purpose. We are conscious of the fact that the order has came to be passed in relation to the two of the companies which is said to be the shell companies adding the commission and the main company of Taiwan is said to be benefiting. It is also alleged that the modus is adopted to shift the profit to the Chinese Company. We also have taken note of some of the details which have been culled out from the file which, for the purpose of secrecy pleaded by the respondent, we choose not to reveal the same as that may prove to be deleterious for the on-going assessment proceedings. However, if the past case of the respondent is taken into consideration along with its on-going proceedings, in our opinion, the fixed deposit which has been made by the respondent of the DBS Bank would suffice to protect the interest of the Revenue for now. We also would like to make a mention of the fact that except one Director, the rest are from Taiwan and therefore, the Indian Director along with the Taiwan Directors are also required to give the undertaking that in the eventuality if the assessment is more than the amount which is permitted to be provisionally attached, they shall fulfill the obligations even from their own personal funds. The said undertaking shall be filed before this Court within a period of one week from the date of receipt of copy of this judgment. They shall also furnish the disclosure of the immovable assets of the company. At this stage, Standing Counsel upon instruction has informed that the matter has been already referred to the Transfer Pricing Officer and therefore, the Court shall need to regard the interest of the Revenue Authority. On furnishing the above aspect, once having verified the details in a week s time thereafter, the attachment of the HSBC bank account bearing account no. 101040608001 shall be then released. The original file is returned to the respondent.
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2022 (12) TMI 649
Disallowance of lower deduction of tax at source u/s 40(ia) - Default u/s 201(1) - HELD THAT:- We do not find any infirmity or error in the above findings and conclusion of the CIT (A). Moreover, the assessee has failed to give any reason for not fulfilling the conditions envisaged by Section 201(1) - The assessee has failed to deduct the TDS and also fail to fulfill the conditions as per Section 201 on the payment made to three entities. We are fully agree with the observation of the Ld.CIT (A) that the said expenses on account of payment made to three entities are not allowable as per provisions of Section 40(a) (ia) - Thus, we do not find any error in the action of the CIT(A) in upholding the disallowance made by the A.O. Accordingly, the grounds of appeal of the assessee are dismissed.
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2022 (12) TMI 648
Rectification of mistake u/s 154 - difference in exempt income claimed by the assessee and the document furnished during the assessment proceedings - HELD THAT:- As admitted by the assessee himself vide written statement filed before the A.O., that the above addition was made due to the clerical error done on the part of the assessee while filing the return and accordingly, the Ld. AR has made a submission before the CIT(A) to allow the assessee to rectify his mistake u/s 154 - Considering the admitted error of the assessee, CIT (A) has rightly provided liberty to the assessee to move rectification application u/s 154 of the Act before the A.O. If there is any typographical error the assessee has to invoke the Section 154 of the Act and not the Appellate Jurisdiction to rectify the mistakes committed during the assessment proceedings. The order of the Ld.CIT(A) neither erroneous nor has any legal infirmity in providing the liberty to more rectification application u/s 154 of the Act before A.O., thus, we do not find merit in the grounds of appeal of the assessee.
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2022 (12) TMI 647
Penalty u/s 271(1)(c) - Defective notice - non-strike off of the irrelevant part in the notice issued u/s.271(l)(c) - Addition u/s 68 - HELD THAT:- As penalty provisions of Section 271(1)(c) of the Act are attracted, where the assessee concealed the particulars of income or furnished inaccurate particulars of income. It is well settled law that the aforesaid two limbs of Section 271(1)(c) carrying different meanings. A.O. to specify the relevant and exact limb so as to make the assessee aware as to what is the charge made against him so that he can respond adequately which has been violated by the A.O in the Assessment order. A.O. has failed to specify the exact limb under which the penalty proceedings to be initiated. As could be seen from the above the Hon'ble Bombay High Court (Full Bench at Goa) in the case of Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT ] while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s.271(l)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. Ratio of this full bench decision of the Hon'ble Bombay High Court (Goa) squarely applies to the facts of the Assessee s case as the A.O. has failed to specify the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices to be issued. - Decided in favour of assessee.
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2022 (12) TMI 646
Rejection of books of accounts u/s 145(3) - Estimating its income at 1% of total turnover - HELD THAT:-No stock register has been maintained by the assessee. Even as regards the payment of excise duty, the auditor has mentioned that the assessee is doing the trading activity, however, as per the profit and loss account assessee has adjusted the excise duty from the sales receipts. Assessee has not valued the stock in trade as required under section 145A of the Act. During the hearing, reliance has been placed upon the statement pertaining to the net profit earned by companies in similar line of business - However, apart from the statement, no other data has been brought on record to show that these companies are having business similar in nature to the assessee and merely computation of profit for the year under consideration was furnished. Therefore, the submission of the assessee to adopt the profit percentage of other companies also does not merit acceptance. In addition, there is no data available on record regarding the past performance of the assessee. Thus, no infirmity in the impugned order passed by the learned CIT(A) in estimating the income at 1% of the turnover. As a result, the grounds raised by the assessee are dismissed.
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2022 (12) TMI 645
Revision u/s 263 - Interest disallowance u/s.36(1)(iii) - HELD THAT:- As assessee s arguments fail to evoke our acceptance since we do not find even a single question or enquiry from the AO s side alleging diversion of interest bearing funds for non-business purposes, attracting section 36(1)(iii) interest disallowance. We conclude that the PCIT herein has rightly termed the AO s assessment completed without making the adequate enquiries in light of section 263 Explanation (2) inserted in the Act by Finance Act, 2015 w.e.f. 01.06.2011 as well as Malabar Industrial Company Ltd., [ 2000 (2) TMI 10 - SUPREME COURT] . Applicability of section 14A r.w.r. 8D - From perusal of the PCIT's revision directions that he has already directed the AO to examine the issue of applicability of section 14A r.w. Rule 8D in his findings of the revision order. Revenue could hardly dispute that the AO had duly disallowed an amount in his assessment and, therefore, the same could not be termed an instance of lack of enquiry as it is alleged at the PCIT s behest. PCIT s revision directions to the limited extent of applicability of section 14A r.w.r. 8D disallowance therefore. Deemed rent computation issue raised in the learned PCIT s revision directions - We note from a perusal of the relevant discussion in page-9 para-3 that neither the assessee could clarify before us about the number of house properties owned in the relevant previous year nor could he rebut his computation in the subsequent assessment year 2015-16 qua the same. Faced with the situation, we upheld the PCIT s revision directions that the AO had neither enquired nor examined the issue of assessee s rental income from house property u/s. 23 of the Act. The assessee s arguments to this effect are rejected accordingly. Section 56(2)(vii) made applicable in assessee s case on account of alleged difference between stamp valuation and actual purchase consideration qua the sale deed executed in the relevant previous year - A perusal of the said sale deed dated 31.12.2013, and more particularly, the schedule of payment therein at page-16 indicates that the assessee had already paid an amount of Rs.50,000/- on 20.09.2016 by way of bank cheque which followed the agreement itself dated 05.10.2006. Faced with the situation, we quote 1st and 2nd proviso to sec.56(2)(viib) that the consideration amount in such a transfer of immovable property at the time of agreement could also be accepted in case whole or part thereof had been paid in any mode other than cash on or before the date of the agreement, for the transfer of such immovable property. CIT-DR could hardly dispute that the legislature had introduced similar provision(s) in sec.50C(1) vide Finance Act 2016 w.e.f. 01.04.2017 which have already been held as carrying retrospective effect being curative in nature in Dharmashibhai Sonani [ 2016 (9) TMI 1259 - ITAT AHMEDABAD ] We, therefore, are of the opinion that the only difference in sec.50C vis- -vis sec.56(2)(vii) is that the former applies in case of transfer of a capital asset in the hands of the vendor whereas the latter one gets attracted in the purchaser/vendee s case, respectively. We thus conclude that the PCIT has erred in law and on facts in directing the Assessing Officer to frame his assessment afresh in light of section 56(2)(vii) in very terms. His directions to this limited extent are reversed accordingly. The assessee s instant former substantive ground succeeds in part therefore.
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2022 (12) TMI 644
Deduction on interest earned from Co-Operative Banks u/s 80P(2)(d) - Dividend Income AND Interest Income earned from another Co-Op Society - HELD THAT:- In our considered view, Ld. CIT(A) has erred in law in holding that the observations in the case of State Bank of India [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] to the effect that the interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act have no binding effect on the jurisdictional Revenue Authorities. The Kolktata ITAT in the case of SubhlakshmiVanijya (P.) Ltd. [ 2015 (8) TMI 174 - ITAT KOLKATA] has held that even the obiter of the jurisdictional High Court has a binding force on the lower authorities. Therefore, in our view, the Ld. CIT(A) has erred in law and in facts in holding that the above order of the jurisdictional Gujarat High Court in the case of State Bank of India [Supra] has no binding effect on the jurisdictional Revenue authorities. In the case of Surat Vankar Sahakari Sangh Ltd. [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] held assessee-cooperative society was eligible for deduction under section 80P(2)(d) in respect of gross interest received from co-operative bank without adjusting interest paid to said bank. In the case of Surendranagar District Co-op. Milk Producers Union Ltd. [ 2019 (9) TMI 978 - ITAT RAJKOT] held that assessee-co-operative society could not claim benefit of section 80P(2)(d) in respect of interest earned by it from deposits made with nationalised/private banks, however, said benefit was available in respect of interest earned on deposits made with co-operative bank. In the case Totagars Cooperative Sale Society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] held that the interest income earned by a co- operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. Thus in our view, dividend income and interest earned by the assessee on surplus held with cooperative bank would be eligible for deduction under Sec.80P(2)(d) of the Act. Appeal of the assessee is allowed.
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2022 (12) TMI 643
Short payment of TDS u/s 195 - error in depositing TDS under the wrong challan - assessee has declared dividends to its shareholder who is a non-resident as per the provisions of the Act - demand raised vide intimation issued u/s 200A/206CB - HELD THAT:- Wrong challan filed by the assessee while depositing the tax deducted at source u/s 195 in respect of payment of dividend to the non-resident shareholder. From the applications filed by the assessee, a copy of which has been brought on record, we find that the assessee has pursued this matter with the concerned authorities and not only requested to consider the deposit of taxes on dividends by the company but has also prayed for correction of the challan from challan No. 280 to challan No. 281. From the copy of the email dated 06/12/2022, filed by the learned DR, we find that the office of DCIT (OSD) TDS has escalated the issue to CPC TDS for either necessitating the required changes in the challan from the backend or enabling the system to allow the TDS AO to do the same from his login at TRACES AO Portal. Therefore, we deem it appropriate to direct the concerned authority to make every possible endeavour of carrying out the necessary correction in the challan within a period of 2 months from the date of receipt of this order and grant the relief to the assessee as per law. As a result, grounds raised by the assessee are allowed for statistical purposes.
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2022 (12) TMI 642
Long term capital gain computation - date of transfer of ownership agreement - indexation benefit from the fast installment paid towards purchase of flat in pursuance to allotment letter issued by the builder -Whether date of acquisition for capital gain purposes will be the date of the agreement of transfer of ownership between the builder and the buyer and not the date of issue of the allotment letter? - HELD THAT:- The agreement between the assessee and the builder for transfer of ownership rights was excluded on 19.07.2010 whereas, the assessee has claimed the indexation benefit from 2007. The departmental authorities have allowed indexation benefit from the date of transfer of ownership agreement by relying upon a decision of Gulshan Malik [ 2014 (3) TMI 474 - DELHI HIGH COURT] . The assessee has failed to bring on record any material or legal proposition to controvert the finding of the departmental authorities or to demonstrate inapplicability of the ratio laid down in case of Gulshan Malik vs. CIT (supra). Thus, in absence of any rebuttal by the assessee, we do not find any reason to interfere with the decision of the Ld. Commissioner (Appeals) on the issue. Grounds raised are dismissed.
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2022 (12) TMI 641
Rectification of mistake u/s 154 - whether rectification application was beyond time? - exemption u/s.5(1)(c) r.w s 6 of the Act treating the status of the appellant as non-resident was not claimed by mistake - whether the assessee was NRI during the relevant point of time and whether he is entitled to the benefit of exemption u/s.5(1)(c) r.w.s 6 - HELD THAT:- Admittedly, the assessee individual is a non-resident Indian and the facts clearly show that the return has been filed with mistakes. These mistakes can admittedly be rectified by filing a rectification application. The rectification application admittedly is not being considered on account of the limitation provided u/s.154(7) of the Act. However, in view of the submissions made by both the sides and considering the Circular No.4 of 2012 dated 20.6.2012 issued by the CBDT, the issues in its appeal are restored to the file of the AO for readjudication of the rectification application on merits. The Assessing Officer is at liberty to examine whether the assessee was NRI during the relevant point of time and whether he is entitled to the benefit of exemption u/s.5(1)(c) r.w.s 6 of the Act. If it is found that the claim of the assessee is correct, then, the AO is to proceed to decide the rectification application on merits in accordance with the provisions of section 5(1)(c) r.w.s 6 of the Act. appeal of the assessee is partly allowed for statistical purposes.
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2022 (12) TMI 640
Disallowance of Corporate Social Responsibility (CSR ) expenses - allowable expenses u/s 37(1) - Expenses incurred under the directions of DPE Govt. of India requiring Companies to spend a prescribed percentage of its profits on CSR-and also made mandatory under the Companies Act 2013 - HELD THAT:- Respectfully following the order of coordinate bench of ITAT Delhi for A.Y. 2013-14 - We hold that the Explanation 2 to section 37(1) of the Act is applicable from A.Y. 2015-16 and onwards and not prior to the amendment including A.Y. 2014-15, therefore ground no. 1.1 1.2 are allowed. Charging of interest u/s. 234 A - Assumption of date of filing of return - HELD THAT:- On carefully consideration of submissions of the assessee undisputedly assessee company is a joint venture company owned equally 50% each by Steel Authority of India Ltd (SAIL) and Damodar Valley Corporation Ltd (DVC) which are Central Public Sector undertakings. Therefore due date for filing of return as per Explanation 2 to section 139(1) of the Act for A.Y. 2015-16 was 30.09.2015. This fact has been controverted by the Ld. Senior D.R. that the company has electronically uploaded its return of income and from 3CEB on 30.09.2015, as also has been mentioned in assessment order para 1. Therefore interest u/s. 234A of the Act is not liable of the assessee hence ground no 2 is allowed.
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2022 (12) TMI 639
Assessment u/s. 153A r.w.s. 153C - Incriminating material available on records found or not ? - HELD THAT:- We hold that there is no incriminating material available on records which were found during the course of search which could have been used by the assessee for disturbing the returned income of the Assessee for AY 2010-11. Accordingly, we allow Ground no 1 of the Appeal. Resultantly, all additions made in the order do not survive. Non issue of notice u/s 143 (2) in case of assessment u/s 153C - HELD THAT:- As we note that these discussions by the CIT(A) are beside the point inasmuch as in the submissions before us, the assesse has submitted that assessee has received notice u/s. 143(2) issued by AACIT, Circle 42, Mumbai to the assessee. Hence, this argument by the assessee before the CIT(A) that notice u/s. 143(2) has not been issued is not factually correct. Hence, the said issue by the assessee is dismissed. Correct head of income - sale of land and development rights - capital gain shown by assessee on sale of land and development rights, treated by it its computation of income as income chargeable to tax under the Head capital gains but learned AO considered it as income from Business and Profession - HELD THAT:- Neither the AO, nor the ld. CIT (A) and ld. DR before us could not show above any incriminating material found during the course of search. In absence of incriminating material, we hold that orders of the ld. Lower Authorities are non-sustainable in view of the decision of honorable supreme court in case of Sinhgad Technical education society [ 2015 (4) TMI 190 - BOMBAY HIGH COURT] . Hence we allow ground no 4 and 5 of the Appeal. Addition of on money income on account of sale of car parking - taxation of on money on sale of flats - HELD THAT:- We find that both this issues were discussed by the coordinate bench in the case of the assessee for AY 2011 -12 [ 2022 (2) TMI 808 - ITAT MUMBAI] and held that there is no incriminating material available for making such addition in the hands of the assessee in case of a concluded assessment. Before us also same document andstatements are relied up on by the lower authorities as well as the ld. DR. Judicial Discipline demands that unless, there is manifest error, same needs to be followed. No infirmities werepointed before us by the ld. DR in the order of coordinate bench, therefore, there is no reason to deviate from the same. On careful analysis, we find that in the order of CIT (A) in appeal before us is identical to Para no 13 of the decision of the coordinate bench where the addition of unaccounted on money on sale of flats was confirmed by him [ the Ld. CIT (A) for AY 2011-12] . When the findings of ld. CIT (A) are ad verbatim for this appeal compared to AY 2011-12, where the coordinate bench has deleted the addition, we have no reason to differ from the same. Accordingly,ground no 6 7 of the appeal are allowed
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2022 (12) TMI 638
Deduction u/s 80HHC - interest paid on security direct nexus with the interest received by the appellant - Whether CIT(A) has erred in not considering deduction of 90% of interest while working out deduction u/s 80HHC? - HELD THAT:- We find that now it is a settled proposition as held in the case of Vikas Kalra [ 2012 (2) TMI 99 - SUPREME COURT] as well as in the case of ACG Associated Capsules Pvt. Ltd [ 2012 (2) TMI 101 - SUPREME COURT] that 90% of net interest [interest paid (minus) interest received] has to be reduced for the purpose of calculation of deduction u/s 80HHC of the Act. CIT(A) failed to take note of these judgments and emphasised more on the issue of nexus which no longer survives after the verdict of the Hon ble Apex Court. We find merit in this contention of assessee and direct AO to reduce 90% of the net interest received from the net profit for the purpose of calculating deduction u/s 80HHC of the Act. In the result, Ground Nos. 1 2 of the assessee are allowed. Correctness of interest charged u/s 234B - Assumption of date of filing of return - assessee has contended that the regular assessment u/s 143(3) of the Act was completed on 29/12/2006 and, therefore, the cut-off date for charging the interest would be December, 2006, whereas the CIT(A) has confirmed the action of the AO charging the interest up to March, 2007 - HELD THAT:- We find that the ld. CIT(A) has referred to Section 234B(3) of the Act, which relates to the order of re-assessment or re-computation u/s 147 or Section 153A of the Act. However, in the instant case, the order of the ld. Assessing Officer is not framed u/s 147 or 153A of the Act. On the other hand, Section 234B(4) of the Act refers to the order u/s 154/155/250/254/260/262/263/264 of the Act and in the case of the assessee, the assessment order has been framed u/s 143(3)/251/254/263/254 of the Act. So, prima facie there remains no dispute to the fact that that in the case of the assessee interest should have been charged as per the provisions of Section 234B(4) of the Act i.e., up to December, 2006. We, therefore, fail to find any merit in the findings of the ld. CIT(A) and the same is reversed and Ground Nos. 3, 4 5, raised by the assessee are allowed. Calculation of interest u/s 234B - Contention made by the ld. Counsel for the assessee has substantial merit because in the assessment order framed on 21/12/2009, interest u/s 234B of the Act has been charged at Rs.12,92,191/- where as in the order dt. 23/12/2010, interest of Rs.19,12,454/- has been charged So far as the difference in the total income assessed is concerned, there is only an increase of Rs.45,393/-, in the order dt. 23/12/2010 as against the order dt. 21/12/2009. There is apparently a calculation error/mistake which needs necessary rectification. Therefore, we restore the issues raised in Ground Nos. 6 7 to the ld. Assessing Officer for necessary verification. Thus, both these grounds are allowed for statistical purposes.
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2022 (12) TMI 637
Denial of deduction u/s 80P(2)(a)(i) - interest income received from investments/FDRs in other Co-operative societies and nationalized banks - HELD THAT:- The claim of the assessee is that the deduction was claimed u/s 80P(2)(a)(i) and the same ought to have been allowed. Thus find that similar issue has been considered by the Pune Tribunal in Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. [ 2020 (9) TMI 964 - ITAT PUNE] . This overturn the impugned order to the extent of denial of deduction u/s 80P in respect of interest income.
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2022 (12) TMI 636
Disallowance u/s 40(a)(ia) for non-deduction of tax at source (TDS) - assessee in default - Assessee has paid interest u/s 201(1A) for non-deduction/short deduction of tax - HELD THAT:- Assessee enclosed Form No. 26A namely Form for furnishing Accountant certificate under the First Proviso to sub- Section 1 of Section 201 of the Act, wherein it is certified that interest under Section 201(1a) of Rs. 4,030/- was paid by the assessee for non-deduction or short deduction of tax vide Bank Challan No. 83 dated 22.12.2018. Further as held by the Ld. CIT(A) there is no signature by Chartered Accountant, but Director of the assessee company has signed, but in Page No. 17 the assessee produced the Interest Challan payment of Rs. 4,030/- remitted into Central Bank of India more particularly under the caption Minor Head 200 TDS/TCS payable by taxpayer. Thus, the assessee having paid the interest of Rs. 4,030/- the assessee cannot be construed as an assessee in default. Therefore, the provision of Section 40(a)(ia) cannot be applied in assessee s case. Thus, the Ld. Assessing Officer and the CIT(A) has not considered the provision of Section 201(1) of the Act which is not justifiable in law. Therefore, the addition made under Section 40(a)(ia) by the Assessing Officer is hereby deleted. Appeal filed by the assessee is allowed.
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2022 (12) TMI 635
Exemption u/s 11 - grant of registration u/s 12AA rejected - charitable activity or not - medical aid / facilities to the poor / needy persons - running the activities on commercial basis - assessee is charging on the basis of commercial rates from the patients, either outdoor/indoor and the assessee has failed to demonstrate that the charges / fee charged by it were on a reasonable markup on the cost - DR submitted that the name of the assessee is different from ROC record and PAN to Form 10A/10G and that there was an ambiguity with regard to the name of assessee and its directors and it is evident from the declarations filed by the assessee in Form 11(5) and 13(1) DR of the Income Tax Act - HELD THAT:- We find that the CIT(E) in the present case, after analyzing the said documents had recorded the finding mentioned in the impugned order whereby he held that the assessee was running the activities on commercial basis and that the activities of assessee are not of charitable nature. Approach of the CIT(E) cannot be faulted merely because he had examined the data supplied by the assessee at the time of making the application. Assessee had failed to bring on record any comparative chart of diagnostic charges / procedure charges / test charges prior to the conversion of the assessee into section 8 company and thereafter to show that there was a major reduction in fee / charges charged by the assessee for the above said purposes. As nothing contrary had been brought to the notice of CIT(E), hence in our view, assessee is not entitled for registration or approval under section 10(23C) / 12A. The present case is a case of conversion of a profit making company into a section 8 Company. In fact, the assessee was earning huge profit as a private company, which was later on converted into section 8 company w.e.f. 03.08.2018. As mentioned assessee was having surplus of Rs.15,96,02,014/- in the financial year 2018-19 and Rs.34,82,52,005/- for financial year 2019-20, which only shows that the assessee has been charging cost plus unreasonable mark up on its services. If we accept the argument of the learned counsel for the assessee that only the subsequent document should be taken into consideration, despite the fact that the assessee, being a profit earning private company prior thereto, then it will be a handy tool for an otherwise profit-making company to conveniently convert into a so-called charitable company and avoid payment of due taxes to a welfare state. In the present case, neither the activities nor the management nor the place of services nor the charges for treatment had changed in any manner by conversion and only the name of the assessee had changed albeit the assessee is claiming registration / approval under the Act. Earlier the assessee was known as Fernandez Hospital Private Limited and presently, it is known as Fernandez Foundation . Further, we are in agreement with the argument of ld.DR that the assessee can do charity by either bringing down its profit by providing services at reasonable rate or by utilizing the surplus for helping medical aid / facilities to the poor / needy persons at free of cost. Nothing of this nature, if at all done by the assessee, has been brought to our notice. The assessee had only provided the treatment to 65 indoor patients for an amount of Rs.84,48,709/- and 5,569 outdoor patients for Rs.39,65,102/- on concessional rates and the said amount is a meagre amount when compared to its total revenue collection of the assessee i.e., Rs.141.90 crore for the period under consideration. By that standard alone the activities of the assessee cannot be said to be charitable activities. Hon'ble Supreme Court Ahmedabad Urban Development Authorit [ 2022 (10) TMI 948 - SUPREME COURT] mandates that all private hospitals that had acquired land at cheaper rates must reserve 10% of their in-patient department capacity and 25% OPD for free treatment of poor patients. Though the said decision was rendered in the context of cheap allotment of land but nonetheless, we are of the view that some percentage of free treatment or treatment at concessional rate should be provided by the assessee. However, in the instant case, the free treatment / concessional rate was less than 1% of the revenue of the assessee. In our view, ld.CIT(E) was correct in holding that the assessee is charging on the basis of commercial rates from the patients, either outdoor/indoor and the assessee has failed to demonstrate that the charges / fee charged by it were on a reasonable markup on the cost. We do not find any error in the decision of ld.CIT(E). Accordingly, the order of ld.CIT(E) is upheld and the appeal of the assessee is dismissed.
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2022 (12) TMI 634
Addition of the net benefit accruing to the assessee on account of CCM - shifting of profit to loss - Client Code Modification (CCM) - Modified Client codes with a malafide intention - contrived loss/profit to evade tax - information from search conducted on the broker of the assessee, ACFSL, that the assessee had benefited by indulging in client code manipulation through his broker, and had shifted out of profit and shifted in loss resulting in net reduction in income due to CCM - HELD THAT:- CIT(A) noted the fact that the AO had given specific transactions where profit had been shifted by CCM and the assessee had adduced no evidence to show that he had not benefited from the same. He also noted that on becoming aware of CCM by broker, the assessee did not take any corrective action by objecting to the Broker. CIT(A) also noted that the director of the Broker Company ACFSL had stated that CCM was misused by his clients. Moreover, agree with the CIT(A) that the assessee sought to justify the genuineness of the transactions by giving only general reply that CCM was carried out by broker to correct genuine punching errors. No evidence has been filed by the assessee either before the Revenue authorities or even before me to substantiate this contention that CCM was done to rectify punching errors. We agree with the Ld.CIT(A) that the assessee was unable to establish the genuineness of its transactions in the light of adversarial material available with the Revenue showing that the losses returned were manipulated by CCM. It is settled principle of law that concurrent findings of the authorities cannot be interfered with without sufficient and just reason or any material irregularities in the finding being pointed out by other side. There is nothing more before me to depart from the view taken by the Revenue authorities on this issue, more so, in the absence of any assistance rendered by the assessee in regard to the issue involved in the ground raised. Speculation loss - reason for addition is non-furnishing of supporting details and evidences to demonstrate speculation loss - HELD THAT:- While upholding the order of the AO, CIT(A) has recorded a finding that during the assessment proceedings and during the appellate proceedings, the assessee did not file any details to support his claim despite giving opportunities. The argument of the assessee that the AO should get details from the broker and accordingly verify the claim of the assessee was untenable, and therefore, the AO was justified in disallowing the impugned speculation loss. Before us there is no contest on behalf of the assessee against the impugned orders of the Revenue authorities. Therefore, in the absence of any explanation or material evidence to support the case of the assessee, we are not inclined to disturb the concurrent finding of the Revenue authorities on this issue also. Even otherwise also, after going through orders of both the authorities, we find no infirmity in the order of the ld.CIT(A) so as to demand interference. Ground of appeal No.3 of the assessee is dismissed.
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2022 (12) TMI 633
Addition u/s 68 - identity of the creditor, genuineness of the transaction and creditworthiness of the creditor not proved - HELD THAT:- Addition made by AO invoking Section 68 does not hold it good since the assessee has filed the confirmation letter from the lender, Bank statement from the assessee, Income Tax Return and statement of total income of the lender namely Mr. Rajesh Vaswani proprietor of M/s. Sunderdeep Builders. Thus the assessee has discharged its initial onus namely identity of the creditor, genuineness of the transaction and creditworthiness of the creditor. Further AO has disbelieved Rs. 5 Crores received from creditor and not doubted about the Rs. 30 Crores received from the same lender. Assessing Officer has not doubted the interest payment of Rs. 1,83,79,553/- as against the above loan, with appropriate TDS made by the Assessee. Therefore the addition made by the AO u/s. 68 of the Act is not sustainable in law. We have no hesitation in confirming the order of the Ld. CIT(A), who deleted the addition made by the Assessing Officer u/s. 68 - Decided in favour of assessee. Assumption of jurisdiction under 153C - what is the relevant date from which the amended provisions of section 153C would be applicable? - HELD THAT:- No doubt, the amended provisions has been expressly brought into force with effect from 01.06.2015. However the search action has been conducted in this case on 10.03.2015 which is prior to 01.06.2015. Hence the provisions of law, as existing on the date of search namely 10.03.2015 in this case is to be followed. Therefore the satisfaction note recorded by the Assessing Officer on 17.11.2017 (which is extracted in Para 2.1 of this order), invoking the amended provisions of section 153C namely various documents were seized which relates to and the information contained therein pertains to the assessee is not correct in law. Even as per the pre-amended provisions of Section 153C, AO has to record satisfaction to the effect that seized material belongs or belongs to other person. In this case, the A.O. has not put on record that any material seized during the course of search does belong to the assessee. However seized materials related to other third party. Therefore in our considered view, the invocation of proceedings u/s. 153C is against the provisions of law. As relying on ANILKUMAR GOPIKISHAN AGRAWAL case [ 2019 (6) TMI 746 - GUJARAT HIGH COURT] the grounds raised by the assessee in the cross objection is allowed and assessment order is hereby quashed.
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2022 (12) TMI 632
Non-grant of TDS credit - assessee is an individual having residential status of Not Ordinarily Resident - HELD THAT:- TDS credit for the aforesaid amounts was not granted to the assessee on the allegation that the credits claimed in the return of income are not reflected in Form 26AS statement. However, on a perusal of Form 26AS statement submitted before us, it is observed, the amount being the TDS deducted by Employees Provident Fund organization is reflected in From 26AS. Similarly, TDS deducted by the employer M/s. Yaskawa India Pvt. Ltd. is also reflected in Form 26AS with TAN number. Thus, the allegation of the CPC that these two amounts are not reflected in Form 26AS, prima facie , appears to be perfunctory. In any case of the matter, since, tax has been deducted at source on the income of the assessee, full credit of such TDS has to be given to the assessee in spite of the fact that the assessee might have committed some technical/typographical error in the return of income, as alleged by Commissioner (Appeals). This is for the reason that the assessee cannot be deprived of getting the benefit of tax genuinely deducted on his behalf. We restore the issue to the Assessing Officer for the limited purpose of factually verifying assessee s claim qua the amounts reflected in Form 26AS and allow credit for the TDS amount reflected therein. Grounds are allowed for statistical purposes.
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2022 (12) TMI 631
Gain on sale of land - nature of land sold - urban land or agricultural land - profit on sale of land earned by the assessee at Mannur near Sriperumbudur holding the same as taxable income as against claimed by the assessee as agricultural land exempt from capital gains tax - HELD THAT:- From the revenue records i.e., patta, chitta and adangal papers issued by Revenue Department of TamilNadu that use of the land owned by assessee is for the purpose of agricultural operation. Assessee has also filed the financials of financial year 2008-09, 2009-10 2010-11 relevant to assessment years 2009-10, 2010-11 2011-12 which indicates that assessee has offered agricultural income and disclosed in the financials and accepted by the Income-tax Department in these years. The contest of the Revenue that this agricultural income are not declared in the returns of income is totally contrary on facts that these incomes are declared in the financials, which has been produced before us and verified by us, which are not contradicted by ld. CIT-DR. It means that the assessee has declared agricultural income varying from Rs.25,000/- to Rs.1,80,000/- and as per revenue records, the assessee has grown crops in the land and earned some agricultural income. The assessee is able to prove that the land is kept for agricultural activity and it has actually carried out agricultural activity, as the evident shows. In view of these facts and circumstances, we are of the view that the CIT(A) has rightly treated this land as agricultural land and held that the same is not assessable to capital gains. We affirm the findings of CIT(A) on this issue and Revenue s appeal is dismissed. Addition u/s.43B towards service tax - assessee before us submitted that the matter can go back to the file of the AO for verification, whether the assessee has paid this amount or not within the due date, as prescribed under Service Tax Act - HELD THAT:- CIT-DR has not objected. We also noted that the CIT(A) has confirmed the disallowance only on the absence of any evidence not produced by assessee in regard to payment of service tax within the due date. Since, the assessee is now requesting for producing evidence, we are setting aside this issue to the file of the AO, who will verify the payment of taxes within the due date and accordingly, decide the claim. This issue of assessee s cross objection is allowed for statistical purposes. Disallowance of diminution in the value of DFL shares and claiming the same as loss - HELD THAT:- The ld.counsel stated that in the initial years the DFL performed extremely well and the assessee company received substantial dividend but subsequently due to severe competition and stringent RBI regulations particularly on public deposit and NPA norms, the business of the company did not do well and hence, there is a fall in the share market. Assessee could not produce any evidence before us that how and to what extent the shares fall to Rs.2 and what is the basis for the same. In the absence of any evidence, we also are of the view that the disallowance made by the AO and confirmed by the CIT(A) is to be confirmed. This issue of assessee s cross objection is dismissed.
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2022 (12) TMI 630
Penalty u/s 271(1)(c) - interest income earned during the year on fixed deposits and savings bank accounts were not offered to tax in the return of income filed for the assessment year under dispute - HELD THAT:- While explaining the reason for not offering the interest income to tax in the return of income, the assessee had explained before the departmental authorities that the TDS figure and the corresponding income relating to second, third and fourth quarter of the relevant financial year were made available on the 26AS site only in September, 2017 by ICICI Bank. The aforesaid explanation of the assessee appears to be believable in view of the certificate issued by the concerned bank on 28th April, 2018. Therefore,there was reasonable cause in terms with section 274 of the Act in not offering the interest income to tax in the return of income. Departmental authorities have failed to consider the explanation of the assessee in proper perspective. In any case of the matter, the assessee has offered the entire interest income to tax whether in the return of income or in course of assessment proceeding. That being the factual position emerging on record, the assessee should not be visited with penalty under section 271(1)(c) of the Act. Accordingly, we delete the penalty imposed. Assessee appeal is allowed.
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2022 (12) TMI 629
Addition of interest on interest free advances given by the assessee - CIT-A deleted the addition - AR submitted that the assessee has interest free funds available at its disposal and hence, the benefit of availability of such interest fee funds should be allowed in computing the disallowance of interest - HELD THAT:- The Hon'ble Bombay High Court in CIT vs. Reliance Utilities and Power Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] has held that where an assessee possessed sufficient interest free funds of its own which were generated in the course of relevant financial year, apart from substantial shareholders funds, presumption gets established that the investments in sister concerns were made by the assessee out of interest free funds and, therefore, no part of interest on borrowings can be disallowed on the basis that the investments were made out of interest bearing funds. It is clear that where interest free funds are available with the assessee and there is net availability of funds, a presumption has to be drawn that the advance made for non-business purposes were advanced by such interest free funds available at the disposal of the assessee. We, therefore, setaside the impugned order and remit the matter to the file of the AO for examining the availability of interest free funds and then compute the disallowance of interest u/s.36(1)(iii) accordingly. Needless to say, the assessee will be allowed reasonable opportunity of hearing. Appeal is allowed for statistical purposes.
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2022 (12) TMI 628
Addition u/s 56(2)(vii)(b) - AO referred the valuation of property to Valuation Cell of the Income Tax Department and the DVO has determined value of property - difference between guideline value of the property and consideration paid for purchase of said property, then, said difference should be treated as income of the assessee in terms of s.56(2)(vii)(b) - difference between the DVO value and consideration shown in the registered document, at the rate of 1/5th on each co-owner name and made addition - HELD THAT:- There is no dispute with regard to the fact that there is a difference between consideration paid for purchase of property as per registered document and guideline value of the property fixed by the authorities for payment of stamp duty. In dispute that the AO has referred valuation of the property to the DVO and the DVO has determined value of the property. Therefore, difference between the DVO value and consideration paid for purchase of property should be assessed as income of the purchasers in terms of s 56(2)(vii)(b) - AO after considering relevant facts has rightly made addition towards differential consideration u/s 56(2)(vii)(b) - CIT(A) has rightly appreciated the facts and sustained the additions made by the AO and thus, we are inclined to uphold the findings of the CIT(A) and dismiss the appeals filed by all the assessees.
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2022 (12) TMI 627
Income accrued in India - income from rented properties held by the appellant in Australia and UK - right of the resident country to tax its residents - AO referred to the Notification No. 91/2008 dated 28.08.2008 and construed the words may be taxed as shall be taxed - DTAA with UK - assessee is a tax resident of India received rental income from the properties outside India held by her in England and Australia and declared the rental income received by her in her return of income filed in Australia and United Kingdom - HELD THAT:- We find that in the absence of an express provision, the right of the resident country to tax its residents cannot be taken away under the DTAA. Therefore, the expression may be taxed cannot be construed to mean shall be taxable only in the resident state , unless it is expressly stated. Provisions of Section 90(1)(a)(i) is clearly applicable to the facts of the case. Appeals of the assessee are allowed.
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2022 (12) TMI 626
TP Adjustment - MAM selection - HELD THAT:- As we direct the TPO to apply CUP as the MAM and recompute the ALP after giving the assessee a reasonable opportunity of being heard. Disallowance of provision for warranty - HELD THAT:- We respectfully follow the decisions of the Co-ordinate Bench [ 2020 (3) TMI 471 - ITAT BANGALORE] and hold that the provision for warranty is an allowable expenditure. MAT computation u/s 115JB - HELD THAT:- Addition of provision for warranty to the book profits u/s 115JB is incidental. In view of the decision on the allowability of provision for warranty, this ground which is incidental, does not warrant any separate adjudication and hence dismissed. Disallowance u/s 37(1) of advertisement and business promotion expenses - HELD THAT:- For the purpose of an expenditure to be claimed u/s 37(1), the expenses should not be capital in nature and should have been incurred wholly and exclusively for the purpose of business. Assessee has submitted various details, including the details of tax deducted at source, bank statement, etc., to substantiate that the expenditure towards advertisement expenditure is actually incurred and that the payments are made to the vendor, Mudhranna Creations. The fact that the vendor has wound up the operations is supported by the report from MCA website and that can be inferred as a reason for non-response from the vendor for the notice under section 133(6) which cannot be the only reason for disallowance, when other documents submitted by the assessee evidences the genuineness of the expenditure. We are, therefore, of the considered view that no disallowance is warranted for the advertisement expenditure incurred by the assessee, which is otherwise substantiated based on the various details submitted. This issue is allowed in favour of the assessee.
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Customs
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2022 (12) TMI 625
Smuggling of gold - town / city seizure - onus to prove the smuggling - the person in possession of the gold appears to have given an explanation stating that he had purchased gold ornaments weighing 2.14 kgs. from the local market, specifying the name of seller - he paid the same by account payee cheque - HELD THAT:- after considering these facts, the Tribunal has held on facts that no evidence could be adduced by the Department in the subsequent investigation that the seized gold was of foreign origin and smuggled into the country. Further, the Tribunal held that the respondent had submitted all the relevant document including GST, purchase invoice etc. covering the gold which have been examined by the Department and no discrepancies were pointed out. Appeal of the revenue dismissed.
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2022 (12) TMI 624
Rejection of request for waiver of interest while granting immunity from penalty and prosecution - order of Settlement Commission - Export Promotion Capital Goods Scheme - failure to fulfill the export obligation - HELD THAT:- The bond was an agreement which is between the Petitioner and the Commissioner of Customs representing the Excellency of President of India. Therefore merely because the said agreement refers to the payment of interest is applicable as per law, it does not mean that the payment of interest ceased to be under the agreement. Though the bond furnished by the Petitioner uses the phrase 'interest as applicable as per law', specifying the interest rate was superfluous in this case. Section 28AA of the Act, states that the interest should be at a such rate below 10% and not extending 36% per annum as per Central Government may by notification in the official gazette. By Notification dated 5 June 1995, amended with effect from 5 September 1995, the interest rate was prescribed and, therefore, was known. Thus, merely because in the case of Rexnord Electronics [ 2008 (3) TMI 8 - SUPREME COURT ] , the interest rate was specified, and in the present case, it is stated as applicable as per law, the law laid down in the case of Rexnord Electronics will not cease to apply to this case. Thus the liability of the Petitioner to pay interest in this case originated from the bond furnished by it and it was rightly held by the Settlement Commission as being contractual. The Commission has rendered the finding that liability of the Petitioner to pay interest was under the bond; therefore, Settlement Commission has no jurisdiction to waive interest liability . Impact of economic crisis / recession in East Asian countries - frustration of contract beyond the control of the petitioner - HELD THAT:- , the Commission held that the economic recession and financial crisis are not such an unique phenomena, and are generally anticipated by prudent businessmen. The Commission rightly observed that those in business are expected to be ready to overcome such a situation. Though the Petitioner had started the unit after two years or that had sought for cancellation of the bank guarantee will not be sufficient when the Petitioner failed to discharge his liability for a period of the license. The Commission has observed that the Petitioner derived substantial financial benefits at the cost of the exchequer for enjoying the amount saved on duty for almost a decade. Petition dismissed.
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2022 (12) TMI 623
Increase in rate of customs duty on import of dry dates - Effective date - Filing of Bill of Entry prior to the issue of notification - goods imported from Pakistan were subjected to 200% duty - Case projected on behalf of the petitioner was that the impugned Notification dated 16.02.2019 can only be prospective in operation. - HELD THAT:- In Paragraphs 7 and 8 of the writ petition, there are specific averments to the effect that the petitioner had filed a checklist Bill of Entry, which was filed by the Clearing House Agent of the petitioner in the online EDI Portal of Customs wherein Job No. 3568 dated 16.02.2019 was allotted, seeking clearance of the goods for home consumption. In support of such assertion, a copy of the checklist copy of Bill of Entry stands appended and placed on record as Annexure P Still further in Paragraph 8 of the writ petition, there is a positive assertion that the goods in question had arrived before 18.00 hours on 15.02.2019 and the IGM (Import General Manifest) was filed on 16.02.2019 and the checklist Bill of Entry having also been filed on 16.02.2019. Under such circumstances, generation of the Bill of Entry would be seen as a mere procedural fallout. Revenue is not in a position to controvert that the petitioner has placed the import orders prior to 16.02.2019 and has also received goods on or before 16.02.2019 and in any case prior to issuance of the impugned notification which was uploaded on 16.02.2019 at 8.45 p.m. Following the decision in M/s Rasrasna Food Pvt. Ltd. [ 2019 (8) TMI 1400 - PUNJAB AND HARYANA HIGH COURT ], the writ petition is allowed
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2022 (12) TMI 622
Levy of penalty u/s 114AA and u/s 12(a) (ii) (b) (ii) - importer wrongly claimed the benefit of exemption notification - mis-declaration of the Retail Sales Price [RSP] of the imported good s - HELD THAT:- a new plea of change of classification to CTH84714190 is raised by the learned counsel before us which was neither raised before the Principal Commissioner nor was it considered in the impugned order. This claim of classification is significant as, according to the learned counsel, the tariff rate for the Basic Customs Duty itself will be NIL and the exemption notification in dispute becomes irrelevant. It is also significant because of the claim of the learned counsel that goods falling under CTH 84714190 are not covered by Section 3A of the Central Excise Act read with the Legal Metrology Rules and therefore, Additional Duty of Customs does not have to be determined as per the RSP. If it is so, then the allegation of misdeclaration of RSP will require re-examination. Additional Duty of Customs may also have to be re-determined. Consequently, it needs to be examined if the confiscation, fine, penalty, etc. still survive. We are of the considered view that the Principal Commissioner should get an opportunity to examine this claim for classification under CTH 84714190 which the appellant has now made and the consequential effects on demand of duty, effect of alleged mis-declaration of RSP, confiscation, fine, penalty, etc. Matter restored back.
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2022 (12) TMI 621
Levy of penalty - Mis-declaration of goods - Self assessment of Bill of entry - dispute related to classification of goods - import of Bulk Reishi Gano Powder-100% Ganoderma and Bulk Ganocelium Powder-100% and Gano Mycelium - to be classified under Customs Tariff Heading [CTH] 30039011 or CTH 21069099 - HELD THAT:- In the impugned order the Principal Commissioner obfuscated the fact that the Final Order of this Tribunal was passed on an appeal by the Revenue as the Commissioner (Appeals) had decided the classification in favour of the importer. Until the Final Order was passed by this Tribunal on 10.1.2018, the order of the Commissioner (Appeals) was binding on both sides. In these Bills of Entry also, after the order of the Commissioner (Appeals), SCNs could have been issued and transferred to call book and decided after this Tribunal passed the Final Order. However, until the Final Order of this Tribunal was issued, the order of Commissioner (Appeals) was binding both on the importer and the officers. Self Assessment of Bill of Entry - While the importer is required to subscribe to the truth of the contents of the Bill of Entry, it refers to facts and not opinions. There cannot be any absolute true or false views. The importer may self-assess the duty under a particular tariff heading as per its view and understanding, the officer re-assessing the Bill of Entry may take hold a different view. In the subsequent chain of appeals through Commissioner (Appeals), Tribunal and Supreme Court, different views may be taken and at any point of time, the view of the higher judicial/ quasi-judicial authority prevails over the view of the lower authority. Self-assessment is subject to any reassessment by the proper officer. Self-assessment can also be appealed against to the Commissioner (Appeals). They can assess duty as per their understanding and the officers are free to reassess it as per Section 17(4). Mis-classification or incorrect assessment of duty does not amount to mis-declaration in the Bill of Entry nor does it attract any penalty. Levy of penalty u/s 112 (a) (ii) - Penalty under section 112 (a) (ii) is imposable on any person for acts or omissions which render any goods liable to confiscation under section 111. - The goods were not confiscated even in the impugned order under section 111(d). Section 111(m) applies if goods do not correspond to an entry made under section 46 and there is no allegation, let alone evidence in this case that the goods were not as per declaration. The allegation of mis-classification of goods, even if it is true, will not attract 111(m). Levy of penalty u/s 114AA - There is no allegation or evidence that the goods were wrongly declared and the allegation of mis-classification or incorrect assessment of duty, even if it is true, will not attract penalty under section 114AA. No penalty.
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Corporate Laws
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2022 (12) TMI 655
Independence of the judicial officers of NCLT - reappointment of the petitioner - judicial member of the National Company Law Tribunal - Section 413 of the Companies Act, 2013 - The petitioner held office for 5 years as contemplated. It appears that the petitioner sent her willingness on 02.02.2021 to continue as Member(Judicial), National Company Law Tribunal (NCLT) for another term of 5 years. HELD THAT:- Merely because the petitioner has shown her willingness to be considered, merely because she is liable to be considered and merely because she has opted for reappointment, could not be ground to seek writ from the Court that her appointment process may be completed. The petitioner's case could be at the best considered along with other aspiring candidates in accordance with law and on its own merits. Upon being queried, learned senior advocate for the petitioner stated that five persons have been seeking appointment as Members of the Tribunal. Any direction or observation in respect of the petitioner in particular to complete the process cannot be granted. While therefore, the first prayer cannot be considered, the second prayer is regarding formation of policy that the appointment shall be rational and with transparency. It has to be only stated in this regard that the authorities cannot be presumed to be not alive to sub-serve the interests of NCLT and act in accordance with the directions of the Supreme Court as above. No further direction is necessary. The prayers in the petition are not liable to be granted.
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2022 (12) TMI 620
Disqualification of the Petitioners - Deactivation of Director Identification Number (DIN) and the Digital Signature Certificate (DSC) of the Petitioners - non-filing of balance sheet and other returns with the Registrar of Companies. - The grievance of the Petitioners is that they have been disqualified without issuing any show cause notice, or giving any giving any opportunity to present their case. - HELD THAT:- This scheme has been introduced in view of the COVID-19 pandemic with the aim to enable a fresh start to defaulting companies and directors of such companies. The disqualification of defaulting companies was a step which was taken sometime in 2016-17 in order to ensure that filing of regular returns and compliances are undertaken strictly as per the provisions of the Act. It was also meant to be a measure to ensure that entities that are not conducting businesses are not misused as 'shell companies' for any improper activities. A substantial part of the disqualification period has already been completed. The introduction of the CFSS is itself a step for 'providing a fresh start'. Under such circumstances, continuation of the disqualification would defeat the Scheme and its purpose. In furtherance of the purpose of this scheme, directors of struck off companies who seek to be appointed as directors of other/new companies, ought to be provided an opportunity to avail of this scheme, provided that they have undergone a substantial period of their disqualification. Following the decision in Mukut Pathak Ors. v. UOI Ors., [ 2019 (11) TMI 319 - DELHI HIGH COURT] and Anjali Bhargava Anr. v. UOI Anr. 2021 (1) TMI 1228 - DELHI HIGH COURT] , this Court directs that the DIN/DSC of the Petitioners be reactivated within 2 weeks to enable them to file the requisite documents in terms of the Companies Act, 2013 and effect compliances in respect of the companies.
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2022 (12) TMI 619
Seeking lifting of corporate veil - Recovery of dues - dispute related to Joint Venture Agreement between the parties - Learned counsel for the HUDCO at this juncture has submitted that corporate veil of the Bakshi Holdings Pvt. Ltd. need to be lifted and shares held by Bakshi Holdings Pvt. Ltd. also held to be covered by the direction issued by Recovery Officer. HELD THAT:- We have noticed that on the application which was filed by the HUDCO on which order was passed on 02.02.2016 was only with regard to 3100 shares held by Vikram Bakshi in M/s Connaught Plaza Restaurants Pvt. Ltd. Learned counsel for the HUDCO has emphasized on the expression or any other quantity in the name of CD#3 till further orders as occurring in the order dated 02.02.2016. The expression or any other quantity in the name of CD#3 , CD#3 being Vikram Bakshi obviously referred to the shares in the name of Vikram Bakshi in M/s Connaught Plaza Restaurants Pvt. Ltd apart from aforesaid 3100 shares. It is not the case of either of the parties that any more shares apart from 3100 shares are owned by Vikram Bakshi in M/s Connaught Plaza Restaurants Pvt. Ltd. Hence, the order dated 02.02.2016 issued by the Recovery Officer has to be held to be confined to 3100 shares. On the strength of said order, the Counsel for the HUDCO is not right in his submission that corporate veil of other company in which Vikram Bakshi is also shareholder should also be lifted i.e. Bakshi Holdings Pvt. Ltd. Present is not a case where there is any occasion for lifting corporate veil of other companies which has nothing to do with recovery of Ascot Hotels and Resorts Pvt. Ltd.. HUDCO is fully entitled to recover its dues which are owed by Ascot Hotels and Resorts Pvt. Ltd. On the strength of Recovery Certificate granted by Debts Recovery Tribunal being Recovery Certificate No. 330/2015, Recovery Officer in fact is proceedings to effect recovery and certain amount has already been deposited before the Recovery Officer including the value of 3100 shares of Vikram Bakshi, which were under restraint in the Recovery Officer s order.
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Insolvency & Bankruptcy
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2022 (12) TMI 618
CIRP - moratorium is in force - Petitioner (Corporate Debtor) receiving the show cause notice alleging various breaches of the Fuel Supply Agreement (FSA) - SCN for Cancellation of agreement and forfeiture of security - Various bank guarantees for a total sum of approximately Rs.25 crores were furnished in terms of the FSA. However, for various reasons which are not relevant for the present purposes, there was a delay in the formal commissioning of the plant. HELD THAT:- The above order is in two parts - One is the appointment of the interim resolution professional and the other is the application of moratorium under Section 14 of the IBC. The NCLAT order extracted above primarily directs the RP not to take any steps, but the moratorium itself has not been stayed by the NCLAT. Therefore, the said order only concerns the first part of the NCLT decision extracted above. In view thereof, the moratorium would continue to apply even qua the forfeiture of the security deposit. Accordingly, it is directed that invocation of the bank guarantees shall not be given effect to by the banks till 4th January, 2023. If an application before the NCLT is filed by the Petitioner by the said date i.e., 4th January, 2023, the protection granted qua encashment of the bank guarantees shall continue till the date of first listing before the NCLAT.
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2022 (12) TMI 617
CIRP - Applicant has prayed that he should be provided the electricity connection without security deposit - HELD THAT:- the Adjudicating Authority has rightly come to the conclusion that security deposit is a pre-condition for sanction of High Tension Power Connection to industries. The Applicant being a heavy industry huge power supply is required. The security deposit is only to adjust the shortfall which come in payment of bills. The Adjudicating Authority has rightly partly allowed the I.A. No. 2477 of 2020 insofar as past dues of Southern Power Distribution Company of A.P. Ltd. were concerned. There is no merit in the Company Appeal
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2022 (12) TMI 616
Initiation of CIRP - Period of limitation - approval of Resolution Plan - distribution of the amount to the Financial Creditors - HELD THAT:- When the challenge to the Section 7 application filed by the Appellant on all grounds has been rejected by the Hon ble Supreme Court, the Appellant cannot be permitted to challenge initiation of CIRP on the ground of limitation in this Appeal. The Appellant cannot be heard to say that initiation of CIRP itself was bad. What is challenged in this Appeal is approval of Resolution Plan by order dated 14.02.2020 and subsequent order passed on the I.A. of the Resolution Professional. Distribution of the amount to the Financial Creditors as per the decision of the CoC cannot be permitted to be challenged. - Judgment of Hon ble Supreme Court in India Resurgence ARC Pvt. Ltd. vs. Amit Metaliks Ltd. Anr. [ 2021 (6) TMI 684 - SUPREME COURT ] followed. Appeal dimissed.
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2022 (12) TMI 615
Initiation of CIRP - pre-existence of dispute or not - admission of debt or not - supply of poor quality of material - impact of case pending for dishonor of cheque u/s 138 of NI Act - NCLT admitted the application - HELD THAT:- The very fact that a criminal complaint before the Hon ble Judicial Magistrate of First Class Court No.V, Mysuru, is filed by the 1st Respondent / Petitioner / Operational Creditor against the Corporate Debtor , that itself, will clearly, unerringly points out to the Admission of Debt , and that will not point out an existence of dispute As regards the quality of materials , that was supplied and the supplied goods were lying in the Godown , without any use, etc., this Tribunal , pertinently points out, that only in the Reply of the Corporate Debtor to the issuance of Statutory Demand Notice , the quality aspect of Goods was taken and on an earlier occasion there was no correspondence , that was exchanged / communicated between the parties or that was not placed before the Adjudicating Authority , (National Company Law Tribunal, Hyderabad Bench, Hyderabad), to support the Claim of the Corporate Debtor . Under the Insolvency Bankruptcy Code, 2016, the aspect of existence of Default , takes a prime seat , and the reason supposed to be projected by the concerned Party viz., inability to pay , is of no avail. Appeal dismssed.
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2022 (12) TMI 614
CIRP - Fairness of Resolution plan - appellant being Association of the Homebuyers - plan challenged on various issued including, the Resolution Plan amount being lower than the Liquidation Value , exorbitant interest charges by the Financial Creditors in their claims, denial of claims of the Appellant etc. - HELD THAT:- The contention of the Appellant with regards to equitable treatment with the financial creditor and not being treated at par with them does not seems to hold ground as the Hon ble Supreme Court of India had established in case of Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta and Ors [ 2019 (11) TMI 731 - SUPREME COURT ] . Hence the challenge to the impugned order on ground that percentage recovery available to members of the association is lower than Financial Creditor is not palatable. Therefore, this Appellate Tribunal do not find any error in the impugned order on this ground. Whether the amount under the Resolution Plan can be less than the Liquidation Value ? - HELD THAT:- The Resolution professional in its submissions has said that the liquidation value was strictly according to the regulations of the I B Code, 2016 and were valued by two independent registered valuers. It has also been said that the Resolution Plan amount was approved by Committee of Creditors including, majority of the of the Homebuyers . All apartments forming part of pending projects of the Corporate Debtor had been included and made part of the information memorandum, which was approved by the Committee of Creditors . - no fault can be found in view of judgment of the apex court in the case of Maharashtra Seamless Ltd Vs Padmanabhan Venkatesh Ors. [ 2020 (1) TMI 903 - SUPREME COURT ] and therefore the Adjudicating Authority rightly held that the resolution plan amount need not match the Liquidation value. Whether the 4th Respondent who is Successful Resolution Applicant is close associate of 3rd Respondent who is Financial Creditor of the 1st Respondent (Corporate Debtor) and whether the 4th Respondent as such can be barred by I B Code, 2016 for submission of the Resolution Plan .? - HELD THAT:- as the I B Code, 2016 places no embargo upon a financial creditor from voting upon a Resolution Plan which is fully funded by it or partly funded by the Successful Resolution Applicant . This Appellate Tribunal , does not find any material irregularity or patent illegality , in the impugned order
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2022 (12) TMI 613
CIRP - sanctioned scheme of rehabilitation - contravention of the scheme - seeking liquidation of the corporate debtor - whether the same to be considered as the Resolution Plan - The learned Counsel for the Respondent refuting the submissions of learned Counsel for the Appellant submits that approved Rehabilitation Scheme is not a Resolution Plan within the meaning of IB Code. The Notification dated 24.05.2017 has been held to be in excess of jurisdiction of Central Government, hence, cannot be relied by the Appellant for filing Application under Sections 33 and 34. HELD THAT:- We are not in agreement with the submission of learned Counsel for the Appellant with regard to Notification dated 24.05.2017 that the judgment of the Hon ble Supreme Court can be treated as only an obitor. The Hon ble Supreme Court has clearly approved the view of the Appellate Tribunal that Notification dated 24.05.2017 travels beyond the scope of removal of difficulties provisions, which is law declared by the Hon ble Supreme Court and is binding on all under Article 141 of the Constitution of India. The judgment of the Adjudicating Authority impugned in the present Appeal follows the judgment of the Hon ble Supreme Court in M/s Spartek Ceramics India Ltd. vs. Union of India Ors. [ 2018 (10) TMI 1660 - SUPREME COURT ] When the Notification dated 24.05.2017, is not a valid Notification, there is no occasion to accept the submission that approved Rehabilitation Scheme dated 07.01.2005, which is foundation of the Application filed by the Appellant under Sections 33 read with Section 34 can be treated as a Resolution Plan within the meaning of IB Code. The very foundation of the Application filed by the Appellant under Sections 33 and 34 having been knocked out, the Application was rightly rejected by the Adjudicating Authority. No error has been committed by the Adjudicating Authority in rejecting Application filed by the Appellant under Sections 33 and 34. There is no merit in the Appeal.
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2022 (12) TMI 612
Initiation of CIRP - Demand Notice on unpaid Operational Debt - existence of dispute - Outstanding dues towards 'Interest' - It is sbumitted that, there was no agreement between the parties to pay any interest, in any view of the matter. - NCLT admitted the application - HELD THAT:- Section 9(5)(ii) contemplates that Adjudicating Authority shall reject the Application if notice of dispute has been received by the Operational Creditor or there is record of dispute in the Information Utility. The object and purpose of IBC is to reorganize and revive the Corporate Debtor. Section 9 Application is not contemplated to decide the dispute between the parties regarding the operational dues. The crux of the matter in the present case is to find out as to whether there was a plausible dispute supported by the materials raised by the Corporate Debtor in Reply to Demand Notice. The averments of the Corporate Debtor are that the accounts till 31st March, 2016 were settled hence interest charges upto April, 2016 of Rs. 8,170/- were asked for by email dated 03.06.2016 which also said that subsequent payment has to be made with 18% interest. Paragraph 9 further gives a details of happening where the Operational Creditor denied to collect the goods and settlement was entered there between the parties that Operational Creditor shall not raise any demand of payment. When we look into the contents of allegations made in the Reply Notice, it is clear that Reply notice raises substantial and genuine issues to oppose the claim of the Operational Creditor s amount due. - Present is a case where it cannot be said that defence taken by the Corporate Debtor in Reply Notice is a moonshine defence unsupported by any evidence. Corporate Debtor having raised genuine disputes by sending a Reply Notice to the Demand Notice, the Adjudicating Authority ought not to have admitted the Section 9 Application. Appeal allowed.
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2022 (12) TMI 611
CIRP - bonafide nature of the transactions or not - recovery from the ex-directors of the corporate debtor - forensic and transaction audit of the corporate debtor was conducted - increase in quantum of commission from 5% to 32% - transfer to stock from one warehouse to another, instead of selling the same as scrap - HELD THAT:- An increase in commission percentage of 32% in the FY 2018-19 is appropriately explained by the Appellant as being related to commission representing many services which were provided by the new company Y2Y Fashions. The sealing of the corporate debtor s warehouse in early 2018 and also the cancellation of its teleshopping arrangement with channels such HomeShop18 and ShopCJ were driving factors that were instrumental in the decision of the promoters/ex-directors of the corporate debtor to set up a new company Y2Y Fashions International Limited which would do website hosting, and provide a number of services as covered in the T-commerce Vendor Agreement. We are convinced by the argument of the Appellant that this was done in the normal course of business to let the corporate debtor function in the changed business environment. Such an arrangement, even though with related party, cannot be termed as preferential transactions done to defraud the creditors of the corporate debtor. We are of the clear view that the Adjudicating Authority has committed an error in arriving at the inference that the amount of Rs.83.97 lakhs was transferred by the corporate debtor to Y2Y Fashions Pvt. Ltd., a related party, and is, therefore, a diversion by the corporate debtor and Y2Y Fashions Pvt. Ltd. with an intention to defraud the creditors of the corporate debtor by the ex-directors of the corporate debtor. Ex-directors of the corporate debtor and Y2Y Fashions Pvt. Ltd. shall not be liable to make contribution to the extent of Rs. 83.97 lakhs in the account of the corporate debtor. Appeal allowed
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2022 (12) TMI 610
Initiation of CIRP - Operational Debt - NCLT admitted the application - Recovery Forum for Unpaid Dues - existstence of a Dispute - Appellant contends that the amount, claimed to be in default , is based on the Memorandum of Compromise and further that the Claim of the Respondent , based on the unpaid Instalments , under the Memorandum of Compromise , is not to be considered as an Operational Debt . - HELD THAT:- In the present case, the Defaults , took place in the year 2018 and later in the year 2019, with a promise to effect payments, by October 2019, prior to the Covid-19 Pandemic , in March 2020. Apart from that, the Appellant , in the instant Appeal Memorandum , had tacitly admitted that, till date, a payment of Rs.2,00,00,000/-, was made in favour of the Respondent by the Appellant and UDL as against the Outstanding Sum of Rs.5,25,00,000/-, which was admitted by the Respondent. Therefore, the Balance Outstanding Sum , payable was Rs.3,25,00,000/-. In the instant Appeal Memorandum , the Appellant , has expressed a desire to make payment, but the same is not accepted by the Respondent , because of the fact that, inspite of ample opportunities and time granted, the Appellant , has not made payment, in respect of Outstanding Principal Amount of Rs.2.05 Crores, barring the Outstanding Interest factor , as opined by this Tribunal . There is no material brought on record on the side of the Appellant , to exhibit, the Existence of a Preexisting Dispute , in regard to the Interest . In fact, the Memorandum of Compromise , dated 30.04.2019 is a document, filed in support of the Section 9 Application , before the Adjudicating Authority , by the 1st Respondent / Operational Creditor , to establish an Acknowledgement of Debt , by the Appellant / Corporate Debtor . The act of Admitting the Section 9 Application , by the Adjudicating Authority , as per Section 9 (5) of the Code, is free from any Legal Infirmities . Resultantly, the instant Appeal fails.
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2022 (12) TMI 609
CIRP proceedings - Proposal of the RP for liquidation of Corporate Debtor - Going concern - Infirmities and illegalities committed by the RP - As per the appellant at that time when IRP took over the Corporate Debtor it was generating a revenue of Rs.87 lakhs in the month of November, 2019. The appellant offered unconditional support to RP to continue the operation of the Hospital to maximise the value of the Corporate Debtor. - It is allege that, the RP had not taken any step to get certain dues of the Corporate Debtor recovered from the concerned Govt Departments/Agencies HELD THAT:- it is evident that the RP had not taken any reasonable step to get the CD as going concern which is mandated as per Section 25(2)(h) or he acted in accordance with Section 24 of the Code and as such there is no reason to allow the impugned order to further continue. The holding of the CoC Meeting in the premises of the Financial Creditor and also joint filing of the reply by RP and financial creditor also reflects that something was going on in between the parties. IBBI directed to conduct an enquiry regarding conduct of the RP and other circumstances which led to filing of petition under Section 33(2) of the IBC before the NCLT. Matter is remitted back to the NCLT to re-examine the issue and consider to change the RP.
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2022 (12) TMI 608
Initiation of CIRP - inter corporate deposit - Proof of debt - Appellant failed to produce any proof of the RTGS by way of bank statement indicating that the amount has in fact been transferred from its account to the account of the Corporate Debtor - NCLT dismissed the application - HELD THAT:- During the course of hearing, Counsel for the Appellant was repeatedly asked as to how 25.04.2018 has been determined the date of default to which she could not give any answer. Moreover, the amount involved also does not fall within the definition of financial debt because the financial debt would be a debt alongwith interest if any which is disbursed against consideration for the time value of money whereas in the present case no reliance can be placed upon the alleged acknowledgement in which the rate of interest has been hand written besides other entries made by hand whereas the rest of the document has been typed. There is no initials of the parties concerned on the hand written corrections, therefore, it could not be disciphered as to whether these were the agreed term between the parties at the time when document was executed or were later on incorporated. Be that as it may, the intercorporate deposit is a loan is not substantiated by the Appellant. There is no error found in the finding recorded by the Adjudicating Authority particularly in para 7 of the impugned order in which all aspects of the matter have been discussed. Appeal dismissed.
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2022 (12) TMI 607
Condonation of delay in filing of appeal - Period of limitation - CIRP - fairness of Resolution Plan - providing meagre settlement money to the Appellants for examples- only 1.5% to the Operational Creditors of their claims - non-initiation of the cases by the Resolution Professional for the fraudulent, preferential, avoidance and extortionate transactions. - HELD THAT:- It cannot be the case of the Appellants that, despite being Parties and in knowledge of pronouncement of the Order , by the Adjudicating Authority , they have chosen not to be pro-active in obtaining the required documents including, Certified Copy of the Order , to file the Appeal , before this Appellate Tribunal . This Appellate Tribunal , therefore, comes to an irrefutable and purposive conclusion that the Appellants , fail to meet the requirements of limitations, as stipulated in I B Code, 2016. Hence, these Appeals , are dismissed on the point of Limitation .
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PMLA
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2022 (12) TMI 606
Provisional attachment - Expiry of 80 days mandatory period for confirmation of the provisional attachment u/s 5 of PMLA - Applicability of decision of Supreme Court for exclusion of certain period on account of COVID-19 pandemic - the competent authority had failed to pass any formal order of confirmation or extension of validity of the provisional attachment order u/s 8(3) - HELD THAT:- undisputedly the order of provisional attachment under Section 5(1) of the PMLA was passed on 30th of September, 2021. 180 days period from the date of order was over on 31st of March, 2022. Before the expiry of 180 days, no order was made under Section 8(3) of the PMLA. Hence, on these undisputed facts, the provisional order of attachment had expired on 31st of March, 2022. Hon ble Supreme Court in the above judgment has clearly noted in suo motu petition that the order was passed for extending the limitation for filing petitions/applications/suits/appeals and all other proceedings and the order was for the benefit of those who wanted to take remedy, whose remedy were barred by time because they were unable to come physically to file such proceedings. Hon ble Supreme Court has clearly laid down that the order passed in Suo Motu petition dated 23rd of March, 2020 never meant to curtail any provisions of the Cr.P.C. or any other statute which was enacted to protect personal liberty of a person. Considering the provisions contained under Section 5(1) and 5(3) of the PMLA in the light of the above pronouncement, it is found that Section 5(1) does not relate to filing of any pleading but relates to the period of validity of the order of attachment. By virtue of Section 5(3) of the PMLA, the order of attachment under Section 5(1) ceases to have effect on expiry of the prescribed period. Thus, for such a provision, the order of the Hon ble Supreme Court passed in SMW (C) No. 3 of 2020 extending the period for filing the pleading will not apply. The learned Single Judge has not committed any error in reaching to the conclusion that the benefit of extended period of limitation by virtue of the orders passed by the Hon ble Supreme Court from time to time in SMW (C) No. 3 of 2020 will not be available for extending the validity period of provisional attachment order under Section 5(1) of the PMLA. Hence, learned Single Judge has rightly set aside the provisional attachment order.
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2022 (12) TMI 605
Ponzi schemes - Various persons conspired and connived with Karvy and its promoters to dupe the Petitioners - It has been estimated that the cumulative amount invested in these schemes totals Rs. 800 crores. - The Petitioners then preferred complaints before the Enforcement Directorate (ED) requesting action in accordance with law against the accused. However, till date, the Petitioners are not aware of any action taken against the private Respondents as a result of the complaint filed on 6th September, 2022 Mr. Ahluwalia, ld. CGSC appearing for the ED submits that the ED has launched a money laundering investigation against M/s Karvy Stock Brocking Ltd. and various other connected entities. Significant developments have taken place in these investigations and the matter is under examination. According to the ED, the Petitioners complaint has already been taken on record. Considering the nature of allegations and the stand taken by the parties, it is directed that the contents of the present writ petition along with the annexures and documents shall be transmitted to ED. Since the ED has already stated that the Petitioners complaint is under examination, let the allegations made in this writ petition be also considered and proper action be taken in accordance with law.
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Service Tax
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2022 (12) TMI 604
Paperless Court - Incorporation of ICT (Information and Communication Technology) initiatives in regard to revenue litigation - Directions issued - the Union government must now take all expeditious steps to ensure that filing by the Union government of all appeals and proceedings before the High Courts as well as the revenue tribunals, including the CESTAT and the ITAT should take place in the e-filing mode. The High-Powered Committee shall accordingly proceed to take necessary steps to achieve the above goal so that e-filing can be made universal within a period of three months where the government is in appeal. Functioning of GST Tribunals - The Union government shall take necessary steps to ensure that while the modalities for the GST tribunal are being put in place, they shall include the requirement that all filings should be in the electronic mode exclusively and that the tribunal should be paperless in its operations.
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2022 (12) TMI 603
Rejection of SVLDRS declaration - remedy available to petitioner - delay of eight to nine months in filing these writ petitions - whether the case of the petitioner falls within the purview of the exception in Section 125(1)(e) of the SVLDRS, 2019 or not? - quantification qualifies as quantification before 30.6.2019 under SVLDRS, 2019 or not - HELD THAT:- the rejection of applications filed by the respective petitioners and communication of the same after the scheme has expired did not bar the respective petitioners from challenging the impugned orders rejecting their application under the SVLDRS,2019 Had the petitioner immediately challenged the impugned orders rejecting their declaration as soon as it was communicated to them before the so called expiry period under SVLDRS,2019, could it be said that the petitioners were barred from proceeding further and the Court was barred from passing a final order? In our view, the writ petitions could not have been dismissed. If the Declarations were filed for settling the tax case under SVLDRS, 2019 in time but were rejected at the threshold, an applicant whose application was rejected cannot be left without any remedy as the right to have the case settled under the SVLDRS, 2019 is a substantive right. - In our view, the respective Writ petitions cannot be rejected in limine. Validity of show cause notice - Proper officer - HELD THAT:- the second respondent, the Principal Additional Director General, Directorate General of Goods and Service Tax Intelligence, is a Central Excise Officer. The second respondent was therefore competent to issue the impugned Show Cause Notice No.47 of 2020 dated 25.09.2020 under Section 73 of the Finance Act, 1994 to the petitioner. Whether the Show Cause Notice makes out a case for evasion of tax, warranting invocation of the provisions of the Finance Act, 1994 is altogether a different issue. We will refrain from making any observation on the merits of the case. Validity of orders of the Designated Committee - quantification qualifies as quantification before 30.6.2019 under SVLDRS, 2019 or not - Claim of quantification based on letter issued by the Audit Team or Investigation team - HELD THAT:- There should have been a quantification of the tax dues/duty liability on or before 30.06.2019 as per Section 123(c) where the tax dues are linked to an enquiry, investigation or audit against the declarant so as not to attract the exception under Section 125(1)(e). Non-quantification of tax dues acts as a dis-qualifier and therefore inhibits a person from availing the benefit of the SVLDRS, 2019. Such a person cannot file a declaration under the scheme. Quantification of tax dues is sine qua-non for availing the benefit for relief under Sec.124(1)(d) of SVLDRS,2019. During the course of enquiry investigation or audit, a person can file a Declaration under SVLDR, 2019 provided there is a proper quantification of tax liability on or before 30.06.2019. However, mere filing of a Declaration ipso facto will not mean that the enquiry, investigation or audit has to be stopped. If the amount quantified is correct, such quantification can be accepted. However, if enquiry, investigation or audit is complete, where there is no quantification, there is no scope for filing Declaration. However, it is not the self declared quantification of a Declarant of tax dues which will entitle the benefit of the aforesaid scheme. The scheme brings a closure to the tax dispute with issuance of certificate under Section129 of SVLDRS, 2019. It has to be a quantification which ought to have been accepted by the Investigating Wing or Audit Wing of the Department. Failure to furnish the details and information sought during Audit / Investigation - HELD THAT:- The details furnished by the petitioner in its communication dated 24.10.2018 and the information in the Show Cause Notice dated 26.02.2022indicate that the petitioner did not make a complete disclosure. There was no proper quantification of the tax due by the petitioner for the entire period between March 2016 to June 2017. However, only an adhoc quantification was made for the tax dues period between April 2017 to June 2017. Therefore, there was quantification for the aforesaid period alone. No quantification was provided by the petitioner for the period between March 2016 to March 2017 for the purpose of definition under Section 121(r) r/w Section 123(c) Section 124(1)(d). The disability under Section 125(1)(e) of SVLDRS, 2019 is attracted for the period between March 2016 to March 2017 and therefore as an errant taxpayer whose tax liability has not been determined, the petitioner is not entitled to avail the benefit of SVLDRS, 2019 for the period between March 2016 to March 2017.
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2022 (12) TMI 602
Demand of service tax - providing real estate agent services - self service or not - Extended period of limitation - assessee were not registered with service tax department and not paying service tax - it was submitted that, the service provided by the Appellant till the execution of the sale deed would be in the nature of self service and would not attract service tax. HELD THAT:- It is common knowledge that the real estate agent transacts the business of sale or purchase of the property, leasing or renting of the property and gets an amount as a commission. Though the definition of real estate consultant talks about evaluation, construction, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management of real estate, it has to borne out of the record that such services are rendered. As already stated hereinabove that the appellant herein has not rendered any of the services. It is clear that the amount received by the appellant as development charges which are nothing but in the form of profit, which will not get covered under the category of real estate agent services. We agree with the learned advocate that the services being provided by the appellant were not Real Estate Agent' service so as to confirm service tax on the same.
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2022 (12) TMI 601
Refund of service tax wrongly / under a mistake of law - Period of limitation - Club or Association Services - refund claim on the ground that, they have paid service tax under protest as they are Co-operative Society not engaged in any activity of profit and as per the principle of mutuality, services provided by them to their members would not be liable to Service tax under the Club or Association Service. - HELD THAT:- In view of series of decisions it is clear that the appellant cannot be said to be liable to pay service tax in any manner whatsoever inasmuch as what was paid by the appellant was not tax as envisaged under the Finance Act, 1994. Thus, the amount paid by the Appellant would not take the character of tax but is simply an amount paid under a mistake of law. Since Service Tax received by the concerned authority is not backed by any authority of law, in view of the provisions of Article 265 of the Constitution, the authority concerned has no right to retain the same. A similar view has been taken by the Hon ble High Court of Judicature at Bombay in the matter of Parijat Construction v. Commissioner Excise, Nashik, [ 2017 (10) TMI 659 - BOMBAY HIGH COURT ]. by holding that limitation prescribed under Section 11B of Central Excise Act, 1944 not applicable to refund claims for Service Tax paid under mistake of law. Refund allowed.
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2022 (12) TMI 600
Demand of services on surrender charge retained by the appellant upon withdrawal of insured from unit linked insurance policies (ULIP) - voluntary withdrawal from coverage under unit linked insurance policy (ULIP) - HELD THAT:- It is, unabashedly, about treating the return of the consideration, once already considered for taxability, upon discontinuation of contract of service even though such retention does not alter either that reality or that no additional consideration has passed from recipient to appellant while the provision of service subsisted. The premium paid in the past by the recipient was in pursuance of contract providing for amortized payments towards the bundled service each of which was assessed to tax on receipt by the appellant over the contract period and obliging of repayment of the amounts, not attributable to service already rendered by coverage and investment, upon termination of contract of service may be treated as consideration only in a bizarre, and perverse, context that is out of touch with the reality of transactions in the insurance sector. This was the finding in re Bharti- AXA Life Insurance Company Ltd [ 2021 (7) TMI 735 - CESTAT MUMBAI] which, de hors the decisions in earlier rulings, led to the outcome therein. The taint, if any, that the other decisions may have vis- -vis the recall of the decision in re Reliance Life Insurance Company Ltd [ 2018 (4) TMI 1407 - CESTAT MUMBAI] has no bearing on the binding precedent of this decision placed before us on behalf of the appellant. The surrender value so retained had already been subjected to tax as premium for rendering of taxable service and not liable to be taxed again for that very reason upon ceasing to be provision service
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2022 (12) TMI 599
Construction of complex service - construction of a single residential unit - Demand of service tax for the period 2005-06 to 2008-09 - work order was for building independent residential buildings on behalf of the Housing Board and each house that was constructed was an independent residential unit - HELD THAT:- The definition of a residential complex leaves no manner of doubt that it would be a complex comprising of a building or buildings, having more than twelve residential units. In other words a complex may have a building having more than twelve residential units or a complex may have more than one building each having more than twelve residential units. Independent buildings having twelve or less than twelve residential units would not be covered by the definition of residential complex . In the present case, the appellant had constructed independent buildings having one residential unit only. Thus, even if the appellant had constructed more than 12 independent buildings, the nature of activity would not be construction of complex and, therefore, the service tax could be levied. Levy of service tax on the appellant under construction of complex service cannot be sustained.
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Central Excise
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2022 (12) TMI 598
CENVAT credit - Input services - availability of Service tax charged on procurement of insurance service for covering medical claims of employees who had opted for the Voluntary Separation Scheme (VRS) - HELD THAT:- the impugned order has held the service on which CENVAT credit had been availed was ineligible for having been incurred on employees who were to retire and consequently having no nexus with manufacturing activity that is essential for taking credit under rule 3 of CENVAT Credit Rules, 2004. The decision of the Larger bench [ 2022 (4) TMI 1357 - CESTAT MUMBAI (LB) ] has categorically spelt an end to the controversy over eligibility of credit in such circumstances. Decided in favor fo assessee.
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CST, VAT & Sales Tax
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2022 (12) TMI 597
Purchase of gold for manufacturing of jewellery and ornaments - Claim of exemption from tax under Rule 33A of the West Bengal Value Added Tax Rules, 2005 (the Rules) - The assessing authority of the said bank disallowed the claim for exemption on the sole ground that the purchasing dealer namely the writ petitioner did not manufacture the jewellery in the State of West Bengal but had manufactured the same at Coimbatore in Tamil Nadu state. HELD THAT:- As mentioned above, if we read the scheme of the WBVAT and the rules, it is clear that the Rule 33A was intended to give a special benefit to dealers registered in the State of West Bengal that is both the selling and purchasing dealer who deal with gold and who sells gold purchased by another registered dealer in the state who manufactures jewellery for export. Therefore, the arguments that by preventing the petitioner from carrying out job work outside the State of West Bengal would violate Article 301 and 304 of the Constitution is an argument which is stated to be outrightly rejected. The intention, the object and the purpose of such exemption cannot be interpreted by referring to Rule 26A which operates in entirely different field. There is absolutely no inconsistency nor the form is contrary to the Rule 33A rather the form is part of the rule itself. The order passed by the learned tribunal rejecting the revision petition filed by the fourth respondent to be just and proper and does not call for any interference. Writ petition dismissed.
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2022 (12) TMI 596
Exemption from central sales tax (CST) - transit sale - Petitioner had effected sales by transfer of documents of title of the goods during their movement from one State to another - Section 6(2) of the CST Act. - Assessee also contended that under normal business transactions, bills are not raised immediately after the delivery of goods and as the normal business practice, bills are also generally raised after time gap of one to six months. HELD THAT:- The learned tribunal has completely failed to appreciate the ratio of the Judgment of the Hon ble Apex Court rendered in the case of A G Projects [ 2008 (12) TMI 392 - SUPREME COURT ] and merely on the basis of an observation as contained in para-13 of the said judgment proceeded to reject the claim of Transit Sale of the petitioner. If the aforesaid transaction of Transit Sale is deemed to have been rejected, then the transaction would fall under the purview of Section 3(a) of the C.S.T. Act and since, admittedly, the entire tax in respect of the aforesaid sale falling under Section 3 (a) of the C.S.T. Act has been discharged by the petitioner to the respective State Governments, no further tax liability can be imposed by the State of Jharkhand upon the petitioner. At the cost of repetition, there is misinterpretation and misreading of the judgment delivered by the Hon ble Apex Court in the case of A G Projects (Supra). The learned tribunal has committed an error by wrongly appreciating that there was pre-determined or pre decided contract of sale between the petitioner and the dealer of the goods at the point of time prior to the sale of goods between the manufacturer of the goods from other inter-state and the dealer of the goods. Even otherwise, the law is now well settled that the tribunal was not supposed to decide an issue which was not the case of the revenue. Decided in favor of assessee.
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2022 (12) TMI 595
Deemed sale - leasing of wagon - Levy of Value Added Tax (VAT) on the lease charges paid by the Railways Department to the Petitioner Company - interstate sale or local sale - Own Your Wagon Scheme - HELD THAT:- The High Court of Orrisa in M/s Srei International Finance Ltd. Vs. State of Orissa Ors. [ 2008 (3) TMI 638 - ORISSA HIGH COURT [ in somewhat identical set of facts has held that since the sale or purchase was in the course inter-state trade and commerce, the State of Orissa has no jurisdiction to levy tax on the lease rent received. The taxable event is the transfer of right to use goods and not the right to use goods or the use of goods. Therefore, the right to use goods or the use of goods is not the relevant factor to justify the levy of tax. The Orders of the assessment so made by the Assessing Authority and the rejection of the Revision by the Revisional Authority both being in contravention to the provisions of law and also contrary to the Judgments of the Hon'ble Supreme Court, the same thus would not be sustainable and therefore both the Orders deserve to be set-aside/quashed.
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2022 (12) TMI 594
Stay of demand - Reassessment proceedings were initiated upon audit objection - lack of proper notice in the statutory Form XIV as prescribed in terms of Rule 20 of Bihar Sales Tax Rules, 1983. - Learned counsel for the State prays for and is allowed four weeks time to file counter affidavit. Two weeks time thereafter is allowed to the petitioner to file reply, if so advised. HELD THAT:- In the meantime, subject to deposit of 20% of the tax of Rs. 6,64,65,700/- in the State Exchequer through challan within a period of 15 days from today, no coercive steps be taken against the petitioner.
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Indian Laws
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2022 (12) TMI 593
Dishonor of cheque - accused was acquitted - Preconditions for a valid cheque - material alteration but putting date on cheque - offence punishable u/s 138 - presumption u/s 139 - whether the accused has successfully rebutted that presumption? - HELD THAT:- It is true that once the accused is acquitted, the presumption of innocence get strengthened. It is not the rule of law but rule of prudence not to interfere in the judgment of acquittal. It is important to note that the prosecution under Section 138 of the Negotiable Instrument Act is quasi criminal in nature. So as to say that burden not only lies on the complainant (just like on prosecution in criminal trial), but it also lies on the accused. In other words, the burden never entirely rests on the complainant. So, putting a date whether was in pursuance to the common intention of the parties is a question. Putting the name of the payee also cannot be held to be objectionable. It is for the reason that they were handed over to the complainant only. No doubt cheque is negotiable instrument which is transferable and negotiable, presumption under Section 138 of the Negotiable Instrument Act can be drawn only when the preconditions are satisfied. The complainant unilaterally has put in dates on the cheques without the authority of the accused and even by not informing him. So, it amounts to material alterations. If it is so such negotiable instrument becomes void. Hence prosecution under Section 138 of the Negotiable Instrument Act cannot be initiated. On that aspect the complainant has failed to satisfy the requirement of valid cheque. Appeal dismissed.
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