TMI Tax Updates - e-Newsletter
December 21, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Law of Competition Service Tax CST, VAT & Sales Tax Indian Laws

Articles

1. ADVANCE TAX PAYMENTS – letters from income tax authorities and suggested reply and observations by taxpayers in appreciation and also as grievance, if any.

   By: DEVKUMAR KOTHARI

2. Interest income need not to be assessed when assessee is a Non-resident

   By: Bimal jain

News

1. IICA launches ESG Impact Leader Programme

Notifications

GST - States

1. 21/2022 – State Tax - dated 24-11-2022 - Chhattisgarh SGST

Seeks to extend the due date for furnishing the return in FORM GSTR-3B

2. 22/2021 – State Tax (Rate) - dated 3-11-2022 - Chhattisgarh SGST

Seeks to supersede notification 15/2021 — State Tax (Rate) dated 19.01.2022 and amend Notification No 11/2017 — State Tax (Rate), dated 28.06.2017

3. 21/2021 – State Tax (Rate) - dated 3-11-2022 - Chhattisgarh SGST

Supersession notification No. 14/2021 — State Tax (Rate), dated the 11th February, 2022 and Amendment in Notification No. 1/2017 — State Tax (Rate), dated the 28th June, 2017

4. 15/2022-State Tax - dated 17-11-2022 - Delhi SGST

Amendment in Notification No. 10/2019-State Tax, dated the 12th September, 2019

5. 12/2022-State Tax - dated 17-11-2022 - Delhi SGST

Amendment in Notification No. 73/2017-State Tax, dated the 31st January 2018

6. 38/1/2017-Fin(R&C)(239)/1071 - dated 2-12-2022 - Goa SGST

Goa Goods and Services Tax (Third Amendment) Rules, 2022

7. 22/2022-State Tax - dated 15-12-2022 - Maharashtra SGST

Maharashtra Goods and Services Tax (Third Amendment) Rules, 2022

8. ERTS (T) 65/2017/Pt.III/325 - dated 23-11-2022 - Meghalaya SGST

Meghalaya Goods and Services Tax (Fourth Amendment) Rules, 2022

9. ERTS (T) 65/2017/Pt.III/324 - dated 23-11-2022 - Meghalaya SGST

Seeks to empower the Competition Commission of India to handle anti-profiteering cases under Meghalaya Goods and Services Tax Act, 2017 with effect from 01.12.2022

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS/DDHS_Div1/P/CIR/2022/176 - dated 19-12-2022

Clarification to SEBI circular dated August 04, 2022 on enhanced guidelines for debenture trustees and listed issuer companies on security creation and initial due diligence

Highlights / Catch Notes

GST

• Assessment Order Invalidated for Violating Natural Justice Principles; Non-compliance with Section 75(4) of Act, 2017.

  Case-Laws - HC : Violation of principles of natural justice - validity of assessment order - The element of principles of natural justice incorporated in the statutory provisions cast a mandate on the statutory authority to follow the procedure for finalization of its action. The assessment order dated 06.09.2022 as rectified on 13.9.2022 is, thus, found to be illegal being in contravention of provisions of Section 75(4) of the Act, 2017 and is hereby set-aside. - HC
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• High Court Orders Immediate Restoration of GST Registration Canceled Amid Missing Documents Held by DGGI During Investigation.

  Case-Laws - HC : Cancellation of GST registration of petitioner - the petitioner earlier also in response to the notice, dated 28.09.2021, had replied intimating the respondent authorities that pending DGGI investigation, all the documents are lying with the Office of DGGI and for the second time in response to the notice dated 17.05.2022, he had shown his inability to produce the documents for the very same reason. Further, in the affidavit too, no explanation was provided that under which provision respondent had initiated proceedings proposing cancellation of registration. - The respondents are directed to restore the registration of the petitioner forthwith. - HC
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• Court Quashes GST Registration Cancellation for Natural Justice Violation; Orders New Notice and Hearing Opportunity.

  Case-Laws - HC : Violation of principles of natural justice - cancellation of GST registration of petitioner - The show cause notice and the impugned order are quashed and set aside granting a liberty to the respondent No.2 to issue a fresh show cause notice with particular reasons incorporated with details and thereafter to provide reasonable opportunity of hearing to the writ applicant and to pass appropriate speaking order on merit which shall be done physically as directed in the very decision. With the aforesaid, the GST Registration Number of the applicant stands restored forthwith.- HC
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Income Tax

• Deputy Commissioner of Income Tax Held Guilty u/s 12, Contempt of Courts Act for Defying Court Order Intentionally.

  Case-Laws - HC : Guilty u/s 12 of Contempt of Courts Act, 1971 - Deputy Commissioner of Income Tax - deliberate and willful disobedience - If the action of DCIT, Range -2, Lucknow is considered in the background by the allegations made against him, it was his purposeful act to harass the applicant in spite of order of the writ Court. Unnecessarily mens rea is not required to be proved in a case of contempt but in the present case the violation is willful, deliberate and coupled with intention and motive to harass the applicant. - HC
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• Trusts Must Keep Accurate Donor Records to Qualify for Exemptions u/s 11(1)(d) and Avoid Taxation u/s 115BBC.

  Case-Laws - AT : Exemption u/s.11(1)(d) - Assessment of trust - corpus donations - anonymous donations and taxing the same u/s.115BBC - Going with the prescription of section 115BBC r.w.s.11(1)(d), only such corpus donations fall for consideration u/s 115BBC for which the assessee did not maintain and furnish address of the donors to the AO through the list. - AT
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• Court Rules No Tax Deduction at Source Needed for UK Agents u/s 195 of Income Tax Act.

  Case-Laws - AT : TDS u/s 195 - Disallowance of commission income - there was no requirement for the assessee to deduct tax at source on such payments made to non-resident agents based out of UK, without anything to substantiate that such agents had a permanent establishment in India or that the services were rendered India or that the agents had visited India in connection with providing such services. - AT
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• Railway siding and demurrage charges exempt from TDS u/s 194C if compliance is impossible due to uncontrollable circumstances.

  Case-Laws - AT : TDS u/s 194C - non-deduction of tax at source on railway siding charges and demurrage charges - Where the law creates a duty or charge and the party is disabled to perform it, without any default in him and has no remedy over it, there the law will, in general, excuse him. Therefore, when it appears that the performance of the formalities prescribed by a statute has been rendered impossible by circumstances over which the person interested had no control, the circumstances will be taken as a valid excuse. - AT
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• Court Upholds Addition u/s 68 Due to Unproven Long-Term Capital Gains; Assessee Fails to Prove Legitimacy.

  Case-Laws - AT : Addition u/s 68 - Bogus LTCG - The assessee cannot escape from the burden cast upon him and unfortunately in these cases the burden is heavy as the facts establish that the shares which were traded by the assessees had phenomenal and fanciful rise in price in a short span of time - The assessee had opportunity to prove that there was no manipulation at the other end and whatever gains the assessee has reaped was not tainted. This has not been proved or established - AT
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• Court Rules Against Tax Authority's Disallowance of Provident Fund Contributions u/s 143(1) as Non-Prima Facie Adjustment.

  Case-Laws - AT : Prima facie adjustments - while processing the return u/s 143(1) - The tax auditor had not stated in the instant case to disallow Employees Contribution to Provident Fund wherever it is remitted beyond the due date under the respective Act. Hence, the said action of the Ld.CPC Bangalore in disallowing the employees’ contribution to Provident Fund while processing the return u/s 143(1) of the Act is against the provisions of the Act as it would not fall within the ambit of prima facie adjustments. - AT
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• CIT's Revision u/s 263: No Set-Off Claim Due to Lack of Positive Income, No Prejudice to Revenue.

  Case-Laws - AT : Revision u/s 263 by CIT - Unabsorbed Depreciation or unabsorbed Business Loss - Even, assuming for a moment, the PCIT is right on his observation, but fact remains that brought forward unabsorbed depreciation can very well be examined by the AO when the assessee has claimed set off of unabsorbed depreciation against current year income in subsequent assessment years. Since, there is no positive income for the impugned assessment year and the assessee has not claimed set off of unabsorbed depreciation there is no prejudice is caused to the Revenue - AT
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• Appellant's Ignorance Plea Rejected in Sections 153A, 153C Tax Case; Conduct Deemed Contumacious After Section 133A Survey.

  Case-Laws - AT : Assessment u/s 153A /153C - non-filing the return of income as he was illiterate and not aware of the consequences of non-filing. - plea of the appellant may look reasonable before conducting survey U/s. 133A of the Act. The same plea holds no water subsequent to survey operation due to the fact that the appellant appeared before lower authorities, filed details with the aid and service of professional, deposed statements and he was made aware of the consequences. Hence, the plea of ignorance is rejected and the conduct is contumacious to the authority - AT
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• Revision u/s 263 Initiated Due to Erroneous Assessment and Lack of Exempt Income Details, Disallowance u/s 14A.

  Case-Laws - AT : Revision u/s 263 - Disallowance u/s 14A r.w.r. 8D - There is no reference in the assessment order that these investments did not earn any exempt income nor assessee has filed details before the assessing officer. Therefore, assessment order passed by the assessing officer is erroneous and prejudicial to the interest of Revenue. - AT
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• Rectification of loss set-off with shareholding change u/s 154 is debatable, not a mistake on record.

  Case-Laws - AT : Rectification of mistake u/s 154 - it can be safely concluded that set-off of losses when there is a change in shareholding is not a mistake apparent from record, and is debatable issue in the facts and circumstances discussed supra and it is not a case rectification - AT
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• Debate on Comparable Company Selection in Transfer Pricing Case: Profitability of Companies in Question Acknowledged by Assessee.

  Case-Laws - AT : TP adjsutment - “AE” investment banking activities - comparable selection - The persistence loss- making company are normally excluded as comparable. As per the submission of assessee both the companies are made profit in relevant years. DR did not strongly object on the plea of assessee. No objection was made by the ld DR in factual position. So, these companies should not be excluded on the ground of loss-making company. - AT
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• Transfer Pricing Adjustment: Depreciation Must Be Included in Operating Costs for Accurate ALP Computation.

  Case-Laws - AT : TP Adjustment - ALP determination - depreciation - operating cost - since the assets are used by the assessee with respect to the services provided to AE and hence the depreciation of such assets of Bhogapuram Unit should necessarily form part of the operating cost and should be considered in the computation of ALP of the assessee. CIT(A) has rightly considered the extraordinary depreciation and has recomputed the PLI of the assessee - AT
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Customs

• Central Government's Decision on Anti-Dumping Duties u/s 9A Lacks Justification; Review Ordered for Reconsideration.

  Case-Laws - AT : Non-Levy of anti-dumping duty under section 9A of the Customs Tariff Act 1975 - the decision taken by the Central Government not to impose anti-dumping duty despite a recommendation having been made by the designated authority for imposition of anti-dumping duty, cannot be sustained as it does not contain reasons nor the principles of natural justice have been compiled with. - matter is remitted to the Central Government to reconsider the recommendation made by the designated authority in the final findings - AT
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• Court Rules Late Fee Waiver Valid; System Error in Bill of Entry Causes Unjust Hardship and Litigation Costs.

  Case-Laws - AT : Waiver of late fees - Bill of Entry got purged before payment of duty through IGST - filing of fresh Bill of entry due to system error - The imposition of late fee itself and its confirmation by the Commissioner (Appeals) by erroneously holding that there was no dispute of the fact that Bill of Entry was filed beyond the time limit prescribed under Section 46(3) of the Customs Act, 1962, was irregular and unsupported by any legal provision. It has also caused considerable hardship to the Appellant by burdening the Appellant with further unnecessary litigation and by burdening the Tribunal in showing scanty respect to the law of the land - litigation cost of Rs.20,000/- imposed - AT
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• Appeal Dismissed Due to 7.5% Duty Non-Deposit and Over 2.5-Year Delay; Counsel Negligence Claims Unsupported.

  Case-Laws - AT : Maintainability of appeal - non deposit of 7.5% of the amount of duty - delay in filing of appeal - observations are opined sufficient to falsify the allegations against the previous counsel that he was negligent and that he was responsible for these delay, as substantial as that of more than two and a half years, for filing the appeal before Commissioner (Appeals). There is not even any affidavit of the said previous counsel on record, acknowledging the alleged negligence on his part. - the appeal is dismissed - AT
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Corporate Law

• Bombay High Court Rules No Stamp Duty Required for Company Name Change in Amalgamation Process.

  Case-Laws - HC : Levy of stamp duty - Amalgamation of the company - premises owned/possessed by company - whether the petitioner company, pursuant to order of amalgamation passed by Bombay High Court, permitting it to change its name from M/s Inox Air Products Ltd. to M/s Inox Air Products Private Ltd. is liable to pay stamp duty - Held No - HC
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Indian Laws

• Exclude 24.02.2018 to 07.03.2018 from appeal delay; writ petition maintainable but not entertained. Appellant acted promptly.

  Case-Laws - SC : Condonation of delay in filing appeal - In the facts of the present case, we find that the period from the date of filing of the writ petition on 24.02.2018 and the date on which it was dismissed as not entertained viz. 07.03.2018, should have been excluded. The writ proceedings were maintainable, but not entertained. Bona fides of the appellant in filing the writ petition are not challenged. Further, immediately after the dismissal of the writ petition, the appellant did file an appeal before the Appellate Authority. - SC
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• Court Affirms ICAI's Authority to Start Disciplinary Actions Based on March 2018 Letter; Section 21 Cited.

  Case-Laws - HC : Jurisdiction - suo moto power of Institute of Chartered Accountants of India (Institute) to initiate disciplinary proceedings against its members - It was the material recorded and encompassed in the letter of 13 March 2018 which would constitute the foundation for testing the argument of the petitioner whether there was “information” which merited further enquiry - the Court is of the firm opinion that the Institute did have the requisite information as contemplated by Section 21 and which justified the initiation of the enquiry against the petitioners in the facts of the present case. - HC
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Service Tax

• Court Upholds Denial of SVLDRS Benefits for Missed Payment Deadline; Petitioner's Late Payment Rejected.

  Case-Laws - HC : SVLDRS - denial of benefit of scheme for not having paid the amount mentioned in SVLDRS-3 within stipulated time - The petitioner appears to have made belated attempt to pay the amount on 16.3.2020. This was long after the period specified in Form SVLDRS-3 had expired. - there is no merits in the present writ petition. - HC
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Case Laws:

• GST

• 2022 (12) TMI 857
  Cancellation of registration of petitioner - non-furnishing of return for a contentious period of six months under Section 39 of the Central Goods and Services Tax Act - HELD THAT:- There are no reason whatsoever in the impugned order for cancelling the registration fo the petitioner. The only reason stated that the petitioner did not respond to the show cause notice. This Court is of the considered view that even in case that the petitioner did not given response to the show cause notice it was incumbent to the competent authority to consider the fact of case and come to the conclusion that the facts necessitate cancellling of the registration of the petitioner in exercise of powers under Section 39 of the CGST Act. The impugned order dated 03.01.2022 is illegal and hence in the aforesaid circumstances, the same is set aside - the matter is remitted to the adjudicating authority and is further directed to the petitioner to file his reply to show cause notice dated 02.12.2021 within three weeks for today - petition allowed by way of remand.

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• 2022 (12) TMI 856
  Violation of principles of natural justice - validity of assessment order - no personal hearing was accorded to the petitioner before passing order impugned despite the request made - HELD THAT:- From perusal of Section 75(4) of the Act, 2017, it is evident that opportunity of hearing has to be granted by the authority under the said Act where either a request is received from the person chargeable with tax or penalty for opportunity of hearing or where any adverse decision is contemplated against such person. Thus, where an adverse decision is contemplated against a person even he need not to request for opportunity of personal hearing and it is mandatory for the authority concerned to afford opportunity of personal hearing before passing any order adverse to such person. In view of the legislative mandate, in case of non-affording of opportunity of hearing by the assessee by intimating him the date, time and venue for personal hearing, the assessment order was found to be in violation of the principles of natural justice. The Article 226 of the Constitution of India confers discretionary power on the High Court, however, in case of availability of alternative remedy, as self-restraint, not as a rule of law, the High Court could not entertain the writ petition and may relegate the person approaching it to avail the alternative remedy. However, there are certain exceptions to the rule of alternative remedy as settled by the Apex Court in a catena of decisions and one of them is in violation of principles of natural justice, which is prejudicial to the interest of the writ petitioner - It is evident that the order of assessment dated 13.9.2022 was passed by the respondent no.2 under Section 74 of the Act, 2017 for the assessment year 2017-18 without affording opportunity of personal hearing as sought by petitioner. The act of the respondent no.2 in denial of the opportunity of personal hearing to the petitioner is in clear contravention of the statutory mandate under Section 75(4) of the Act, 2017. The element of principles of natural justice incorporated in the statutory provisions cast a mandate on the statutory authority to follow the procedure for finalization of its action. The assessment order dated 06.09.2022 as rectified on 13.9.2022 is, thus, found to be illegal being in contravention of provisions of Section 75(4) of the Act, 2017 and is hereby set-aside. The matter is remitted back to the respondent no.2 to pass a fresh order strictly in accordance with law after affording opportunity of hearing to the petitioner herein - Petition allowed by way of remand.

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• 2022 (12) TMI 855
  Revocation of cancellation of registration - Violation of principles of natural justice - cryptic show cause notice as well as the cryptic order - HELD THAT:- Noticing the fact that here also the initial notice which has been issued is of one line Any Taxpayer other than composition taxpayer has not filed returns for a continuous period of fix months. And the order passed for cancellation of registration also of half life Your request is no consider. This is in clear violation of principle of natural justice, as this Court in detailed has already been made out a case of Aggarwal Dyeing and Printing Works [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] and thereafter various cases. This Court also in such a matter has brought this fact to the notice of learned AGP and it has been given to understand to this Court that now it has been circulated to all concerned. This notice is of October 2021 and therefore, this mistake. This petition is ALLOWED solely on the ground of violation of the principles of natural justice.

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• 2022 (12) TMI 854
  Seeking cancellation of GST registration of petitioner - violation of principles of natural justice - HELD THAT:- In the instant case also not only the civil but the penal consequence pursuant to the impugned order of cancellation of certificate of registration, the petitioner would be liable. This judgment has come in the month of February 2022, the petition has been preferred on 14.11.2022 and the reply of the respondent has come before this Court on 28.11.2022. There is not a whisper of Aggarwal Dyeing and Printing Works [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] nor the officer concerned has taken note of the fact that this Court has in Aggarwal Dyeing and Printing Works (supra) and in subsequent decisions has emphatically disapproved this conduct on the part of the officers. This unpalatable apathy to the principle of natural justice would need surely quick rectificational approach on the part of the officers concerned. This petition is allowed on the ground of principle of natural justice.

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• 2022 (12) TMI 853
  Attachment of Bank Account of petitioner - appeal filed within time limitation or not - ex-parte assessment order - power to condone the delay - HELD THAT:- The appellate authority concerned, has the power to condone the delay in presenting the appeal if it had done beyond the period of three months or six months as the case may be and allowed the further period of one month. In the instant case, the period was of 05 months and 22 days in presenting the appeal. This Court in Aggarwal Dyeing and Printing Works v. State of Gujarat [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] , considered the question of cancellation of registration on account of nonspeaking order which the officer concerned had passed, the Court while directing that the department ought to have incorporated specific details to contents of a show cause notice as in prudent person would fail to respond to a show cause notice bereft of details, the Court also having an occasion to consider the issue of limitation to certain extent. It question of delay of more than 02 years, the writ applicant had preferred the appeal before the appellate authority by submitting the FORM GST APL-01 under Section 107 of the Act, 2017 read with Rule 108(1) of the Rules framed there under. The Court examined the entire scheme of Act and held that where specific forms have been prescribed at each stage right form registration, cancellation and revocation of cancellation of registration, the same are to be strictly adhered to. At the same time, it is equally important that the Proper Officer empowered under the said Act adheres to the principles of natural justice. The right of appeal beyond the period of 30 days and the issue of limitation while dealing with Section 107 of GST Act is a larger issue which needs to be addressed. Noticing, particularly, the period of Pandemic and the order of the Apex Court in this relation in a given case to be applied to each matter, in our opinion, the appellate authority could have taken into consideration this entire period of Pandemic to condone the delay as the date of knowledge. So far as the case of the petitioner is concerned, the date of knowledge is 6.9.2022 and the bank attachment had been made on 6.9.2022 and he thereafter had approached the authority concerned. If his date of knowledge is taken into consideration, the delay deserves to be condoned. It is apt to know the period of limitation to question the decision of the authority concerned was long over when for the first time the entire aspect had come to the knowledge of the present petitioner on 6.9.2022. It was simply not feasible to prefer the appeal against the order of the respondent authority asked on 15.7.2021 - Petition allowed.

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• 2022 (12) TMI 852
  Cancellation of GST registration of petitioner - restraint to carry out investigations since the investigation by Directorate General of GST Intelligence (DGGI) is already pending - HELD THAT:- There is no provision under the GST Act which permits respondents to initiate proceedings for cancellation of registration second time and therefore, the order dated 03.08.2022 is ex-facie illegal and without jurisdiction - The show-cause notice dated 17.05.2022 proposing to cancel the registration is bereft of any reasons, and therefore, it is in clear violations of principles of natural justice. There are no specific reason for which proceedings for cancellation of registration has been initiated for the second time. Language of the show-cause notice dated 17.05.2022, does not communicate the reasons and the reasons are so general, therefore vague in nature. We are also mindful of the fact that the petitioner earlier also in response to the notice, dated 28.09.2021, had replied intimating the respondent authorities that pending DGGI investigation, all the documents are lying with the Office of DGGI and for the second time in response to the notice dated 17.05.2022, he had shown his inability to produce the documents for the very same reason. Further, in the affidavit too, no explanation was provided that under which provision respondent had initiated proceedings proposing cancellation of registration. This Court in case of Aggarwal Dyeing [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] and thereafter, in series of decisions has reiterated that the reasons are heart and soul of the order and non-communication of the same itself amounts to denial of reasonable opportunity of hearing resulting into miscarriage of justice. Applying the same principle, in our opinion, the show-cause notice dated 17.05.2022 being without any reason, the same is bad in law and deserves to be quashed and set aside and hereby quashed and set aside accordingly. The order dated 03.08.2022, of cancellation of registration is also quashed and set- aside. The respondents are directed to restore the registration of the petitioner forthwith. Application disposed off.

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• 2022 (12) TMI 851
  Violation of principles of natural justice - cancellation of GST registration of petitioner - HELD THAT:- Noticing the cryptic notice as also the order which again is very cryptic and impugned in this petition applying the decision of this Court Aggarwal Dyeing and Printing Works [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] and the directions issued by this Court, according to us, challenge deserves to be entertained. This amounts to violation of principle of natural justice as the person concerned would have no opportunity to deal with the matter as otherwise required of him. Again, the very purpose of issuance of show cause notice is to avail an opportunity to the parties and if the matter can be addressed at that stage, the very purpose of the notice get frustrated once there is such cryptic notice which makes hardly any sense. It would not require further dilation of the issue since in case of Aggarwal Dyeing and Printing Works (supra) the Court had extensively and elaborately dealt with the same and also given the directions extensively for the authority to follow. We are also persuaded by the learned AGP that the kind of error which has been noticed in the present case is coming up for the first time and therefore, no cost should be imposed. The fact remains that the portal has not been amended till date and this matter has consumed substantial judicial time as the issue has dragged almost for six months and again with fresh notice, it is going to take a lot much time of all concerned only because of the technical glitches need to be amended at the end of the authority concerned. Application disposed off.

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• Income Tax

• 2022 (12) TMI 850
  Maintainability of appeal before Supreme court on low tax effect - tax effect to prefer an appeal before Supreme Court - HELD THAT:- As respective parties that tax effect in both the appeals for the relevant Assessment Years - 1995-96 and 1996-97 would be less than Rs. 2 Crores which is the monetary limit to prefer an appeal before this Court, as per Circular F.No.390/Misc/115/2017-IC dated 22.08.2019 issued by the Central Board of Indirect Taxes Customs. In that view of the matter and on the ground of low tax effect only, the present Appeals stand disposed of.

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• 2022 (12) TMI 849
  Guilty u/s 12 of Contempt of Courts Act, 1971 - Deputy Commissioner of Income Tax - deliberate and willful disobedience - Power to issue notice u/s 124 - DCIT jurisdiction to assess the petitioner at Lucknow - petitioner - applicant had been filing his returns at New Delhi - as argued local address was inserted deliberately to create jurisdiction, which, in fact, legally was not vested with the opposite party No.2. - contempt application under Section 12 of the Contempt of Courts Act, 1971 has been filed alleging willful and deliberate disobedience of judgment and order [ 2015 (3) TMI 1229 - ALLAHABAD HIGH COURT] passed by a Division Bench of this Court in Writ Petition - Whether changing the principal place of profession or residential address in PAN does not automatically change the jurisdiction of the AO - HELD THAT:- AO in spite of direction issued for consequential action, permitted to continue the outstanding amount for a period of seven months on the web portal and when this Court made query in the present contempt application in regard to consequential benefits granted to the applicant - petitioner, only then it was deleted from the web portal. This fact has been admitted by the opposite party in his affidavit dated 05.12.2022. This clearly amounts violation of the judgment and order passed by the division bench of this Court on 31.03.2015. Civil contempt is punishable with imprisonment as well as fine. In a given case, the court may also penalise the party in contempt by ordering him to pay the costs of the application and a fine can also be imposed upon the contemnor. Disobedience of this Court s order strikes at the very root of the rule of law on which the judicial system rests. The rule of law is the foundation of a democratic society. Judiciary is the guardian of the rule of law. Hence, it is not only the third pillar but also the central pillar of the democratic State. On perusal of judgment and order dated 31.03.2015, it is crystal clear that notice issued by the Assessing Officer was quashed on the ground of jurisdiction as well as consequential orders were also directed to be set-aside. Meaning thereby, the Assessing Officer has to take care that the entry existing on the web portal was to be deleted immediately after passing of the judgment and order dated 31.03.2015 but deliberately and intentionally the outstanding of notice of assessment year 2011- 12 became operative on the web portal till seven months, which ruined the reputation of the applicant and this act of the Income Tax authority was in deliberate and willful disobedience of the judgment and order dated 31.03.2015. Here, in the present case, as per own admission of Sri Manish Mishra, learned counsel for opposite party, the outstanding amount was deleted from the web portal after seven months, which amounts deliberate and willful disobedience of the judgment and order dated 31.03.2015, for which the opposite party is liable to be punished with imprisonment as well as fine. Here, in the present case, this Court has set aside the notice dated 11.09.2013 on the ground of jurisdiction with further direction that as the notice has already been quashed, consequential order, if any, are also quashed. Meaning thereby, the outstanding showing on the web portal against the applicant was to be deleted immediately after the judgment but the authorities have permitted to continue the outstanding amount on the web portal for a period of seven months, which clearly violates the judgment and order dated 31.03.2015 and this act and action of the opposite party is deliberate in nature, for which he is liable to be punished. The action of the opposite party is not only contemptuous but is also malicious. He took care with the money of the applicant in spite of clear direction of this Court and there is no justifiable reason for the said action. If the action of Mr. Harish Gidwani, Deputy Commissioner of Income Tax, Range -2, Lucknow is considered in the background by the allegations made against him, it was his purposeful act to harass the applicant in spite of order of the writ Court. Unnecessarily mens rea is not required to be proved in a case of contempt but in the present case the violation is willful, deliberate and coupled with intention and motive to harass the applicant. This Court finds the opposite party - Mr. Harish Gidwani, Deputy Commissioner of Income Tax, Range-2, Lucknow to be guilty under Section 12 of Contempt of Courts Act, 1971. A fine of Rs.25,000/- along with simple imprisonment for a period of one week is awarded to the contemnor - opposite parity i.e. Mr. Harish Gidwani, Deputy Commissioner of Income Tax, Range-2, Lucknow. In case of default, he would suffer one day s further simple imprisonment. The contemnor - opposite parity Mr. Harish Gidwani, Deputy Commissioner of Income Tax, Range-2, Lucknow will surrender before the Senior Registrar of this Court at 03.00 p.m. on 16.12.2022, who will send him jail to serve out the sentence.

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• 2022 (12) TMI 848
  Exemption u/s.11(1)(d) - Assessment of trust - corpus donations - Addition made towards anonymous donations and taxing the same u/s.115BBC of the Act - HELD THAT:- AO issued notices/summons to 10/5 donors and 9/4 responded by admitting the making of corpus donations. He, however, made addition even qua those donors who he had not issued any notice even though the assessee had given their address. This approach is not proper. If the AO chose to issue notice u/s.133(6) and summons u/s.131 in respect of a few of them, he cannot draw an adverse inference in respect of others who he did not issue any notice. Genuineness of such other donors having made corpus donations has to be accepted. Going with the prescription of section 115BBC r.w.s.11(1)(d), only such corpus donations fall for consideration u/s 115BBC for which the assessee did not maintain and furnish address of the donors to the AO through the list. Therefore, set-aside the impugned order and remit the matter to the file of the AO for examining the list of corpus donors as given at page 350 onwards of the paper book and make addition only in respect of such donors whose addresses are not given. In carrying out this exercise, the AO will give adequate opportunity of hearing to the assessee. Only the donations as per page 350 onwards of the paper books, where address of the donors were not given, fall within the domain of section 115BBC and the rest are eligible for exemption u/s.11(1)(d) of the Act. Assessee appeal is allowed for statistical purposes.

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• 2022 (12) TMI 847
  Revision u/s 263 by CIT - disallowance of claim of deduction u/s 80P of the Act with respect to interest income accrued / received on the fixed deposits made with State Bank of India - HELD THAT:- As undisputed fact that the assessee society s case for the Asst.Year 2017-18 was selected for limited scrutiny only with the reason to verify deduction under Chapter VIA of the I.T.Act and such verification was done by the then AO in the scrutiny assessment proceedings and assessment order dated 10.12.2019 u/s 143(3) was passed by accepting the claim of deduction u/s 80P and by accepting the income returned by the assessee society. As AR contended that the assessee society invested in fixed deposits with State Bank of India only as stopgap arrangement to earn some income on the then surplus funds and it was clearly incidental income, eligible for deduction u/s 80P and one more opportunity may be given to the assessee to furnish it s explanation before the Ld.PCIT for which the Ld.DR has not raised any objection. Considering all we are of the view that it is a fit case to grant one more opportunity of being heard to the assessee - we direct the Ld.PCIT to pass order after giving opportunity of being heard to the assessee and the assessee is also directed to cooperate with the Ld.PCIT - Appeal of the assessee is allowed for statistical purpose.

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• 2022 (12) TMI 846
  TP Adjustment - provisions of section 92BA(i) relating to expenditure referred in section 40A(2)(b) - As argued since clause (i) of section 92BA of the Act was omitted, payments made by the assessee U/s. 40A(2)(b) of the Act cannot be considered as specified domestic transaction - As stated since the provisions of clause(i) to section 92BA of the Act has been omitted by the Finance Act, 2017 w.e.f 1/4/2017 and hence it would be deemed that clause (i) of section 92BA of the Act was never in the statute - HELD THAT:- Where a particular provision in a statute is omitted with a saving clause in favour of the pending proceedings, then it can be reasonably inferred that the intention of the Legislature is that pending proceedings shall not continue. Therefore, the omission of clause (i) of section 92BA w.e.f 1/42017 shall render the pending proceedings invalid. However, in this case, the assessment was completed on 27/12/2016 much before the amendment came into effect by the Finance Act, 2017. We therefore find no merit in the argument of the Ld. AR and hereby dismiss the additional ground raised by the assessee. TPO while considering the comparables have not considered the entrepreneurial companies which are engaged in the Palm Tree Plantation as well as production - HELD THAT:- As on perusal of the GOs submitted by the Ld. AR that 3F Oil Palm sells at a price lower than the notified rates to the assessee and hence we are of the considered view that there is no over-charging of price of the Oil Palm by 3F Oil Palm to the assessee. Similarly, we also note that the price charged to third parties ie., Non-Associated Enterprises is more than the price charged to the assessee by 3F Oil Palm. Further, from the financials submitted by the Ld. AR, we find that 3F Oil Palm has sold Rs. 7.68 Crs worth goods / services to the assessee as against the total sales of goods by 3F Oil Palm aggregating to Rs. 88.51 Crs. From the above, we find that the sales made by 3F Oil Palm to the assessee by less than 10% of the total sales of 3F Oil Palm. We are inclined to remit the matter back to the file of the Ld. TPO to verify the claim made by the assessee-company with respect to price chart to third parties vis- -vis price supplied to the assessee. Similarly, the Ld. TPO may also verify the price charged by 3F Oil Palm to the assessee as against the notified rates by the Government of Andhra Pradesh vide its Government Orders on Monthly basis. We therefore, direct the Ld. TPO to compare the rates and decide the matter in accordance with law after affording a reasonable opportunity of being heard to the assessee. Disallowance of Miscellaneous Expenditure - HELD THAT:- As we could not accept the arguments of the Ld. AR that it is wholly and exclusively for the purpose of business or profession. The Ld. CIT(A) in his order in para 6.1 has considered this issue and has disallowed the gift expenses and Vaastu expenses which do not constitute as wholly and exclusively for the purpose of business or profession. In our considered view, since the Ld. CIT(A) has rightly considered the issue we find no infirmity in the order of the Ld. CIT(A) and hence this ground raised by the assessee is dismissed.

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• 2022 (12) TMI 845
  Revenue recognition - Income in respect of the plots/villas - AO was of the view that substantial work has been executed and hence the revenue have to be recognised as per AS-7 - Considering 20% profit margin on projected cost, the AO worked out the net profit - CIT(Appeals) partly allowed assessee s appeal and restricted the addition by holding that the net profit of the assessee has to be taken at 15% - HELD THAT:- It is on completion of the transaction of purchase and sale culminating into an extinguishment of the title of the vendor and simultaneous creation of the title of the vendee that the assessee earns profit or suffers loss. Receipt of Rs. 2,13,772 would, therefore, assume the character of income or profit only when sale transaction was completed in accordance with law. Doctrine of part performance embodied in section 52A of the Transfer of Property Act could not also be brought into aid to treat the said receipt as trading receipt. The agreement in writing to sell, coupled with parting of possession, would not confer any legal title on the purchaser, i.e., the society and take the land out of the assessee s stock-in-trade. The assessee s method of accounting has no relevance in determining whether receipt of the above nature was trading receipt or income. The method of accounting, whether cash method or mercantile method, would have bearing only in respect of completed business transaction. Thus, the impugned receipt would not constitute the assessee s taxable business income in the assessment year 1971-72. In the case of Shah Doshi Co [ 1981 (3) TMI 56 - GUJARAT HIGH COURT] the Assessee firm, dealing in land, agreed to sale of land, which it agreed to purchase from original owner, to a third party though no sale deed had been executed in assessee s favour by original owner. The Gujarat High Court held that assessee could not treat part of profit arising from such transaction as value of its stock-in-trade in assessment year prior to execution of sale deed in favour of third party by original owner. Further, High Court held that profits arising from impugned transaction accrued to assessee only in assessment year in which sale deed was executed in favour of third party. The judicial precedents on the subject as discussed above, in our considered view, the amounts received as interest free deposits by the assessee from the allottees could not be subject to tax as income in its hands during the year under consideration. TDS u/s 195 - Disallowance of commission income - AO made disallowance in respect of commission income paid for marketing services to three parties based out of UK on account of not deduction of tax at source - HELD THAT:- In the case of Inox India (P.) Ltd [ 2021 (1) TMI 1283 - ITAT AHMEDABAD] held that where since services in respect of commission expenses were stated to be rendered outside India as well as utilized outside India, income arising by way of commission against rendition of agency services could not be deemed to accrue or arise in India in hands of recipients of such commission payments. ITAT held that where income arising to non-resident commission agents is not found to be chargeable in India under section 4 read with section 5(2), obligation under section 195 for deduction of tax at source cannot be fastened upon assessee and in absence of statutory obligation arising under section 195 for deduction of tax in absence of chargeability of remittances, corresponding disallowance under section 40(a)(i) is without any merit and, thus, uncalled for. In our considered view, there was no requirement for the assessee to deduct tax at source on such payments made to non-resident agents based out of UK, without anything to substantiate that such agents had a permanent establishment in India or that the services were rendered India or that the agents had visited India in connection with providing such services. Accordingly, in our view, the assessee was not required to deduct tax at source u/s 195 of the Act in respect of such payments. Ground of the assessee s appeal is allowed.

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• 2022 (12) TMI 844
  Nature of expenditure - expenditure on account of repairs - revenue or capital expenditure in nature - application of principles of commercial trading - HELD THAT:- Assessee has evidently demonstrated from the documents placed on record by referring to the inspection report for the inspection carried out in the year 2007 2008 as well as the terms of license agreement and the work order placed on Portek and a separate work order placed on Nextgen for upgradation of new automation system. Assessee has also categorically demarcated the expenses incurred on account of repairs of revenue in nature and of capital in nature which have been duly accounted and reported in the audited financial statements. It is thus axiomatic that the expenditure incurred by the assessee in the facts of the case are on revenue account which have been rightfully allowed by the ld. CIT(A). We thus, find no reason to interfere with the findings given by the ld. CIT(A) in this respect. Accordingly, Ground Nos. 1 to 5 by the Revenue in this respect are dismissed. TDS u/s 194C - non-deduction of tax at source on railway siding charges and demurrage charges - HELD THAT:- It is an admitted fact that assessee is contractually bound by SAIL to act as a handling contractor for imported coking coal and there is an agreement between the two parties to the effect that any incidental charges relating to handling job were to be deducted from the payments made to assessee by SAIL. In pursuance of this activity of handling contractor for SAIL, assessee had received the payments from SAIL after deduction of the two impugned expenses. Assessee has claimed these two expenses as admissible expenses in its Profit Loss account. Reference is made to the legal maxim impotentia excusat legam and lex non cogit ad impossibilia in this respect. When there is an invincible disability to perform mandatory part of the law that impotentia excuses. Law does not compel one to do that which one cannot possibly perform. Where the law creates a duty or charge and the party is disabled to perform it, without any default in him and has no remedy over it, there the law will, in general, excuse him. Therefore, when it appears that the performance of the formalities prescribed by a statute has been rendered impossible by circumstances over which the person interested had no control, the circumstances will be taken as a valid excuse. In the present case before us, Haldia Dock Complex, Kolkata Port Trust levied charges on SAIL who in turn deducted the same from the payments made by SAIL to the assessee. AO has raised his doubts whether SAIL has made payments for these levies to Haldia Dock Complex, Kolkata Port Trust after deduction of applicable tax at source which is separate from of the contractual arrangement between SAIL and assessee for the handling job of imported coking coal. Considering the factual matrix of the case and the two legal maxims dealt above, we do not find any reason to interfere with the finding given by ld. CIT(A) in this respect. Accordingly, Ground Nos. 6 to 8 by the Revenue in this respect are dismissed.

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• 2022 (12) TMI 843
  Addition u/s 68 - Bogus LTCG - proximity of the time between the buy and sale operations - addition being 0.5% as alleged cost of arrangement of accommodation entry by treating it as unexplained expenditure u/s. 69C - HELD THAT:- The test to be applied is the test of preponderance of probabilities to ascertain as to whether there has been violation of the provisions of the Income-tax Act. In such a circumstance, the conclusion has to be gathered from various circumstances like the volume from trade, period of persistence in trading in the particular scrips, particulars of buy and sell orders and the volume thereof and proximity of time between the two which are relevant factors. Therefore, the methodology adopted by the revenue cannot be faulted. Test of preponderance of probabilities have to be applied and while doing so, the court cannot loose sight of the fact that the shares of very little known companies with in-significant business had a steep rise in the share prices within the period of little over a year. The assessee was not named in the report and when the assessee makes the claim for exemption, the onus of proof is on the assessee to prove the genuinity. It is incorrect to argue that the assessees have been called upon to prove the negative in fact, it is the assessees duty to establish that the rise of the price of shares within a short period of time was a genuine move that those penny stocks companies had credit worthiness and coupled with genuinity and identity. The assessee cannot escape from the burden cast upon him and unfortunately in these cases the burden is heavy as the facts establish that the shares which were traded by the assessees had phenomenal and fanciful rise in price in a short span of time - The assessee had opportunity to prove that there was no manipulation at the other end and whatever gains the assessee has reaped was not tainted. This has not been proved or established by any of the assessee.Assessing Officers as well as the Commissioner (Appeals) have adopted an inferential process which is found to be a process which would be followed by a reasonable and prudent person. Thus in the context of factual matrix of the present appeal before us narrated above, the position of law as enunciated in Swati Bajaj [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT] carrying force of binding nature on the issue under consideration for us, we note that issue involved in this appeal is covered against the assessee by the said decision as the fact pattern is similar to that which were before the Hon ble High Court. Since none appeared before us on behalf of the assessee, the relevant factual matrix was captured with the assistance of Ld. Sr. DR. After taking into consideration the factual matrix of the case before us vis- -vis the decision of Hon ble jurisdictional High Court of Calcutta in Swati Bajaj others (supra), we respectfully following the said decision carrying the force of binding nature, being the jurisdictional High Court, dismiss the appeal of the assessee and confirm the action of the Ld. CIT(A). Appeal of the assessee is dismissed.

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• 2022 (12) TMI 842
  Addition treating cash deposit in bank accounts as income from undisclosed sources u/s 68 - assessee was selected for limited scrutiny through CASS for verification of cash deposits during demonetization period - whether addition has been made on surmises and conjectures without there being any direct material on record? - HELD THAT:- Undisputedly, the assessee had withdrawn the amount of Rs. 13,59,000/- and out of this the assessee has stated that a sum of Rs. 3,09,000/- was utilized for domestic needs and rest of the amount was deposited in the bank account. As find that the authorities below have not given any cogent reason for not accepting the explanation offered by the assessee. In the absence of any evidence by the assessing authority that the amount which was available in the form of withdrawals from bank was utilized by the assessee for any other purpose, the addition cannot be sustained. Therefore, hereby direct the Assessing Officer to delete the addition. Grounds raised by the assessee are allowed.

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• 2022 (12) TMI 841
  Prima facie adjustments - while processing the return u/s 143(1) - Disallowance of employees contribution to Provident Fund - Addition made based on the statement made in the Tax Audit Report while processing the return u/s 143(1) - HELD THAT:- It is not in dispute that assessee had remitted the employees contribution to Provident Fund beyond the due date prescribed under the Provident Fund Act, but had duly remitted the same before the due date of filing the return of income u/s 139(1) - This fact of remittance made by the assessee with delay had been reported by the Tax Auditor in the Tax Audit Report. Tax Auditor had not even contemplated to disallow the employees contribution to Provident Fund wherever it is remitted beyond the due date prescribed under the Provident Fund Act. It is merely recording of facts and a mere statement made by the Tax Auditor in his audit report. CPC Bangalore had taken up this data from tax audit report and sought to disallow the same while processing the return u/s 143(1) of the Act, apparently by applying the provisions of section 143(1)(a)(iv) of the Act. The tax auditor had not stated in the instant case to disallow Employees Contribution to Provident Fund wherever it is remitted beyond the due date under the respective Act. Hence, the said action of the Ld.CPC Bangalore in disallowing the employees contribution to Provident Fund while processing the return u/s 143(1) of the Act is against the provisions of the Act as it would not fall within the ambit of prima facie adjustments. Our view is further fortified by the co-ordinate bench decision of this Tribunal in the case of Kalpesh Synthetics Pvt Ltd. [ 2022 (5) TMI 461 - ITAT MUMBAI] - Decided in favour of assessee.

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• 2022 (12) TMI 840
  Revision u/s 263 by CIT - Unabsorbed Depreciation or unabsorbed Business Loss - The limitation for carrying forward of business loss do not apply to carrying forward the unabsorbed Depreciation - HELD THAT:- Once the AO has considered the issue and has accepted the explanation of the assessee, then there is no scope for the PCIT to take up said issue for revision proceedings on the guise of inadequate enquiry. We further noted that the PCIT may assume jurisdiction to revise assessment order, in a case, where there is no enquiry at all. However, he does not have power to revise the assessment order, in a case, where enquiry has been made and according to the PCIT, enquiry is inadequate and this principle is supported by the decision of CIT v. Gabriel India Ltd. [ 1993 (4) TMI 55 - BOMBAY HIGH COURT] As regards unabsorbed depreciation to be carry forward to subsequent years, the PCIT was of the opinion that although, the assessee has furnished return of income for the AYs 2012-13 to 2014-15 beyond due date specified u/s.139(1) of the Act, but the AO has allowed to carry forward unabsorbed depreciation. We find that once again the reasons given by the PCIT to revise the assessment order on this issue is devoid of merits for simple reason that the issue before the AO is AY 2015-16 and for this assessment year, the assessee has returned nil total income. Even, assuming for a moment, the PCIT is right on his observation, but fact remains that brought forward unabsorbed depreciation can very well be examined by the AO when the assessee has claimed set off of unabsorbed depreciation against current year income in subsequent assessment years. Since, there is no positive income for the impugned assessment year and the assessee has not claimed set off of unabsorbed depreciation there is no prejudice is caused to the Revenue for the impugned assessment year and thus, the question of revision of assessment order on this issue does not arise. PCIT is erred in revising the assessment order passed by the AO u/s.143(3) - order passed by the PCIT u/s.263 quashed - Decided in favour of assessee.

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• 2022 (12) TMI 839
  Unexplained cash credit u/s. 68 - cash deposits found in the bank account of the assessee - assessee could not submit any evidence in support of his claim that source for cash deposit is out of known source of income - HELD THAT:- Although the assessee could not justify cash deposit in his bank account with valid evidence, but in our considered view the CIT(A) should not have summarily rejected affidavit filed by nine persons who claimed to be closed relatives of the assessee. When the assessee has filed affidavit from certain persons, it is the duty of the authorities below to verify the claim of the assessee and summon the persons from whom the assessee claims to have received cash. In this case, CIT(A) summarily rejected affidavit filed by the assessee to justify source for cash deposit without carrying out further enquiries to ascertain the claim of the assessee, in light of affidavit filed by various persons. Neither the assessee justified source for cash deposit with necessary evidence, nor the CIT(A) reached a the conclusion that cash deposits with bank account is unexplained income of the assessee, which can be assessed u/s. 68. Thus to settle dispute between the parties by restoring some sought of estimation of income towards cash deposits found in the bank account of the assessee. Therefore, we deem it appropriate to direct the AO to estimate 20% profit on total cash deposits found in the bank account of the assessee. Hence, we direct the AO to sustain 20% profit on total cash deposits and delete balance amount of addition made u/s. 68 of the Act. Appeal filed by the assessee is partly allowed.

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• 2022 (12) TMI 838
  Assessment u/s 153A /153C - Necessity to record satisfaction - As argued satisfaction as required u/s. 153C was not recorded by the Ld. AO. - incriminating material found and seized at the time of search and seizure operations U/s. 132 - HELD THAT:- Since there is no representation by the assessee before us, based on the material available on record, we are of the considered view that the CIT(A) has rightly examined the facts in the present case and has rejected the legal ground raised by the assessee and therefore we found no infirmity in the order of the Ld. CIT(A) and hence no interference is required in the order of the Ld. CIT(A) on this issue. Commencement of six preceding assessment years - We are of the considered view that the Ld. CIT(A) has rightly examined and adjudicated the issue that construction of provision leads to distortion and antivirus to the letter and spirit of the law. Therefore as unable to find any reason to agree with the argument of the appellant that the AY 2006-07 is beyond six preceding AYs. Accordingly, the legal grounds and the additional grounds raised by the appellant are rejected being illogical and such situation amounts to putting the cart before the horse - no interference is required on this issue. Additions of the opening balance of capital and loans and advances appearing on the assets side of the balance sheet - The overall impression conveyed by the details is that the appellant is having taxable income but deliberately not filed the returns of income. He has confirmed the fact of non-filing the returns of income during the appellant proceedings but reasons were not made known except stating that the appellant did not understand the gravity of non-filing the return of income as he was illiterate and not aware of the consequences of non-filing. This plea of the appellant may look reasonable before conducting survey U/s. 133A of the Act. The same plea holds no water subsequent to survey operation due to the fact that the appellant appeared before lower authorities, filed details with the aid and service of professional, deposed statements and he was made aware of the consequences. Hence, the plea of ignorance is rejected and the conduct is contumacious to the authority - no interference is required on this ground. Restricting the agricultural income - We find from the order of the Ld. CIT(A) that the assessee has disclosed an agricultural income in the capital account filed before the Ld. AO. Revenue Authorities has considered the amount of Rs. 1.50 lakhs which is recorded in the books of accounts as agricultural income of the assessee for the relevant AY and accordingly allowed the same. Since there is no representation and no evidence submitted before us with respect to earning of the agricultural income of Rs. 3 lakhs, we are inclined to uphold the findings of the Ld. CIT(A) on this ground and hence this ground raised by the assessee is dismissed. Addition for purchase of Venkateswara Nagar Plot - HELD THAT:- We find from the order of the Ld. CIT(A) the assessee has submitted that the assessee has earned agricultural income for Rs. 3 lakhs and other income of Rs. 3 lakhs being interest income. However, while filing the return of income the assessee has disclosed Rs. 1.50 lakhs as agricultural income in the capital account and Rs. 50,000/- profit from real estate business. It is seen from the order of the Ld. CIT (A) that no details are filed before the Ld. Revenue Authorities for the balance of Rs. 4 lakhs. Assessee also not represented before us nor filed any evidence regarding the interest income and agricultural income which the assessee claims to have purchased the plot at Venkateswara Nagar for Rs. 6 lakhs. In the absence of any cogent evidence, the Ld. CIT(A) has confirmed the amount of Rs. 4 lakhs and therefore we are of the considered view that there is no infirmity in the order of the Ld. CIT(A) and hence we hereby dismiss the ground raised by the assessee. Penalty u/s. 271(1)(c) - assessee is a regular non-filer of the return of income which tantamounts to concealment of income, even though the return of income was filed after the issue of notice U/s. 153C of the Act - HELD THAT:- As seen from the order of the Ld. CIT(A) the assessee has pleaded ignorance as he is an illiterate and not conversant with the tax matters and also not aware of the consequences of non-filing of returns of income. CIT(A) observed that the assessee has engaged a qualified Tax Consultant for reply to the final show cause notice. CIT(A) has held that the assessee has wilfully failed to file his return of income or to substantiate the investments and the additions. CIT(A) has also observed that the assessee was subject to tax audit u/s. 44AB of the Act for some years however has not produced any tax audit report before the Ld. Revenue Authorities. CIT(A) has therefore concluded that since the assessee neither substantiated nor explained the case with cogent evidences, it is deemed concealment of income and hence penalty order needs to be confirmed. Even before us, the assessee as not represented his case substantiating the reasons for non-filing of return of income. We therefore are inclined to uphold the order of the Ld. CIT(A) considering the facts and circumstances of the case and we hereby dismiss the grounds raised by the assessee. Appeals filed by the assessee are dismissed.

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• 2022 (12) TMI 837
  Revision u/s 263 - Disallowance u/s 14A r.w.r. 8D - PCIT noted that no inquiry in this regard has been made by the assessing officer in the course of assessment proceedings and order was passed without application of his mind - HELD THAT:- As share received from Joint Venture is exempt income therefore disallowance under section 14A of the Act would attract. After getting the details and information from the assessee, the assessing officer has failed to compute the disallowance under section 14A of the Act, therefore jurisdiction exercised by ld PCIT under section 263 of the Act is valid in law. As noted investments were not examined by the assessing officer. There is no discussion in the assessment order framed by the assessing officer under section 143(3) in respect of these investments. There is no reference in the assessment order that these investments did not earn any exempt income nor assessee has filed details before the assessing officer. Therefore, assessment order passed by the assessing officer is erroneous and prejudicial to the interest of Revenue. The reliance can be placed on the decision in the case of Indian Textiles [ 1985 (2) TMI 23 - MADRAS HIGH COURT] wherein it was held that provisions of section 263 can be invoked even where full facts are disclosed but the AO has not examined these details as per correct provisions of law. Therefore, considering the facts and circumstances, as narrated above, we uphold the order passed by ld PCIT under section 263 of the Act and dismiss the appeal of the assessee.

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• 2022 (12) TMI 836
  Rectification of mistake u/s 154 - debatable issue - set off of brought forward losses and unabsorbed depreciation u/s - 79 - change in shareholding - HELD THAT:- We are of the opinion that the AO could not have invoked jurisdiction u/s 154 of the Act which power is only for rectification of mistake which is apparent on the face of record. According to Ld. AR, the AO in the appellant s case has made assessment u/s 154 by invoking the provisions of section 79 - section 79 of the Act clearly excludes the company in which public are substantially interested, now in order to check the applicability of section 79, we need to see the definition of the company in which public are substantially interested, which is defined u/s 2(18) of the Act. Section 3 of Companies Act, 1956 defines the company, Private company and public company, thus the issue in the appellant s case require interpretation of various sections, in order to see whether the provisions of section 79 is applicable on the appellant or not, and it indeed involves interpretation of various provisions of law. As noted that there are various judicial precedents on the issue of applicability of provisions of Section 79 of the Act on change in shareholding within the Group and when there is no change in ultimate holding or management. There are also various judicial precedents in which authorities tried to establish whether the company is a company in which public is substantially interested or not and thus provisions of section 79 is not applicable. In every decision, whether it is in favour or against the appellant, appellate authorities has made the decisions after satisfying itself as to the applicability and interpretation of various provisions and laws. Thus, it cannot be said that it is a mistake apparent from records, when the issue involves interpretation of relevant laws and sections. Thus, it can be safely concluded that set-off of losses when there is a change in shareholding is not a mistake apparent from record, and is debatable issue in the facts and circumstances discussed supra and it is not a case rectification. Thus, it can be safely concluded that set-off of losses when there is a change in shareholding is not a mistake apparent from record, and is debatable issue in the facts and circumstances discussed supra and it is not a case rectification AO erred in invoking Section 154 of the Act to disallow the losses u/s 79 of the Act which in any case can be termed to be mistake apparent on record. From the discussion (supra) it can be seen that not only provisions of Income Tax Act but also Companies Act need to be considered for adjudicating the issue on which several judicial precedents are there on the issue and which is mixed question of fact and law and therefore, certainly it cannot be rectified by AO u/s 154 - Appeal of the assessee is allowed.

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• 2022 (12) TMI 835
  TP Adjustment - ALP determined in respect of the international transactions pertaining to the Manufacturing Segment and related activities - Working Capital Adjustment - HELD THAT:- As relying on Mobis India Ltd. [ 2014 (2) TMI 36 - ITAT CHENNAI] the issue is remanded back to the file of this AO/TPO with the directions to grant suitable Working Capital Adjustment. Claim for Ideal Capacity Adjustment Exclusion of Extra-Ordinary Expenses - DRP had rejected claim for Idle Capacity Adjustment, and Exclusion of Extraordinary Expenses made by the Appellant on the ground that no such adjustments were made in the Transfer Pricing Study, however, the same were claimed by the Appellant only during the course of assessment proceedings - HELD THAT:- From documentary evidence, it is clear that the Appellant had shifted the manufacturing facility which resulted in incurring one-time extra ordinary expenditure and capacity under-utilization during the relevant previous year on account of shifting of manufacturing facility. Accordingly, we direct the AO/TPO to recomputed operational margins of the Appellant after excluding the one-time extra ordinary expenditure after verification of the same. Further, the AO/ TPO is also directed to grant suitable capacity under-utilization adjustment to the Appellant after necessary verification and after providing the Appellant an opportunity of being heard. Foreign Exchange Fluctuation Adjustment - We direct the Assessing Officer/TPO to provide suitable foreign exchange fluctuation adjustment after verification and after providing the Appellant opportunity of being heard. Comparable selection - Exclusion of Nitin Fiber Protection Industries Limited (NFPIL) from list of Comparables - HELD THAT:- We note that the Tribunal has, while deciding the appeal filed by the Appellant for immediately preceding Assessment Year 2012-2013 [ 2017 (4) TMI 1552 - ITAT CHENNAI] directed the AO to exclude NFPIL after coming to a conclusion that major income of NFPIL was from project related activities and therefore, could not be compared to the Appellant. In view of the aforesaid, we direct the AO to exclude NFPIL from the list of comparables. Selection of Comparables and Computation of Margins - HELD THAT:- As the authorities below have failed to appreciate the correct facts and take into account the financial data as reflected in the annual accounts of the comparables placed on record by the Ld. Authorised Representative for the Appellant. We find merit in the contentions advanced on behalf of the Appellant in this regards - subject to the directions given by us hereinabove, since there are a number of factual discrepancies leading to incorrect selection/rejection of comparables and computation of margins, we deem it appropriate to remit all issues related to inclusion/exclusion of comparables and computation of the margins thereof back to the file of AO/TPO for fresh adjudication after giving appellant opportunity of being heard. Rejection of claim of carry forward of unabsorbed depreciation by setting off of the unabsorbed depreciation before allowing set off of the brought forward losses while computing taxable income of the relevant previous year - HELD THAT:- As relying on SPEL Semi Conductors Ltd [ 2012 (12) TMI 81 - MADRAS HIGH COURT] . we direct the Assessing Officer to allow the set off of the brought forward business loss with current year business income as claimed by the Appellant and allow carry forward of the unabsorbed depreciation. Accordingly, Ground is allowed.

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• 2022 (12) TMI 834
  Revision u/s 263 by CIT - order prejudicial to the interests of the revenue - Bogus Expenses - HELD THAT:- It is not the case that the AO has not made any enquiry. Indeed the Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of the bogus bill issued by the above mention two parties. It is not the case of that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, the AO had made enquiries and after consideration of material placed on record accepted the genuineness of the claim of the assessee. PCIT in his order passed under section 263 of the Act has made reference to the explanation 2 of section 263 of the Act. As attempted by the learned PCIT to hold that there were certain necessary enquiries which should have been made by the AO during the assessment proceedings but not conducted by him. Therefore, on this reasoning the order of the AO is also erroneous insofar prejudicial to the interest of revenue. We make our observation that the learned PCIT has not invoked the explanation 2 of section 263 of the Act in the show cause notice about the same. Therefore, the opportunity with respect to the explanation 2 of section 263 of the Act was not afforded to the assessee. PCIT erred in taking the re-course of such provisions while deciding the issue against the assessee. Secondly, PCIT has also not specified the nature and the manner in which the enquiries which should have been conducted by the AO in the assessment proceedings. Thus, in the absence of any specific finding of the learned PCIT with respect to the enquiries which should have been made, we are not convinced by his order passed under section 263 of the Act. In view of the above and after considering the facts in totality, we hold that there is no error in the assessment framed by the AO under section 143(3) of the Act, causing prejudice to the interest of revenue. Thus, the revisional order passed by the learned PCIT is not sustainable - Appeal of assessee allowed.

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• 2022 (12) TMI 833
  TP adjsutment - AE investment banking activities - comparable selection - comparable were selected by the TPO on basis of business activities KPO which is summarily rejected by the ld. CIT(A) - HELD THAT:- Rejection of KJMC Global Market (India Limited and Kinetic Trust Limited - The persistence loss- making company are normally excluded as comparable. As per the submission of assessee both the companies are made profit in relevant years. DR did not strongly object on the plea of assessee. No objection was made by the ld DR in factual position. So, these companies should not be excluded on the ground of loss-making company. It is to be directed to the ld. TPO that KJMC Global Market (India) Limited and Kinetic Trust Limited be included in the set of comparable. Accordingly, the Ground no-1 of the assessee is allowed. Erroneous acceptance of Khandwala Securities Ltd and Keynote Corporate Services Ltd. - As submitted that the principle that companies making abnormally high profit margin are required to be excluded - DR did not make any strong objection in this issue. No contrary judgment was produced by ld DR during hearing. We are directing that M/s Khandwala Securities Ltd M/s Keynote Corporate Services Ltd be excluded from the set of comparable. Accordingly, the Ground no-2 of the assessee is allowed.

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• 2022 (12) TMI 832
  Exemption u/s 11 - donation received by the Dalai Lama Charitable Trust - amount deposited in the bank account - addition which includes some of the amounts deposited in the bank account of the assessee from the sale of books as well as advance received for University work - HELD THAT:- When the AO has not even verified how much of the amount deposited in the bank account of the assessee represents the donation and how much is the assessee s own amount from the sale of books and other resources, the addition made by the AO of the entire amount is not justified. Once the amount is owned by the Dalai Lama Charitable Trust and also reflected from the material available on record that the said amount was received as donation by the Dalai Lama Charitable Trust during the visit of Dalai Lama at Varanasi to deliver the teachings from 8th January, to 14th January, 2009, then without verifying these facts about the said amount which was transferred by the assessee to the Dalai Lama Charitable Trust which is also declared as income by the Dalai Lama Charitable Trust the addition made by the Assessing Officer and sustained by the CIT(A) is not justified. Accordingly, the matter is remanded to the record of the Assessing Officer to re-adjudicate the same after considering all these details and evidence to verify the fact that this amount being donation received by the Dalai Lama Charitable Trust is owned and declared by the said trust as its income. If the said amount was owned and declared by the Dalai Lama Charitable Trust then the same is required to be considered in the assessment of Dalai Lama Charitable Trust and not in the assessment of the assessee. Needless to say, the assessee be given an appropriate opportunity of hearing before passing the fresh order. Appeal of the assessee is allowed for statistical purposes.

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• 2022 (12) TMI 831
  TP Adjustment - ALP determination - calculation of Profit Level Indicator (PLI) including the depreciation as operating cost - first contention of the Ld. AR is the depreciation should not form part of the operating cost since the assessee has incurred huge capital additions and the depreciation should be considered as an extraordinary item and cannot form part of the computation in the determination of ALP - HELD THAT:- CIT(A) in his order observed that the addition to the assets were made to the assessee s export unit at Bhogapuram and the depreciation claimed was relating to that unit only. The Bhogapuram unit is exclusively used for the software development and is a self-contained unit. Admitted facts are that the assessee has not rejected the comparables adopted by the TPO but only objected to the inclusion of the depreciation in the operating cost. Rule 10B of the IT Rules, 1962 specifies that the comparability of international transaction in an uncontrolled transactions shall be adjusted with the functions performed taking into account the assets employed or to be employed and there is assumption by the respective parties to the transactions. Hence, as rightly pointed by the Ld. CIT(A) that the unit situated at was exclusively engaged in the export activities and only reported export transactions relating to the services to Associated Enterprises (AEs). Therefore, the assets deployed in Bhogapuram Unit for the provision of such services to the AE and their corresponding cost therefore would be an important component of the operating cost for the services rendered. The assessee has also claimed depreciation while computing the total income in the relevant assessment year. We are also of the considered view that since the assets are used by the assessee with respect to the services provided to AE and hence the depreciation of such assets of Bhogapuram Unit should necessarily form part of the operating cost and should be considered in the computation of ALP of the assessee. CIT(A) has rightly considered the extraordinary depreciation and has recomputed the PLI of the assessee - In view of the above, we find no infirmity in the order of the Ld. CIT(A) and Ground No.2 raised by the assessee is dismissed. Working capital adjustment made in the ALP margin - We find from the observations of the Ld. CIT(A) that the Ld. CIT(A) has rejected the working capital adjustment of (-)2.07% arrived by the Ld. TPO but has not considered any working capital adjustments as submitted by the Ld. AR before the Ld. CIT(A). The Ld. CIT(A) has also not rejected the working capital adjustment of (+)3.76% arrived at by the assessee. AR therefore pleaded that when the negative working capital adjustment was added back to the PLI a similar treatment should also be given for the positive working capital adjustment while arriving at the computation of ALP. We find merit in the argument of the AR and direct the AO to give effect to the positive working capital adjustment of (+)3.76% after verifying the same while arriving at the ALP margin of the assessee.

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• Customs

• 2022 (12) TMI 830
  Non-Levy of anti-dumping duty under section 9A of the Customs Tariff Act 1975 - validity of office memorandum, communicating the decision of the Central Government not to impose anti-dumping duty, despite a recommendation having been made by the designated authority in the final findings to impose anti-dumping duty - violation of principles of natural justice. HELD THAT:- The maintainability of the appeal under section 9C of the Tariff Act was examined at length by this very Bench in M/S APCOTEX INDUSTRIES LIMITED AND OTHERS VERSUS UNION OF INDIA AND OTHERS [ 2022 (11) TMI 1096 - CESTAT NEW DELHI ] and it was held that the appeal would be maintainable against the decision of the Central Government contained in the office memorandum not to impose anti-dumping duty. The Bench also examined whether the determination by the Central Government was legislative in character or quasi-judicial in nature and after examining the relevant provisions of the Tariff Act, the 1995 Anti-Dumping Rules observed that the function performed by the Central Government would be quasi-judicial in nature. The Bench also, in the alternative, held that even if the function performed by the Central Government was legislative, then too the principles of natural justice and the requirement of a reasoned order have to be compiled with since the Central Government would be performing the third category of conditional legislation contemplated in the judgment of the Supreme Court in TATE OF T.N. SECRETARY HOUSING DEPTT. MADRAS VERSUS K. SABANAYAGAM ANR. [ 1997 (11) TMI 520 - SUPREME COURT ]. The inevitable conclusion, therefore, is that the decision taken by the Central Government not to impose anti-dumping duty despite a recommendation having been made by the designated authority for imposition of anti-dumping duty, cannot be sustained as it does not contain reasons nor the principles of natural justice have been compiled with. The matter, therefore, would have to be remitted to the Central Government for taking a fresh decision on the recommendation made by the designated authority for imposition of anti-dumping duty on the import of the subject goods from the subject countries. The office memorandum dated 06.06.2022 is set aside and the matter is remitted to the Central Government to reconsider the recommendation made by the designated authority in the final findings - Appeal allowed by way of remand.

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• 2022 (12) TMI 829
  Waiver of late fees - Bill of Entry got purged before payment of duty through IGST - filing of fresh Bill of entry due to system error - late fee was leviable under Section 46(3) of the Customs Act, 1962 for filing Bill of Entry after the specified period and there would be no waiver of late fee - HELD THAT:- The dispute concerning filing of previous Bill of Entry and its getting purged is not denied by the Respondent-Department nor by the Commissioner (Appeals) in his order but as has been argued by the learned Counsel for the Appellant Mr. C. M. Sharma, Bill of Entry was in fact filed by the end of next day of arrival of the goods at Mumbai Customs but it has been observed by the Commissioner (Appeals) that on arrival of vessel, Bill of Entry filed prior to it did not get finalised through system with IGM inward entry. It is a common knowledge that for various technical reasons and system error or upon laps of time in rectifying the error shown in the ICEGATE system after submission Bill of Entry, it gets purged. This is unrelated to the issue on hand since compliance/non-compliance of Section 46(3) of the Customs Act, 1962 is required to be scrutinized for the purpose of confirmation of payment of late fee that was being imposed on the Appellant. Astonishing features of the orders passed by the Assistant Commissioner, which are treated as Order-in-Original and the order of the Commissioner (Appeals) are that both of them have not cited any reason as to why the Bill of Entry dated 25.09.2019 is not to be accepted as the Bill of Entry filed under Section 46(3) of the Customs Act, 1962 except noting the submissions of Appellant that it got purged/erased in the system. More importantly, it is an indication of arbitrariness to say in the Order-in-Appeal at para 7 that Appellant had failed to provide any documentary evidence confirming any system related error due to which the delay in filing the Bill of Entry had taken place. This is something impossible and beyond the reach of the Appellant to get evidence from the computer system that is under the control of the Respondent-Department and operated by their Officials. The imposition of late fee itself and its confirmation by the Commissioner (Appeals) by erroneously holding that there was no dispute of the fact that Bill of Entry was filed beyond the time limit prescribed under Section 46(3) of the Customs Act, 1962, was irregular and unsupported by any legal provision. It has also caused considerable hardship to the Appellant by burdening the Appellant with further unnecessary litigation and by burdening the Tribunal in showing scanty respect to the law of the land for which, in view of the decision reported in SUNIL SPONGE PVT. LTD. VERSUS COMMISSIONER OF C. EX. S.T., RAIPUR [ 2015 (9) TMI 1336 - CESTAT NEW DELHI ], the Respondent is also liable to compensate the Appellant by way of cost. Appeal allowed.

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• 2022 (12) TMI 828
  Maintainability of appeal - non deposit of 7.5% of the amount of duty as was confirmed by the original adjudicating authority - appeal was not filed within 60 days of the date of receiving the Order-in-Original rather it was filed after a delay of two years - HELD THAT:- There is no denial to the fact that the appeal before Commissioner (Appeals) was filed after a delay of more than two and a half years. The only reason to justifying the delay, the only sufficient cause resulting into said delay is cited as the negligence of the previous counsel of the appellant. To appreciate the same, the record of the impugned appeal is perused. It is apparent that no reply to the show cause notice was filed by the appellant. There is nothing on record to show that any counsel was engaged who failed to filed the said reply. From the Order-in-Original, It is observed that three notices of personal appearance were served upon the appellant i.e. for 20.12.2016, 13.01.2017 and 02.02.2017. No doubt the appellant through their previous counsel had responded to the notice dated 20.12.2016 and 13.01.2017 but it is simultaneously apparent on record that the time requested by the counsel to submit his defense was duly afforded by the original adjudicating authority. Before Commissioner (Appeals) also the notice of personal hearing was granted to the appellant on 23.06.2021. The previous counsel for the appellant instantly vide e-mail dated 25.06.2021 requested for another date. His request was accepted, however, on the next date of hearing, the counsel failed to appear. There is nothing on record to show any step ever taken by the appellant to enquire the absence of the appellant s counsel or to enquire about the time taken by him for filing his defense before the adjudicating authority. These observations are opined sufficient to falsify the allegations against the previous counsel that he was negligent and that he was responsible for these delay, as substantial as that of more than two and a half years, for filing the appeal before Commissioner (Appeals). There is not even any affidavit of the said previous counsel on record, acknowledging the alleged negligence on his part. It is apparent that the appellant had even failed to observe the timeline of the EPCG License as was granted to him. Not even once he appeared before the adjudicating authorities below. As already observed the grounds cited in the present case are not held to be the sufficient cause for reasonably explaining the substantial delay of more than two and half years. Hence, I do not find it to be a fit case to be where substantial delay in filing appeal should be condoned. There hereby remains no reason for the matter to be remanded back to Commissioner (Appeals) for adjudication on merits, irrespective that the another ground on which Commissioner (Appeals) has dismissed i.e. about the deposit 7.5% of the demands stands duly complied with - the appeal is dismissed.

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• Corporate Laws

• 2022 (12) TMI 827
  Seeking grant of regular bail - money laundering - siphoning off/diversion of the funds - false statements - beneficiary of the transactions - Dummy director or not - applicability of twin-stringent conditions stipulated under Section 212(6) of the Companies Act, 2013 - HELD THAT:- The petitioner claims himself to be a Dummy Director. However, there is nothing on record to authenticate the said plea. As per the Companies Act, a Director is required to discharge his duties with due diligence ensuring that there is no siphoning off and/or diverting of the funds. Still further having actively participated in the affairs of the Company and having signed the Financial Statements, the petitioner cannot take the plea that him being a dormant Director, no liability can be fastened upon him. The economic offences, being against the Society at large, have been strictly dealt with in the recent past. Very recently, the Hon ble Apex Court in Vijay Mandanlal Choudhary Ors. Vs. Union of India Ors. [ 2022 (7) TMI 1316 - SUPREME COURT ], while considering the constitutional validity and applicability of restrictive conditions of bail provided under Section 45 of the Prevention of Money Laundering Act, 2002, has held that money laundering is an offence against the sovereignty and integrity of the country. The allegations against the petitioner are serious in nature. The complaint was filed only after detailed investigation report. The said investigation reveals the petitioner s involvement in 88 Companies of SRS Group. The Directors of the said Companies, including the petitioner, had submitted false statements of the debtors, inflated purchase and sale figures and deliberately concealed the material facts. The said Companies are accused of siphoning off the funds to the tune of Rs.671.48 crore and diverting the funds of Rs.645.86 crore from SRS Group of Companies by way of separate/distinct transactions. The petitioner does not deserve the concession of bail - Petition dismissed.

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• 2022 (12) TMI 826
  Levy of stamp duty - Amalgamation of the company - whether the petitioner company, pursuant to order of amalgamation passed by Bombay High Court, permitting it to change its name from M/s Inox Air Products Ltd. to M/s Inox Air Products Private Ltd. is liable to pay stamp duty on account of sale, purchase transfer, if any, of the premises owned/possessed by company having amalgamated into another company, in view of specific law laid by Division Bench of this Court in JSTI TRANSFORMERS PVT. LTD VERSUS THE STATE OF HIMACHAL PRADESH THROUGH ITS PRINCIPAL SECRETARY-CUM-FINANCIAL CONTROLLER (REVENUE) , GOVERNMENT OF HIMACHAL PRADESH, GOVERNMENT SECRETARIAT, SHIMLA, DEPUTY COMMISSIONER, SOLAN, DISTRICT, HIMACHAL PARDESH [ 2022 (4) TMI 1480 - HIMACHAL PARDESH HIGH COURT] ? HELD THAT:- In the instant case, it is not the case of the respondents that while effecting change in the name of the company, sale/purchase, if any, of the property took place inter se two entities as detailed rather, Certificate of Incorporation issued by Registrar of Companies in the name of M/s Inox Air Products Private Limited clearly reveals that there is only change of the name in terms of Ss.21 and 23 of Companies Act. Since no new entity, if any, has come into existence on account of proposed change in the name of company coupled with the fact that there is no document available on record, if any, to show that sale-purchase of properties took place between two entities, as noticed above, action of the respondents, demanding stamp duty appears to be highly unjust and unreasonable. While placing reliance on various judgments passed by this Court as well as other Constitutional Courts, the Division Bench has categorically held in the judgment supra that upon conversion of a registered partnership firm to an LLP under the provisions of the Limited Liability Partnership Act, all movable and immovable properties of erstwhile registered partnership firm automatically vest in the converted LLP by operation of Section 58(4) (b) of the Limited Liability Partnership Act. The Co-ordinate Bench of this Court in Sozin Flora Pharma LLP Vs. State of Himachal Pradesh and another, which otherwise has been taken note in JSTI Transformer Pvt. Ltd, while dealing with similar facts and circumstances, where partnership Firm became a private limited liability partnership, categorically held that the stamp duty /registration fee cannot be levied upon conversion of partnership firm to a limited liability partnership firm. If it is so, no permission, if any, under Section 118 of H.P. Tenancy and Land Reforms Act, 1972 is required for change of name in the revenue documents from M/s Inox Air Products Ltd. to M/s Inox Air Products Private Ltd. Respondents are directed to consider the request of the petitioner-company to effect change of name of petitioner company as M/s Inox Air Products Private Limited , without insisting upon payment of stamp duty - Petition disposed off.

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• Insolvency & Bankruptcy

• 2022 (12) TMI 825
  Approval of the Resolution Plan - Section 30(6) read with Section 31 of Insolvency Bankruptcy Code, 2016 (IBC, 2016) - HELD THAT:- It appears that it is undiputed fact that the copy of resolution plan has not been provided to the suspended management. Further the law has been well settled by the Hon ble Supreme Court in the case of Vijay Kumar Jain Vs. Standard Chartered Bank Ors. [ 2019 (2) TMI 97 - SUPREME COURT ], it was held that a combined reading of the Code as well as the Regulations leads to the conclusion that members of the erstwhile Board of Directors, being vitally interested in resolution plans that may be discussed at meetings of the committee of creditors, must be given a copy of such plans as part of documents that have to be furnished along with the notice of such meetings. The suspended management must be provided with the copy of the resolution plan. However, the resolution professional can take an undertaking from members of the erstwhile Board of Directors to maintain confidentiality. In the present case, the reply of resolution professional to the objection of the suspended management, states about the 4th CoC meeting, wherein the procedure to obtain the data was informed. The resolution professional are directed to provide the resolution plans to the suspended management and then convene a meeting of the CoC and the CoC will deliberate on the resolution plans afresh and either reject them or approve them with the requisite majority, after which, the further procedure detailed in the Code and the Regulations will be followed. Application disposed off.

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• Service Tax

• 2022 (12) TMI 824
  Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - declaration in SVLDRS-1 made in time - denial of benefit of scheme for not having paid the amount mentioned in SVLDRS-3 dated 13.1.2020 within 30 days stipulated by the Designated Committee in SVLDRS-3 dated 13.1.2020 - correct declaration of the tax payable made or not - HELD THAT:- The petitioner as a declarant was expected to pay both the tax and the interest thereon. The only concession which the petitioner would have got was against the imposition of penalty if Form SVLDRS-1 filed by the petitioner was accepted - In the case of voluntary disclosure , the Designated Committee is not expected to verify the disclosure in the declaration made in Form SVLDRS-1. The Designated Committee, merely relies on the declaration in Form SVLDRS-1. In the declaration, the petitioner has stated that the declaration was being made under the voluntarily category - the declaration was filed in time as is evident from a reading of Rule 3 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019. However, as per Section 125(1)(e), a person who has been subjected to an enquiry of investigation or audit and the amount of duty involved in the said enquiry or investigation or audit has not been quantified on or before the 30 th day of June 2019, shall not be entitled to file a declaration under the scheme. The petitioner however failed to pay even the amount specified in Form SVLDRS-3 in time. The petitioner appears to have made belated attempt to pay the amount on 16.3.2020. This was long after the period specified in Form SVLDRS-3 had expired. The amount which was initially debited from the petitioners account was however later recredited back. Thereafter, the petitioner did not take steps to make the payment. Meanwhile, lockdown was imposed due to outbreak of COVID 19 pandemic. Demand alongwith interest and penalty upheld - there is no merits in the present writ petition - petition dismissed.

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• CST, VAT & Sales Tax

• 2022 (12) TMI 823
  Rectification of Mistake - mistake apparent from the record or not - whether the Tribunal was right in exercising power under Section 62 of the Act and analyses the facts only in this context and not for adjudicating the dispute? - HELD THAT:- The language of the section would indicate that what can be rectified is mistake apparent from the record . What is the exact ambit of the phrase mistake apparent from the record that has fallen for consideration of the Honorable Supreme Court in various cases. In the case of COMMISSIONER OF CENTAL EXCISE, BELAPUR, MUMBAI VERSUS RDC CONCRETE (INDIA) P. LTD. [ 2011 (8) TMI 25 - SUPREME COURT] after taking review of the earlier decisions on the subject, the Honorable Supreme Court observed that power to rectify a mistake should be exercised when the mistake is a patent one and should be quite obvious. Thus, the mistake apparent from the record has to be obvious and patent mistake and not the one that needs to be established by long drawn process of reasoning. As regards a ground in the rectification application based on the decision of Pee Vee Textiles, the learned Assistant Government Pleader contended that the decision in the case of Pee Vee Textiles [ 2008 (10) TMI 616 - BOMBAY HIGH COURT ] contains an elaborate discussion of facts and various factual distinctions made between the two schemes, i.e. of 1993 and 1988 have been omitted from consideration and reading of Pee Vee Textiles would clearly show that there is no legal proposition sought to be culled out by the Tribunal in the First Order as emerges from the decision of Pee Vee Textiles in respect of the 1988 Package Scheme of Incentives. The learned Assistant Government Pleader states that if Respondent No. 1 intends to take steps to challenge the order passed by the Tribunal on 18 April 2009, the issue of limitation may arise. However, this aspect will have to be decided by the court where such proceedings are presented. The concerned court will no doubt consider that it was not necessary for the Respondents to file any proceedings to challenge the First Order to date because the Respondent had succeeded in the Rectification proceedings. Petition allowed.

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• Indian Laws

• 2022 (12) TMI 822
  Condonation of delay in filing appeal - Time consumed while pursuing writ petition - exclusion of the said period in terms of Section 14 of the Limitation Act, 1963 - HELD THAT:- It is an accepted position that the appellant had filed a writ petition before the High Court on 24.02.2018, which was not entertained vide the order dated 07.03.2018 on the ground that the appellant should approach the Appellate Authority. The appellant is entitled to ask for exclusion of the said period in terms of Section 14 of the Limitation Act, 1963. Exclusion of time is different, and cannot be equated with condonation of delay. The period once excluded, cannot be counted for the purpose of computing the period for which delay can be condoned. Of course for exclusion of time under Section 14 of the Limitation Act, 1963, the conditions stipulated in Section 14 have to be satisfied. In the facts of the present case, we find that the period from the date of filing of the writ petition on 24.02.2018 and the date on which it was dismissed as not entertained viz. 07.03.2018, should have been excluded. The writ proceedings were maintainable, but not entertained. Bona fides of the appellant in filing the writ petition are not challenged. Further, immediately after the dismissal of the writ petition, the appellant did file an appeal before the Appellate Authority. On exclusion of the aforesaid period, the appeal preferred by the appellant would be within the condonable period. The appeal is allowed with the direction that the Appellant Authority would examine the appeal on merits.

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• Law of Competition

• 2022 (12) TMI 821
  Jurisdiction - suo moto power of Institute of Chartered Accountants of India (Institute) to initiate disciplinary proceedings against its members - scope of the word information as occurring in Section 21 of the Chartered Accountants Act, 1949 (Act) - HELD THAT:- Section 21 of the Act empowers the Institute to proceed either on the basis of a complaint or on information that may be received. The Court has on due consideration of the relevant provisions, the scheme of the Act and the nature of the duty cast upon the Institute, found that it could also proceed on the basis of cogent information that may be either gathered or may come to light from an external source. The usage of the word information in Section 21 thus clearly places the extent of the power vested on the Institute on a clearly distinct pedestal. It appears to be guided by the intent of the Legislature to enable and empower the Institute to proceed on any material or fact that may either come to its attention or be brought to its notice. Section 21 thus clearly appears to be distinguishable from the various statutory provisions and the scheme of the respective statutes which formed the basis for the various decisions rendered on the subject and which were noticed hereinabove. None of them empowered the authorities to initiate action on the basis of information . Viewed in the aforesaid backdrop, this Court is of the considered opinion that Section 21 does empower the Institute to proceed suo moto and unhindered by the absence of a written complaint or allegation that may be submitted. A written complaint or allegation in writing cannot, in any manner, be understood to be a pre-requisite or a sine qua non for the initiation of action under Section 21. The Court also bears in mind the significant observations which were made by the Division Bench of this Court in P. Ramakrishna [ 2013 (3) TMI 367 - HIGH COURT OF DELHI] where while recognizing the intrinsic distinction between a complaint and information, the Court had aptly observed that information would include material that may be made available by a third person or even that which may come to the knowledge of the Institute. The Division Bench clearly held that in case of information, action may be initiated either suo moto or even on the basis of material that may be provided by a third party who may for a variety of reasons be not desirous of filing a formal complaint. The answer to the question whether a particular power stands conferred under statute must necessarily be answered on a reading of the statute and on discernment of its scope. The meaning to be conferred upon a statute cannot rest merely on the fact that the power though being found to exist was never invoked earlier. In any case, the respondents disclose and provide details in paragraph 49 of their counter affidavit of a suo moto power having been exercised even in the past. The averments made in the counter affidavit establishes that the Institute had exercised its suo moto powers similarly in relation to the Satyam Computers scam - The report with respect to MNAF s and the contemporaneous material which was noticed by the Supreme Court in its order would clearly constitute material relating to facts of which cognizance was taken by the Institute. The Court notes that it would be wholly incorrect to accept the contention that the initiation of the enquiry was based simply on news reports. As has been averred on behalf of the respondents, the news report only brought certain facts relating to a financial scam which had occurred in PNB to the notice of the respondents. They appear to have consequently elicited preliminary comments from the petitioners in that respect. The matter thereafter appears to have been scrutinised in further detail with appropriate information being gathered from PNB and the LRR also being carefully examined. It also becomes pertinent to note the fact that the huge financial fraud had been duly taken cognisance of and details thereof also provided to SEBI prior to the submission of the LRR, was an admitted position insofar as the petitioners are concerned. This would be evident from their reply to the initial show cause notice itself. The recordal of facts would clearly establish that the action which was initiated and the material which was treated as information for the purposes of Section 21 was not based on mere newspaper reports. In fact, those reports could not have possibly and on their own constituted material at all since they did not carry any allegation against the petitioners here. What appears to have transpired is of the news reports merely acting as a catalyst for the Institute to delve deeper into the massive fraud which had occurred and to examine whether any member had failed to abide by the SAs which applied. It was the material recorded and encompassed in the letter of 13 March 2018 which would constitute the foundation for testing the argument of the petitioner whether there was information which merited further enquiry - the Court is of the firm opinion that the Institute did have the requisite information as contemplated by Section 21 and which justified the initiation of the enquiry against the petitioners in the facts of the present case. While the Court is not called upon at this stage to return any definitive or final conclusions with respect to the alleged violation of the various SAs as well as SRE 2410, the material placed on the record would clearly belie the contention of the petitioners that the entire initiation of proceedings was based merely on news reports. This Court is of the considered opinion that the conclusions which stand recorded in Manubhai are clearly based on an extremely restrictive interpretation of Section 21 of the Act and in any case would amount to recognising Rule 7 as an essay on the scope and ambit of Section 21 of the Act itself. It would essentially amount to according pre-eminence to a subordinate rule and recognise the same as trammelling the scope of Section 21 of the Act. This Court has for reasons aforenoted come to the definitive conclusion that in the absence of the Act and the Rules having specifically defined the words information and complaint , it is the principles of purposive interpretation which must be adopted bearing in mind the fundamental objectives of the disciplinary procedure as constructed under the Act and the role and duties which the Institute is ordained to discharge. For all the aforesaid reasons, the Court finds itself unable to adopt the line of reasoning which weighed with the learned Judge in Manubhai. The writ petitions shall stand dismissed. The Institute shall consequently be entitled to proceed further in accordance with law. It shall therefore be open to the Institute to give effect to the final orders which have been kept in a sealed cover. The rights of the petitioners to question any final decision that may have been taken is kept open.

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