TMI Tax Updates - e-Newsletter
December 26, 2020

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Insolvency & Bankruptcy Law of Competition Central Excise CST, VAT & Sales Tax

Articles

1. THE LIQUIDATOR IS NOT LIABLE TO REIMBURSE THE COMPOUNDING FEE

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Communication between Recipient and Supplier Taxpayers on GST Portal

Notifications

Companies Law

1. G.S.R. 795 (E) - dated 24-12-2020 - Co. Law

Companies (Incorporation) Third Amendment Rules, 2020

2. G.S.R. 794 (E) - dated 24-12-2020 - Co. Law

Companies (Share Capital and Debentures) Second Amendment Rules, 2020

Customs

3. 68/2020-Customs (N.T./CAA/DRI) - dated 24-12-2020 - Cus (NT)

Appointment of CAA by DGRI

GST - States

4. ERTS (T) 65/2017/Pt. II/143 - dated 15-10-2020 - Meghalaya SGST

Prescribe the due date for furnishing FORM GSTR-1 for the quarters October, 2020 to December, 2020 and January, 2021 to March, 2021 for registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year

5. F.17(131-Pt.-II)ACCT/GST/2017/6182 - dated 2-12-2020 - Rajasthan SGST

Notification by CCT - Regarding mentioning of HSN Codes

6. F.17(131-Pt.-II)ACCT/GST/2017/6143 - dated 18-11-2020 - Rajasthan SGST

Seeks to recind Notification No. F.17(131-Pt.-II)ACCT/GST/2017/6097, dated the 21st October, 2020

7. 17/2020-PP2/5520/2020 - dated 17-11-2020 - Tamil Nadu SGST

Extends the time limit for furnishing the declaration in FORM GST ITC-04

8. 16/2020-PP2/5520/2020 - dated 17-11-2020 - Tamil Nadu SGST

Rescinds the notification No. 12/2020, dated 16th October, 2020

Income Tax

9. 91/2020 - dated 24-12-2020 - IT

U/s 10(46) of IT Act 1961 - Central Government notifies " Yamuna Expressway Industrial Development Authority " in respect of the specified income arising to that Authority

Highlights / Catch Notes

Income Tax

• Interest and salary from partnership firms excluded from presumptive income u/s 44AD; impacts tax treatment.

  Case-Laws - HC : Characterization of interest income from the partnership firm as business income - Presumptive income @8% u/s 44AD - Interest and salary received by the assessee from firms in which he was a partner - conspicuously section 28(v) has not been included in sub-section (2) of Section 44AD which deals with any interest, salary, bonus, commission or remuneration by whatever name called, due to or received by, a partner of a firm from such firm. - HC
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• Court Upholds Tribunal's Decision: Re-assessment Quashed Due to Lack of Communication u/s 147 of Income Tax Act.

  Case-Laws - HC : Reopening of assessment u/s 147 - the Revenue could not produce any evidence to show that the reasons recorded were provided to the assessee in spite of opportunity having been granted by the Tribunal. Thus, we find that the Tribunal was right in allowing the assessee's appeal and quashing the re-assessment proceedings. - HC
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• Dispute Over Reopening Tax Assessment for 2016-17: Validity Challenged u/ss 263 and 147 of Income Tax Act.

  Case-Laws - HC : Validity of reopening of assessment - year of taxation of capital gain - Petitioner argument that the order of assessment for AY 2016-17 has been challenged in appeal only on the aspect of computation of the capital gain and thus as far as the year of taxability is concerned, the order has attained finality is misconceived since the very doubt entertained by the Officer turns on the question of whether the year of taxability adopted by the petitioner is correct or not. The finality attained by filing of the first appeal by the petitioner is subject to statutory processes such as 263 and 147 of the Act, if otherwise valid. - HC
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• Higher Depreciation Rate of 30% Approved for Assessee Earning 2/3rd Income from Hiring Plant and Machinery Business.

  Case-Laws - AT : Higher depreciation claim - Receipt from business of hiring of plant and machinery - The assessee’s claim is that since the substantial income i.e. 2/3rd of its income is from hiring business, it qualifies for higher depreciation @ 30%. - Claim allowed - AT
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• Deduction for Audit Fees u/s 37(1) Scrutinized; Verification of Payee's Tax Payment Obligations Required.

  Case-Laws - AT : Claim of deduction of expenditure u/s 37(1) - Provision for audit fees - the matter requires examination and verification of fact that the payee has discharged its obligation to pay the taxes on Audit fees. - AT
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Customs

• Imported Goods Confiscated for Missing Pre-Shipment Certificates and Misdescription; Upheld u/s 111(d) of Customs Act 1962.

  Case-Laws - AT : Confiscation of goods - imposition of redemption fine and penalty - at the time of importation of the goods, admittedly, Pre Shipment Inspection Certificates were not available and the goods were wrongly described as scrap of tin instead of scrap of steel. The appellant could not even produce such certificates prior to adjudication and as such, the order of confiscation of the imported goods are proper and correct under Section 111(d) of the Customs Act, 1962 and thus upheld. - AT
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• Department Can't Appeal or File Cross-Objections on Refund Orders; Section 128 of Customs Act Restricts Rights.

  Case-Laws - AT : Right of department to file any appeal or cross-objections before the Commissioner (Appeals) against Refund order - the Department could neither have filed an appeal before the Commissioner (Appeals) against a part of the order passed by the Deputy Commissioner nor it could have filed cross-objections in the appeal filed by the Vivo Mobile before the Commissioner (Appeals) against that part of the order sanctioning the refund amount since the right to file cross-objection has not been conferred under section 128 of the Customs Act, which deals with appeal to the Commissioner (Appeals). - AT
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IBC

• Company's CIRP Bid Opposed by Creditors SIDBI, IOB u/s 10 for Alleged Misuse of Insolvency Process.

  Case-Laws - AT : Initiation of CIRP - filing of application by the Promotor / Director of company - it is on record that the SIDBI and IOB, the Financial Creditors have strenuously opposed the admission of Section 10 Application by filing their Counter Affidavits. We add and express that the intention of Promotors is only to get admission and followed by imposition of Moratorium to stall all further proceedings. The IBC being a special legislation cannot be used as a tool to one’s advantage and other’s disadvantage. - AT
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• Corporate Insolvency Resolution Process Hinges on Unresolved Dispute Over Substandard Material and Adhesion Issues in Laminates.

  Case-Laws - AT : Initiation of CIRP - Whether the ‘Dispute’ pertaining to the invoice was settled between the parties? - The material on record, specifically the email dated 08.02.2019 evidences that the ‘Dispute’ is not ‘transaction centric’ but is an ongoing ‘Dispute’. Additionally, there is no documentary evidence to substantiate the contention of the Learned Counsel for the Appellant that November 2017 ‘Dispute’ was settled. The correspondence between the parties establishes that the ‘Dispute’ is with respect to substandard material supplied for both the consignments and explicitly refers to ‘problem of adhesion’ which led to laminates becoming unusable. - AT
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• NCLAT Decision: Assignee Considered Related Party if Assignor is Related to Corporate Debtor in Debt Assignment Cases.

  Case-Laws - Tri : Validity of deed of assignment - Related Party - if the Assignor of a debt is a Related Party of the Corporate Debtor, as per the ratio laid down by the Hon'ble NCLAT, the Assignee, who is a third party, is also liable to be held as a Related Party of the Corporate Debtor. - Tri
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VAT

• Merger u/ss 391 & 394: Transferee Company Inherits All Without Sale Certificate Due to 2016 Exemption Notification.

  Case-Laws - HC : Stock Transfer - merger and amalgamation done under Section 391 and 394 of the Indian Companies Act - In the present case the predecessor Company/transferor Company have been succeeded by the Revisionist/ transferee Company who had taken over its business along with assets, liabilities, profits and losses etc. The stock transferred as a result of amalgamation was not a sale requiring issuance of certificate by M/s. Ritesh Vyaapar Ltd. in favour of the Revisionist as per the Exemption Notification of 2016. - HC
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• Tribunal Confirms Validity of Reassessment Order; Citing Incorrect Provision Doesn't Invalidate Authority u/s 39(1.

  Case-Laws - HC : Validity of reassessment order - Even though, Tribunal may have referred to amended provisions of the Act, however, it is trite law that mere mention of a wrong provision would not invalidate an order so long as power exists with the authority. In the instant case, the re-assessment have rightly been initiated as the power to do so exists even under the un-amended Section 39(1) of the Act - HC
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• Court Rules Construction Services Under Entry 23, Sixth Schedule, Subject to 12.5% Tax Rate.

  Case-Laws - HC : Works contract service - Composite Contract or not - works contract of 'structural glazing', 'suspended glazing', 'curtain walling', 'ACP cladding', 'spider glazing', 'fixed glazing', are not specified in any of the categories of Entry No.1 to 21 and are works along with the categories covered by Entry Nos.3 and 4. - the nature of activities of the petitioner fall within Entry 23 of Sixth Schedule to the Act and are liable to tax at 12.5%. - HC
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Case Laws:

• Income Tax

• 2020 (12) TMI 996
  Condonation of delay - Validity of order of Settlement Commission - full and true disclosure or not - additional income offered during section 245D(4) - HELD THAT:- As there is delay of 214 days in filing the Special Leave Petitions and the explanation offered in support of the prayer for condonation is far from being satisfactory, we refuse to condone delay. Consequently, the SLPs stand dismissed on the ground of delay.

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• 2020 (12) TMI 995
  Rectification u/s 254 - Period of limitation - HELD THAT:- In the present case, the order was passed on September 09, 2018, and the copy of order was admittedly served upon the assessee on December 05, 2018. Tribunal should have excluded the time period between September 09, 2018, to December 05, 2018, in computing the period of limitation.Tribunal was wrong in not applying the exclusion period in computing the period of limitation and rejecting the application being barred by limitation. If Section 254(2) is read with Sections 254(3) and 268 of the Act and no hardship or unreasonableness can be found in the scheme of the Act. The Court need not make a violence to the words of Section 254(2) by substituting the word within the end of the month in which the order was passed by the word the date on which the order was served . Such interpretation is absolutely uncalled for when the application has been served upon an assessee in terms of Section 254(3) of the Act. Since it is not necessary to interpret Section 254(2) differently to avoid hardship or absurdity or uncertainty, the judgment in D. Saibaba case has no applicability to the present case. The controversy with regard to whether pronouncement of a judgment in open court amounts to communication of the order is much ado about nothing since the order complained of in this case was served upon the assessee in terms of Section 254(3) of the Act. The appeal is, accordingly, allowed. The Tribunal below is directed to hear out the application under Section 254(2) taken out by the assessee on merit.

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• 2020 (12) TMI 994
  Characterization of interest income from the partnership firm as business income - Presumptive income @8% u/s 44AD - Interest and salary received by the assessee from firms in which he was a partner - Tribunal held that only remuneration and salary, received from a firm, to the extent of eligible under clause (b) of Section 40 of the Act, would be considered as profits and gains of business or profession of the recipient partner? - HELD THAT:- As already seen in Section 44AD, the words used are total turnover or gross receipts and it pre-supposes that it pertains to a sales turnover and no other meaning can be given to the said words and if done so, the purpose of introducing Section 44AD would stand defeated. That apart, the position becomes much clearer if we take note of sub-Section (2) of Section 44AD which states that any deduction allowable under the provision of Section 30 to 38 for the purpose of sub-section (1) be deemed to have been already given full effect to and no further deduction under those sections shall be allowed. Thus, conspicuously section 28(v) has not been included in sub-section (2) of Section 44AD which deals with any interest, salary, bonus, commission or remuneration by whatever name called, due to or received by, a partner of a firm from such firm. We find that the Tribunal rightly rejected the plea raised by the assessee and confirmed the order passed by the CIT(A) and the Assessing Officer.

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• 2020 (12) TMI 993
  Capital gain deduction - Allowable deduction u/s 48 - sale was received by the appellant and same was directly paid to the Bank by the purchaser in discharge of the mortgage - whether Tribunal was right in law in not holding that there was a diversion of the sale proceeds towards redeeming the interest of the mortgagor and therefore the amount so diverted was not liable to capital gains tax? - HELD THAT:- Hon ble Supreme Court in RM. ARUNACHALAM VERSUS COMMISSIONER OF INCOME-TAX [ 1997 (7) TMI 5 - SUPREME COURT] had held that where the mortgage had been created by the owner after he had acquired the property, the clearing of the mortgage by him prior to the transfer of the property would not entitle him to claim deduction under Section 48 of the Act because, in such a case he did not acquire any interest in the property subsequent to his acquiring the same.

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• 2020 (12) TMI 992
  Review Application - Penalty u/s 271(1)(c) imposed - non-disclosure of the capital gains - other sufficient reason which would entitle the petitioner/assessee to apply for review of the judgment passed by this Court - HELD THAT:- Unless any other sufficient reason is analogous to other two conditions, review cannot be granted. Therefore, the argument of Ms.S.Yogalakshmi, that she seeks to invoke the third limb of order 47 Rule 1(1) CPC is not acceptable, because the third limb has been explained to mean that unless any other sufficient reason is analogous to the other two conditions, viz., excusable failure to bring to the notice of the Court new and important matters or error apparent on the face of the record, a review cannot be entertained. The grounds canvassed in this review application were in fact argued in the appeal and the Court has taken into consideration the arguments and held against the assessee. As rightly pointed out by Ms.K.G.Usha Rani, learned Standing Counsel, the finding of this Court, more particularly, in paragraphs 6 and 12 is a clear answer to the grounds canvassed before this Court in this review application. Thus, in the absence of any grounds made out to exercise review jurisdiction of this Court, this review application has to necessarily fail.

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• 2020 (12) TMI 991
  Reopening of assessment u/s 147 - whether original assessment framed did not deal with the issue of exemption of sale of agricultural land? - as per AO as assessee had cooperated in the re-assessment proceedings and therefore, cannot object to the reopening - HELD THAT:- For validity of the reopening proceedings, we find that the reopening was made based on the facts, records and documents, which were available on the file of the Assessing Officer when the original assessment was completed. AO miserably failed to establish that the assessee had failed to disclose fully and truly all material facts necessary for the assessment for that year. The CIT(A) states that the Assessing Officer during the original assessment did not properly appreciate the documents. As held by the Hon ble Supreme Court in Calcutta Discount Co. Ltd. [ 1960 (11) TMI 8 - SUPREME COURT] it is not for the assessee to tell as to how the Assessing Officer has to complete his assessment. The duty of the assessee is to disclose fully and truly all material particulars and it is not for him to advice the Assessing Officer to how he has to go about with the assessment proceedings. Having noted that the assessee, at the first instance, sought for furnishing the reasons for reopening, would clearly show that non-furnishing of reasons has put him to prejudice. As noted above, the Revenue could not produce any evidence to show that the reasons recorded were provided to the assessee in spite of opportunity having been granted by the Tribunal. Thus, we find that the Tribunal was right in allowing the assessee s appeal and quashing the re-assessment proceedings.

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• 2020 (12) TMI 990
  Validity of reopening of assessment - year of taxation of capital gain - change of opinion or review of the earlier order - HELD THAT:- Revenue points out that as the original processing of the ROI was only by way of intimation and no scrutiny assessment under Section 143(3) had been made, the assumption of jurisdiction under Section 147 is unassailable. It was only when the return of income for AY 2016-17 was taken up that the Officer gleaned that the appropriate year for taxing the capital gain would be 2014-15 and not 2016-17. The question of change of opinion or review of the earlier order would not arise insofar as no opinion was formed and no order passed at the first instance. Whether the assumption of jurisdiction in terms of Section 147 for AY 2012-13 is proper, particularly, seeing as the Officer only proposes a re-assessment, on protective basis? - Admittedly, there has been no scrutiny assessment for AY 2012-13 and only an intimation has been passed. The issue based on which the re-assessment has been initiated is whether the capital gains offered to tax in AY 2016-17 should have been offered in the earlier year i.e. AY 2012-13. Ordinarily the limitation provided for the initiation of re-assessment is four years from the end of the relevant financial year, extended to six years upon satisfaction of the conditions elaborated in the proviso to Section 147, conditional upon an order under Section 143(3) having been passed at the original instance. Since only an intimation under Section 143 (1) has been passed in this case, limitation of six years is, available. In the present case, the return of income for AY 2012-13 was not scrutinized and only the return of income of the petitioner for AY 2016-17 was taken up for scrutiny. The question of whether the capital gain is assessable in AY 2012-13 or 2016-17 is thus, a matter to be decided by the Authorities after due verification of relevant documents and in accordance with the law. Thus, while the merits of the matter relating to the year in which the instance of capital gain would fall is left entirely open for decision by the Officer, the assumption of jurisdiction is upheld. In this case the issue that arises is whether the capital gain is taxable in one year or the other and thus, it is only if the material pertaining to both years were available before the officer that a proper decision in this regard could be arrived at. Petitioner argument that the order of assessment for AY 2016-17 has been challenged in appeal only on the aspect of computation of the capital gain and thus as far as the year of taxability is concerned, the order has attained finality is misconceived since the very doubt entertained by the Officer turns on the question of whether the year of taxability adopted by the petitioner is correct or not. The finality attained by filing of the first appeal by the petitioner is subject to statutory processes such as 263 and 147 of the Act, if otherwise valid. This argument is thus rejected. - Decided against assessee.

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• 2020 (12) TMI 989
  Validity of order u/s 144 - ex parte assessment order - Violation of principles of natural justice as not affording sufficient opportunity to the petitioner to raise all his contentions available to him under law - HELD THAT:- As seen from the impugned assessment order passed under Section 144 of the Income Tax Act, 1961, the petitioner has not participated in the said proceedings and the order is in the nature of ex parte assessment order. The grounds raised by the petitioner, namely, the cash amount deposited under the Pradhan Mantri Garib Kalyan Yojana Scheme, 2016, on 31.03.2017 has not been taken into consideration under the impugned assessment order. Contention of the petitioner that since he has has availed the benefit of Pradhan Mantri Garib Kalyan Yojana Scheme, 2016, the cash amount cannot be treated as an unexplained money under Section 69 (A) has not been considered by the respondent in accordance with law. Similarly, the contention of the petitioner that amendment made to Section 115BBE in the year 2020, will not apply to the assessment year 2017-2018, has also not been considered by the respondent in the impugned assessment order. The respondent has also not considered the petitioner s contention in this Writ Petition that the amendment to Section 143 (3A) of the Income Tax Act, 1961, was proposed only in the Budget 2020 to include Section 144 proceedings also under the e-proceedings and therefore, for the assessment year 2017-2018, the same is not attracted. Though in the counter affidavit, the respondent has given reasons for each and every contention of the petitioner in this writ petition, the same is not reflected in the impugned assessment order. no personal hearing has been afforded to the petitioner. It is also not clear that whether such an opportunity was given by the respondent to the petitioner or not. All these aforementioned factors will clearly indicate that the respondent has violated the principles of natural justice while passing the impugned assessment order by not affording sufficient opportunity to the petitioner to raise all his contentions available to him under law. Thus the impugned assessment order is hereby quashed and the matter is remanded back to the respondent for fresh consideration.

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• 2020 (12) TMI 988
  Estimation of income - Bogus purchases - closing stock computation - claim of the assessee that when assessee has already disallowed the bogus purchases, it should also get benefit by reducing the amount in the closing stock, because of the reason that inventory is to be valued, if found in existence as the bogus purchases inventory - Double addition - HELD THAT:- It is not in existence, the consequent closing stock shown also to be reduced by the above amount. This claim of the assessee has been correctly rejected by the CIT(A) by stating that the opening stock in the subsequent year i.e. AY 2013-14, assessee has shown it to be Rs. 4,74,01,230/- and therefore, in that particular year the stock is debited to the profit and loss account. If the claim of the assessee is accepted then assessee must necessarily proved that items shown as bogus purchases were also carried on in the closing stock. The same has not been shown by proving the quantity of such goods as well as the price on which it is carried on in the inventory. Admittedly, no inventory is furnished in the opening and closing stock by the assessee. In this view, we do not find any infirmity in the order of the Ld. CIT(A), so far as it relates to rejecting the claim of the assessee of double addition. Alternative arguments of the Ld. AR that in the case of bogus purchases, if they are not written off or reduced from the closing stock then, necessarily in the sale price the same is included and therefore, only gross profit on the same can be added - We find that the above arguments also supported by relying on Simit P. Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] - The assessee has shown that in the year ending March, 2012, the gross profit ratio of the assessee is 9.25%. We direct the Ld. Assessing Officer to retain the addition @9.25% of Rs. 2.44 crores of Rs. 22,57,000/- deserve to be retained and the balance addition of Rs. 2,21,43,000/- deserve to be deleted. The reasons being that once the bogus purchases have gone into the profit and loss account, and necessary sales have not been doubted, only option left with the revenue is to make the addition of the gross profit embedded in the bogus purchases. Accordingly, the ground no. 1 of the appeal is partly allowed.

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• 2020 (12) TMI 987
  Penalty order u/s 271(1)(c) - Defective notice - HELD THAT:- In the present case, AR demonstrated the notice, we find that the AO is not sure whether he was to proceed on the basis that the assessee has concealed the particulars of his income or furnished inaccurate particulars of income. The Hon ble High Court in M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] also observed that in such a situation, the levy of penalty suffers from non-application of mind. Considering the legal position and the action of the AO in passing the penalty order u/s 271(1)(c) shows that there is non-application of mind thereby the penalty order is not sustainable - See M/S SSA S EMERALD MEADOWS [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] - Decided in favour of assessee.

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• 2020 (12) TMI 986
  Disallowance of expenditure of liquidated damages in relation to two parties, holding the same as penal in nature - CIT(A) has in principle agreed that expenses towards liquidated damages are not penal in nature and on production of confirmation from one party i.e. M/s IFFCL deleted the disallowance made by the Assessing Officer - HELD THAT:- CIT(A) in absence of reconciliation of amount of the liquidated damages claimed, has rejected the claim of the assessee, however, in our opinion, it is matter of verification from the third-party only and the interest of the justice, one more opportunity can be allowed to the assessee to produce confirmation of the liquidated damages charged by said company to the assessee. If the accounts of both the assessee and the said party can be reconciled, then matter ends and no disallowance would be required in the case of the assessee. Accordingly, we feel it appropriate to restore this issue back to the file of the CIT(A) with the direction to the assessee to produce document in support of its claim of liquidated damages including confirmation of Chandrapura Thermal Power Station and copy of ledger account of the assessee in their books of accounts specifying money withheld in the form of liquidated charges. It is needless to mention that both the assessee and the Assessing Officer shall be provided adequate opportunity of being heard.

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• 2020 (12) TMI 985
  Reopening of assessment u/s 147 - HELD THAT:- AO has completely ignored the reassessment order dated 11.3.2015 passed u/s. 148/143(3) of the Act in which he has accepted the cash credit in dispute in the form of share capital from these 5 entities and again reopened the case of the assessee for the same assessment year on the same ground by recording the almost same reasons and made the same addition which is in dispute while completing the assessment in dispute u/s. 147/143(3) of the Act vide order dated 30.12.2017, which is not permissible as per law as well as in view of the aforesaid judgment of ADITYA KHANNA [ 2017 (12) TMI 64 - DELHI HIGH COURT] Considering the documentary evidences filed by the assessee in the shape of paper book and the written submissions alongwith various case law Aditya Khanna, as reproduced above, the addition in dispute is deleted and the appeal filed by the assessee is allowed.

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• 2020 (12) TMI 984
  Unexplained cash credit u/s. 68 - HELD THAT:- Assessee has filed all the necessary documents as required for substantiating its claim u/s. 68 - Assessee has discharged its initial onus which lay upon it by proving the identity and capacity of the share applicants and the genuineness of the transactions. It cannot be said that such a conclusion was unreasonable or perverse or passed on no evidence. Ld. CIT(A) has also relied upon the decision of the Hon ble Supreme Court of India in the case of CIT vs. Orissa Corporation Pvt. Ltd. [ 1986 (3) TMI 3 - SUPREME COURT] . CIT(A) has deleted the addition in dispute, therefore, we are of the view that no interference is called for in the well reasoned order passed in the case of the assessee, accordingly the same is upheld and the appeal filed by the Revenue is dismissed.

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• 2020 (12) TMI 983
  TP Adjustment - Working capital adjustment - HELD THAT:- AO/TPO has to consider the assessee s case as entitled for working capital adjustment as in earlier year, while determining the ALP. Accordingly, we direct the A.O. to determine the appropriate rate of working capital risk adjustment after going through the relevant records of the assessee. Comparable selection - Mubea Suspension (India) Ltd. rejected by the TPO on the reason that this comparable is having loss for 2 years out of 3 years - It is not disputed that there is only one-year profit out of 3 successive financial years. Being so, there is a profit in 1 year out of consecutive 3 financial years, Mubea Suspension (India) Ltd. to be considered as a comparable to determine the ALP of the transactions in assessee s case as held in the case of KBACE Technologies Pvt. Ltd. [ 2020 (2) TMI 78 - ITAT BANGALORE] . TP adjustment should be restricted to international transaction with the Associated Enterprises - contention of the assessee is that as the quantum of sales made to the A.E. vis- -vis total sales is 52.16%, it is stated that if the TP adjustment is to be restricted only to the quantum of manufacturing sales pertaining to A.Es i.e. 52.16% and it cannot be extended to other than international transactions to A.E. - HELD THAT:- As gone through the orders of the authorities below. Admittedly, this issue came for consideration in assessee s own case in the assessment year 2010-11. The Tribunal on this issue observed in para 23 [ 2016 (7) TMI 1281 - ITAT BANGALORE] that TPO was confined to the adjustment to the value of international transactions only as the section 92 of the Act applies with reference to computation of income from international transactions having regard to ALP in this AY 2013-14 and other domestic transactions cannot be considered for determining ALP in this A.Y. Being so, we direct the AO/TPO to confine the TPO adjustment only on international transaction in manufacturing segment only. Benefit of +/- 3% as applicable under proviso to section 92C(2) - HELD THAT:- We observe that while computing the ALP if the profit margin is within the range of +/- 3% in terms of section 92C(2) of the Act there it cannot be any TP adjustment with regard to the international transactions. The AO/TPO to take note of provision of section 92C(2) of the Act and decide accordingly. Ordered accordingly.

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• 2020 (12) TMI 982
  Exemption u/s 54 - Assessee has not invested an amount which should have been invested in capital gain account scheme - HELD THAT:- In the present case, the assessee filed the return of income for the assessment year 2014-15 on 13.6.2014 before the due date of filing return u/s 139(1) of the Act. However, by that time, he has not utilized the amount of Rs. 2,59,03,849/- in construction of new residential house or deposited the same in capital gain account scheme as notified by the Central Government. In other words, unutilized capital gain should have been deposited in capital gain account before due date of filing of return u/s 139(1) of the Act. Now the contention of the Ld. A.R. is that even if the assessee deposited unutilized portion of capital gain after the due date provided u/s 139(1) of the Act, assessee is entitled for deduction u/s 54 of the Act. This argument cannot be upheld. To avail benefit u/s 54 of the Act, unutilized portion of capital gains shall be deposited by assessee in capital gain account scheme before due date of filing of return of income u/s 139(1) of the Act as prescribed u/s 54(2) of the Act. We are of the view that in the case of assessee the deduction claimed should be examined in the parameters of section 54F - We make it clear that assessee shall furnish necessary evidences of construction or purchase of new residential property in Chicago, USA. A.O. has to examine the same and decide the issue in the light of the order cited - We are of the opinion that it is appropriate to remit the issue to examine the claim of the assessee and decide in accordance with law. Appeal of the assessee is partly allowed for statistical purposes.

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• 2020 (12) TMI 981
  Capital gain computation - ascertain the date of applicability of the beneficial proviso to section 50C(1) which gives a breathing space to all such assessee who enter into agreement for transfer of property on a date anterior to the date of actual registration and also receive full or part of the consideration for such transfer - HELD THAT:- When we examine the content of the two provisos to section 50C(1) in juxtaposition to the language of sub-section (1), it gets graphically clear that the beneficial proviso has been inserted in order to benefit some assesses who enter into agreement prior to the date of registration and also simultaneously receive full or a part of consideration. Such beneficial provision does not inflict a corresponding detriment to other assessees or the public generally. Since object of the first proviso to section 50C(1) is to confer a benefit to certain class of assesses in the given situation, going by the ratio laid down in Vatika Township [ 2014 (9) TMI 576 - SUPREME COURT] this proviso will have to be held as retrospective applicable from the date of insertion of section 50C w.e.f. 01-04-2003. Our view is fortified by a recent judgment rendered by the Hon ble Madras High Court in CIT Vs. Vummidi Amarendra [ 2020 (6) TMI 74 - ITAT CHENNAI] - It is, therefore, held that the alternate plea raised by the ld. AR for adopting stamp value on the date of agreement in the year 2000 instead of the date of registration in 2006 is hereby countenanced, in principle. Transfer of asset u/s 2(47) - transfer took place on 06.05.2000, being the date of agreement or contradicted by the Revenue by making out a case that the date of registration, being, 03-08-2006 is the real date of transfer attracting section 45 - assessee handed over possession of the property to M/s. V.S. Kolbhor Associates in the year 2000 on receiving substantial part of consideration. This, in our opinion, constituted transfer u/s. 2(47)(v) of the Act read with section 53A of the TPA attracting taxability of capital gain in the A.Y. 2001-02. As the `transfer took place in the said earlier year, it cannot once again take place in the assessment year 2007-08 attracting taxation. Setting aside the impugned order, we hold that the transfer took place in the A.Y. 2001-2002 and not 2007-08, leading to taxation of capital gain only in the earlier year and not the latter. As the ld. CIT(A) has upheld taxability of the capital gain in the A.Y. 2007-08, we hereby overturn the same. The Revenue is at liberty to examine the taxability of the capital gain, if any, arising from the transaction in the earlier year, subject to the relevant provisions. In view of our favorable decision on the main argument of the ld. AR, the alternate claim of the assessee and the discussion made has been rendered academic - Decided in favour of assessee.

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• 2020 (12) TMI 980
  Validity of reopening of assessment u/s 147 - reason to believe v/s suspicious - notice beyond jurisdiction being without any reason to believe and satisfaction of AO or of the superior authority who accorded approval in a mechanical manner - HELD THAT:- It is evident from the reasons recorded that at the stage of issue notice under section 148 Assessing Officer was suspicious on the source of the cash deposits and, therefore, he wanted to investigate further to find out the actual source of the cash deposits. At the stage of issue of notice, the Assessing Officer was not sure whether income had escaped to tax or not. No notice under section 148 can be issued merely on such suspicion. There has to be a reasonable material before the Assessing Officer on the basis of which a reasonable person can make requisite belief. In the instant case, there is lack of reasonable material to form a reasonable belief that income has escaped tax. Under the circumstances, the action of the AO of reopening assessment in exercise of the power under section 148 of the Act cannot be sustained. Accordingly, we quash the re-assessment proceeding initiated in the case of the assessee.

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• 2020 (12) TMI 979
  Rectification of mistake u/s 254 - present Misc. Application is filed in respect of the order passed in Misc. Application which Tribunal dismissed the same as barred by limitation - HELD THAT:- Tribunal may after giving opportunity to both the parties to the appeal rectify the order, but the order was passed in Misc. application and the same is a speaking order which cannot be reviewed by us at this juncture. The case laws submitted by the Ld. AR cannot be dealt in the present Misc. Application as the same are related to the merit of limitation period of filing of earlier Misc. Application and not the present Misc. Application and the earlier Misc. Application is already decided with the detailed order regarding the issue of limitation which we cannot review in the present Misc. Application. The preposition of the Ld. AR amounts to review of its own order dated 07.02.2018 by the Tribunal which is not permissible in law, the remedy in our opinion lies elsewhere, but not before the Tribunal at this juncture. Hence, the present Misc. Application filed by the assessee is dismissed.

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• 2020 (12) TMI 978
  Addition u/s 68 - unexplained cash deposits - agricultural income as not genuine - AR emphasized that the A.O and CIT(A) have erred in denying the sources of agricultural income generated out of the agriculture activities - HELD THAT:- There is no doubt on the genuineness of purchase of agricultural lands but the only doubt the A.O has raised in the assessment proceedings that the assessee could not substantiate the agricultural activities with evidences. The Ld. AR reiterated the submissions made before the lower authorities and explained that the assessee has acquired the agricultural lands in April 2007 and constructed polyhouse by obtaining loan from Syndicate Bank. Information submitted by the assessee cannot be disbelieved. But the fact remains though the assessee has filed the details, there are no observations of the A.O nor the assessee could explain that the expenses and income allocated to the assessee share are not considered in the M/s Sankalp farm. Further, the assessment records of M/s Sankalp farms are not available with the A.O. Therefore, to meet the ends of justice, We provide one more opportunity to the assessee to establish and clarify the income generated in agricultural activities and the expenses incurred Accordingly, we set aside the order of the CIT(A) and remit the entire disputed issues to the file of assessing officer for limited purpose to verify and examine the claims. Appeal of the assessee for statistical purposes.

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• 2020 (12) TMI 977
  Higher depreciation claim - Receipt from business of hiring of plant and machinery - AO to restrict depreciation on plant and machinery @ 15% as against the claim @ 30% by assessee - HELD THAT:- Assessee in this assessment year has received total receipt and from which the assessee has received from hiring which is more than 66% of the total receipt. The assessee s claim is that since the substantial income i.e. 2/3rd of its income is from hiring business, it qualifies for higher depreciation @ 30%. For that the Ld. A.R has relied on the decision of Hon ble Rajasthan High Court in Bansiwala Iron Steels Ltd. [ 2003 (9) TMI 813 - RAJASTHAN HIGH COURT] find that assessee s income from hiring constitutes more than 2/3rd of its total income therefore since the assessee s substantial income is from hiring business, relying on the ratio laid (supra), the assessee s claim for higher depreciation should be allowed @ 30% instead of 15% allowed by the AO. Therefore, the assessee s claim of allowing higher depreciation @ 30% is directed to be allowed.

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• 2020 (12) TMI 976
  Addition u/s 68 - Bogus LTCG on shares - Application for Vivad se Vishwas Scheme - HELD THAT:- On the merits case of the assessee is covered against him by the judgment of Udit Kalra vs. ITO [ 2019 (4) TMI 834 - DELHI HIGH COURT] wherein has declared M/s Kappac Pharma as bogus company who made only accommodation entries in which the assessee is a beneficiary. This is also followed by many decisions of coordinate benches holding against assessee. As assessee has submitted a letter dated 12th March, 2020 under the signature of his Chartered Accountant Mr. Vikas Gupta that assessee is contemplating the option of Vivad se Vishwas Scheme. It was stated that at that particular time when this letter was given the Scheme was yet to be announced. Now despite notices the assessee is not appearing. The assessee has also disclosed his intention through his CA to settle the dispute under Vivad se Vishwas Scheme. As the assessee would like to opt for the above Scheme and to settle the impugned dispute, the appeal of the assessee is technically treated as withdrawn and dismissed. Appeal of the assessee is treated as dismissed as withdrawn with a liberty to the assessee that in case assessee is not granted Form No.3 under the above Scheme for settlement of the above dispute, he may file an application for recall of the above order. Meanwhile, the appeal filed by the assessee is dismissed as withdrawn.

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• 2020 (12) TMI 975
  Reopening of assessment u/s 147 - assessee did not produce any evidence to claimed expenses towards the production cost incurred during the years under consideration and failed to substantiate the difference in the production cost adopted in the return of income filed and Form 52A filed in spite of opportunity of being heard granted to assessee - HELD THAT:- We note that section 285B requires any person carrying on production of cinematographic film during the whole or any part of the financial year to file the statement before Ld. AO within 30 days from the end of such financial year or within 30 days from the date of completion of the production of the film whichever is earlier. The statement is necessarily to contain the payments that exceeds Rs. 50,000/- in the aggregate made by such person to eat such person engaged by him in such production. Form 52 relevant for financial year 2005-06 and 2006-07 relevant to assessment year under consideration was filed by assessee before Ld. AO on 09/01/2008 being the year in which the production of the film was completed. We therefore, do not find any infirmity in the observations of Ld. CIT(A), as the reassessment was initiated based on change of opinion. On merits we note that, there is no dispute regarding compliance under section 285B, within the relevant period. It is an admitted position that, production cost claimed by assessee for assessment year 2006-07 is remanded by this Tribunal to Ld. AO for fresh consideration. Assessee placed the copy of the order passed by this Tribunal for assessment year 2006-07 - For assessment year 2007-08, we note that, assessee has not claimed production cost as expenditure which is clear from page 82 of paper book. We note that production cost has been considered as work in progress. - Decided against revenue.

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• 2020 (12) TMI 974
  Disallowance of expenditure on account of professional charges and security services - no business during the year - As per AO assessee does not have any income during the year and consequently no premises were available with the assessee - HELD THAT:- With respect to security services it was stated that the assessee has not paid any rent but has moved into basement of Thapar House being the premise of its group company. The assessee carried out its work from that premises and therefore, security personal continued to be deployed. For the above proposition the assessee has only produced the copies of the bills and ledger account of the expenditure. With respect to the legal expenditure as not known that what for the above legal expenditure were paid by the assessee. The narration of the bills speaks that it is professional fees for providing legal opinion and drafting of various legal documents for the clients of the assessee Rs. 10 lakhs are charged. With respect to Rs. 20,000/- the same were paid for the certification related to the companies law filing with MCA. Therefore out of professional fees Rs. 1020,000/- disallowance of Rs. 20,000/- requires to be deleted. But for the legal fees/professional charges, assessee needs to show that whether these expenditure are wholly and exclusively incurred for the purposes of business. Assessee also needs to elaborate the facts about the fact business of the assessee has not ceased to exist. Further, with respect to the security charges a sum of Rs. 60450/- per month were paid to one agency for providing security charges, but assessee needs to establish that those premises are used for the purposes of the business of the assessee. Assessee must show that it operates from that premises and why it bears whole of the security charges. In view of this, we set aside issue back to the file of the ld AO with respect to legal fees of Rs. 10 Lakhs and Security charges with direction to the assessee to prove that same - Decided partly in favour of assessee.

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• 2020 (12) TMI 973
  Claim of deduction of expenditure u/s 37(1) - Contribution to BATF - contribution made by the assessee to BATF as per the directions of Dy. Commissioner of Bellary District Administration for the purpose of infrastructure development and to maintain cordial relationship with the Government and provide social facilities to the deprived class and which has a nexus with the assessee business - HELD THAT:- We find that the AO has not disputed the genuineness of the expenditure and of the view, that it is not connected to the business and not allowable under Section 37(1) of the Act. We considered the judicial decisions and the provisions of law, are of the opinion that the contribution made by the assessee is wholly and exclusively for the purpose of business and is allowable under Section 37(1) of the Act. Accordingly, we set aside the order of CIT (Appeals) on this disputed issue and direct the Assessing Officer to delete the addition and allow the ground of appeal of the assessee. Provision for audit fees - AO has disallowed the claim as the assessee has failed to deduct the TDS and applied the provisions of Section 40(a)(ia) - contentions of the Ld. AR that the Audit fee was not credited to the Auditors Account and was lying in the provision for audit fees payable account - alternative contention submitted by the Ld. AR, that the recipient has offered the income for income tax purpose and paid taxes as per the second proviso to Section 40(a)(ia) of the Act, and therefore the payee has discharged his obligation - HELD THAT:- We considering the submissions and the facts, are of the opinion that the matter requires examination and verification of fact that the payee has discharged its obligation to pay the taxes on Audit fees. Hence to meet ends of justice, we provide one more opportunity to the assesses to substantiate the claim before the Assessing Officer with proof of offering of income by the payee for income tax purpose. Accordingly, we set aside the order of the CIT (Appeals) on this disputed issue and restore the entire disputed issue for limited purpose to the file of AO to examine and verify the claim and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the details and allow the ground of appeal of assessee allowed for statistical purposes.

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• 2020 (12) TMI 972
  Disallowance of deduction u/s 80P(2)(d) - interest received on deposit kept with co-operative bank - AO disallowed the claim of deduction by stating that the co-operative bank is different than a co-operative society, as per provisions of section 80P(2) - HELD THAT:- The assessee had made the claim before the authorities below duly supported by several jurisdictional ITAT order in this regard. AO refused to follow the same on the ground that Department has not accepted the same and the same is in appeal before the honourable Bombay High Court. This in our considered opinion is a violation of discipline of judicial hierarchy, as no case is made out that Hon ble Bombay High Court has reversed any of the decisions. CIT(A) also has refused to follow the discipline of precedence by referring to decision of honourable Karnataka High Court. In this regard as evident from the above said decision of the ITAT [ 2019 (4) TMI 1933 - ITAT MUMBAI] wherein it has been brought out that there is a decision of honourable Karnataka High Court itself in favour of the assessee and there is another decision of honourable Gujarat High Court in favour of assessee on the same issue. In this view of the matter in our considered opinion learned CIT(A) has also committed violation of the judicial discipline by refusing to follow the precedence cited before him on not very cogent ground. Be as it may we find that the issue involved is covered in favour of the assessee by several decisions of ITAT Mumbai as above. Moreover it is also supported by the decisions of honourable Karnataka High Court in the case of Totagars Cooperative Sale Society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] .

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• 2020 (12) TMI 971
  Disallowance of expenditure u/s 14A - suo motu disallowance made by the assessee - AO mandation of recording reasons - HELD THAT:- AO has recorded his satisfaction why assessee s claim that no exempt income can be attributed to earning exempt income as well as the suo motu disallowance is not acceptable. On a perusal of the said reasoning, it is noticed that the AO has not rejected the claim of the assessee merely on the reasoning that the assessee does not maintain its account in a manner from which expenditure attributable to earning exempt income can be easily identified. AO has clearly stated that the time devoted by the investment committee and the employees as well as other overheads certainly involve a cost which is attributable to earning of exempt income. Therefore, it is not a case where the Assessing Officer has failed to record any satisfaction and mechanically proceeded to compute the disallowance under section 14A r/w rule 8D. Therefore, in our view, the condition of section 14A(2) stands satisfied in the present case. Reasonableness of disallowance computed under rule 8D(2) - AO treated the suo motu disallowance of Rs. 6,13,500, as direct expenditure under rule 8D(2)(i) - Commissioner (Appeals) has disapproved the aforesaid decision of the AO and we entirely agree with the reasoning of the first appellate authority. Disallowance made under rule 8D(2)(iii) - As noticed that the assessee had furnished a computation of such disallowance by applying certain basis. Whereas, the AO without properly examining assessee s computation has straight away applied the formula prescribed in rule 8D(2)(iii). Of course, the first appellate authority while deciding the issue has granted partial relief to the assessee by directing the AO to exclude the investments which have not yielded exempt income during the year and which in our opinion is correct. However, as far as the remaining disallowance is concerned, in our view, before applying rule 8D(2)(iii), the Assessing Officer should properly examine assessee s computation. It is observed, while deciding similar issue relating to disallowance under section 14A r/w rule 8D(2)(iii) in the assessment year 2009 10, the Tribunal has restored the issue to the Assessing Officer for fresh adjudication. Following the aforesaid decision, the Tribunal has restored identical issue to the Assessing Officer. Appeal of assessee are allowed for statistical purposes.

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• 2020 (12) TMI 970
  Disallowance of deduction u/s 80P(2)(d) - interest received on deposit kept with co-operative bank - AO disallowed the claim of deduction by stating that the co-operative bank is different than a co-operative society, as per provisions of section 80P(2) - HELD THAT:- The Hon ble Karnataka High court in the case of PCIT vs. Totagars Cooperative Sale Society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] has held that for the purpose of section 80P(2)(d) Co-operative Bank should be considered as cooperative society. Similar view has been taken by the Hon ble Gujarat High court in the case of Surat Vankar Sahakari Sangh Ltd. vs. ACIT [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] On the same issue in the case of PCIT vs. Totagars Co-operative Sale Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] has taken a contrary view holding that interest income earned from deposit with the cooperative bank does not qualify for deduction under section 80P(2)(d) of the Act. It would be relevant to mention here that the Hon ble High Court while rendering the later judgement has not considered the earlier decision rendered in the case of Totagars Co-operative Sale Society (supra). No judgement from Hon ble Jurisdictional High court on the issue of eligibility of deduction under section 80P(2)(d) of the Act on interest income derived by a Cooperative Society from a Cooperative Bank has been brought to our notice. The Hon ble Bombay High Court in the case of K. Subramanian Vs. Siemens India Ltd. [ 1983 (4) TMI 3 - BOMBAY HIGH COURT] has held that when two conflicting decisions of non-jurisdictional High Courts are available, the view that favours the assessee is to be preferred. Accordingly, following the decision of Hon ble Karnataka High Court in the case of Totagars Cooperative Sale Society (supra) and the decision in the case of Hon ble Gujarat High Court in the case of Vankar Sahakari Sangh (supra) the deduction claimed by the assessee under section 80P(2)(d) of the Act in respect interest derived from investments with the cooperative banks is allowed. I find merit in the grounds of appeal raised by the assessee. The impugned order is set aside and the appeal of assessee is allowed.

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• 2020 (12) TMI 969
  Condonation of delay - delay in filing 738 days before the CIT(A) - sufficient cause of delay - HELD THAT:- The assessee did not file an appeal before the first appellate authority within the time limit prescribed, on the bonafide belief that the demand that has arisen on account of disallowance of claim u/s. 80P would not be enforced and shall be kept in abeyance until the assessment order was rectified by fixing the final liability based on the Hon ble Supreme Court judgment. When recovery proceedings were initially initiated on 01.02.2017, the assessee approached the Assessing Officer and orally it was informed to the assessee that the demand would not be enforced and the notice was issued in usual course along with other cases. As submitted by the assessee, later in December 2018, when there was threat of attachment of bank accounts and direction to pay atleast 20% of the total demand, the assessee was forced to file appeal before the CIT(A) on 30.01.2019. I am of the view that there was bonafide reasons on the part of the assessee for not filing the appeal within the prescribed time limit before the CIT(A). The delay in filing the appeal before the CIT(A) was solely on account of the clear statement by the Assessing Officer that the demand raised in the assessment order would be kept in abeyance till the final decision is taken by the Hon ble Apex Court. The assessee was under bonafide belief that the A.O. would pass an order u/s. 154 of the I.T. Act confirming the demand citing the Hon ble Apex Court judgment before starting recovery action. Therefore, there is sufficient cause for filing appeal belatedly before the CIT(A) and the delay cannot be attributed to any latches on the part of the assessee.

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• 2020 (12) TMI 968
  Estimation of income - bogus purchases - CIT-A restricted the disallowance @12.5% - HELD THAT:- CIT(A) considered the factual aspects and dealt on the provisions of the Sales Tax Act and relied on the decision of Hon ble Tribunal in assessee s own case and partly allowed the appeal. The Ld. DR could not controvert the findings of the CIT(A) with any cogent material or new information and relied on the order of the Assessing officer. We do not find infirmity in the order of the CIT(A) and upheld the same and dismiss the grounds of appeal of the revenue. Penalty u/s 271(1)(c) - CIT(A) has estimated the income at 12.5% of the bogus purchases and the addition was accepted by the assessee - HELD THAT:- We are of the opinion that, when the addition is sustained on estimation/ adhoc basis, no penalty u/s 271(1)(c) of the Act can be levied. We find that the LdCIT(A) relied on the Coordinate Bench of Hon ble tribunal decisions and passed a reasoned order in directing the Assessing Officer to delete the penalty. Accordingly, we are not inclined to interfere with the order of the Ld CIT(A) and upheld the same and dismiss the grounds of appeal of the revenue.

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• 2020 (12) TMI 967
  Disallowance of provision for retention bonus - amount not paid before the due date for filing return of income out of provision - HELD THAT:- A perusal of provision of section 43B of the Act would show that clause (c) relates to the sum referred to in 36(1)(ii) of the Act, which in turn relates to any sum paid to an employee as bonus or commission for services rendered. Admittedly in the instant case, provision for retention bonus is payable to an employee for services rendered by him during the year under consideration. Hence, the retention bonus is allowable as deduction u/s. 36(1)(ii) of the Act only and not u/s. 37(1) as contended by Ld A.R. Provisions of section 43B of the Act would also apply to the Provision for retention bonus. As per the provisions of section 43B of the Act, the provision for retention bonus is not allowable as deduction. As per the proviso to sec. 43B, the amount paid before the due date for filing return of income out of the provision so created is allowable as deduction. Admittedly, the assessee has paid a sum out of the provision so created, before the due date for filing return of income. Accordingly, we are of the view that the Ld. CIT(A) was justified in directing the A.O. to restrict the disallowance being the amount not paid before the due date for filing return of income out of provision for retention bonus claimed by the assessee. Accordingly, we uphold the order of Ld. CIT(A) on this issue. Addition of interest income - Addition on the ground that the same is not offered to tax by the assessee, even though it is reflected in form 26 AS and the TDS relating to the same was claimed - HELD THAT:- We notice that the Ld. CIT(A) has not disposed of this ground in his order. Nevertheless the Ld. A.R. submitted that the interest income was received from M/s. Tata Power Company Ltd., which was adjusted against electricity bills raised by the above said company. Since the assessee had accounted for net amount of electricity bills, the interest income was not separately disclosed in the profit loss account. Accordingly, the Ld. A.R. submitted that the impugned interest income has actually been offered by the assessee by way of reduction in the electricity bill. Since the submissions made by Ld. A.R. require verification of facts, we restore this issue to the file of A.O. for examining it afresh.

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• Customs

• 2020 (12) TMI 966
  Unconditional release of the detained silk fabric and carpets covered under various shipping bills - export consignments of the petitioners kept on hold - prohibited goods or not - HELD THAT:- Clearance of export goods are dealt with in sections 50 and 51 of the Customs Act, 1962. Once the exportable goods are entered in the customs automated system by generating shipping bill in terms of section 50, the proper officer is required to clear the goods under section 51. As per sub-section (1) of section 51, where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty if any assessed thereon and any charges payable under the Customs Act, 1962, the proper officer may make an order permitting clearance and loading of the goods for exportation - If there is no seizure of the exportable goods of the petitioners, there cannot be any good reason for withholding of the exportable goods, the same admittedly being not prohibited goods. Stand over to 12.01.2021.

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• 2020 (12) TMI 965
  Principles of Natural Justice - grievance of the petitioner is that though two dates of hearing were granted by the adjudicating authority, no hearing has taken place till date - import of peas - HELD THAT:- Since show-cause notice has been issued under section 124 of the Customs Act, 1962 to which petitioner has submitted reply, we are of the view that it would meet the ends of justice if the adjudicating authority adjudicates the matter in accordance with law and passes the order in original expeditiously. Let the adjudicating authority pass a speaking order of adjudication after hearing the petitioner and upon independent application of mind considering all aspects - Petition allowed by way of remand.

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• 2020 (12) TMI 964
  Confiscation of goods - imposition of redemption fine and penalty - absence of valid PSI certificate - import of Tin Waste and Scrap (Light Melting Scrap) - misdeclaration of goods - appellant further submits that there was neither any knowledge nor reason to believe on the part of the appellant herein w.r.t. the alleged mis-declaration of the goods so imported - HELD THAT:- It is apparent that the goods declared as Tin Waste and Scrap (Light Melting Scrap) were on verification by the qualified Chartered Engineer certified as Tin Plated Steel Scrap since steel predominates by weight. The appellant had not asked for any re-test or alike at the relevant point of time. On the contrary under letter dated 24.01.2013 (page no. 23 of the appeal memorandum) the appellant/ importer had waived his right of show cause notice and/or hearing at the stage of adjudication and hence, the contention on behalf of the appellant before me that the certificate was issued by the Chartered Engineer on visual examination, cannot come to rescue of the appellant with regard to the proper description of the goods. It is also not in dispute that for importation of steel scrap, Pre Shipment Inspection Certificate was mandatory in terms of the Foreign Trade Policy, 2009-14. The subsequent communication from the Overseas Supplier together with PSI Certificates cannot come to the aid of the appellant w.r.t. the confiscation of the goods under Section 111(d) of the Customs Act, 1962 since there was restriction under Foreign Trade Policy, 2009-14 in importation of steel scrap. The importation was permitted only against Pre Shipment Inspection Certificates and it is settled position of law that conditions for import, if not fulfilled, the importation is not permitted - In the present case, at the time of importation of the goods, admittedly, Pre Shipment Inspection Certificates were not available and the goods were wrongly described as scrap of tin instead of scrap of steel. The appellant could not even produce such certificates prior to adjudication and as such, the order of confiscation of the imported goods are proper and correct under Section 111(d) of the Customs Act, 1962 and thus upheld. Imposition of penalty - Section 112 of the Customs Act, 1962 - HELD THAT:- There is nothing on record to suggest any prior knowledge or reason to believe about the confiscable nature of the imported goods under Section 111 of the Customs Act, 1962. Moreover, the goods imported in January, 2013 by the appellant have already lost its market value of Rs. 21,73,643.25(as declared) and the appellant /importer has already suffered substantial loss and injury for no fault on his part. The law requires existence of mens rea and maintenance of balance of convenience prior to imposition of penalty upon any person. In the present case, neither there is any existence of ingredient of section 112 of the Customs Act, 1962 nor any mens rea and hence, the imposition of penalty upon the appellant is bad in law and liable to be quashed. The order of confiscation of the imported goods under section 111(d) of the Customs Act, 1962 upheld - penalty imposed upon the appellant under Section 112 of the Customs Act, 1962 - appeal allowed in part.

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• 2020 (12) TMI 963
  Permission to re-export confiscated goods - redemption fine and penalty - import of Run Flat Tyres from Dubai, UAE - goods were found to be branded radial car tyres and seized - case of Revenue is that wrongdoing on the part of the foreign exporter cannot be treated as bona fide act on the part of the importer and onus lies upon the importer to prove that it is the bona fide act and no mala fide intention existed - HELD THAT:- The lower authority has concluded that though there was mis-declaration of brand and quality of goods imported, there was nothing on record to show that there was a malafide intention on the part of the importers. In fact, immediately after the fact of mis-declaration came to light, the importer conveyed the same to the foreign supplier who has instantly admitted mistake on their part and they were ready to take back the goods - Under such circumstances, the learned Commissioner (A) has rightly held that there was no malafide intention on the part of the importer and as such, imposition of penalty and redemption fine was not warranted. Imposing redemption fine and permission to re-export simultaneously - HELD THAT:- Learned Commissioner (A) held that as there was no malafide intention on the part of the importer and re-export being permitted, imposition of redemption fine and penalty was not warranted - it is found that once the goods are allowed to be redeemed on payment of fine in lieu of confiscation, it is not open to the adjudicating authority to impose further conditions on the goods. Putting such a condition, would cause double jeopardy to the appellant. In the fact of absence of malafide intentions being established conclusively, and in the absence of no evidence to the contrary, redemption fine is not imposable on the impugned goods. Appeal dismissed - decided against Revenue.

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• 2020 (12) TMI 962
  Right of department to file any appeal or cross-objections before the Commissioner (Appeals) - Section 128 of the Customs Act - Deputy Commissioner had sanctioned the refund amount but a direction was given that this amount should be credited to the Consumer Welfare Fund in terms of section 27(2) - HELD THAT:- A perusal of section 128 of the Customs Act shows that any person aggrieved by any decision or order passed under the Act by an officer of customs lower in rank than a Principal Commissioner or Commissioner may appeal to the Commissioner (Appeals). This section does not provide for filing of cross-objections, unlike sub-section of (4) of section 129A of the Customs Act which, in regard to Appeals to the Appellate Tribunal, provides for filing a memorandum of cross-objections against any part of the order appealed against and also provides that such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified. Section 128 of the Customs Act dealing with Appeal to Commissioner (Appeals) provides that any person aggrieved by any decision or order may appeal to the Commissioner (Appeals). The right to file cross-objection is a substantive right conferred by a statue and can be exercised only in accordance with the provisions of the statue. Thus, neither could the Department have filed any appeal against the order of the Deputy Commissioner as it could not have considered itself to be aggrieved by the order since the Deputy Commissioner had not directed for the amount to be paid to Vivo Mobile but had directed to be credited in the Consumer Welfare Fund, nor was it permissible in law for the Department to have filed cross-objections in the appeal filed by the Vivo Mobile before the Commissioner (Appeals) since cross-objections cannot be filed before the Commissioner (Appeals). It is, therefore, more than apparent that the Department could neither have filed an appeal before the Commissioner (Appeals) against a part of the order passed by the Deputy Commissioner nor it could have filed cross-objections in the appeal filed by the Vivo Mobile before the Commissioner (Appeals) against that part of the order sanctioning the refund amount since the right to file cross-objection has not been conferred under section 128 of the Customs Act, which deals with appeal to the Commissioner (Appeals). The appeals may now be listed for hearing on 06 July, 2020.

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• Corporate Laws

• 2020 (12) TMI 961
  Restoration of name of Excellent Cooling Services Pvt. Ltd. struck off by the Registrar of Companies, Uttar Pradesh - Section 252(3) of the Companies Act, 2013 read with Rule 87A of the National Company Law Tribunal Rules, 2016 - HELD THAT:- The Appellant has been able to satisfy this bench that it has certain assets which necessitate and justify the restoration of its name in the Register of Companies. A step as stringent as what has been taken at least requires an opportunity to the appellant to take remedial measures. Merely to disallow restoration on grounds of its failure to file annual returns would neither be just nor equitable. As per several decisions of various courts it should only be an exceptional circumstance that court should refuse restoration where the company has been struck off for its failure to file annual return as that would be excessive or inappropriate penalty for that oversight. The Registrar of Companies, the Respondent herein, is ordered to restore the original status of the Appellant Company as if the name of the Company has not been Struck off from the Registrar of Companies and take all consequential actions such as change of Company s status from Strike Off to Active (for e-filing) etc. - Application allowed.

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• 2020 (12) TMI 960
  Restoration of name of the struck off company in the register of companies, maintained in the office of the Registrar of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- On perusal of the application, we are satisfied that the company was a going concern and doing business on the date of striking off its name. ROC West Bengal has not objected to this application for restoration of the name of the company. Therefore, this petition deserves sympathetic consideration. The Registrar of Companies, West Bengal the respondent herein, is directed to restore the original status of the petitioner company as if the name of the Company had not been struck off from the register of Companies with the resultant and consequential actions like changing status of petitioner company from struck off to Active - Petition allowed.

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• 2020 (12) TMI 959
  Restoration of name of the company in the Register of companies maintained by Registrar of Companies - allegation that Appellant had not filed its Financial Statements and Annual Returns for the Financial Years since 2016-17, 2017-2018 and 2018-19 thereby giving rise to the surmise that the business of the company was not in operation - Section 252(3) of the Companies Act, 2013 - HELD THAT:- The Appellant has submitted sufficient evidence that it has been in operation during the period preceding strike off, therefore it could not be termed as a defunct company as per section 252 of the Act. Thus, taking into consideration the provisions of Section 252(1) of the Companies Act, 2013, which vests this Tribunal with a discretion where the Company, whose name has been struck off, and such Company is able to demonstrate that it is just to do so, can restore the name of the Company, in the Register and in the interest of all stakeholders, including the Appellant itself, who seeks restoration of the name of the Company in the register maintained by Registrar of Companies, the company deserve to be restored. The name is restored - application allowed.

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• 2020 (12) TMI 958
  Restoration of the name of the Company to the Register of Companies maintained by the Registrar of Companies - the name of the company was struck off due to failure on the part of the company to file the statutory documents for Financial Year 2014-15 and 2016-17, and also for not carrying on the business - section 252 of the Companies Act, 2013 - HELD THAT:- Upon perusal of the Financial Statements of the Company, it is observed that the Petitioner Company has not generated any revenue for the financial year 2014-15 and 2015-2016. The Petitioner Company has incurred Total Expenses of Rs. 19,788.00 and has Current Assets of Rs. 97,131.00 for F.Y. 2014-15. Further, Petitioner Company has incurred Total Expenses of Rs. 17,950.00 and has Current Assets of Rs. 79,181.00 for F.Y. 2015-16. The Petitioner Company has other current liabilities of Rs. 26,149.00 for F.Y. 2014-15 and 2015-16. The Bench observes that the Petitioner Company has not generated revenues. However, the Petitioner Company has Current Assets other current liabilities in its Books of Accounts. Therefore, it would be just, equitable and in the interest of justice to provide an opportunity to the company to rectify its defaults and continue the business. The Respondent Registrar of Companies, Maharashtra, Mumbai, is directed to restore the name of the Petitioner Company - Application allowed.

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• Law of Competition

• 2020 (12) TMI 957
  Approval of Scheme of Amalgamation - Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- In his report, the Regional Director, MCA has submitted that the Scheme appears to be fair, reasonable and is not detrimental against the Members or Creditors or contrary to public policy and the same can be approved. Replies have also been furnished in respect of the observations of the Income tax Department and the Competition Commission of India. As per the Petition, the Scheme in question will help in bringing valuable synergies in the operations, in scaling up the business of the undertaking of the Transferor Company resulting in expanding the reach and business base and would enable the Companies concerned to rationalize and streamline their management and finances and will pave better and more productive, economical control and running of the operations, etc. We are satisfied that the procedure specified in sub-sections (1) and (2) of section 232 of the Companies Act, 2013 has been complied with, and hence the Scheme of Amalgamation, as approved by the Boards of both the Transferor and Transferee Companies, is hereby sanctioned, as prayed - Scheme is sanctioned - application allowed.

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• Corporate Laws

• 2020 (12) TMI 956
  Right to apply under section 241 - Seeking for waiver of the applicability of Section 244 of the Companies Act, 2013 - Applicant is even though not a member however is only a Director of the Company - HELD THAT:- It is required to be seen that a bare reading of the above provision including under proviso provided under Section 244 of the Companies Act, 2013 waiver can be granted in relation to an application filed only by a Member and not a Director. Even though Learned Senior Counsel for the Applicant presses for certain interim directions, we are not inclined to grant the same unless the Waiver Application is disposed of by this Tribunal after giving an opportunity to the respondents. For this purpose, let notice be issued to the Respondents who have been impleaded in the Application through their respective e-mail by Counsel for the Applicant and the Registry will also issue notice to the Respondents - Post this matter on 16.09.2020.

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• 2020 (12) TMI 955
  Removal of Managing Director - Seeking waiver of the requirements for filing the company petition under section 241 read with section 242 of the Companies Act, 2013 - section 244 of the Companies Act, 2013 - HELD THAT:- The applicant/the petitioner has made out a prima facie case by establishing that he has been holding the position of the managing director of the company and was authorized signatory before his removal by the respondents on May 14, 2019. Admittedly the applicant/ petitioner was removed by the respondents without following the due process of law, as he was not afforded an opportunity of being heard. Thus, it is a fit case for inference by this Tribunal, as the matter complained is more than a directorial complaint. Therefore, there requires an enquiry to be conducted into the acts of oppression and mismanagement alleged to have been committed by the respondents. The applicant/petitioner is holding 5,000 shares, i. e., 0.04 per cent. of the total issued share capital of the first respondent-company and not fulfilling the requirements of section 244(1) for filing the petition under section 241 read with section 242 of the Companies Act, 2013. Therefore, it is prayed by the applicant/petitioner to grant waiver of the requirements of section 244(1) for filing the petition under section 241 read with section 242 of the Companies Act, 2013 against the respondents. The proviso to sub-section (1) of section 244 provides that the Tribunal may, on an application made to it in this behalf, waive all or any of the requirements specified in clause (a) or clause (b) so as to enable the members to apply under section 241 (emphasis supplied). In the present case, the requirements of sub-clause (a) of sub-section (1) of section 244 were to be fulfilled (as the company is having a share capital), which the applicant/ petitioner is falling short of. However, the applicant being member of the first respondent-company is holding 5,000 shares, i. e., 0.04 per cent. of the total issued share capital and is eligible to seek waiver as prayed for. Thus, it is a fit case where the requirements laid down under section 244(1)(a) of the Act, 2013 need to be waived and allow the applicant/petitioner to file company petition under section 241 read with section 242 of the Act, 2013, as the company petition cannot be dismissed at the threshold because it requires a detailed enquiry into the matter complained of. Thus, the issue framed stands decided in favour of the applicant and against the respondents - in exercise of the powers conferred under proviso to section 244(1) of the Act, 2013, we waive all the requirements of section 244(1)(a) of the Act, 2013 and treat the company petition under Order 1, rule 8 of the Code of Civil Procedure, 1908 as a representative petition read with sections 241 and 242 of the Act, 2013.

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• Insolvency & Bankruptcy

• 2020 (12) TMI 954
  Approval of revised Resolution Plan - Respondent submits that if this Hon ble Tribunal directs the Respondent No. 2 is ready to consider the revised Resolution Plan, an effort may be made if Committee of Creditors accepts the revised Resolution Plan - HELD THAT:- The revised Resolution Plan Annexure P/6 may be processed by the Resolution Professional as required by the provisions of IBC and if in order Resolution Professional will take steps to place the same, before Committee of Creditors . The Committee of Creditors may consider the revised Resolution Plan and it will be for the Committee of Creditors whether or not to accept the Resolution Plan, and if rejected may take further suitable decision regarding liquidation. Appeal disposed off.

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• 2020 (12) TMI 953
  Maintainability of application - initiation of CIRP - filing of application by the Promotor / Director of company - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The Applicant has not approached the Adjudicating Authority with a bonafide intention and we affirm that the Adjudicating Authority rightly rejected the Application of the Appellant. In the present case, the Adjudicating Authority dealt with all aspects including the Special Power of Attorney given by one of the Promotors Ms. Neelu Gupta, and did not confine to only non-disclosure of facts beyond the statutory requirements. Therefore, the learned Counsel for the Appellant cannot rely upon the Judgment of this Tribunal passed in M/S. UNIGREEN GLOBAL PRIVATE LIMITED VERSUS PUNJAB NATIONAL BANK, CORPORATION BANK, VIJAYA BANK AND ORIENTAL BANK OF COMMERCE [ 2018 (1) TMI 505 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] . Further, this Tribunal in the matter of GAJA TRUSTEE COMPANY PRIVATE LIMITED AND ORS. VERSUS HALDIA COKE AND CHEMICALS PRIVATE LIMITED [ 2018 (8) TMI 1270 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] held that the Application under Section 10 of IBC cannot be filed by the Board of Directors of a Company without prior approval of the shareholders in its Extraordinary General Meeting or Annual General Meeting. Further, it is on record that the SIDBI and IOB, the Financial Creditors have strenuously opposed the admission of Section 10 Application by filing their Counter Affidavits. We add and express that the intention of Promotors is only to get admission and followed by imposition of Moratorium to stall all further proceedings. The IBC being a special legislation cannot be used as a tool to one s advantage and other s disadvantage. The Adjudicating Authority rightly rejected the Application - Appeal dismissed.

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• 2020 (12) TMI 952
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - HELD THAT:- The Hon ble Supreme Court in a catena of Judgements has laid down the Principle that in an Application under Section 9, the Corporate Debtor can point out any Pre-Existing Dispute raised prior to the issuance of Demand Notice under Section 8, IBC, 2016. The existence of Dispute must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice. If it comes to the notice of the Adjudicating Authority that the operational debt is exceeding Rs. 1 lakh and the Application shows that the aforesaid debt is due and payable and has not been paid, in such case, in absence of any existence of a Dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt , the Application under Section 9 cannot be rejected and is required to be admitted. Whether the Dispute pertaining to the invoice of November 2017 was settled between the parties? - HELD THAT:- This Tribunal finds force in the contention of the Learned Counsel appearing for the Respondent that there is no cogent evidence that these amounts have been paid towards November 2017 transaction and that the Dispute was completely settled. Learned Counsel placed reliance on the email dated 30.01.2019 and 03.02.2019 to establish that the Dispute with respect to the November 2017 transaction was never resolved. There is an ongoing Dispute which is not specific to only November 2017 transaction. The email dated 08.02.2019 sent by the Operational Creditor to the Corporate Debtor categorically states that the issue was never settled, that nobody on behalf of the Operational Creditor had confirmed the closure of the matters; that the problem in the material supplied was on account of process malfunction at the end of the Corporate Debtor and that the Operational Creditor suffered huge losses and had instructed their office to stop future business with the Operational Creditor. The material on record, specifically the email dated 08.02.2019 evidences that the Dispute is not transaction centric but is an ongoing Dispute . Additionally, there is no documentary evidence to substantiate the contention of the Learned Counsel for the Appellant that November 2017 Dispute was settled. The correspondence between the parties establishes that the Dispute is with respect to substandard material supplied for both the consignments and explicitly refers to problem of adhesion which led to laminates becoming unusable. The object of the Code, at least insofar as Operational Creditors are concerned, was to initiate Insolvency Process against the Corporate Debtor only in clear cases where a real Dispute between the parties as to the debt owed did not exist. In the instant case, this Tribunal is of the considered view that there is sufficient evidence on record to exhibit a Pre-Existing Dispute between the parties prior to the issuance of the Demand Notice under Section 8, IBC, 2016 - In the present case, the defence is not spurious, mere bluster, plainly frivolous or vexatious. Therefore, this Tribunal is of the consequent view that the ratio of the Judgement of the Hon ble Supreme Court in the case of M/s. Mobilox Innovations Pvt. Ltd. V/s. Kirusa Software Pvt. Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT] squarely applies to the facts of the attendant circumstances of the case. Appeal dismissed.

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• 2020 (12) TMI 951
  Validity of deed of assignment - appellant is Assignee of the Loan from the Assignor case of Respondent is that that the Applicant is a Related Party , hence they are not entitled to participate in the proceedings of the CoC - HELD THAT:- The Corporate Debtor was already a sinking ship in a very deep financial crisis. At that point of time, the loan was assigned to the Applicant may be with an idea to put their men in the CoC. However, the decision of the Respondent/IRP that Applicant is a Related Party is not challenged in this application. In the present case, it is seen that the Applicant was the Assignee of a loan from the Related Party of the Corporate Debtor and by following the principles laid down in the Judgment of the Hon ble NCLAT, in Pankaj Yadav Anr. [ 2018 (9) TMI 1223 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] the rights of the Assignee are no better than those of the Assignor , the Applicant is stepping into the shoes of the Assignor and thereby takes over the right of the Assignor with the onerous crown, which also includes the disadvantage as found in the Assignment Agreement. Thus, if the Assignor of a debt is a Related Party of the Corporate Debtor, as per the ratio laid down by the Hon ble NCLAT, the Assignee, who is a third party, is also liable to be held as a Related Party of the Corporate Debtor. In view of the dispositive reasoning that have been set out, this Tribunal is of the considered view that the Applicant being Assignee of the Loan from the Assignor, is also a Related Party of the Corporate Debtor and as such the Application as filed by the Applicant is liable to the dismissed - Application dismissed.

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• Central Excise

• 2020 (12) TMI 950
  Reversal of irregularly availed CENVAT Credit - Rule 6(1) of the Cenvat Credit Rules - benefit of N/N. 65/95-CE available - Interpretation of statute - N/N. 65/95-CE - whether Notification No. 65/95-CE is a notification which grants exemption absolutely as envisaged under Section 5A(1) of the Act and consequently sub-section (1A) of Section 5A is attracted? - HELD THAT:- Referring to and relying upon the decisions of the Hon ble Karnataka High Court in COMMISSIONER OF CENTRAL EXCISE VERSUS M/S FEDERAL MOGUL TPR INDIA LTD. [ 2015 (8) TMI 308 - KARNATAKA HIGH COURT] , of the Coordinate Bench of the Tribunal in M/S INCOPAC PARTS PVT. LTD. VERSUS CCE CGST, JAIPUR [ 2018 (7) TMI 1366 - CESTAT NEW DELHI] and BALKRISHNA PAPER MILLS LTD, LAXMI BOARD AND PAPER MILLS LTD, COMMISSIONER OF CENTRAL EXCISE, THANE-I VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE I AND LAXMI BOARD AND PAPER MILLS LTD [ 2015 (11) TMI 210 - CESTAT MUMBAI] , all involving similar issue, it has been held in the said order dated 28.07.2020 that the finding in the impugned order that availment of cenvat credit by the appellant during the material periods was by contravening the provisions of Rule 6(1) of the said Rules is incorrect and unsustainable and there is no irregularity or wrong availment of cenvat credit by the appellant; the appellant had the option to avail or not to avail the exemption under N/N. 65/95-CE and since it paid duty on the goods manufactured without availing the exemption, the appellant was eligible to avail the cenvat credit involved. CENVAT Credit is rightly availed - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (12) TMI 949
  Non-issuance of Form-D - approval of the scheme of amalgamation by the Hon ble High Court of Delhi - Section 391 and 394 of the Companies Act - infringement of exemptions granted by the State Government vide notification dated 03.03.2016 - merger and amalgamation done under Section 391 and 394 of the Indian Companies Act - HELD THAT:- The action of respondents in not issuing Form D in favour of Revisionist in pursuance of order dated 26.2.2016 is unjustified and arbitrary as the stock transferred on merger of Company has been treated to be sold by the transferor Company without there being any evidence with the Department to substantiate such claim - The action of respondents in not issuing Form D in favour of the revisionist also ignores the exemption granted by the State Government by notification dated 3.3.2016. The Tribunal as well as Assessing Authority and the Appellate Authority failed to appreciate that by virtue of merger and amalgamation having been done under Sections 391 and 394 of Indian Companies Act, tax benefits and exemptions that were available to Transferor Company would also enure to the Transferee Company i.e. Revisionist. The Hon ble Supreme Court in M/s Dalmia Power Ltd. and another vs. Assistant Commissioner of Income Tax Circle 1, Trichy, [ 2019 (12) TMI 991 - SUPREME COURT ] has considered the consequences of merger of two Companies on the basis of an approved Amalgamation Scheme - The Supreme Court made these observations in a case where revised Income Tax Returns were rejected by the Department on merger of the transferor and transferee Company. The Supreme Court relied upon its observations in MARSHALL SONS AND COMPANY (INDIA) LIMITED VERSUS INCOME-TAX OFFICER [ 1996 (11) TMI 6 - SUPREME COURT ] to observe that pursuant to the Scheme of Arrangement and Amalgamation, the assessment of the transferee Company must take into account the income of both the transferor and transferee Companies - It was observed that filing of revised returns by the transferee Company was not because of any omission or wrong statement contained in the original returns but because delay occurred on account of time taken to obtain sanction of the Scheme of Amalgamation. In the present case the predecessor Company/transferor Company have been succeeded by the Revisionist/ transferee Company who had taken over its business along with assets, liabilities, profits and losses etc. The stock transferred as a result of amalgamation was not a sale requiring issuance of certificate by M/s. Ritesh Vyaapar Ltd. in favour of the Revisionist as per the Exemption Notification of 2016. The questions on which the Revision was initially admitted are answered in favour of the Revisionist - Revision allowed.

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• 2020 (12) TMI 948
  Rectification of mistake - assessing authority passed deemed assessment order under Section 12C(8) of the Act in terms of Notification No.FD 116 CSL 2006(3) dated 31.03.2006 without considering the revised return filed by the petitioner which was filed before the deemed acceptance of the annual returns - HELD THAT:- Admittedly, in the case of the petitioner, the orders have been passed under Section 12C(8) of the Act. Section 12-C(2) of the Act provides that where before completion of self assessment, returns submitted or any compliance furnished under sub Section (1) is found to involve mistake apparent on record, the assessing authority shall afford an opportunity to the dealer to submit revised return or to rectify such mistake. Thus, it is evident that the provision for filing the revised return was in existence in the statute. It is trite law that once a revised return is filed, the original return must be taken to have been withdrawn and to have been substituted by a fresh return for the purposes of assessment. Section 25-A of the Act deals with rectification of the mistake - Admittedly, in the instant case, it is not in dispute that the assessing authority passed an order taking into account the original return instead of revised return on 31.05.2006, 28.08.2006 and 31.08.2006. The petitioner had filed the revised returns in Form No.4 on 12.04.2006, 19.08.2006 and 30.05.2006. Therefore, in view of second proviso to Section 25A of the Act, on expiry of sixty days, the revised return should have been deemed to have been accepted. However, after a period of sixty days, the adjudicating authority passed an order on 31.10.2007, 21.01.2008, and 05.01.2008, which were per se without jurisdiction. The aforesaid aspect of the matter was neither considered by first appellate authority nor by the tribunal. The tribunal has decided the question of law erroneously, which arose for its consideration. The orders of rectification dated 31.10.2007, 21.01.2008 and 05.01.2008 passed by the adjudicating authority, orders dated 09.07.2008, 10.07.2008 and 11.07.2008 passed by the first appellate authority and order dated 17.07.2013 passed by the tribunal are hereby quashed - Revision allowed.

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• 2020 (12) TMI 947
  Validity of reassessment order - Assessing Authority issued a revised notice under Section 39(1) of the Act proposing to reject monthly returns filed in respect of tax periods (5 months) were there was short payment of tax by the petitioner and undertake re-assessment only in respect of said tax periods - petitioner submitted that the authorities have grossly erred in ignoring the provision as it stood during the disputed period and instead considering the amended Section 39(1) of the Act which came into force with effect from 01.04.2007 - Section 39(1)(a) of Karnataka VAT Act - HELD THAT:- Even prior to amendment with effect from 01.04.2007, the Assessing Authority under Section 39(1) of the Act could re-assess the tax, if it has grounds to believe that any return furnished is deemed as assessed is incorrect or that any assessment issued under Section 38 understate the correct tax liability and could reassess the additional tax payable. Section 2(33) of the Act read with Rule 37(2) with the Rules defines tax period to mean a calendar month. Section 35 of the Act requires dealers to file returns for each tax period and as per Section 38 of the Act every dealer is deemed to be assessed to tax based on the return filed by him under Section 35 of the Act. Admittedly, there has been a short payment of tax in respect of tax periods namely April, June, July and August 2005, April, May, August, November and December 2006 and February 2007. It is also not in dispute that the orders of re-assessments have been passed in respect of the periods where there has been a short payment of tax. The Assessing Authority in the light of Section 2(33) of the Act and Rule 37(2) of the Rules has rightly taken each month as separate period of assessment. It is also pertinent to note that Section 35 requires dealers to file returns for each tax period and as per Section 38 every dealer is deemed to be assessed to tax as per Section 35 of the Act. Therefore, deemed assessment applies for each tax period and Assessing Authority while taking up re-assessment proceeding has to consider the tax paid in respect of each month and not for the year as a whole. Section 39(1) of the Act requires the Assessing Authority to reassess the additional tax payable. Therefore, the Assessing Authority has rightly reassessed the tax period in respect of which there was a short payment of tax. The reliance placed by the petitioner on the audited statement of accounts is misplaced as the same cannot be considered to be return and the same would tantamount to doing violence to the provisions of Sections 35(1) and Section 35(4) of the Act, which prescribe time periods for filing and revising of returns. It is pertinent to note that payment of tax due, if any, with Form VAT-115 and Form VAT-240 is only facility to pay the balance of tax, which was not paid in the earlier opportunities of filing the returns connected and revised returns as the case may be so that tax due according to law should be remitted to state in full. The aforesaid provision would not exempt assessee from payment of original tax liability under Section 35(1). The tax has to be assessed as per provisions of the Act, which provide for tax period as a month. Even though, Tribunal may have referred to amended provisions of the Act, however, it is trite law that mere mention of a wrong provision would not invalidate an order so long as power exists with the authority. In the instant case, the re-assessment have rightly been initiated as the power to do so exists even under the un-amended Section 39(1) of the Act. The Tribunal has neither failed to decide any question of law nor has decided any question law erroneously. Petition dismissed.

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• 2020 (12) TMI 946
  Works contract service - Composite Contract or not - fabrication and erection of aluminum structures and other glazing works contract - assessing authority framed assessment under Section 39(1) of the Act and held that the nature of activity carried on by the petitioner falls under Entry 23 of Sixth Schedule to the Act as all other works contract not specified in any of the above categories including the composite work with one or more categories - HELD THAT:- The tribunal has recorded a finding that from the terms and conditions of the contract, it is evident that petitioner has undertaken composite work contracts. The major portion of the work executed by the petitioner pertains to structural glazing, curtain walling, suspended glazing, structural spider glazing, ACP cladding, fixed glazing, fabrication and supply of aluminum and MS windows, Ventilator and louvers, external doors, canopy etc and work of fabrication and erection of MS structure work is only meager and a small percentage both in quantum and volume. It has also been held that works contract of all these works consisting of window wall glazing to the external walls of the building, spider structural glazing, patch fitted partitions, double glazed sky light roofing, providing aluminum windows and louvers, canopy, clay tile cladding, installation of external fixture and glazing works, stripe glazing, suspended spider glazing, doors in terrace etc., put together which is termed as works contract of structural glazing , suspended glazing , curtain walling , ACP cladding , spider glazing , fixed glazing , are not specified in any of the categories of Entry No.1 to 21 and are works along with the categories covered by Entry Nos.3 and 4. Thus, it has been held that the nature of activities of the petitioner fall within Entry 23 of Sixth Schedule to the Act and are liable to tax at 12.5%. The aforesaid finding of fact is based on meticulous appreciation of evidence on record. The finding recorded by the tribunal cannot be termed as perverse - The tribunal has neither failed to decide nor has erroneously decided any question of law. Appeal dismissed.

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