Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 29, 2020
Case Laws in this Newsletter:
GST
Income Tax
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Articles
News
Notifications
GST - States
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49/2020 - State Tax - dated
19-11-2020
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Chhattisgarh SGST
State Government appoints the 30th day of June, 2020, as the date on which the provisions of sections 2 and 13 of the Chhattisgarh Goods and Services Tax (Amendment) Act, 2020 shall come into force
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46/2020 - State Tax - dated
19-11-2020
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Chhattisgarh SGST
Seeks to extend period to pass order under Section 54(7) of Chhattisgarh Goods and Services Tax Act, 2017
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43/2020 - State Tax - dated
19-11-2020
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Chhattisgarh SGST
State Government appoints the 18th day of May, 2020, as the date on which the provisions of section 11 of the Chhattisgarh Goods and Services Tax (Amendment) Act, 2020, Shall come into force
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35/2020-State Tax - dated
19-11-2020
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Chhattisgarh SGST
Extension of validity of e-way bills
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89/2020-State Tax - dated
23-12-2020
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Himachal Pradesh SGST
Seeks to waive penalty payable for noncompliance of the provisions of notification No.14/2020–State Tax, dated the 23rd June, 2020 - Non issuance of invoice having Dynamic Quick Response (QR) code
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F. 12(46)FD/Tax/2017-III-264 - dated
28-12-2020
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Rajasthan SGST
Rajasthan Goods and Services Tax (Fourteenth Amendment) Rules, 2020.
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F. 12(46)FD/Tax/2017-III-263 - dated
28-12-2020
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Rajasthan SGST
Notification for bringing into force sections 3, 4, 5, 6, 7, 8, 9, 10 and 13 of the Rajasthan Goods and Service Tax (Third Amendment) Act, 2020 (Act no 23 of 2020)
Highlights / Catch Notes
GST
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ACTIVITIES OR TRANSACTIONS TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES - Amendment to Paragraph 4 comes into effect w.e.f. 1.1.2021 - SCHEDULE 02 [Section 7] of the CENTRAL GOODS AND SERVICES TAX ACT, 2017
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Punishment for certain offences. - Amendment to sub-section (1) comes into effect w.e.f 1.1.2021 - Section 132 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017
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Penalty for certain offences. - Amendments as new sub-section (1A) comes into effect w.e.f. 1.1.2021 - Section 122 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017
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Tax deduction at source. - Amendment to sub-section (3) and (4) comes into effect w.e.f. 1.1.2021 - Section 51 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017
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Tax invoice - Amendment to sub-section (2) comes into effect w.e.f 1.1.2021 - Section 31 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017
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Revocation of cancellation of registration. - Power to Extend the Time limit for revocation of cancellation of registration - Amendment to sub-section (1) comes into effect w.e.f 1.1.2021 - Section 30 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017
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Cancellation or suspension of registration. - Amendment to sub-section (1)(c) comes into effect w.e.f 1.1.2021 - Section 29 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017
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Eligibility and conditions for taking input tax credit - Amendment to sub-section (4) comes into effect w.e.f 1.1.2021 - Section 16 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017
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Composition levy. - Amendment to sub-section (2) extending scope of restriction comes into effect w.e.f. 1.1.2021 - Section 10 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017
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Exemption from GST - supply of, services viz. execution of the civil works of Pazhassi small hydro electric project - The Kerala State Electricity Board Ltd falls under the category of a Government entity for the purpose of the said exemption - The supply of services viz. execution of the civil works of Pazhassi small hydro electric project covered under Work order made by the appellant to the Kerala State Electricity Board Ltd are not eligible to concessional rate of CGST @6% and SGST @6% - AAAR
Income Tax
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Additions u/s 40A(3) - Purchase payments in cash in contravention to the provisions of section 40 A(3) - the assessee is merely facilitator and intermediary in the transaction and his receipts assessable to tax constitute the margin between the price obtained and further paid but not the entire receipts which stands further passed on to the two ticketing agencies, we hereby hold that the provisions u/ s 40A(3 ) are not attracted. - AT
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Unexplained cash credit u/s 68 r/w section 115BBE - Bogus purchase and sale - The assessee has recorded the entries of sales and purchase in its books of account and has duly disclosed the items of sales and purchase in the profit & loss account and has duly disclosed the profit earned on the trading in the profit & loss account and has offered the same as business income. The assessee has furnished as much information as possible to justify its claim about the transactions of cloth being genuine. - Additions deleted - AT
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Exemption u/s 11 - whether the assessee is to be treated as a “charitable institution”? - Running a Hospital / Medical institution - generating huge profit - The equipments require higher lay out of the capital, and therefore in order to remain in competition with the hospitals, and to provide best facility to the patients, and to provide medical help, the assessee has to upgrade its investigative tools. - Rates considered by the AO are not relevant rates for determining higher range of profit in the hands of the assessee. - AT
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Validity of notice - Reopening of assessment u/s 147 - In the present case, there is an in advertent error in the notice issued by the AO reflecting only the PAN column of the notice mentions PAN of the “HUF” instead of the ‘individual’ whereas the body of the notice and the address shows that the notice is clearly meant for the assessee himself - On going through the Reasons recorded, the address on the notice, the body of the notice issue of notice, we hold that the notice of the Assessing Officer wherein there is a mistake only in the PAN number, the notice is covered by the provisions of Section 292B. - AT
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Reopening of assessment u/s 147 - non independent application of mind by AO - Borrowed satisfaction - A.O. has reopened the assessment solely on the basis of information received of the ADIT (Investigation) and without forming an independent opinion and there cannot be any reassessment for verification and without satisfying the requisite condition under the law. - AT
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Depreciation on computer software - Because software contained in a disk is tangible property by itself. Since the taxpayer’s ownership of limited right over the computer software purchased from Oracle by making payment of license fee is a tangible assets, it is entitled for depreciation @ 60% as per definition of “Plant” - AT
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Income from other sources as per Section 56(2)(vii) - fair market value of bonus shares - any profit derived by the assessee on account of receipt of bonus shares is adjusted by depreciation in the value of equity shares held by him. In the instant case, there is no material on record to infer that bonus shares have been transferred with an intention to evade tax, which is the object of the provision in question. - when there is an issue of bonus shares, the money remains with the company and nothing comes to the shareholders as there is no transfer of the property and the provisions of Section under Section 56(2)(vii)(c) of the Act are not attracted to the fact situation of the case. - HC
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Reopening of assessment u/s 147 - Material, which was already placed on record, and considered in earlier two rounds of litigation can hardly be a reason to reopen the assessment and all that we can say is that the attempt of the Department is to reopen a settled issue solely based upon change of opinion. The Department is silent and has not disclosed as to what is the tangible material, which is now available with them more than those that were available with the Department in the earlier two rounds of litigation. - No hesitation to hold that the reopening of assessment is without jurisdiction, bad in law and liable to be set aside and consequently, the same is set aside. - HC
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Computation of capital gain - Cost of acquisition - They brought the property to sale through Bank - The contention of the assessee was that the amount was paid directly to the loan account of the company with the bank. The assessee had not received any consideration and therefore there was no capital gain arising out of the above sale. However, the Assessing Officer rejected the contention of the assessee - Order of ITAT confirming the action of AO upheld - HC
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Rectification application u/s 254 - Admissibility and consider the additional evidence furnished by the appellant - as the appellant had admittedly filed an application for admission of additional evidence in terms of Rule 29 of the ITAT Rules prior to the date of final hearing, it was incumbent upon the Tribunal to consider the said application before proceeding ahead with the final hearing. - HC
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Validity of order u/s 144C - Failure to pass a draft assessment order u/s 144C(1) - This Court is of the view that till the Income Tax Department ensures that the Assessing Officers follow the mandate of law, in particular, binding provisions like Section 144C and eschew filing of unnecessary appeals rather than in nearly all matters where the Assessing Officer has taken a view against the Assessee, the assessments will not achieve finality for a number of years like in the present case where the case of assessment year 2007-08 stands remanded and restored to the file of the Assessing Officer. - Revenue appeal dismissed with cost - HC
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TP adjustment - The TPO has not given any reason as to why he altered the aggregate amount of Net profit. Hence the workings made by TPO is liable to rejected. We have noticed that the net profit margin worked out by the assessee in "Domestic - Personal care division" was 12.31%. The net profit margin worked out for "Exports to AEs" was 24.03%. Hence the net profit margin earned in the exports to AEs division is higher than its comparable "Domestic - Personal care division". Hence it has to be held that the international transactions of making exports to AEs are at arms length and hence no T.P adjustment is called for. - AT
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TP Adjustment - determination of Arms Length Price by TPO - MAM selection - No tax can be levied without the authority of law as mandated by Article 265 of the Constitution of India. Similarly, the exchequer should not be deprived from its legitimate tax due. In our view, the assessee would not be prejudiced in setting-aside proceeding, if they have merit in their favour. - AT
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Addition u/s 68 - increase in share capital and share premium - As source of source is proved by the assessee in the instant case though the same is not required to be done by the assessee as per law as it stood/ applicable in this assessment year. The share applicant has confirmed the share application as well as the payments made to the assessee company, which are duly corroborated with their respective bank statements and all the payments are by account payee cheques. - no addition was warranted under Section 68 - AT
Indian Laws
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Dishonor of Cheque - insufficiency of funds - Petitioner borrowed the money from the advocate (respondent) - when there is a specific bar for doing money lending business that too with his own client, the act of the respondent is amount to professional misconduct. Therefore, the entire proceedings initiated as against the petitioner is nothing but clear abuse of process of law and the complaint itself is liable to be quashed. - HC
Service Tax
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Demand of Service Tax - Merger / Demerger of units - ven if it is assumed that BAS was provided, then too only Abhijeet Ltd. and Corporate Ltd. were liable to pay service tax and not the Power Plants and Sponge Iron Plants, which constituted “the Demerged Undertakings” and which alone stood merged with the Appellant. Even in such a situation, it is doubtful whether the Appellant could be held to be liable for discharge service tax liability of the “Demerged Undertakings”. - AT
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Refund of services tax - input services received by the unit of the appellant established in SEZ - refund rejected for alleged non-compliance of several conditions - The substantive benefit of service tax exemption provided under section 26 of the SEZ Act read with rule 31 of the SEZ Rules cannot be denied on procedural grounds. It is not in dispute that the appellant was not required to deposit service tax under the notification dated May 20, 2009, but service tax was deposited. It cannot be urged that the appellant is not entitled to claim refund because of a mistake in depositing service tax even if it was not required to be deposited. - AT
Central Excise
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Valuation - inclusion of Freight charges in the assessable value - place of removal - Merely, because the payment of transit insurance has been made by the appellant would not mean that the place of removal would be the place of the buyer - the payment of transit insurance by the appellant is not a decisive factor for determining the place of removal. - AT
VAT
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Refund of excess tax paid - The Assessing Officer committed a serious error in providing for adjustment of the excess tax against the demands for the later years. - The portion of the order dated 16th December, 2015 passed by the Assessing Officer providing for adjustment of the excess tax to be adjusted for future assessment is set aside. However, if by virtue of the operation of the said order for any future liability such excess tax or any part thereof is already adjusted, the question of refund at this stage will not arise - HC
Case Laws:
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GST
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2020 (12) TMI 1087
Exemption from GST - supply of, services viz. execution of the civil works of Pazhassi small hydro electric project - Whether Kerala State electricity Board Ltd would fall under any of the categories viz. Central Government, State Government, Union territory, a local authority, a Government authority or a Government entity for the purpose of the said exemption - whether the said services shall attract concessional rate of SGST also @6% in terms of notification No. SRO 370/2017 dated 30.06.2017 since the CGST statutory provisions are pari materia With State GST provisions? - HELD THAT:- Kerala State Electricity Board Ltd is a company incorporated under the Companies Act, 1956 by the Government of Kerala for carrying out the business of Generation, Transmission and Distribution of electricity in the State of Kerala. It is the successor entity of the Kerala State Electricity Board which was constituted by the Government of Kerala by Order no. EL1- 6475/56/PW dated 07.03.1957 under the Electricity (Supply) Act, 1948 for carrying out the business of Generation, Transmission and Distribution of electricity in the State of Kerala - It is evident that the Kerala State Electricity Board Ltd is incorporated under the Companies Act, 1956 with 90 per cent or more participation by way of equity or control of the Government of Kerala to carry out the business of generation, transmission and distribution of electricity in the State of Kerala and is a State Transmission Utility within the meaning of Section 2 (67) of the Electricity Act, 2003. Kerala State Electricity Board Ltd cannot be considered as that constituted/established by the Government of Kerala to carry out any function entrusted to a Municipality under article 243W or a Panchayat under article 243G of the Constitution. Therefore, Kerala State Electricity Board Ltd does not fall under the definition of Government Authority as defined in Para 2(zf)of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as amended. However, Kerala State Electricity Board Ltd is also a Board constituted by the State Government with share of 90% or more of the State Government. Hence, Kerala State Electricity Board Ltd squarely falls under the definition of Government Entity under Para 2 (zfa) of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as amended. Thus the condition of the 'said notification as stated in para 8.1 (b) of this order is also satisfied - The Kerala State Electricity Board Ltd is undisputedly procuring the services from the appellant in relation to a work entrusted to it by the State Government i.e. in connection with the generation, distribution and supply of electricity to consumers. KSEB Ltd is also a board constituted by the State Government with share of 90% or more of the State Government. Hence, Kerala State Electricity Board Ltd squarely falls under the definition of Government Entity under Para 2 (zfa) of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as amended. Hence, the mandatory condition specified in para 8.1(c) is satisfied. Whether the supply of works contract services provided to KSEB by the appellant could be classified as works undertaken predominantly for use other than for commerce, industry or any other business or profession? - HELD THAT:- The concessional rate of CGST @6% under Sl. No.3 (vi) (a) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 is applicable only for composite supply of works contracts as defined in clause (119) of Section 2 of the GST Act, 2017 supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works meant pre-dominantly for use other than for commerce, industry, or any other business or profession - The Kerala State Electricity Board as authorized by the Government vide the Electricity Act 2003 is involved in the selling of electricity to the consumers and are collecting charges for the same. The predominant activity of the KSEB is to supply electricity and works executed by the appellant is ancillary to this predominant activity. Kerala State Electricity Board Ltd. has been established for carrying out the business of generation, transmission and distribution of electricity in the State of Kerala on commercial principles as is evident from the provisions of Sections 61 and 62 of the Electricity Act, 2003 regarding tariff regulation and determination of tariff - the supply of works contract services as per the above work order cannot be considered as that meant predominantly for use other than for commerce, industry, or any other business or profession. Thereby, the condition mentioned in para 8.3 is not fulfilled. The Kerala State Electricity Board Ltd falls under the category of a Government entity for the purpose of the said exemption - The supply of services viz. execution of the civil works of Pazhassi small hydro electric project covered under Work order No. 06/CEECCN/ 2017-18 dated 06.10.2017 made by the appellant to the Kerala State Electricity Board Ltd are not eligible to concessional rate of CGST @6%provided by the said notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The said services shall not be eligible for concessional rate of SGST @6% also in terms of notification No. SRO 370/2017 dated 30.06.2017 since the CGST statutory provisions are pari materia with State GST provisions. The ruling of authority upheld.
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Income Tax
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2020 (12) TMI 1086
Validity of order u/s 144C - Failure to pass a draft assessment order under Section 144C(1) - Non adhere to the mandatory procedure prescribed under Section 144C - HELD THAT:- This issue is no longer res integra. It is now settled law that failure to adhere to the mandatory procedure prescribed under Section 144C of the Act would vitiate the entire proceedings and the same cannot be treated as an irregularity/ curable defect. In the present case, in complete contravention of Section 144C, the Assessing Officer wrongfully assumed the jurisdiction and passed the final assessment order without passing a draft assessment order and without giving the respondent/assessee an opportunity to raise objections before the Dispute Resolution Panel. See ESPN Star Sports Mauritius S.N.C. ET Companies [ 2016 (4) TMI 45 - DELHI HIGH COURT ] wherein held as held that failure to pass a draft assessment order under Section 144C(1) of the Act would render the final assessment order without jurisdiction, null and void and unenforceable. This Court is of the opinion that no question of law, let alone a substantial question of law, arises in the present appeal. This Court is of the view that till the Income Tax Department ensures that the Assessing Officers follow the mandate of law, in particular, binding provisions like Section 144C and eschew filing of unnecessary appeals rather than in nearly all matters where the Assessing Officer has taken a view against the Assessee, the assessments will not achieve finality for a number of years like in the present case where the case of assessment year 2007-08 stands remanded and restored to the file of the Assessing Officer. Revenue appeal dismissed with cost.
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2020 (12) TMI 1085
Rectification petition u/s 254 - period of limitation - HELD THAT:- Address of the appellant mentioned in the appeal before the ITAT by the respondent/Department was its former address and not the new address, which had been mentioned in the appeal filed by the petitioner before the Commissioner, Income Tax (Appellate) in form No. 35. Consequently, the petitioner was never served in the appeal filed by the Department before the ITAT. This Court is also of the view that the ITAT has erroneously concluded that the miscellaneous application filed by the petitioner was barred by limitation under Section 254(2) of the Act inasmuch as the petitioner had filed the miscellaneous application within six months of actual receipt of the order. If the petitioner/assessee had no notice and no knowledge of the order passed by the ITAT, it cannot be said that the limitation would start from the date the order was pronounced by the Tribunal. Issue raised in the present petition is squarely covered in favour of the petitioner/assessee by way of the Division Bench judgment of this Court in Golden Times Services Pvt. Ltd. Vs. DCIT [ 2020 (1) TMI 971 - DELHI HIGH COURT] . Course adopted by the ITAT at the first instance, by dismissing the appeal for non-prosecution, and then compounding the same by refusing to entertain the application for recall of the order, cannot be sustained. We, therefore have no hesitation in quashing the impugned order. Accordingly, the present petition is allowed.
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2020 (12) TMI 1084
Certificate under Section 197 denied - refusing to grant a certificate of deduction of tax at source at NIL rate, on payments to the petitioner company by its customers - HELD THAT:- Rule shows that the considerations and parameters prescribed under clause (2) are mandatory and the department is bound to take the same into consideration for the purpose of computation of existing and estimated liability referred in sub-rule (1). As perused the impugned reasons furnished by the Revenue in support of the impugned Lower Tax Deduction Certificate and note that as opposed to estimation of tax liability, the assessing officer has instead rejected the estimates provided by the assessee, on a broad and generalized reasoning. Thus, in absence of determination, as provided under the above-noted Rule, the reasons for rejections cannot be termed as valid in eyes of law. Consequently, decision making process in the present case is contrary to law. This court finds that there is non-application of mind which vitiates the impugned order and reasons. Accordingly, we set aside the impugned order and reasons and remand the matter to the Assessing Officer for fresh determination in accordance with law as expeditiously as possible preferably within three weeks. In the interim, we direct that the benefit of revised TDS rates prescribed for financial year 2019-2020 (determined vide order dated 26th July, 2019) read with rebate of 25% given by Ministry of Finance on account of Covid-19 crisis from the rates applicable in the preceding year 2019-20 vide Press Release dated 13th May, 2020 be given to the petitioner.
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2020 (12) TMI 1083
Rectification application u/s 254 - Admissibility and consider the additional evidence furnished by the appellant under Rule 29 of the ITAT Rules - HELD THAT:- This Court would not entertain an appeal under Section 260A of the Act if an application for rectification under Section 254(2) of the Act is pending consideration as there is some overlap and if the order is recalled by the Tribunal, then the initial appeal would become infructuous. But in the present case, as the last date for availing the benefit of amnesty scheme being Vivad se Vishwas Scheme is 31st December, 2020 and despite all efforts, the Tribunal is not deciding the application for rectification under Section 254(2) of the Act and learned counsel for respondent has stoutly opposed passing of any order in the present appeal to expedite disposal of the application filed by the appellant under section 254(2) before the Tribunal, this Court is of the opinion that if the present appeal is not entertained, it would gravely prejudice the appellant. As far as the argument that the appellant s application under Rule 29 of ITAT Rules is liable to be dismissed as the conditions mentioned therein are not attracted, this Court is of the view that it cannot second guess what order the Tribunal would pass as it is not for this Court but for the Tribunal to decide the said application. In fact, it has been so held by the Supreme Court in the case of Jyotsna Suri [ 1998 (10) TMI 552 - SC ORDER] This Court is not impressed by the submission of learned standing counsel for the respondent that the additional evidence filed by the appellant had in all probability been considered by the Tribunal. In the impugned order passed by the Tribunal, there is no reference to either the additional documents placed on record by the appellant or to the written submissions/synopsis filed by the appellant. To hold that the additional evidence filed by the appellant had been considered by the Tribunal would be to presume and assume certain facts which are not apparent from the record. This Court is further of the opinion that as the appellant had admittedly filed an application for admission of additional evidence in terms of Rule 29 of the ITAT Rules prior to the date of final hearing, it was incumbent upon the Tribunal to consider the said application before proceeding ahead with the final hearing. The present appeal is allowed and the order of the Tribunal dated 28th February, 2019 is set aside; the appeal of the appellant is restored to the file of the Tribunal for de novo hearing.
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2020 (12) TMI 1082
Penalty u/s 271(1)(c) - Debatable assessment - HELD THAT:- This Court is of the view that the ITAT was right in deleting the penalty levied under Section 271(1)(c) of the Act. It has to be noted that penalty proceedings are an outcome of assessment and if the assessment itself is debatable, the penalty proceedings cannot survive. Levy of penalty cannot be a matter of course, as sought to be contended by the Revenue. It can only be levied in cases where the concealment of income has been proven. If the quantum order itself has been challenged and this Court has framed substantial questions of law in the appeal preferred by the respondent-assessee, it shows that the alleged concealment is not final and the issue is disputable. Consequently, the penalty levied by the assessing officer cannot survive in such a case. This Court in CIT Vs. Liquid Investment Ltd [ 2010 (10) TMI 1021 - DELHI HIGH COURT ] has upheld the deletion of the penalty on the same ground i.e. the fact that appeals were admitted proved that the issue was debatable - No question of law.
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2020 (12) TMI 1081
Computation of capital gain - Cost of acquisition - diversion of the sale proceeds towards redeeming the interest of the mortgagor - whether no part of the consideration for sale was received by the appellant and same was directly paid to the Bank by the purchaser in discharge of the mortgage amount - claim that amount paid to bank towards clearing the cloud over the title should be deducted as provided u/s 48 as expenditure incurred wholly and exclusively in connection with such transfer - HELD THAT:- Issue decided in TMT. D. ZEENATH [ 2019 (4) TMI 817 - MADRAS HIGH COURT] mortgage deed was never registered and State Bank of India, Pondicherry did not have a right to bring the property to sale. The assessee in the present case, continued to have title over the property along with her co-owners. They brought the property to sale through Bank - there was no diversion of sale proceeds by virtue of overriding title, but on the contrary, there was only a mere application by the owners themselves of the profits realized on the sale of land towards the discharge of loan obligations of same firm. We also hold that the assessee cannot claim any part of such application as cost of acquisition for the purpose of computing capital gains as per the provisions of Section 48. - Decided in favour of revenue.
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2020 (12) TMI 1079
Reopening of assessment u/s 147 - Revision u/s 263 - Whether Department had not produced any record to show that there was a tangible material available to reopen the assessment and more so when all the 14 lease transactions were the subject matter of block assessment, which was set aside and thereafter, it was the subject matter of the directions issued by the CIT under Section 263? - material for the CIT to exercise his jurisdiction under the said provision to deny the assessee on the deduction as well as on the depreciation claim considered by the Assessing Officer in the assessments related to the relevant assessment years - HELD THAT:- Notices have been issued after getting the prior approval of the CIT. In fact, the CIT passed an order under Section 263 of the Act, which was quashed. Once over again, he granted approval for issuance of notice for reopening. The reasons for reopening were to examine the five transactions where the assessee claimed 100% depreciation. The respondents would state that the Investigation Wing of the Department made certain inquiries and investigation to verify the genuineness of the transactions relating to purchase and lease back of the machineries from the above stated parties and the corresponding claim of depreciation in respect of those assets could not be accepted. Thus, the five transactions, which have been referred to as the reasons for reopening the assessment, were, indeed, the very same transactions, which formed part of the 14 transactions, which were considered in the block assessment as well as in the proceedings under Section 263 of the Act. As perused the return of income filed by the assessee for the relevant assessment years, in which, the claim for depreciation had been disclosed. Therefore, it is clear that the assessee disclosed all material information to the Assessing Officer. There is no allegation made by the Department against the assessee that they failed to truly and fully disclose all relevant material. Thus, without any such allegation against the assessee, the Department would not be justified in reopening the assessment by exercising its power by issuing notices under Section 148 of the Act. Identical circumstances were the subject matter of the decision in the case of Smt.Mira Ananta Naik [ 2008 (8) TMI 800 - BOMBAY HIGH COURT] wherein it was held that it was not in dispute that the block assessment was carried out and the block assessment was the subject matter of the proceedings and that notices merely stating that there was reason to believe that income chargeable to tax for the relevant assessment year escaped assessment without anything more could not be stated to be something, which would enable the Authorities to invoke Section 147 of the Act. We find that the assessee disclosed all relevant facts and the Assessing Officer considered them and after the search, which was conducted on 08.7.1996, the block assessment was framed, which was ultimately set aside. Parallelly, the regular scrutiny assessments were done under Section 143(3) of the Act and thereafter the CIT exercised his power under Section 263 of the Act and passed an order, which was also set aside. Material, which was already placed on record, and considered in earlier two rounds of litigation can hardly be a reason to reopen the assessment and all that we can say is that the attempt of the Department is to reopen a settled issue solely based upon change of opinion. The Department is silent and has not disclosed as to what is the tangible material, which is now available with them more than those that were available with the Department in the earlier two rounds of litigation. Therefore, we can safely hold that what the Department seeks to do is not to reopen the assessment, but to review the earlier orders, which had attained finality. That apart, the tax case appeals filed by the assessee having been allowed by judgment dated 03.12.2013, the decision is binding upon the Department and the same reasons, for which, the CIT exercised his power under Section 263 of the Act, cannot be used for issuing the notices for reopening. Decision of the Tribunal has to be read as a whole and the Department cannot pick and choose a few sentences and observations made by the Tribunal, which are not relatable to the assessee's case, but probably an opinion regarding the statutory provision. The Tribunal recorded a finding that the transactions were not fraudulent, that the assessee disclosed all the transactions and that all the transactions were through banking channels. Unless there is a fresh tangible material available with the Department, the question of reopening the assessments based on the material already available on record is impermissible. As pointed in the decision of the Hon'ble Supreme Court in the case of Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] what is to be borne in mind is the conceptual difference between the power of review and the power to re-assess, that the Assessing Officer has no power to review, but he has a power to reassess, that the reassessment should be based on fulfillment of certain preconditions and that if the concept of change of opinion is removed, then in the garb of reopening the assessment, review would take place. This is precisely what the Department seeks to do in the cases on hand. No hesitation to hold that the reopening of assessment is without jurisdiction, bad in law and liable to be set aside and consequently, the same is set aside.
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2020 (12) TMI 1078
Income from other sources as per Section 56(2)(vii) - whether the fair market value of bonus shares computed as per Rule 11U and Rule 11UA of the Income Tax Rules can be considered as income from other sources as per Section 56(2)(vii) ? - HELD THAT:- The issue of bonus shares by capitalization of reserves is merely a reallocation of the companies funds. There is no inflow of fresh funds or increase in the capital employed, which remains the same. The total funds available with the company remains the same and issue of bonus shares does not result in any change in respect of capital structure of the company. Thus, there is no addition or alteration to the profit making apparatus and the total funds available with the company remain the same. In substance, when a shareholder gets a bonus shares, the value of the original share held by him goes down and the market value as well as intrinsic value of two shares put together will be the same or nearly the same as per the value of original share before the issue of bonus shares. Thus, any profit derived by the assessee on account of receipt of bonus shares is adjusted by depreciation in the value of equity shares held by him. In the instant case, there is no material on record to infer that bonus shares have been transferred with an intention to evade tax, which is the object of the provision in question. Commissioner of Income Tax (Appeals) as well as the tribunal have rightly held that when there is an issue of bonus shares, the money remains with the company and nothing comes to the shareholders as there is no transfer of the property and the provisions of Section under Section 56(2)(vii)(c) of the Act are not attracted to the fact situation of the case. - Decided in against revenue.
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2020 (12) TMI 1073
Disallowance of management fee - HELD THAT:- When the assessee has proved on file that it has availed off the support services from its AE to run its business, it is entitled to claim expenditure. A.O./ CIT(A) was not empowered to decide if there was any necessity for the taxpayer to avail such services. So the ground raised by taxpayer in its appeal for A.Y. 2009-10 and 2010-11 are allowed and disallowance made stands deleted. Disallowance of set off of brought forward losses - HELD THAT:- AO/CIT(A) have disallowed set off losses by ignoring the fact that the matter is pending before the Tribunal for disposal. So, this issue is remitted back to the AO to verify the facts and grant the set off claimed by the assessee if admissible. Disallowance on account of impairment of stock - HELD THAT:- AO has disallowed this claim made by the taxpayer on the ground that the provision for impairment of stock was not ascertained liability - when the AO has not questioned the method of recognizing the value of stock at the close of the year i.e as per AS-2 of Accounting Standard and the stock or net realizable value, whichever is less, the disallowance on the basis of surmises is not permissible. Hence, we find no scope to interfere into the findings returned by Ld. CIT(A) and accordingly, aforesaid grounds in A.Y. 2009-10 and A.Y. 2010-11 raised by the Revenue are dismissed. Addition on account of AMP expenses by treating the same as capital expenses - HELD THAT:- We are of the considered view that Assessing Officer has merely made disallowance by following order passed in A.Y. 2008-09 in which taxpayer has incurred identical AMP expenditure for the purpose of Dealer signage and boards; Printing of Brochures, tyre technical guides, merchandise; Product launches; Print advertisements in newspapers and magazines; Seminars and Exhibitions; Hoardings, etc. which was deleted by the Ld. CIT(A) and order of Ld. CIT(A) was upheld by the tribunal. We find no scope to interfere into the findings returned by Ld. CIT(A). Moreover, it is beyond comprehension as to how the AO quantified 50% of the AMP expenses as capital in nature and remaining 50% as revenue in nature. Depreciation on computer software - @ 25 % as against taxpayer s claim of 60% in the return of income on the ground that AO/ CIT(A) have erred in considering the license fees paid towards the computer software purchase as an intangible assets i.e. acquisition of right to use the application - HELD THAT:- Because software contained in a disk is tangible property by itself. Since the taxpayer s ownership of limited right over the computer software purchased from Oracle by making payment of license fee is a tangible assets, it is entitled for depreciation @ 60% as per definition of Plant given in new Appendix 1 of Rule 5 effective from A.Y. 2006-07 of the Income Tax Rule, 1962. So, we are of the considered view that AO/CIT(A) have erred in allowing the depreciation on the license fee paid towards computer software @ 25% as against 60% . So, AO is directed to grant depreciation @ 60% on the license fee paid to Oracle by clubbing the said payment with computer and software. Credit for tax deducted at source (TDS) and self-assessment tax deposited while computing the tax demand - HELD THAT:- When taxpayer has brought on record the evidence for deducting the TDS and self tax deposited while computing the tax demand the AO is directed to verify the facts and to provide full credit of TDS and self-assessment tax deposited by the taxpayer in its computation of income. Separate expenses debited to profit and loss account of the taxpayer in order to compute the adjusted profit margin in relation to transaction of import of finished goods for resale - Outward freight for import of material distributed can only be considered for adjustment and not outward freight in India. Ld.TPO is to verify this fact and if the freight is for outward freight in India it need not be considered for adjustment When the taxpayer claimed that the freight need not be considered for adjustment as it is outward freight in India and not freight for import of material distributed, it is not to be considered for adjustment as directed by Ld. CIT(A). AO/ TPO is to verify this fact and provide adjustment of the freight expenses debited in the profit and loss account of the taxpayer to compute the adjusted gross margin only if it relates to import of finished goods for resale. Gross profit margin computation - HELD THAT:- Following the decision rendered by Hon ble Delhi High Court in case of Soni Ericssion Mobile Pvt. Ltd. [ 2015 (3) TMI 580 - DELHI HIGH COURT] wherein it is held that gross profit margin should be computed after including AMP expenditure and RPM is considered as the most appropriate method for import segment for resale. So far as question of rejecting Brightline test (BLT) by the Ld. CIT(A) in A.Y. 2010-11 is concerned it has been rejected in a number of judgments by the Hon ble High Courts on the ground that brightline test has no statutory mandate for benchmarking AMP expenses.
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2020 (12) TMI 1072
Assessment order passed on non-existent entity - Scheme of amalgamation conceived - HELD THAT:- As discussed and has also been held by Hon ble Delhi High Court in case of Spice Entertainment [ 2011 (8) TMI 544 - DELHI HIGH COURT] and in the case of Maruti Suzuki [ 2019 (7) TMI 1449 - SUPREME COURT] framing the transfer pricing order on the basis of which draft assessment order has been passed in the name of amalgamating entity is not a curable defect and the assessment framed is bad in law. So, the contention raised by the Ld. DR is not sustainable. Thus assessment order framed in this case on the basis of TP order passed by the TPO is bad in law, hence, non-est and consequently hereby quashed.
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2020 (12) TMI 1071
Reopening of assessment u/s 147 - non independent application of mind by AO - Borrowed satisfaction - information received from ADIT(Inv.), Mehsana - HELD THAT:- Only document relevant to the issue of recording reason is the information received from ADIT(Inv.), Mehsana - There is no other document filed by the revenue that any information on the basis of which the case of the assessee was reopened was received on or before date of recording reason i.e. 30/03/2015. As per the evidences provided by the revenue, the information pertaining to the assesse wherein reference to the documents was made was the letter of the ADIT(Inv.), Mehsana dated 31/03/2015 as cited above in this order and the revenue has not placed any evidence or material to substantiate that the information/document was provided to the assesse by any other authority on or before 30/03/2015 on the basis of which was case was reopened. There is no other document produced before us by the Revenue to controvert for any information and material has been provided to the Assessing Officer on 19/03/2015 by the ADIT(Inv.). Revenue has failed to demonstrate with relevant material or evidences that copies of document/information provided by the ADIT(Inv.) was available with the AO on or before recording reason for reopening of the assessment i.e. 30/03/2015 and further in our considered opinion, A.O. has reopened the assessment solely on the basis of information received of the ADIT (Investigation) and without forming an independent opinion and there cannot be any reassessment for verification and without satisfying the requisite condition under the law. A.O. issued notice to the assessee without any application of mind and satisfaction and same is not sustainable in the eyes of law - Decided in favour of assessee.
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2020 (12) TMI 1070
Validity of notice - Reopening of assessment u/s 147 - disallowing the capital gains as claimed by the assessee - advertent error in the notice issued by the AO reflecting only the PAN column of the notice mentions PAN of the HUF instead of the individual - HELD THAT:- A careful reading of the Section point towards the benefit envisaged to all the stakeholders whether it is the citizen or the state. In our case, the assessee as well as the revenue. Even, the revenue is precluded from treating the return of income filed by the assessee as null and void in cases where there has been a mistake, defect or omission in such return of income. The mistakes in the return such as wrong quoting of the Section or provision pertaining deduction, exemption or wrong filing of the column or wrong typing of PAN or address are not to be treated as fatal to make a valid return invalid. Section 292B has been invoked to benefit the assesses where the returns have been filed in correct jurisdiction. There is a marked difference between want of basic or inherent jurisdiction and exercise of authority which has not been vested with the Assessing Officer. In the instant case, the Assessing Officer has rightly invoked the provisions of Section 148 by recording the reasons and by issue of notice to the proper person to which it was intended to. In the present case, there is an in advertent error in the notice issued by the AO reflecting only the PAN column of the notice mentions PAN of the HUF instead of the individual whereas the body of the notice and the address shows that the notice is clearly meant for the assessee himself. The provisions of Section 292B have been further clarified the Circular No. 179 of CBDT dated 30.09.1975 that this provision has been made to provide against purely technical objects without substance coming in the way of validity of the assessment proceedings. On going through the Reasons recorded, the address on the notice, the body of the notice issue of notice, we hold that the notice of the Assessing Officer wherein there is a mistake only in the PAN number, the notice is covered by the provisions of Section 292B. Capital gain - ascertaining the fair market value of a capital asset - Valuation made by the DVO - CIT (A) directed the Assessing Officer to adopt the valuation as made by the DVO - invoking the jurisdiction by the AO u/s 55A - HELD THAT:- On going through the explanatory note to the Finance Bill 2012, we find that the amendment is substantive in nature and is prospective. The amendment is applicable to all the proceedings taken up after 01.07.2012. In the case of Dove Investments Pvt. Ltd. Vs Gujarat Industrial Investment Corporation [ 2006 (2) TMI 287 - SUPREME COURT] as observed that regard must be had to the context, the subject matter and object of the statutory provision in question in determining whether the same is mandatory or directory. No universal principle of law could be laid down in that behalf as to whether a particular provision or enactment shall be considered mandatory or directory. It is the duty of the Court to try to get the real intention of the Legislature by carefully analyzing the whole scope of the statute or section or phrase under consideration. In the instant case, the notice has been issued on 18.03.2014 and the proceedings have been concluded on 31.03.2015. Hence, the invoking of provisions of Section 55A existing from 01.07.2012 by the Assessing Officer and reference to the Valuation Officer which is in accordance with the provisions of the Act inforce at that time, cannot be faulted with. Objection to the Valuation Process - if the value as determined by the registered valuer is correct or the value determined by the DVO is correct - As gone through the reports of Tahsildar Sadar, ADM Finance regarding the circle rates. While the report of the DVO is based on the prices given as per the circle rates notified by the ADM Finance, the value determined by the registered valuer was based on the report of the Tahsildar which was based on the local enquiries. There has been a dispute as to which segment price of Rampuri Mohalla has to be taken into consideration. The benefit of construction has not been adequately allowed. Keeping in view the entire facts of the case, we hold that the ends of the justice would well served by referring the matter back to the file of the AO to accord further benefit to the construction of nala, boundary wall, tube well, earth filling work and to determine the price taking into consideration the value of Mohalla Rampuri segment. In the result, the appeal of the assessee on the grounds of reopening and reference to Valuation Officer is dismissed. The process and method of determining the FMV is set aside with directions.
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2020 (12) TMI 1068
Excess sugarcane price paid to the members non members - HELD THAT:- The issue relating to excess sugarcane price paid by the assessee, the issue is restored to the file of Assessing Officer with similar directions as above in the cases of M/s. Vasant Rao Dada Patil SSK Ltd. [ 2019 (3) TMI 1637 - ITAT PUNE] and also consider the contentions of assessee with respect to SMP vis-a-vis FRP regime, where ever raised. The Assessing Officer shall decide the issue, after affording reasonable opportunity of hearing to the respective assessees, in accordance with law. Thus, Ground No.1 to 14 relating to the issue of excess cane price paid to members non members is allowed for statistical purposes in the aforesaid terms. Sale of Sugar at Concessional rate to members - HELD THAT:- Respectfully following the decision KARMAVEER SHANKARRAO KALE SSK LTD. [ 2019 (9) TMI 1475 - ITAT PUNE] the issue sale of sugar at concessional rate to member is remanded to the file of Assessing Officer for fresh adjudication for the purpose of giving effect to the directions of Hon ble Apex Court in proper perspective. The Assessing Officer shall grant reasonable opportunity of hearing to the assessee, in accordance with law. Beneficiary Membership Capital C Class membership capital - HELD THAT:- The issue relates to the C-class membership fee is required to be remanded to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall grant reasonable opportunity of being heard to the assessee and pass a speaking order.
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2020 (12) TMI 1067
Revision u/s 263 - Long term capital gain as earned on sale of shares and claimed exempt under section 10(38) - HELD THAT:- Assessee had filed return of income on 31.10.2015 declaring total income of ₹ 7,39,910/-. The case of the assessee was picked up for scrutiny assessment and the assessment was concluded by accepting the return of income so declared. It would be pertinent to examine the action taken by the Assessing Officer during the assessment proceedings. Assessing Officer issued a show cause to the assessee along with questionnaire. The assessee in response there to filed a detailed submission. As stated that the statement of the assessee u/s 131 of the Act was also recorded by the Assessing Officer. Ld. Counsel drew our attention to the statement of assessee enclosed at Paper Book pages 21 to 24. The assessee had replied to questions, it was stated that the shares were sold through exchange. Hence, it is not a case where no enquiry was conducted. In fact from the material placed before us suggests some application of mind, by Assessing Officer. Admittedly, the Ld. Pr. CIT in the impugned order has recorded the factum collection of evidence and recording of statement. Action of the Ld. PCIT revising the assessment order under the peculiarity of the facts and circumstances of the case cannot the sustained. The impugned order is therefore, set aside and the grounds raised by the assessee in this appeal are allowed.
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2020 (12) TMI 1066
Exemption u/s 11 - whether the assessee is to be treated as a charitable institution ? - assessee is a registered society under the Societies Registration Act, 1860 and applied for grant of registration under section 12AA - The registration was granted to the assessee by the Commissioner of Income-Tax, Jalandhar - According to the AO, the sale of medicines has resulted in huge profit to the assessee, and therefore the assessee cannot be considered as a charitable society within meaning of section 2(15) - First circumstance highlighted by the AO is that the assessee is running a pharmacy in the hospital - HELD THAT:- We find that the AO has not specifically rebutted the stand raised by the assessee. The maintenance of pharmacy has been considered in the past as ancillary to the object of running a hospital. It is to be appreciated that how the attendant of the patient would procure medicine from outside during emergency hours, and more so in the night. Thus, it could be considered as an integral part of the hospital activity. It is akin to running hostel alongwith educational institution. It is pertinent to note that when any explanation or a defence of an assessee based on number of facts supported by evidence and circumstances required consideration whether explanation is sound or not must be determined not by considering the weight to be attached to each single fact in isolation but by assessing the cumulative effect of all the facts in their setting as a whole. Assessee has already maintaining separate books of accounts and section 11(4A) requiring the assessee to maintain separate books of accounts before some business is being carried out is concerned, the profit from medical store is incidental to the main object and not as separate business activity at the end of the assessee. The AO failed to appreciate this distinction which has been appreciated by the ld.CIT(A) while reversing the finding of the AO. AO ought to have appreciated concept of a running of hospital as well. It is also to be appreciated that in the last more than 12-13 years, this has never been doubted by the Income-tax Department, then what is the strong motive in this year to disbelieve the version of the assessee ? Therefore, we find that no merit in the first fold of reasoning given by the AO to reverse the finding of the CIT(A). Assessee is showing huge profit, and therefore it is to be construed that the hospital is being run on commercial line under the shadow of a charitable institution - AO has compared rate of such hospitals who were provided subsidies from the Government. SGL Hospital, whose rates were relied by the AO, received subsidies/donations/grants from Government, therefore, rates of such hospital cannot be compared with rates of the assessee, who has to take care of day-to-day operational expenses, and future expansion in the area of investigative tools viz. xray machines, CT-scan etc. These equipments require higher lay out of the capital, and therefore in order to remain in competition with the hospitals, and to provide best facility to the patients, and to provide medical help, the assessee has to upgrade its investigative tools. Rates considered by the AO are not relevant rates for determining higher range of profit in the hands of the assessee. We have made reference to submissions summarized by the ld.CIT(A) while taking note of the written submissions of the assessee. On an analysis of the details submitted by the assessee as well as considered by the AO, we are of the view that the AO has made reference to irrelevant claims for working out higher rate of profit in the hands of the assessee for running a hospital. After going through order of the ld.CIT(A), we do not see reason to interfere in the order on this fold of reasoning also. Paid higher consultancy charges to Dr.R.S. Chahal and this payment was being made simply for the reason that Dr. Chahal is trustee of the institution - AO tried to compare his salary with an anesthesiologist. The AO nowhere made reference to the salaries of any other nephrologist having qualification of Dr.R.S.Chahal in the open market in other hospitals. He could appreciate if he could able to lay his hand on the material that a particular doctor having identical educational qualification and experience in the medical field is paid at lesser amount in similar type of hospital. There may be certain Government institutions where instead of making salary payment at this level, other facilities like housing and transportation etc. may be extended to the medical professions. Thus, the ld.CIT(A) has rightly appreciated the facts and circumstances and also considered rule of consistency. Loss from Kinder Hospital should have not been claimed by the assessee - AO has not pointed out any defect in the books of accounts and has not brought any material on record on account of disallowance of expenses. On one hand, the AO accepted receipt of ₹ 5,09,900/-, but on other hand, disallowed entire expenditure incurred by the trust at ₹ 1,72,42,642/-. The assessee also submitted that similar loss amounting to ₹ 68,79,289/- for the Asstt.Year 2013-14 was accepted by the AO vide order dated 15.3.2016, and further loss of ₹ 98,42,611/- for the Asstt.Year 2015-16 was also accepted by the AO vide order dated 23.11.2017. The ld.CIT(A) after considering submissions of the assessee held that the AO was not justified in denying the claim of the assessee in absence of any material finding and he allowed the claim of the assessee. - Decided in favour of assessee.
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2020 (12) TMI 1065
Reopening of assessment u/s 147 - AO has held that there is an income taxable in hands of the appellant as perquisites in terms of section 17(2)(iii) r/w section 2(24)(iv) - HELD THAT:- We fail to appreciate the action of Ld AO in presuming that there is a notional benefit derived by taking into consideration the FMV. As held above, in section 17(2)(iii) legislature has made Value of benefit provided directly linked to the cost incurred by the employer in either providing the benefit free of cost or at concessional rate . Undisputedly cost of shares of M/s Eltek for M/s SGS is ₹ 10/- per share and the shares have been transferred by M/s SGS to the appellant at the same price i.e., ₹ 10/- per share, there is therefore no taxable perquisite arising in this case. Unable to uphold the validity to assumption of jurisdiction u/s 147. While recording reasons, Ld AO should have applied his own mind to first determine whether provisions of section 17(2)(iii) are at all applicable. A mere perusal of reasons recorded demonstrates that there is no independent application of mind by the AO on following crucial issues, that is - Is there a Benefit which is taxable? - What should be the Value? and Under which provision of Act is the income allegedly escaping is taxable? Lack of independent application of mind by the Ld AO is also apparent from the fact that in the reasons recorded u/s 148(2), he holds that benefit is taxable in hands of the A u/s 17(2)(a)(i) r.w.s. 2(24)(iv) of the Act. Clearly there is no section 17(2)(a)(i) in statute. Even if it is presumed that CIT (A) of M/s SGS and the current Ld Assessing Officer intended to mention section 17(2)(i), then too it is applicable to Rent Free Accommodations and hence not relevant and applicable. This error is noted by Ld CIT (A) in the impugned order. In fact, Ld AO while passing the final order realized this and has therefore upheld taxability u/s 17(2)(iii) and not either u/s 17(2)(a)(i) or 17(2)(i) or section 56. In our considered opinion existence of a Benefit is a Jurisdictional Fact which at the outset must be demonstrated by the Ld. AO by determinative rules while assuming jurisdiction. Reasons recorded by the Ld AO in the instant case clearly shows that, nowhere Assessing Officer has recorded his satisfaction as to the correctness of the findings of the Ld CIT (A) in case of M/s SGS, nor has he recorded his finding as to how he has reached to a conclusion that income in the hands of the A has escaped assessment. Observations made by Ld CIT (A) in case of M/s SGS are not binding upon the Ld. AO. Thus, we hold that assumption of jurisdiction u/s 147 is bad in law. - Decided in favour of assessee.
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2020 (12) TMI 1064
Unexplained cash credit u/s 68 r/w section 115BBE - Bogus purchase and sale - HELD THAT:- Authorities below have not cited any statement of the parties from whom the purchases and sales were made wherein they had denied these transactions and if there are any statements of these parties wherein they had denied these transactions, such statements were not made available to the assessee for cross examination. The assessee in para 3 of the above reply had specifically requested to confront all information and documents etc. but no such opportunity was granted to assessee. The argument of Learned D. R. that since the Hon'ble Allahabad High Court had held the parties to be bogus therefore, there was nothing to be confronted to assessees is not helpful to the Revenue as opportunity of cross examination of third parties on whose statements the Revenue is relying is a legal right available to the assessee and which has been held by various Hon'ble courts including Supreme Court in the case of Andman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] . Moreover, we find that the Assessing Officer had made the additions on the basis of a report from the Assessing Officer of Rich Group of companies and has not carried out any independent investigations for holding the transactions of cloth trading as bogus. The assessee has recorded the entries of sales and purchase in its books of account and has duly disclosed the items of sales and purchase in the profit loss account and has duly disclosed the profit earned on the trading in the profit loss account and has offered the same as business income. The assessee has furnished as much information as possible to justify its claim about the transactions of cloth being genuine. Under these circumstances, Hon'ble Supreme Court in the case of CIT vs. Odeon Builders Pvt. Ltd. [ 2019 (8) TMI 1072 - SUPREME COURT] has decided the issue in favour of assessee. Additions deleted.
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2020 (12) TMI 1063
Unexplained cash credits addition u/s 68 - as per revenue since the assessee s twin investor entities had been found lacking genuineness / creditworthiness, they have been rightly treated as shell entities thereby inviting the impugned addition - HELD THAT:- We find no reasons to sustain the impugned addition. We make it clear that not only the assessee has proved itself to be genuine business entity engaged in rice mill business having turnover of ₹56,640/-from assessment year 2010-11 rising to ₹3,82,83,005/- on pertaining to assessment year 2020-21 but also it has successfully filed on record the twin investor entities supportive evidence and confirmations before the Assessing Officer. All these clinching facts have nowhere been rebutted from the Revenue side since had its case deals with documentary evidence does not itself amount to proving genuineness / creditworthiness of the investor parties in view of hon'ble apex court s decisions in Commissioner of Income Tax vs. Durga Prasad More [ 1971 (8) TMI 17 - SUPREME COURT] Sumati Dayal [ 1995 (3) TMI 3 - SUPREME COURT] - Twin investor parties herein have also explained source of impugned share application money as it is clear from a perusal of the page 43 wherein M/s Astha Rice Mill (P) Ltd. stated the source of impugned share application of ₹10 lakh each coming from similar three investor parties. This tribunal s co-ordinate bench decision in M/s Sanmin Trading Holding Pvt. Ltd. [ 2020 (11) TMI 606 - ITAT KOLKATA] holds that such a share capital involving investor entity s detailed evidence, confirmation and explanation of source does not attract unexplained cash credits additions - Decided in favour of assessee.
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2020 (12) TMI 1062
Addition u/s 56(2)(viib) - Appellant has received consideration in excess of fair market value of shares - valuation technique adopted by the valuer - Whether AO was justified in rejecting DCF method followed by the assessee? - HELD THAT:- As relying on VBHC Value Homes Pvt. Limited [ 2020 (6) TMI 318 - ITAT BANGALORE] - We are of the opinion that the action of Ld. AO in rejecting use of DCF method is not proper. We also find considerable merit in the argument advanced by Ld. AR that the under DCF, the information to be considered should be as on date of valuation. In the instant case, Ld. AO has erred in comparing estimated projections with the actual audited revenues. See M/S. INNOVITI PAYMENT SOLUTIONS PVT. LTD. [ 2019 (1) TMI 688 - ITAT BANGALORE] We do not approve the approach and the findings of either Ld AO or Ld CIT(A). The decisions relied upon by Ld CIT(DR) are also not relevant. In case of Agro Portfolio [ 2018 (5) TMI 1088 - ITAT DELHI] it was a case of ex-parte assessment. AO directed the appellant to furnish material in support of is valuation applying DCF. In reply there was no compliance by the assessee and therefore left with no other alternative AO completed assessment u/s. 144 applying NAV method. In the present case, as noted by us above, the appellant has not only participated during assessment but also categorically highlighted the errors in factual findings of the Ld AO. In this case the assessee filed a writ before Hon'ble High Court challenging jurisdiction of AO. Decision of Hon'ble Kerala High Court has also been considered in case of VBHC Value (supra). We set aside the matter back to the records of Ld AO for a de novo examination of DCF Valuation adopted by the appellant as per law. The Ld. AO is directed to re-examine the matter afresh.
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2020 (12) TMI 1061
Additions u/s 40A(3) - Purchase payments in cash in contravention to the provisions of section 40 A(3) - CIT (A) deleted the addition holding that the provisions of Section 40 A(3) are not attracted where the parties are identified and there is no material on record to doubt the genuineness of the payment. - HELD THAT:- The circular and judgments unequivocally intend at allowing the expenses owing to genuineness of the payment and contingency of the business. Hence, keeping in view the provisions of the Act, Rules and the judgments and having examined the issue and the peculiar facts and circumstances of the case, on finding that the assessee is merely facilitator and intermediary in the transaction and his receipts assessable to tax constitute the margin between the price obtained and further paid but not the entire receipts which stands further passed on to the two ticketing agencies, we hereby hold that the provisions u/ s 40A(3 ) are not attracted. - Decided against revenue.
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2020 (12) TMI 1060
Disallowance of advertisement expenditure - AO noticed that the assessee firm has contributed a sum to a School for the purpose of construction of a swimming pool in that school - HELD THAT:- AO has given identical reasoning for disallowing 20% of the expenses on gifts and promotional aids given to doctors. Accordingly, following the decision rendered by the co-ordinate bench in AY 2013-14, we direct the AO to delete the impugned disallowance. TP adjustment made in respect of goods sold to Associated Enterprises (AEs) - MAM selection - HELD THAT:- We have earlier rejected the methodology adopted by the TPO and we have upheld the assessee's stand on TNMM and Net profit margin. As in the segmental Profit and Loss account prepared by TPO, certain items of expenses have not been correctly considered, since the aggregate amount of Net profit worked out by the Transfer Pricing Officer did not match with that of the assessee. There should not be any dispute that the methodology consistently followed to work out net profit year after year should be followed in this year also. It should not be tinkered with, unless proper reasons are given. The TPO has not given any reason as to why he altered the aggregate amount of Net profit. Hence the workings made by TPO is liable to rejected. We have noticed that the net profit margin worked out by the assessee in Domestic - Personal care division was 12.31%. The net profit margin worked out for Exports to AEs was 24.03%. Hence the net profit margin earned in the exports to AEs division is higher than its comparable Domestic - Personal care division . Hence it has to be held that the international transactions of making exports to AEs are at arms length and hence no T.P adjustment is called for. Accordingly, we direct deletion of Transfer pricing adjustment made in respect of Exports to AEs. TP adjustment made in respect of Advertisement and Marketing expenses - HELD THAT:- Following the decision rendered by the Tribunal in AY 2013-14 and 2011-12 [ 2018 (7) TMI 1964 - ITAT BANGALORE] , we direct the AO to delete the transfer pricing adjustment made in respect of Selling and Marketing expenses. Transfer pricing adjustment made in respect of royalty - TPO noticed that the assessee has got Research and Development unit and accordingly developing all its products - HELD THAT:- We direct the AO to delete the T.P adjustment made by way of royalty.
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2020 (12) TMI 1058
Payment of Franchise fees to BCCI as per the Franchise Agreement - Nature of expenditure - allowable revenue expenditure - HELD THAT:- Where the assessee has paid the Franchisee Fee to BCCI and the claim was examined and the Revenue could not controvert with any new evidences. We respectfully fallow judicial precedence and consider the Franchisee Fee paid to the BCCI as revenue expenditure and direct the Assessing officer to delete the addition and allow the claim of the assessee. Further the assessee has also raised alternative claim. We find that, when the Franchisee Fee paid is treated as revenue expenditure and directed the A.O to allow the claim, Hence the alternative claim becomes infructuous and is dismissed. Adhoc disallowance of Air-fare and Travelling expenses - expenditure has to be incurred on the VIP s and Celebrities to attract the crowd of the matches on the sports - HELD THAT:- Keeping in view the fact that as observed by the CIT(A) that the assessee had failed to place before him any evidence e.g air tickets, details of vehicles, name of service providers, details of persons utilizing these services and their nexus with business etc, therefore, as per him the possibility of the expenditure partly having been incurred for non business purposes could not be ruled out, and the fact that the assessee too had submitted before us that sufficient opportunity was not allowed to it at the time when such adhoc disallowance of expenses was made, therefore, in all fairness restore the matter to the file of the A.O for making necessary verifications on the basis of documentary evidence as regards the entitlement of the assessee towards the claim of the aforesaid expenses. We herein direct that the A.O shall in the backdrop of our aforesaid observations make necessary verifications as regards the aforesaid claim of expense of the assessee booked under the said respective heads, viz. airfare expenses, travelling expenses and vehicle hiring charges. Needles to say, the A.O shall during the course of the set aside proceedings afford sufficient opportunity of being of heard to the assessee, who shall remain at a liberty to substantiate its claim by placing on record fresh documentary evidence. Appeal of the assessee for statistical purpose. Adhoc disallowance of expenditure on Boarding and Lodging Food and Nutrition expenditure for Celebrities - A.O has disallowed 33% of the claim - HELD THAT:- Relying on the decision for 2009-10 in assessee's own case, restored the issue to AO for fresh adjudication. Since the facts in the impugned assessment year are identical, we deem it appropriate to restore this issue back to the file of Assessing Officer with similar directions. In the result, grounds Nos. 7 and 8 of the appeal are allowed for statistical purpose
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2020 (12) TMI 1057
Reopening of assessment u/s 147 - unexplained bank deposits - HELD THAT:- Since, as per the records available, it is not clear on the aspect of the receipt of this amount of ₹ 5,00, 000/- into the account of the assessee, we find it just and necessary to direct the AO to verify the fact with reference to the material. We clarify that this direction does not entitle the revenue to summon or call for any details from the assessee as the revenue has already had 120 months from the date of filing of return and 43 months from the date of issue of notice u/s 148 at their disposal to come out with the details of the deposit. Our above view in respect of ₹ 5,00,000 /- leads to examination of applicability of Explanation-3 to Section 147 of the IT Act inserted by the Finance (No. 2 of 2009 ) with regard to the ground no 7 of the appeal where it was contested that addition of ₹ 2. 2 cr. made by the Assessing officer for which no satisfaction has been recorded at the time of reopening or during the reassessment proceedings. With regard to the issue whether any addition made by the AO is legally valid in the absence of a valid addition made based on the reasons recorded is examined in the context of the judgment of the Hon ble Jurisdictional High Court in the case of Ranbaxy Laboratories ltd. Vs CIT [ 2011 (6) TMI 4 - DELHI HIGH COURT] - We hold that the other addition made by the AO depends upon the view to be taken by the AO in respect of the addition of ₹ 5,00,000 /- as mentioned in the reasons. To sum up, we hereby hold that, a. The addition of ₹ 5,00,000/- as mentioned in the reasons recorded is being sent for verification owing to absence of proof of deposit in the assessee s bank account. b. The issue of the addition of ₹ 2.20 cr. made by the AO for which reasons have not been recorded since linked to the point (a.) above will have a contemporaneous effect on the outcome of the verification by the revenue.
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2020 (12) TMI 1051
TP Adjustment - determination of Arms Length Price by TPO - MAM selection - TPO while bench marking proceed bench marked the transaction by using CUP as most appropriate method - assessee selected TNMM as most appropriate method to benchmark the international transaction - HELD THAT:- There is no dispute that Tribunal in assessee s own case for A.Y. 2012-13, which was followed in A.Y. 2011-12 held that the ad-hoc determination of Arms Length Price by TPO de-hors section 92C(1) would not be sustainable. No tax can be levied without the authority of law as mandated by Article 265 of the Constitution of India. Similarly, the exchequer should not be deprived from its legitimate tax due. In our view, the assessee would not be prejudiced in setting-aside proceeding, if they have merit in their favour. Considering the aforesaid factual and legal discussion and the facts that the TPO has not followed the mandate of section 92C in determining ALP, therefore, we deem it appropriate to restore the issue to the file of AO/TPO for determination of ALP of International Transaction by the method prescribed under section 92C(1) read with Rule 10AB and 10B of Income Tax Rules, 1962. Needless to order that before passing the order, the AO/TPO shall provide due opportunity of hearing to the assessee. The assessee is also directed to substantiate its contention by explaining all the facts and provide necessary information and evidences to the AO/TPO. The AO/TPO is further directed to pass the order as early as possible and within six month of receipt of this order. In the result, the grounds of appeal related with the T.P. Adjustment in all years (AYs 2013-14, 2014-15 2015-16) are restored back to the file of AO/TPO and are treated as allowed for statistical purpose. Disallowance of MAT credit entitlement - HELD THAT:- We direct the AO to allow MAT credit to the assessee on the basis of order for AY 2013-14 in accordance with law. Needless to order that before passing the order, the AO/TPO shall provide due opportunity of hearing to the assessee. Calculation of tax and interest - HELD THAT:- Considering the fact that substantial addition, which was based on the adjustment on account of T.P. issue has been restored to the file of AO/TPO, the AO is directed to verify the fact and calculate the tax and interest in accordance with law.
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2020 (12) TMI 1050
Addition u/s 68 - increase in share capital and share premium - HELD THAT:- The nature of receipt towards share capital is seen from the entries passed in the respective balance sheets of the companies as share capital and investments. For proving the identity of share applicants, the assessee furnished the name, address, PAN of share applicants together with the copies of balance sheets and Income Tax Returns. With regard to the creditworthiness of share applicant, as we noted supra, this company is having sufficient fund. These transactions are also duly reflected in the balance sheets of the share applicant, so creditworthiness is proved. Even if there was any doubt if any regarding the creditworthiness of the share applicant was still subsisting, then AO should have made enquiries from the AO of the share subscribers as held in the several judgments cited above, which has not been done, so no adverse view could have been drawn. The third ingredient is genuineness of the transactions, for which we note that the monies have been directly paid to the assessee company by account payee cheques out of sufficient bank balances available in the bank accounts of the share applicant. It will be evident from the paper book that the assessee has even demonstrated the source of money deposited into their bank accounts, which in turn has been used by them to subscribe to the assessee company as share application. As source of source is proved by the assessee in the instant case though the same is not required to be done by the assessee as per law as it stood/ applicable in this assessment year. The share applicant has confirmed the share application as well as the payments made to the assessee company, which are duly corroborated with their respective bank statements and all the payments are by account payee cheques. We note that section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its undisclosed income. In the facts of the present case, both the nature source of the share application received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicant. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed on AO's record. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68 - we delete the addition made by the assessing officer - Decided in favour of assessee.
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Insolvency & Bankruptcy
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2020 (12) TMI 1054
Seeking extension of time for implementation of plan which was granted by Committee of Creditors - it was submitted that approved Resolution Plan complied with all the requirements of Section 30(2) of IBC, 2016 and r.w. relevant Regulations made thereunder - HELD THAT:- It is noted that the Resolution Plan, submitted for approval, has been duly approved by the CoC in its meeting dated 19.09.2019 by 100% votes. The Resolution Professional has given requisite certificate that plan complies with all requirements Section 30(2) of IBC, 2016 r.w. relevant CIRP Regulations. The perusal of the Resolution Plan shows that the Financial Creditor will get a sum of ₹ 41,59,40,000/- against the their total claimed amount of ₹ 65,75,36,785/- which works out to 63.26%. Workmen dues have been provided in toto for the claims submitted by such workmen. The Operational Creditors would receive a sum of ₹ 16,02,791/- as against their total claimed of ₹ 8,74,42,091./- provisions for statutory liabilities has been made at ₹ 86,27,208/-. Thus, in sum and substance, the Resolution Plan provides for settlement of claim of various stakeholders. It is also noted that the Resolution Plan provides the background of successful Resolution Applicant and its associates. The revised 'Resolution Plan' filed with the Application meets the requirements of Section 30(2) of I B Code, 2016 and Regulations 37, 38, 38(1A) and 39 (4) of IBBI (CIRP) Regulations, 2016. The 'Resolution Plan' is also not in contravention of any of the provisions of Section 29A. The Resolution Professional has also certified that the 'Resolution Plan' approved by the CoC does not contravene any of the provisions of the law for the time being in force. The Compliance Certificate is placed on record. The 'Resolution Plan' has been approved by the CoC with 100% voting share - the revised 'Resolution Plan' is hereby approved, which shall be binding on the Corporate Debtor and its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan including Resolution Applicant. Resolution Plan stands modified to the extent of our direction given in this order and to be read along with such directions - Application disposed off.
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2020 (12) TMI 1053
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - HELD THAT:- The petitioner has placed on record the last invoice/challan dated 04.03.2016, whereas the instant petition is filed on 19.09.2019 i.e. beyond three years from the date of the last invoice. Therefore, the instant application is barred by limitation. On perusal of the record it is found that the petitioner has claimed interest @ 18% per annum. It is found that the petitioner has failed to put on record any document in support of its claim that interest @ 18% will be levied upon the default, more so when the tax invoice is silent on such aspect, claim of the petitioner is bad in the eye of law - the petitioner has put on record certificate/statement from the bank to the effect no payment is received through RTGS/NEFT during the period from 27.08.2019 to 16.09.2019 which has no relevance with the claim since the transactions had taken place during the period from 18.12.2015 to 04.03.2016. The application, so filed by the applicant is not maintainable - Petition dismissed.
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2020 (12) TMI 1052
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The Operational Creditor has produced the relevant Invoices, Statement of Account, passbook entries for the period of 30.09.2019 to 26.07.2019. All about evidence proved two facts (i) the debt of ₹ 1,25,000/- is due and payable by the Corporate Debtor to the Operational Creditor and (ii) Corporate Debtor has committed default in paying the same. The Application filed under Section 9 of the Insolvency Bankruptcy Code, 2016 is defect free - Application admitted - moratorium declared.
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Service Tax
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2020 (12) TMI 1069
Refund of services tax - input services received by the unit of the appellant established in SEZ - refund rejected for alleged non-compliance of several conditions prescribed in the notifications dated March 3, 2009 and May 20, 2009, but in view of the provisions of section 26 of the SEZ Act read with rules 22 and 31 of the SEZ Rules, the claim for refund could not have been rejected - Refund in respect of certain input services not duly approved by Unit Approval Committee - Availment of CENVAT Credit - Time limit for filing of refund - No documentary evidence to satisfy condition no. 2(a) of Refund Notification - Nexus of input services with the authorized operations - Input service invoices are dated prior to the date of refund notification - Refund admissible only in case where services not wholly consumed within SEZ. Refund in respect of certain input services not duly approved by Unit Approval Committee - proviso (a) of the notification dated March 3, 2009 - HELD THAT:- In MAST GLOBAL BUSINESS SERVICES INDIA PVT LTD VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE [ 2018 (9) TMI 258 - CESTAT BANGALORE] the Tribunal held that the SEZ Act had an overriding effect, in view of the provisions of section 51 of the SEZ Act, over all other laws and, therefore, the ground for rejecting the refund claims was not tenable in law and even otherwise, approval from UAC was only procedural in nature and not a mandatory condition - the Commissioner (Appeals) was not justified in rejecting the refund claims on this ground. Availment of CENVAT Credit - proviso (e) of the Notification dated March 3, 2009 - HELD THAT:- The reversal of CENVAT credit prior to its utilization and prior to the filing of the refund application would amount to not availing CENVAT credit. This, in turn, would mean that the requirement for claiming exemption contemplated under proviso (e) of the Notification dated March 3, 2009 stands satisfied. The rejection of the refund claim on this ground by the Commissioner (Appeals) is, therefore, not justified. Time limit for filing of refund - clause 2(f) of the Notification dated March 3, 2009 - HELD THAT:- Though, this issue did not form part of the show cause notice, yet a perusal of the details contained in the aforesaid table clearly indicate that the refund claims have been filed within six months from the date of payment of the service tax. In such circumstances the refund claims could not have been rejected on this ground. No documentary evidence to satisfy condition no. 2(a) of Refund Notification - paragraph 2(a) of the Notification dated March 3, 2009 - HELD THAT:- There is no evidence on the record which may indicate that any operation was carried out by the appellant from any unit outside the SEZ. Thus, all input services were used in relation to the authorized operations. This issue was examined by the Tribunal in RELIANCE INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-I [ 2015 (11) TMI 1048 - CESTAT MUMBAI] . The Tribunal found as a fact that the unit of the appellant operating in SEZ was the sole undertaking of the appellant and the SEZ Act that provides for exemption of duties and taxes has an overriding effect when in conflict with other laws. The Tribunal, therefore, held that there can be no doubt that the services provided by the appellant were for authorized operations in SEZ - learned counsel for the appellant has also pointed out that a certificate issued by a chartered engineer that input services had been used in relation to authorized operations had also been placed before the Department. - finding recorded the Commissioner (Appeals) on this issue, therefore, cannot be sustained. Input service invoices are dated prior to the date of refund notification - HELD THAT:- Tribunal in WARDHA POWER COMPANY LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [ 2012 (5) TMI 289 - CESTAT, MUMBAI] wherein emphasis was placed on clause 3 of the notification dated March 3, 2009 which states that the exemption benefit in the notification shall apply only in respect of service tax paid on the specified service on or after the date of publication of the notification in the Official Gadget - the Commissioner (Appeals) committed an error in rejecting the refund applications for this reason since it is the date of making payments this is relevant. Refund admissible only in case where services not wholly consumed within SEZ - HELD THAT:- Learned counsel for the appellant submitted the substantive benefit of the service tax exemption provided under section 26 of the SEZ Act and rule 31 of the SEZ Rules cannot be denied by any procedural requirement under a notification - This submission of learned counsel for the appellant deserves to be accepted. The substantive benefit of service tax exemption provided under section 26 of the SEZ Act read with rule 31 of the SEZ Rules cannot be denied on procedural grounds. It is not in dispute that the appellant was not required to deposit service tax under the notification dated May 20, 2009, but service tax was deposited. It cannot be urged that the appellant is not entitled to claim refund because of a mistake in depositing service tax even if it was not required to be deposited. This issue has been examined while dealing with the applicability of the section 26(1) of the SEZ Act - the Commissioner (Appeals) was not justified in rejecting the refund applications on this ground. The matter is remitted to the Commissioner (Appeals) to decide whether the appellant had paid service tax on the services for which the appellant had claimed refund in the five applications submitted by the appellant - Appeal allowed by way of remand.
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2020 (12) TMI 1055
Demand of Service Tax - Merger / Demerger of units - commission/ discounts paid to Abhijeet Ltd. and Corporate Ltd. - case of Revenue is that Abhijeet Ltd. and Corporate Ltd. had merged with the Appellant, it was the Appellant that was liable to pay service tax that would otherwise have been payable by Abhijeet Ltd. and Corporate Ltd. - HELD THAT:- It is apparent that only the Sponge Iron Plants and Power Plants of Abhijeet Ltd. and Corporate Ltd. merged with the Appellant and it was not a merger of Abhijeet Ltd. merged with the Appellant and it was not a merger of Abhijeet Ltd. and Corporate Ltd with the Appellant. The Demerged Companies, namely Abhijeet Ltd. and Corporate Ltd., continue to operate as going concerns. Thus, the liabilities of Abhijeet Ltd. and Corporate Ltd. could not have been fastened upon the Appellant. However, even if it is assumed that BAS was provided, then too only Abhijeet Ltd. and Corporate Ltd. were liable to pay service tax and not the Power Plants and Sponge Iron Plants, which constituted the Demerged Undertakings and which alone stood merged with the Appellant. Even in such a situation, it is doubtful whether the Appellant could be held to be liable for discharge service tax liability of the Demerged Undertakings . The show cause notice could have been issued to Abhijeet Ltd. and Corporate Ltd. and not to the appellant, which is a service recipient and not a person liable to pay service tax under section 68 of the Finance Act. Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (12) TMI 1056
Valuation - inclusion of Freight charges in the assessable value - place of removal - premises of the buyers - appellant paid duty on the assessable value without including the value of freight, as according to the appellant, freight was incurred beyond the place of removal which is the factory gate of the appellant - HELD THAT:- The sale invoices raised by the appellant clearly mentioned at serial number 4 that our responsibility ceases when goods leave factory . Rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 also provides that the cost of transportation from the place of removal to the place of delivery is not includable in the assessable value. The cost of transportation has also been separately mentioned in invoices and this cost is paid by the buyer. It is, therefore, evident that the factory gate is the place of removal and duty is charged at the price of the goods charged at the factory gate. Merely, because the payment of transit insurance has been made by the appellant would not mean that the place of removal would be the place of the buyer - the payment of transit insurance by the appellant is not a decisive factor for determining the place of removal. The Supreme Court in COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. [ 2015 (10) TMI 613 - SUPREME COURT] considered this situation in detail. According to the Department, the said Industry evaded Central Excise duty by mis-declaring that the factory gate was the place of removal and not the buyer's premises and, consequently, the freight charges were required to be added in determining the assessable value. The Commissioner held that the premises of the customer was actually the place of removal and not the factory gate of the Industry. In regard to the payment made by the appellant to the buyer for any transit loss, the appellant has submitted that such charges were paid only in cases where the transit loss was more than 30 kg and even these cases, the charges were recovered from the transporters. The Commissioner (Appeals) was not justified in holding that the value of freight charges was required to be added in the assessable value of the goods - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (12) TMI 1080
Refund of excess tax paid - petitioner submitted that the Assessing Officer could not have adjusted the refund claims of the petitioner against future assessments - HELD THAT:- The Assessing Officer committed a serious error in providing for adjustment of the excess tax against the demands for the later years. We may recall, while framing fresh assessments, the Assessing Officer found that the petitioner had paid certain excess tax in two of the four years concerned. In the other two years, where the tax was payable he raised a demand and we are told that such tax was also paid by the petitioner. For the years 2009-2010 and 2010-11, therefore, where the petitioner had admittedly suffered excess tax deduction at source as compared to his tax liability and thereafter deposited further amounts by way of pre-deposit for maintaining his revision petitions, he was entitled to refund thereof. Under sub-section (1) of Section 43 of Tripura Value Added Tax Act 2004, the Commissioner would refund to a dealer the amount of tax, penalty or interest, if any, paid by such dealer in excess of the amount due from him. Section 45 provides for payment of interest if the refund is not made within the time prescribed. Sub Section (1) of Section 46 provides that where an order giving rise to refund is subject matter of an appeal or further proceeding or where any other proceeding under the Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue and it may not be possible to recover the amount later, the Commissioner may withhold the refund till such time as he may determine. It is true that the TVAT Rules provide for a mechanism for grant of refund. In particular, Rule 35 requires the registered dealer to file a refund application before the concerned authority in prescribed manner. sub-rule (4) of Rule 35 prescribes a time limit for making such an application for refund. However, in the present case, the Assessing Officer himself while framing fresh assessments had declared that the petitioner shall not be granted refund but the excess tax collected would be adjusted against the future assessments. Till this order was set aside, therefore, the petitioner had no occasion to file refund claim. Any such refund application filed under Rule 35 of the TVAT Rules would have been summarily dismissed. The portion of the order dated 16th December, 2015 passed by the Assessing Officer providing for adjustment of the excess tax to be adjusted for future assessment is set aside. However, if by virtue of the operation of the said order for any future liability such excess tax or any part thereof is already adjusted, the question of refund at this stage will not arise - The authority shall verify the petitioner s claim that for future years, he had no further tax liability and refund such excess tax with statutory interest which may not have been adjusted against the future liability of the petitioner. This exercise shall be completed within 3(three) months from today. Petition disposed off.
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Wealth tax
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2020 (12) TMI 1059
Wealth tax assessment - whether property was let out and rental income was shown in the income tax returns filed for the relevant assessment years or not? - claim of the assessee that none of the assets are coming within the meaning of assets as defined u/s.2(ea) of the Wealth Tax Act, 1957, therefore, one more opportunity of hearing may be given to the assessee to go before the Assessing Officer to explain with necessary evidence and prove that assets are not coming within the ambit of Wealth Tax Act - HELD THAT:- As considered the arguments of the assessee in light of the fact that the learned CWT(A) has decided the appeals without waiting for remand report called for from the Assessing Officer despite the fact that he himself has called for remand report regarding certain additional evidences filed by the assesse. Therefore, we are of the considered view that appeals filed by the assessee needs to go back to the file of the Assessing Officer to re-verify the averments made by the assessee in light of various evidences and to decide whether those assets are coming within the meaning of asset as defined u/s.2(ea) of the Wealth Tax Act, 1957. Hence, we set aside both the appeals filed by the assessee to the file of the Assessing Officer and direct him to redo the assessment after considering various evidences filed by the assessee.
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Indian Laws
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2020 (12) TMI 1077
Dishonor of Cheque - insufficiency of funds - Sections 138 read with 142 of the Negotiable Instruments Act, 1881 - vicarious liability on the part of the accused - legally enforceable debt or not - HELD THAT:- It is not in dispute that the petitioner/A3 was a Director of A1 company and in the complaint lodged by the respondent except mentioning the magical word that the accused are incharge of the management and affairs of the company, there is nothing more. This Court finds that there is no factual averments to show how the petitioner is responsible for the business and conduct of A1 company to invoke provision under Section 141 of the Negotiable Instruments Act - Further, the petitioner/A3 is no more Director of the A1 company on the date of cheque i.e., on 07.09.2012, since she resigned from the company on 10.10.2011. In support of the contention, the petitioner produced Form 32 to that effect, which is at page No.6 of the typed set. The petitioner is a lady. Petition allowed.
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2020 (12) TMI 1076
Dishonor of Cheque - It is contended by the petitioner's counsel that as per section 148 of the Negotiable Instruments Act, which came into force on 01.09.2018, by virtue of the Amendment Act 20 of 2018, the appellate court is competent to direct the petitioner only to deposit such sum which shall be a minimum of 20% of the fine or compensation awarded by the trial court - section 148 of the Negotiable Instruments Act - HELD THAT:- On a reading of section 148 of the Negotiable Instruments Act, it is evident that pending appeal, the appellate court is competent to direct the appellant/accused to deposit such sum which shall be a minimum of 20% of the fine or compensation awarded by the trial court. In such view of the matter, the impugned order passed by the Court below directing the petitioner/accused to deposit 20% of the cheque amount is found to be erroneous and liable to be setaside, particularly when the petitioner/accused has been directed by the trial court to pay only a fine of ₹ 10,000/- alone and also to undergo simple imprisonment for one year. The impugned order is set aside - Petition disposed off.
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2020 (12) TMI 1075
Dishonor of Cheque - insufficiency of funds - Petitioner borrowed the money from the advocate - only point raised by the learned counsel appearing for the petitioner is that the respondent is being an Advocate, he ought not to have do the business of money lending - Section 138 of Negotiable Instruments Act - HELD THAT:- Hon'ble Supreme Court of India in V.C. RANGADURAI VERSUS D. GOPALAN AND ORS [ 1978 (10) TMI 155 - SUPREME COURT] held that the action of Advocate is against public policy and an act of professional misconduct. The proceedings under his complaint is felt to be abuse of process of law and have to be quashed. In the case on hand, when there is a specific bar for doing money lending business that too with his own client, the act of the respondent is amount to professional misconduct. Therefore, the entire proceedings initiated as against the petitioner is nothing but clear abuse of process of law and the complaint itself is liable to be quashed. Petition allowed.
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2020 (12) TMI 1074
Dishonor of cheque - Section 138 of Negotiable Instruments Act - case of petitioner is that the respondent and his brother cheated the petitioner to the tune of ₹ 7 lakhs and also misused the cheque issued by the petitioner herein and filed false case as against him with concocted stories - HELD THAT:- The proceedings under his complaint is felt to be abuse of process of law and have to be quashed. In the case on hand, when there is a specific bar for doing money lending business that too with his own client, the act of the respondent is amount to professional misconduct. Therefore, the entire proceedings initiated as against the petitioner is nothing but clear abuse of process of law and the complaint itself is liable to be quashed. In the judgment of the Hon'ble Supreme Court of India in M/S BRIDGESTONE INDIA PVT. LTD. VERSUS INDERPAL SINGH [ 2015 (12) TMI 777 - SUPREME COURT ] held that the place where the cheque is delivered for collection i.e., the branch of the payee or holder in due course, where the drawee maintains an account, would be determinative of the place of territorial jurisdiction. Accordingly, the respondent ought to have filed the complaint within the jurisdiction of Indian Bank, High Court branch. Therefore, on this ground also the complaint cannot be sustained as against the petitioner. Petition allowed.
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