Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 29, 2021
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Central Excise
Indian Laws
Articles
News
Notifications
GST - States
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AE-I/DT&T/2021-22/13 - dated
21-12-2021
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Delhi SGST
Commissioner, State Tax confer powers under section 69, section 70, section 71, section 73 & section 74 of the DGST Act 2017, Jurisdictional Officer
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AE-I/DT&T/2021-22/12 - dated
17-12-2021
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Delhi SGST
Commissioner, State Tax confer powers under section 69, section 70, section 71, section 73 & section 74 of the DGST Act 2017, Jurisdictional Officer
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S.O. 129/P.A.5/2017/S.128/Amd./2021 - dated
12-11-2021
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Punjab SGST
Amendment in Notification No. S.O.13/P.A.5/2017/S.128/ 2018, dated the 27th February, 2018
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S.O. 128/P.A.5/2017/Ss.50 and 148/Amd./2021 - dated
12-11-2021
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Punjab SGST
Amendment in Notification No. S.O.24 /P.A.5/2017/Ss.50, 54 and 56/ 2017, dated the 30th June, 2017
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927/2021/16(120)/XXVII(8)/2021/CTR-10 - dated
10-12-2021
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Uttarakhand SGST
Amendment in Notification No. 526/2017/9(120)/XXVII(8)/2017 dated the 29th June, 2017.(Insertion of entry 3A)
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923/2021/16(120)/XXVII(8)/2021/CTR-06 - dated
10-12-2021
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Uttarakhand SGST
Amendment in Notification No. 525/2017/9(120)/XXVII(8)/2017 dated the 29th June 2017
Income Tax
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138/2021 - dated
27-12-2021
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IT
Income-tax (34th Amendment) Rules, 2021. - Computation of exempt income of specified fund for the purposes of clause (23FF) of section 10
Highlights / Catch Notes
GST
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Seeking grant of bail - only allegation against the petitioner is that the principal accused used the address of the premises where the business of the petitioner is situated - petitioner submits that the petitioner does not have any connection with main accused - Bail granted - HC
Income Tax
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TDS credit - AO did not allow the TDS credit on the ground that the corresponding income of this TDS has not been offered to tax by the assessee as it was not received during the impugned assessment year - assessee would be entitled to credit of the entire TDS offered as income in the year of deduction. We hold that the Ld. CIT(A) is not justified in denying the credit of TDS. - AT
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Validity of assessment u/s 153A - Non issuance of notice U/s 143(2) - Protective assessment - the assessment has been made on a protective basis, but, it is not clear whether any assessment has been framed in substantive basis in case of other/s - when the assessments in other/s assessee’s cases are not framed on substantive basis, how the protective assessment can be framed in the case of the assessee on hand. Therefore, in our considered opinion, the assessment framed on protective basis in the case of the assessee does not stand in the eyes of law. - AT
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Assessment u/s 153A - Addition u/s 68 - Unsecured cash credits - documentary evidences on record have not been rebutted by the A.O. through any evidence or material on record. No independent enquiry has been made against these documentary evidences except issuing notices under section 133(6), which were also replied by the subscribing companies. Therefore, such documentary evidences clearly support the explanation of assessee that investments made in the assessee companies are genuine. - AT
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Revision u/s 263 by CIT - Addition u/s 68 - scope of section 147 - unsecured creditors - The assessee, situated in Aurangabad, received loans running into crores from certain companies based in Kolkata or Mumbai, that were neither in the financing business nor had any past business dealings with the assessee. No question was asked by the AO as to how the assessee came into contact with them, the answer to which was neither given to the ld. PCIT nor has it come up before the Tribunal. - there was utter failure on the part of the AO to conduct enquiry in respect of huge loans received by the assessee from various parties thereby rendering the assessment order erroneous and prejudicial to the interest of the Revenue justifying the exercise of revisionary power u/s 263 of the Act. - AT
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Claim of deduction u/s. 35AD by stating that the appellant did not build the hotel building - Once deduction u/s.35AD of the Act is claimed then by virtue of section 35AD(4) of the Act, no other deduction in respect of these expenditure shall be allowed as deduction - the beneficial provisions of the Act and our observations mentioned herein above in the instant case before us the assessee is entitled for the benefit of deduction u/s. 35AD towards the expenditure incurred by it for establishing its hotel business of specified category as provided under the Act - AT
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Penalty u/s.271D & 271E - Period of limitation for imposing penalty u/s 275(1)(c) - he discussion by the AO in the assessment order and making reference to the Addl. CIT for imposition of penalty under section 271D or 271E of the Act, constitutes initiation for action for imposition of penalty and that is the date which should be reckoned for the purpose of limitation as specified in clause (c) of section 275(1) of the Act. - AT
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Computation of capital gains on the constructed area falling into assessee's share as per JDA - acted constructed are cannot be determined, as they are non-existent as on the date of entering into JDA and the constructed area that accrues to assessee in the future cannot be predicted. Therefore such constructed area cannot be brought to tax during the year under consideration. For the year under consideration except for the plans having prepared no activity in respect of the development has been completed. There is nothing on record brought by the Ld. AO to show that there was development activity in the land under consideration during the year under consideration, and the cost of construction incurred by the developer was merely an assumption by Ld. AO. - AT
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TP Adjustment - Disallowance of expenditure u/s 40(a)(ia) - any expenditure not for the purpose of business, the A.O. can certainly re-characterize the same as not allowable expenditure u/s 37 - as mentioned earlier, the A.O. nor DRP has not examined whether the said expenditure is allowable business expenditure u/s 37 - A.O. held that provision disallowed by the assessee u/s 40(a)(ia) of the Act cannot be allowed as deduction in the subsequent assessment year, since, the expenditure does not pertain to the subsequent year. DRP did not adjudicate the issue by observing that there is no variation to the returned income on this count. Therefore, the matter needs to be reconsidered by the AO afresh. - AT
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Computation of capital gain - determination of deemed sale consideration under section 50C - CIT(A) accepted contentions of the assessee - part payment makes it clear that a valid agreement to sell was executed. Between the date of agreement vis-à-vis ultimate registration of sale deed, the State Government has revised valuation of the property for the purpose of charging stamp duty. This case of the assessee do fall within the first proviso of section 50C of the Act, and this aspect has been dealt with by the ld.CIT(A) elaborately - AT
Customs
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Rejection of request of provisional release of the goods - import of Black Pepper - prohibited goods or not - The appellant would remit the entire duty if not remitted already and furnish the bond to the satisfaction of the respondents in regard to the interest payable, penalty or charges that may be deemed necessary. - The condition imposed by the Writ Court is modified regarding to furnish bank guarantee to furnish a bond to the same value. - HC
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Maintainability of appeal - Jurisdiction of HC to entertain an appeal against the order of CESTAT - foreign-going vessel or not - No decision on the point of foreign-going vessels having precedential value has been brought to our notice - The questions formulated by the appellant or such other questions that may be formulated by this Court under Section 130(3) of the Act, hear the parties and dispose of the appeal. We have taken sufficient care to hear and not advert to any of the circumstances in issue on the main question between the parties, and even reference is made in this order, the same is for the limited purpose of finding out whether this Court ought to proceed with hearing the appeal on merits or not. The question of limitation may also be one of the questions the Court may consider while disposing of the appeal. - HC
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Valuation of imported goods - payment for the services, sought to be included - The payment for the services, sought to be included by customs authorities in the assessable value of ‘reactor set’, became due well after the import and the obligation for providing the ‘technical knowhow’ and ‘technical assistance’ – the services in question – was contingent upon ‘certificate of conformity’ with the basic engineering package - None of these facts find fitment within the scheme of taxing of services rendered by an overseas provider at the rate of duty for assessment of imported goods as intended by rule 9 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 set out. - AT
Indian Laws
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Dishonor of Cheque - insufficiency of funds - Applying the ratio decidendi of Damodar S.Prabhu and the guidelines framed therein, on the strength of compromise arrived at between petitioner and the complainant, It is felt persuaded to exercise revisional jurisdiction for doing real and substantial justice in the matter for the administration of which alone the Courts exist. - Compounding of offence under Section 138 of the Act, obviously, entails acquittal of the petitioner - HC
PMLA
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Seeking grant of Bail - Smuggling - rule of presumption of innocence - Section 45(1) of the PML Act - It is a matter of great concern that the Petitioner has been in detention for more than 8 years as on today, however, the trial in the instant case has not yet been commenced. The longevity of detention of the under-trial prisoners without commencement of trial defeats the very purpose of Criminal Justice System. - HC
Central Excise
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Recovery of CENVAT Credit - fraudulent availment of CENVAT Credit - Merely because the company issuing invoice was found non-existent, the appellant could not be denied the availment of Cenvat Credit thereupon unless and until his involvement in terms of his knowledge about such non-existence and about the invoice to be bogus is not proved on record. Otherwise also there is no denial that the appellant has cleared his final product on payment of duty. - Once assessee is found to have acted with all reasonable diligence in its dealings within the meaning of Rule 9 (3) of Cenvat Credit Rules, 2004 will amount to casting an impossible or impractical burden on the assessee and same would be contrary to the rules. - AT
Case Laws:
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GST
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2021 (12) TMI 1184
Seeking grant of bail - only allegation against the petitioner is that the principal accused used the address of the premises where the business of the petitioner is situated - petitioner submits that the petitioner does not have any connection with M/s. Balaji Enterprises - HELD THAT:- On consideration of the submissions advanced by the learned counsel for the respective parties coupled with the period of custody undergone by the petitioner which is since 19.01.2021, the petitioner is directed to be released on bail on furnishing bail bond of ₹ 10,000/- with two sureties of the like amount each, to the satisfaction of learned Chief Judicial Magistrate, Chaibasa. Bail granted - application allowed.
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Income Tax
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2021 (12) TMI 1183
Reopening of assessment u/s 147 - correct head of income - non-compete fees receipt - Notice after expiry of 4 years from the end of relevant assessment year on the ground of escapement of income chargeable to tax on the non-compete fees in question by contending that it was taxable as business income under Section 28 (V-A) of the Act instead of income under the head capital gain - HELD THAT:- In the facts and circumstances of the case assumption of jurisdiction under Section 147 by the respondent/AO and issuance of impugned notice under Section 148 of the said Act after the expiry of 4 years from the end of the relevant assessment year 2012-13 is bad and not tenable in the eye of law in view of non-fulfilment of criteria under the first proviso to Section 147 of the Act and in view of the fact that the respondent Assessing Officer could not establish from record that there was any omission or failure on the part of the assessee petitioner in disclosing fully and truly all relevant material facts necessary in course of scrutiny assessment under Section 143 (3) of the Income Tax Act, 1961. In the facts and circumstances of the case invoking of provision of Section 147 read with Section 148 of the Act by the Assessing Officer for reopening the assessment of the assessee on the self-same material which were very much available to the Assessing Officer at the time of scrutiny assessment under Section 143 (3) of the Income Tax Act, 1961 is not justified by taking a view different from his predecessor who had already allowed to tax the nom-compete fees in question as Long Term Capital Gain in scrutiny assessment and by taking a view that the same should be treated as income from business under Section 28 (V-A) of the Income Tax Act, 1961 instead of Long Term Capital Gain. In the facts and in the circumstances of the case the respondent assessing authority is legally not justified in reopening the assessment in question under Section 147 of the Income Tax Act, 1961 by ignoring the fact that non-compete fees in question had already been treated and taxed as capital gains by the Assessing Officer during the scrutiny assessment proceedings under Section 143 (3) of the Act by accepting the claim of the petitioner after examining, verifying and scrutinising all the facts, relevant documents, details and particulars which were requisitioned by the assessing officer in course of scrutiny assessment and which are matters of records. In the facts and in the circumstances of the case reopening of assessment by invoking Section 147 and issuance of notice under Section 148 of the Income Tax Act, 1961, after expiry of 4 years from the end of relevant assessment year on the basis of information received from investigation wing which are nothing new and are the same material which were already available before the Assessing Officer and were considered at the time of scrutiny assessment under Section 143 (3) of the Act, and taking a different view on the self-same material is a mere change of opinion. - Decided in favour of assessee.
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2021 (12) TMI 1182
Validity of Reopening of assessment u/s 147 - income chargeable to tax of the Corporate Debtor has escaped assessment - notice under Section 148 to a Corporate Debtor, calling upon it to submit a return in the prescribed form for the assessment year falling prior to the date of approval of Resolution Plan under Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Once the public announcement is made under the IBC by the Resolution Professional calling upon all concerned, including the statutory bodies, to raise claim, it would be expected from all the stakeholders to diligently raise their claim. The Income Tax authorities in that sense, ought to have been diligent to verify the previous years assessment of the Corporate Debtor as permissible under the law and to raise the claim in the prescribed form within time before the Resolution Professional. In the present case, the Income Tax Authorities failed to do so and therefore, the claim stood extinguished. As stated earlier, there could be a contingency where statuary claim is raised after the approval of the Resolution Plan, owing to receipt of information of the Corporate Debtor having suppressed certain facts while filing returns of the previous years, which then could not be a part of the Resolution Plan. To counter such a situation, the statutory authorities will have to explore the possibility of raising such claims before the Resolution Professional or Adjudicating Authority, as the case may be, by requesting to make certain provisions for payment of statutory claims in the Resolution Plan. Whether to accept such claim is a matter that should be left to the COC, the Resolution Professional or the Adjudicating Authority. However, in absence of any such claim having been made and dealt with by the Resolution Professional and in absence of any provision to settle such claim in the Resolution Plan, such claim could not be raised subsequently. In that sense, the Petitioner is correct in contending that the impugned notice could not have been issued by the Assessing Officer. We did not come across any such provision under the Income Tax Act, 1961 nor did the parties before us informed of its existence. We, accordingly, record our answer in the negative to the question framed. Objection of maintainability of the petition - As decided in Ghanashyam Mishra s case [ 2021 (4) TMI 613 - SUPREME COURT] the alternate remedy would not operate as a bar for invoking jurisdiction under Article 226 of the Constitution of India in at least three contingencies, namely, (1) where the writ petition has been filed for the enforcement of any of the Fundamental Rights; (2) where there has been a violation of the principle of natural justice; and (3) where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. We find that the impugned notice falls under category 3 above. Accordingly, the preliminary objection is rejected.Both the Petitions are allowed. The impugned notices dated 25.03.2021 and 24.03.2021 are hereby quashed and set aside. - Decided in favour of assessee.
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2021 (12) TMI 1181
TDS credit - AO did not allow the TDS credit on the ground that the corresponding income of this TDS has not been offered to tax by the assessee as it was not received during the impugned assessment year - assessee during the impugned assessment year has adopted cash method of accounting - HELD THAT:- We find an identical issue had come-up before the Coordinate Bench of the Tribunal in the case of Chander Shekhar Aggarwal [ 2016 (2) TMI 420 - ITAT DELHI] wherein the Tribunal after considering the identical set of facts has held that assessee would be entitled to credit of the entire TDS offered as income in the year of deduction. We hold that the Ld. CIT(A) is not justified in denying the credit of TDS. Accordingly, order of the Ld. CIT(A) is set aside and the AO is directed to allow the credit of TDS - Decided in favour of assessee.
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2021 (12) TMI 1180
Disallowance with respect to loan advanced by assessee written off and claimed as business loss - CIT(A), who confirmed the disallowance holding that same is neither allowable under section 37(1) or under section 36(1)(vii) or under section 36(2) - HELD THAT:- We find that for assessment year 2014-15, the assessee has earned no interest from private parties and the assessee only earned the interest from bank FDRs. Therefore, if the statement of the partner is looked into with respect to the activities of the assessee for assessment year 2014-15, the facts are stated correctly. However, the partner was fully aware about the loan given and the amount repaid by the borrower. This is demonstrated from answers to questions - such as ledger account of the borrower showing advances of ₹ 10 crores, proof of earning interest income, repayment of sum , outstanding remaining of ₹ 2 Crores, such sum being written off in the books of accounts, object of the partnership deed and past assessment records of the assessee, merely using the statement of the partner against the assessee for disallowance of the above loss is not justified. Merely because the borrower is a related party and in which the partners of the assessee firm are interest, cannot be the reason for disallowance of the above loss. As the assessee has satisfied all the conditions of section 36(1)(vii) read with section 36(2) of the Act, the claim of the assessee is allowable. In the result, we reverse the orders of the lower authorities and direct the assessing officer to delete the above disallowance. Erroneous set off of business loss against the capital gains rather than against the business income of the year - As per the assessment order, the long term capital gain of the assessee is ₹ 5,48,65,125/-. However, as per the income-tax computation form, the learned assessing officer has taken long term capital gain of ₹ 4,56,01,325/- . Thus, the total income remains same at ₹ 6,56,01,325/- but the figure of the long term capital gain has been changed by the assessing officer in the income-tax computation form. Thus, we direct the learned assessing officer to correctly compute the income-tax computation by taking the long term capital gain at ₹ 5,48,65,125/- only. Accordingly, ground 2 of the appeal of the assessee is allowed.
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2021 (12) TMI 1179
Validity of assessment u/s 153A - Non issuance of notice U/s 143(2) - Protective assessment - HELD THAT:- AO has not issued a notice u/s 143(2) and even the ld. D.R. also could not bring on record any copy of the notice issued by the assessing officer or any proof of service of notice u/s 143(2) of the Income Tax Act, 1961 as mentioned above. The provisions of section 292BB also do not support the revenue because in the impugned case there is no documentary evidence to show that there was a notice issued U/s 143(2) - Even in the assessment order, the AO has mentioned the notice has been issued before filling of the return of income. We observe from the assessment order the assessment has been made on a protective basis, but, it is not clear whether any assessment has been framed in substantive basis in case of other/s - when the assessments in other/s assessee s cases are not framed on substantive basis, how the protective assessment can be framed in the case of the assessee on hand. Therefore, in our considered opinion, the assessment framed on protective basis in the case of the assessee does not stand in the eyes of law.
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2021 (12) TMI 1178
Assessment u/s 153A - Addition u/s 68 - Unsecured cash credits - Assessment against concluded assessments - HELD THAT:- As concluded assessments cannot be interfered with unless there is incriminating material discovered from the seized documents as a result of search and further, no additions can be made where the assessments are framed u/s.153A for unabated year i.e. where no assessment is pending. The seized documents must at least clearly point out that there is some undisclosed income, which here in this case is completely absent, as is discussed above, and thus, are not in the nature of incriminating material so as to warrant any addition. Submissions made by ld. CIT-DR, regarding seized documents having bearing on total income becoming incriminating documents automatically, we are not impressed with the arguments of Ld CIT DR, as the same goes contrary to the judgments of jurisdictional high court as cited above. And further, with reference to the order of assessment or even going by the order of learned CIT (A), the learned CIT DR was not able to point out any single document which was not disclosed by assessee prior to search proceedings and neither the judgments so relied by counsel of assessee were rebutted or contradicted by learned CIT DR. We have no hesitation to hold that firstly, none of the documents mentioned in the order of assessment more specifically the copy of flowchart, email and share certificates are incriminating in nature out of which any adverse inference can be drawn as to any undisclosed income, relating to assessee-company have been unearthed during the course of search and; since, the impugned assessment year from 2008-09 to 2011-12 were not pending, as the assessment stood completed prior to the date of search, therefore, we hold that without any incriminating material, concluded assessments cannot be tinkered with and no addition can be made without there being any incriminating material for the impugned assessment year. Accordingly, we hold that the additions made by the Assessing Officer are beyond the scope of Section 153A. - Decided in favour of assessee. Addition u/s 68 - HELD THAT:- AO in the order of assessment has relied on report and observations of the Investigation wing, which otherwise does not implicate any of the assessees, whereas, no concrete enquiry or investigation had been carried out by the assessing officer in the order of assessment to dislodge the explanation or rebut the documentary evidence placed and recorded by AO - Thus, when no appropriate investigation has been carried out by the AO and as such the burden which lay upon the learned A.O. has not been discharged, the addition so made is unsustainable and deserves to be deleted. We have also noticed that that the Revenue has failed to controvert the findings so recorded by learned CIT (A) which is based on documentary evidences as have been discussed above, wherein, substantial relief on merits was provided to assessee by CIT (A). Thus, documentary evidences on record have not been rebutted by the A.O. through any evidence or material on record. No independent enquiry has been made against these documentary evidences except issuing notices under section 133(6), which were also replied by the subscribing companies. Therefore, such documentary evidences clearly support the explanation of assessee that investments made in the assessee companies are genuine. The assessee apart from submitting the various documents related to receipt of share capital and share premium as listed hereinabove, also furnished the workings for share valuations using discounted cash flow method and furnished explanation for issuing shares at a premium taking into account the future growth in the business of the assessee and also considering the future prospects of the assessee business coupled with the fact entire group had a turnover of over ₹ 2500 crores in financial year 2014-15. - Decided in favour of assessee.
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2021 (12) TMI 1177
Net profit estimation - assessee is agitating for the higher net profit rate applied by the ld. CIT(A) ignoring past net profit track of the assessee - HELD THAT:- Respectfully following the decision of this Tribunal in the case of M/s B.B.C. Project Services Pvt. Ltd [ 2018 (11) TMI 1884 - ITAT KOLKATA] consistent business of contract work carried out by the assessee and the net profit rate offered in the financial statements and being fair to both the parties are of the view that application of net profit rate of 0.6% on the turnover of contract business during the year i.e. ₹ 87.46 Cr. will meet the end to justice. We accordingly order so and direct the revenue to compute the net profit for the year @ 0.6%. We further make it clear that this net profit rate of 0.6% will take care of all the business expenses including interest and depreciation incurred for the purpose of running contract business and related to the turnover of ₹ 87.46 cr. Accordingly assessee will get part relief on this common issue and revenue fails to succeed. Ground No.1 of the assessee s appeal for A.Y. 2012-13 is partly allowed. Addition for sale of immovable property - HELD THAT:- We find merit in the contentions of the assessee that the alleged amount of sale consideration of ₹ 2,81,70,890/- is just one of the many transactions of sale of property executed by the assessee on behalf of the purchaser and the income earned by the assessee from such transactions of purchase/sale carried out in past as well as in the year under appeal have been routed through its books of account and the commission income earned from such transactions have been duly disclosed in the financial statements and offered to tax. We, therefore, set aside the finding of ld. CIT(A) and delete the addition made by the Ld. AO. Thus, ground no.2 raised by the assessee is allowed. Unexplained cash deposit - HELD THAT:- As assessee has made general submissions that this cash deposited in the bank are out of the business receipts but no such evidence in the form of extract of the cash book of the relevant date has been filed so as to make possible for us examine this fact that whether the assessee had sufficient cash in hands in the books as on the date of deposit of the alleged amount with the HDFC Bank. In lack of necessary evidences, we find no merit in this ground raised by the assessee
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2021 (12) TMI 1176
Revision u/s 263 by CIT - Addition u/s 68 - scope of section 147 - unsecured creditors - no enquiry or inadequate enquiry - HELD THAT:- The opening part of section 147 categorically provides that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section. Thus, it is evident that section 147 duly empowers the AO to make addition on any other income chargeable to tax which escaped the assessment and comes to his notice during the reassessment proceedings, in addition to the point(s) on which the re-assessment was initiated. Turning to the facts of the instant case, we find that though the AO initiated reassessment for denial of deduction u/s.80G, but he did initiate enquiry on receipt of unsecured loans for which the assessee also furnished certain details as discussed above. In that view of the matter, it cannot be said that the ld. PCIT travelled outside the assessment order passed u/s 147 of the Act, which vitiated the revisionary order. The assessee, situated in Aurangabad, received loans running into crores from certain companies based in Kolkata or Mumbai, that were neither in the financing business nor had any past business dealings with the assessee. No question was asked by the AO as to how the assessee came into contact with them, the answer to which was neither given to the ld. PCIT nor has it come up before the Tribunal. AO issued notice u/s 133(6) to such parties. Most of them did not respond and the AO chose to accept the genuineness of the loan creditors without proceeding further as per law, rather, by recording to the contrary in the assessment order.Most of the companies which replied and filed their Balance sheets etc. had shown to have received huge share premium on issue of share capital without any justifiable valuation. Such companies had declared nominal profit running into thousands or a few lakhs, but the share premium was in crores. These companies were prima facie shell or penny stock companies. AO kept the information received on record without blinking. Four Kolkata based companies who allegedly advanced identical loans of ₹ 25.00 lac each had same address and the AO did not consider it expedient to inquire further.No interest was paid to some of the unsecured loans despite no prior business. We are fully satisfied that there was utter failure on the part of the AO to conduct enquiry in respect of huge loans received by the assessee from various parties thereby rendering the assessment order erroneous and prejudicial to the interest of the Revenue justifying the exercise of revisionary power u/s 263 of the Act. Once it is held that the AO failed to apply his mind to the issue of unsecured loans which ought to have been done in the facts and circumstances of the case thereby rendering the assessment order erroneous and prejudicial to the interest of the revenue, the sequitur is that the exercise of revisionary power gets justified. As can be seen, that the ld. PCIT did not enhance the assessment on any issue but simply restored the matter to the file of the AO: ` with a direction that the assessment order should be reframed as per the provisions of law after considering proper facts and submissions of the assessee and also for necessary verification in the light of the observations made above, after affording proper opportunity to the assessee . If the assessee has an explainable case on the issues taken note of by the ld. PCIT, it can put forth the same before him in the course of proceedings giving effect to the order passed u/s 263. - Decided against assessee.
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2021 (12) TMI 1175
Claim of deduction u/s. 35AD by stating that the appellant did not build the hotel building - HELD THAT:- Provisions of section 35AD of the Act does not specify that the assessee has to construct the entire building by itself or own the building and land. The provisions only specify that the specified business should be in the nature of building and operating a new hotel of 2 star or above category as classified by the Central Government - there is no doubt that the entire investment made by the assessee was for constructing a portion of the building and for operating a new hotel of the category specified under the Act - from the provisions of section 35AD it is obvious that these provisions are brought into the Act in order to promote certain specified business in the country. These provisions grant deduction to the assessee in respect of the entire capital expenditure incurred wholly and exclusively for the purpose of the specified business which has commenced during the previous year. Even otherwise, by virtue of section 32 of the Act, the assessee is entitled for deduction towards such expenditures u/s.32 of the Act by way of depreciation over a period of time. There is no loss to the revenue when the whole issue is viewed in its entirety, because when the assessee derives the benefit of Section 35AD of the Act it saves payment of tax in the initial years but in the subsequent years ends up paying higher tax as it is deprived of the benefit of depreciation u/s. 32 of the Act. Provisions of section 35AD of the Act, only helps the assessee to maintain higher cash liquidity during the initial years of its business. Once deduction u/s.35AD of the Act is claimed then by virtue of section 35AD(4) of the Act, no other deduction in respect of these expenditure shall be allowed as deduction - the beneficial provisions of the Act and our observations mentioned herein above in the instant case before us the assessee is entitled for the benefit of deduction u/s. 35AD towards the expenditure incurred by it for establishing its hotel business of specified category as provided under the Act - we hereby direct the Ld. AO to grant deduction to the assessee under the provisions of section 35AD - Appeal of the assessee is allowed.
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2021 (12) TMI 1174
Penalty u/s.271D 271E - Accepting and repayment of loan / deposits through journal entries - Period of limitation for imposing penalty u/s 275(1)(c) - assessee has accepted loans / deposits from various sister concerns through journal entries and had repaid loans to various sister concerns through journal entries as according to ld. DCIT, the same were in violation of provisions of Section 269SS and 269T - proof of reasonable cause‟ in Section 273B for non-imposition of penalty under section 271E - HELD THAT:- Journal entries which had been passed by the assessee company in its books for mutual extinguishment of liabilities between various entities and assignment of debts / receivables from one entity to another entity would not be hit by the provisions of Section 269SS and 269T of the Act as there is sufficient reasonable cause for the same within the meaning of section 273B of the Act. We find that the ledger accounts produced by the assessee before the ld. AO in the quantum assessment proceedings and before the ld. Addl. CIT during the penalty proceedings had not raised any doubt in respect of genuineness of the transactions and the transactions being entered into in the normal course of business of the assessee. Hence, it could be safely concluded that those entries were passed out of business exigencies with bonafide belief that they are not in contravention of provisions of Section 269SS and 269T of the Act. It is a well known fact that concealment should always be established and could never be presumed. Assessee was under a bonafide belief that passing of journal entries do not violate provisions of law. This is established by the fact that (i) the plea was taken before the ld. AO in the first instance itself ; (ii) this has not been disbelieved by the ld. AO ; and (iii) the assessee group has a common set of accountants, chartered accountants and advisors. In the group cases, the Tribunal and Hon'ble High Court has accepted the explanation of bonafide belief of the assessee. With common set of people, it has to be held that the assessee was also under the same belief Thus we hold that the assessee had proper reasonable cause within the meaning of section 273B of the Act and hence the transactions passed through journal entries though would be hit by the provisions of sections 269SS and 269T of the Act, since reasonable cause is established in the instant case, the assessee company would get immunity from levy of penalty thereon. Accordingly, the grounds raised by the revenue are dismissed. Period of limitation for imposing penalty u/s 275(1)(c) - HELD THAT:- the discussion by the AO in the assessment order and making reference to the Addl. CIT for imposition of penalty under section 271D or 271E of the Act, constitutes initiation for action for imposition of penalty and that is the date which should be reckoned for the purpose of limitation as specified in clause (c) of section 275(1) of the Act. - a reference made by the AO to the Addl. CIT for initiation of penalty proceedings in the assessment order, by a preliminary act, constitutes action for imposition of penalty as contemplated in the provisions of section 275(1)(c) of the Act. Hence, the penalty orders passed by the Addl. CIT in all these cross objections are barred by limitation and accordingly, quashed.
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2021 (12) TMI 1173
Disallowance of administrative expenses - Expenses related to Business or to earn capital gain - JDA - CIT(A) based on disallowance made for assessment year 2009-10 being the immediately preceding assessment year and considering the fact that assessee executed JDA during the previous year relevant to assessment year under consideration, allowed expenditure of ₹ 15 lakh as sufficient for running the company - HELD THAT:- We note that in all the preceding assessment years a proportionate amount of expenditure was disallowed, which has not been contested by assessee before this Tribunal. Assessee has restrained from filing any appeal before this Tribunal in any of the preceding assessment years. Further assessee has placed in the paper book, the orders passed by 1st appellate for preceding assessment years. There is a categorical observation in all the preceding assessment years by the Ld. CIT(A) therein that, assessee had an increase in work in progress. On perusal of the balance sheet for year under consideration placed in the paper book, we note that, no work in progress is accounted for. Under such circumstances, we do not find any reason to allow entire administrative expenses claimed by assessee. Whatever has been allowed by the Ld. CIT(A) is justifiable. Addition of direct expenses - Whether payments were relating to transfer of capital asset? - HELD THAT:- Clause 3 of the memorandum allows assessee to undertake construction activities. Assessee used to have clubhouse business which could not run well in the past. Assessee had to shut down the business as there was a lull period. It was during this period that, the assessee entered into real estate construction. This led to the JDA with M/s. Palma Developers Ltd. The expenses incurred are towards development of the land as per JDA. Under such circumstances, in our view these expenses pertained to the activities carried on by assessee during the relevant period.Accordingly these expenses are to be allowed as business expenditure. Computation of capital gains on the constructed area falling into assessee's share as per JDA - CIT(A) treated the refundable deposit as non-refundable, for the purposes of capital gains - HELD THAT:- As on the factual findings in case of M/s. Plama Developers Ltd. that Ld. CIT(A) determined the consideration for transfer of land by assessee to be at ₹ 19.30 crores (16.30+3), during the assessment year 2010-11. Admittedly assessee has received ₹ 19.30 crores during the relevant year under consideration. There is nothing on record to establish that assessee received anything over and above ₹ 19.30 crores. We therefore do not find any infirmity in the observation of the Ld. CIT(A) in treating the money received by assessee to be ₹ 19.30 crore from the developer. Transfer of capital asset - analyse the JDA along with the power of attorney executed by assessee with M/s. Plama Developers Ltd. - By virtue of the terms and conditions mentioned in the agreements referred to herein above, transfer as contemplated under section 2(47)(v) of the Act had taken place during the relevant year under consideration. The land mentioned in the JDA was transferred as was the provisions of the said section and part performance was made by the developer by paying the consideration towards the transfer of the land. A reading of the JDA coupled with all the supplementary agreement entered into between the party subsequently shows that the owner has transferred the developers share in the land akin to ownership to the developer. Also a real income has arisen in the hands of assessee upon such transfer of developers share which is fortified by the subsequent sup supplementary JDA entered into between the parties in the year 2013. Even otherwise the nomenclature of the amount received by assessee during the year under consideration from the developer is non-refundable security deposit . Further it is more clear from the supplementary agreement entered into between the parties in the year 2013 that, upon completion of the construction the developer is only handing over the constructed premises to assessee. If one goes by the averments in the JDA and supplementary agreement the intention is very clear that the money received at the time of entering of JDA, automatically leads to the conclusion that it pertained to the transfer of rights and ownership of the developers share in the land. We are therefore unable to appreciate the arguments advanced by the Ld. AR under such peculiar facts that emanate from records that assessee had only granted right to enter the land for purposes of developing. Respectfully following the observation of Hon'ble Supreme Court in the case of CIT vs. Balbir Singh Maini [ 2017 (10) TMI 323 - SUPREME COURT] and TK. DAYALU [ 2012 (6) TMI 405 - KARNATAKA HIGH COURT] do not find any infirmity in the view taken by Ld. CIT(A). - Decided against assessee. Taxability of constructed area to be received by assessee - AO noted that assessee has not declared the capital gains of the constructed area that is receivable and therefore brought to tax by applying cost of construction at ₹ 1880/- per square feet as contemplated to be disclosed by M/s. Plama Developers Ltd - HELD THAT:- On perusal of various supplemental agreement entered into by assessee, there is a mention of additional FAR that may be available, the actual constructed area which will be handed over to the assessee by the developer is not known for the year under consideration. We therefore of the opinion that acted constructed are cannot be determined, as they are non-existent as on the date of entering into JDA and the constructed area that accrues to assessee in the future cannot be predicted. Therefore such constructed area cannot be brought to tax during the year under consideration. For the year under consideration except for the plans having prepared no activity in respect of the development has been completed. There is nothing on record brought by the Ld. AO to show that there was development activity in the land under consideration during the year under consideration, and the cost of construction incurred by the developer was merely an assumption by Ld. AO. Depreciation granted by Ld. CIT(A) on other assets at normal rates - HELD THAT:- In order that the assessee can be entitled to depreciation, assessee must carry on a business. It is not necessary that the business should in fact yield profits. The carrying on of a business may result in loss; but the particular activity carried on by the assessee must be such as must be calculated to yield profits. The test is not the actual making of the profits; the test is whether the nature of the activity is such as possibly to yield profits to the assessee. Where no business has been carried on by the assessee during the previous year, the assessee cannot claim depreciation. Admittedly, assessee did not carry on any business during the relevant financial year as observed by Ld. CIT(A) himself in para 6 of the impugned order. We therefore hold that the Ld. CIT(A) was wrong in granting depreciation in part to assessee.
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2021 (12) TMI 1172
Revision u/s 263 by CIT - Reopening of assessment u/s 147 - HELD THAT:- As per the ratio laid by the Hon'ble Bombay High Court in the case of Jet Airways India Pvt. Ltd. [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] and case of Ranbaxy Laboratories Ltd.[ 2011 (6) TMI 4 - DELHI HIGH COURT] which ratios were concurred by the Hon'ble jurisdictional Calcutta High Court in the case of M/s. Infinity Infotech Parks Ltd. [ 2014 (9) TMI 1142 - CALCUTTA HIGH COURT] though in the context of reopening u/s. 147 of the Act wherein the ratio held was that if the AO reopens the assessment of an assessee on 'x' ground and if he finds during the reassessment proceedings, that 'x' ground is absent/non-existing, then the AO should drop the proceedings and cannot make any other addition unless the AO makes an addition on 'x' ground. We thus find merit in the contention of Ld. A.R. that jurisdictional fact to exercise the revisional jurisdiction being absent/non-existing in this case, the Ld. PCIT ought to have dropped the proceedings and if he found any other issues/error on the part of the AO while framing the assessment order, then he ought to have given opportunity to the assessee and confronted it to the assessee and thereafter he could have made fresh endeavour to exercise revisional jurisdiction, which is not the case before us. Therefore the impugned order of Ld. PCIT dated 08.03.2021 is bad for want of jurisdiction and therefore stands quashed - Appeal of an assessee is allowed.
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2021 (12) TMI 1171
Revision u/s 263 by CIT - accumulation u/s. 11(2) - HELD THAT:- Assessee had applied ₹ 4,50,172/- this year as part of application of amount to the tune of ₹ 2,76,18,535/-. And it had filed the revised schedule rectifying the Schedule-I (page 26 PB) which created the confusion. We note that the assessee has shown surplus to the tune of ₹ 8,53,939/- and has been set apart u/s. 11(2) of the Act. So the fault pointed out by the Ld. CIT(E) based on the mistake of fact which crept into while filing column 4 of Schedule-I cannot change the fact that assessee had set apart ₹ 8,53,939/- as surplus u/s. 11(2). The question of assessee applying ₹ 4,50,172/- before the beginning of F.Y. i.e. before 01.04.2016, when there is no deficit in preceding year has not been answered by the Ld. CIT(E)/DR. So the apprehension of Ld. CIT(E) that assessee has thus claimed double deduction is erroneous and on wrong assumption of fact - we do not find any omission on the part of AO while framing the assessment order on this issue - AO rightly did not draw any adverse inference on the issue which was pointed out as a fault by the Ld. CIT(E). Therefore, we find that the Ld. CIT(E) has erroneously usurped the revisional jurisdiction u/s. 263 of the Act and resultantly the same is quashed. Appeal of the assessee is allowed.
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2021 (12) TMI 1170
Delayed payment of employees contribution to PF and ESI paid after the due dates prescribed in the relevant Statutes but before the due date of filing of return under section 139(1) - HELD THAT:- As a similar issue relating to the disallowance on account of delayed payment of employees contribution towards PF and ESI was involved in the case of Lumino Industries Limited [ 2021 (11) TMI 926 - ITAT KOLKATA] and after considering the relevant provisions of the Income Tax Act as amended from time to time as well as the relevant judicial pronouncements on the issue, this Tribunal allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s. 139(1) - Decided in favour of assessee.
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2021 (12) TMI 1169
Revision u/s 263 by CIT - large increase in sundry creditors with respect to turnover as compared to the preceding year - HELD THAT:- PCIT has accepted the gross receipt of ₹ 2.73 crores and cost of ₹ 2.62 crores while doubting the sundry creditors without even doubting the sundry debtors of like amount. So therefore, according to the Ld. AR the action of the A.O to have accepted the explanation given by the assessee after going through the ledgers of the sundry creditors and sundry debtors as well as the balance sheet as well as profit loss filed by the assessee is a plausible view, so the Ld. PCIT ought not to have interfered with it. We find force in the submissions of Shri S.M. Surana. We find from the discussion supra and after going through the records especially the details of sundry creditors and sundry debtors, we are of considered opinion that the A.O has taken a plausible view in the facts and circumstances of the case. And at any rate the action of the A.O in the given facts cannot be held to be unsustainable in law. So, therefore, the action of the A.O in not drawing any adverse inference in respect of sundry creditors in the given facts should not have been interfered by Ld. PCIT exercising his revisional jurisdiction u/s. 263 - the action of the Ld. PCIT to interdict when the A.O has discharged his duty as an investigator as well as that of the adjudicator as discussed above. Since the A.O's action on the facts as discussed is a plausible view, we find merit in the appeal of the assessee and we are inclined to hold that the impugned action of the Ld. PCIT is without jurisdiction and therefore null in the eyes of law so quashed. Appeal of assessee allowed.
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2021 (12) TMI 1168
Late remittance of employees' contribution to PF and ESI - Assessee had paid the employees' contribution to PF and ESI prior to the due date of filing of the return u/s.139(1) - HELD THAT:- On identical facts, the Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company [ 2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down by the Hon'ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd. Vs. DCIT [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] , had held that the assessee would be entitled to deduction of employees' contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s. 139(1) of the I.T. Act. It was further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. The amended provisions of section 43B as well as 36(1)(va) of the I.T. Act are not applicable for the assessment year under consideration. By following the binding decision of the Hon'ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] the employees' contribution paid by the assessee before the due date of filing of return of income u/s. 139(1) of the I.T. Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee and the disallowance made by the Assessing Officer is deleted - Appeal filed by the assessee is allowed.
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2021 (12) TMI 1167
TP Adjustment - payment of royalty at 4% to be at arm s length - HELD THAT:- As relying on assessee's own case accepting the payment of royalty at 4% to be at arm s length, we hold that the payment of royalty at 4% in the year under consideration is to be treated as being at arm s length. Accordingly ground is allowed. Payment of Interest on Compulsory Convertible Debentures - Whether TPO and DRP erred in treating CCDs as ECBs and benchmarked the interest rate against LIBOR rate? - CCDs is a hybrid instrument and cannot be per se treated as ECB / loan - HELD THAT:- In the instant case, admittedly, the CCDs are issued in INR, interest is paid in INR and CCD s are repaid also in INR. Therefore, placing reliance on the judgment of the Hon ble Delhi High Court in the case of CIT v. Cotton Naturals (I) Pvt. Ltd [ 2015 (3) TMI 1031 - DELHI HIGH COURT] we hold that the TP study of the assessee to justify the interest rate by arriving at average rupee cost and comparing the same with SBI prime lending rate is correct. It is ordered accordingly. Disallowance u/s 14A computed as per Rules 8D(ii) and (iii) - HELD THAT:- It is an undisputed fact that the assessee did not earn any exempt income during the year under consideration. It is a settled position that in the absence of any exempt income, no disallowance can be made u/s 14A of the Act. See Quest Global Engineering Services Pvt. Ltd. [ 2021 (3) TMI 434 - KARNATAKA HIGH COURT] The Hon ble Bombay High Court in the case of India Debt Management (P.) Ltd. [ 2019 (9) TMI 920 - BOMBAY HIGH COURT] has held that when the assessee does not receive any dividend income, no disallowance can be made u/s 14A - thus disallowance made u/s 14A of the Act, ought to be deleted, since the assessee was not in receipt of any exempt income during the relevant assessment year. Disallowance of deduction of expenditure as per first proviso to section 40(a)(ia) - HELD THAT:- The assessee is entitled to claim the deduction of expenditure (as per first proviso to section 40(a)(ia) of the Act) in the year the tax on the same has been deducted at source and remitted to the Government account. Therefore, we reiterate the directions to the DRP and remit the matter to the A.O. The A.O. is directed to grant deduction of aforesaid expenditure, if it is found that tax on the same has remitted to the Government account during the relevant assessment year. It is ordered accordingly. Disallowance u/s 40(a)(ia) - DRP rejected the claim of the assessee on the ground that the expenses do not pertain to the year under consideration - HELD THAT:- As rightly pointed out by the DRP, the expenditure claimed as deduction does not pertain to the year under consideration. If at all there is an inadvertent offer to tax in the previous year, namely, assessment year 2010-2011, the assessee ought to have taken correctional steps for the assessment concluded for assessment year 2010-2011 and not for the relevant assessment year. There is no statutory provision which provide for claiming amount wrongly shown as income in one year as deduction / expenditure in any subsequent year (unlike first proviso to section 40(a)(ia) whereby the assessee is permitted to claim deduction of the expenditure in the year in which the tax has been deducted on such expenditure and remitted to the Government account). Therefore, we affirm the view taken by the DRP. Disallowance of expenditure u/s 40(a)(ia) - assessee suo moto had disallowed a sum for non-deduction of tax at source - AO recharacterized the same as a disallowance u/s 37 - HELD THAT:- AO held the expenditure is not an admissible expenditure u/s 37 - DRP has not adjudicated the issue holding that the objection of the assessee does not arise out of the variation in the returned income. The issue whether the impugned expenditure can be disallowed u/s 37 has not been dealt with either by the AO nor by the DRP. AO has authority to hold that expenditure (though provision expenditure) is not an allowable deduction u/s 37 of the Act. Only those expenditure otherwise allowable u/s 30 to 38 of the Act is deductible as per proviso to section 40(a)(ia) - Therefore, any expenditure not for the purpose of business, the A.O. can certainly re-characterize the same as not allowable expenditure u/s 37 - as mentioned earlier, the A.O. nor DRP has not examined whether the said expenditure is allowable business expenditure u/s 37 - A.O. held that provision disallowed by the assessee u/s 40(a)(ia) of the Act cannot be allowed as deduction in the subsequent assessment year, since, the expenditure does not pertain to the subsequent year. DRP did not adjudicate the issue by observing that there is no variation to the returned income on this count. Therefore, the matter needs to be reconsidered by the AO afresh.
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2021 (12) TMI 1166
Late payments towards EPF and ESI u/s 36(1)(va) - payment before furnishing the return of income u/s 139(1) - HELD THAT:- Since the facts involved in the present case are identical to the facts involved in the case of Mohangarh Engineers and Construction Company [ 2021 (9) TMI 1319 - ITAT JODHPUR] and in the case of Bikaner Ceramics Private Limited, Bikaner[ 2021 (9) TMI 1319 - ITAT JODHPUR] the impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted - Decided in favour of assessee.
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2021 (12) TMI 1165
Belated payment of employee's contribution to PF invoking provisions of sec. 36(1)(va) - HELD THAT:- We find merits in the submissions of the assessee, that the payment within grace should be allowed. Therefore, total amount to be allowed within grace period comes to ₹ 31,615/- ( ₹ 15,919 + ₹ 15,696) which are paid by the assessee within the grace period, therefore, addition to the extent of ₹ 31,615/- is hereby deleted and we direct the assessing officer to make the disallowance of the balance amount of ₹ 35,496/- (₹ 67,111- ₹ 31,615). Thus, ground no.1 raised by the assessee is partly allowed. TDS u/s 194C - non-deduction of TDS from payment of labour charges - assessee submitted before us that amendment in section 40(a)(ia) of the Act is retrospective in nature therefore disallowance under section 40(a) (ia) should be restricted to 30% of the impugned amount - HELD THAT:- We note that in subsequent judgment of the Hon'ble Supreme Court in the case of Shree Chaudhury Transport Company[ 2020 (8) TMI 23 - SUPREME COURT] held that amendment in section 40(a)(ia) of the Act is prospective in nature - Issue clearly in the affirmative i.e., against the assessee and in favour of the revenue that the payments in question have rightly been disallowed from deduction while computing the total income of the assessee-assessee. Disallowance of interest expenditure u/s 36(1)(iii) - HELD THAT:- As considering all these facts it is crystal clear that assessee has given interest free loan to Mr. Ajay Shah of ₹ 3,00,000/-, out of its interest free funds, therefore addition should not be made. Accordingly, the addition made by A.O. to the tune of ₹ 36,000/- is deleted. Addition u/s 68 - HELD THAT:- We note that assessee had furnished the details which would discharge the onus which lay on the assessee. It is not the case of the revenue that the partners of the assessee firm are fictitious. Therefore, addition sustained by ld CIT(A) is hereby deleted.
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2021 (12) TMI 1164
Computation of capital gain - determination of deemed sale consideration under section 50C - Change in circle rate in-between the date of agreement and date of registration - CIT(A) accepted contentions of the assessee - HELD THAT:- Section 50C of the Act provides that where the consideration received or accruing as a result of transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall for the purposes of section 48, be deemed to be the full value of the consideration. There is no dispute with regard to the fact that stamp valuation authority has determined value of the property for charging stamp duty at ₹ 5,82,39,975/-, but referring to the fact brought the notice of the ld.Revenue authorities is that the assessee has purchased this property on 17.9.2010 for a consideration of ₹ 24 lakhs. Thereafter, it was converted to non-agriculture land. The assessee has sold the same on 28.9.2011. The assessee had entered into an agreement with M/s.Ashwal Infracon P.Ltd. on 23.12.2010 and sale consideration was settled at ₹ 80.00 lakhs. The assessee has received part payment through account payee cheque. Stamp duty valuation authority have revised their valuation on 1.4.2011, and thereafter vendee was required to pay additional stamp duty of ₹ 24,58,000/- In the present case, we find that there are two different dates. One is 23.12.2010 when the assessee entered into an agreement for sale of this property and another 29.9.2011 when the sale deed was ultimately registered. At the time of agreement and prior to that the assessee has received part payments through negotiation. Such payments have been received through account payee cheque. He received ₹ 25 lakhs on 26.2.2011 and ₹ 10.00 lakhs on 13.10.2010. This part payment makes it clear that a valid agreement to sell was executed. Between the date of agreement vis- -vis ultimate registration of sale deed, the State Government has revised valuation of the property for the purpose of charging stamp duty. This case of the assessee do fall within the first proviso of section 50C of the Act, and this aspect has been dealt with by the ld.CIT(A) elaborately in the finding extracted (supra), therefore, no interference from our side is called in the impugned order on the issue. Reopening of assessment u/s 147 - We find that the AO got concrete information about the sale of the property and therefore he has a reason to believe that income has escaped assessment, and has rightly reopened. The ld.CIT(A) has examined this issue elaborately, and has rightly rejected the contentions of the assessee. We do not find any merit in this CO of the assessee
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2021 (12) TMI 1163
Revision u/s 263 by CIT - undisclosed income and interest and remuneration paid to the partners - HELD THAT:- We note that Assessing Officer has raised the question during the assessment stage and assessee has replied to the assessing officer along with relevant documents. Thereafter, assessing officer has applied his mind and examined both the issues, viz: undisclosed income and interest and remuneration paid to the partners. Therefore, it cannot be said that the issue has not been examined by the Assessing Officer. Considering this factual position, we note that order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of Revenue Revisionary jurisdiction exercised by the Ld. Pr. C.I.T. u/s. 263 was not in tune with the facts and evidences on record duly explained to the Assessing Officer and verified by him and that being so the order passed u/s 263 of the Act on such erroneous stand is liable to be quashed. Therefore, we quash the order of the ld. PCIT u/s 263 - Appeal of assessee allowed.
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Benami Property
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2021 (12) TMI 1162
Benami transaction - suit property is ancestral property - Suit property was purchased in the name of grandmother of the plaintiff by grandfather - what was the reason for the defendant to purchase the property in the name of mother and not in his own name? - HELD THAT:- Whether the transaction in question was a Benami and whether the defence of the defendant that in fact he is the exclusive owner and not his mother, though the property was standing in her name, could have been allowed to be raised in view of Section 4 of Benami Transactions (Prohibition) Act, 1988, was not considered by both the Courts below. But, definitely, that point which is the law point, which can be framed here, will have to be gone into because if the defendant could not have been allowed to raise that defence, then his entire defence fails. Here, we are concerned with whether defendant can take such defence and to that extent, the observations in paragraph No.13 would be required to be considered. However, since the categories have been made, we will have to consider its interpretation. Further, the real intention whether was brought on record is also a question. Another fact to be appreciated on the basis of the same is, if the property was in the name of mother, then whether defendant could have raised any loan from any institution/bank/ Patsanstha is also required to be considered. On this point, in fact, the Courts below have considered that the said construction would have been made by the defendant as per his choice and will. It does not deprive the plaintiff of his right. The documents on record were considered by both the Courts below and it was observed that those documents appear to be fabricated. The defendant was the Secretary of the Patpedhi, from whom it was shown that he had raised loan. Therefore, as regards factual aspect is concerned, it is not giving any rise to a substantial question of law, however, the nature of the property and whether the defendant could have raised defence of exclusive ownership, though the property stood in the name of his mother, deserve to be resolved/adjudicated in this case. Hence, the second appeal stands admitted. Following are the substantial questions of law :- I) What was the nature of the suit property i.e. as to whether ancestral or of exclusive ownership of defendant No.1? II) Whether the defendant could have been allowed to take defence that though the suit property was purchased in the name of his mother but he was in fact the real owner (Benami Transactions) in view of Bar under Section 4 of the Benami Transactions (Prohibition) Act, 1988? Issue notice to the respondents. Mr. M. S. Kulkarni waives notice for respondent Nos.1 to 3.
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2021 (12) TMI 1161
Applicability of the Benami Transactions (Prohibition) Act, 1988 - Single Judge while concurring with the findings of the Trial Court held that under Section 3 (2) of the said Act there was no prohibition to the property being purchased in the name of the ostensible owner's wife and unmarried daughter - Appellants herein are the successors-in-interest of the original Defendant - Single Judge discussed the evidence led and disbelieved the case of the Defendant that the registered sale deed was vitiated by fraud and coercion - HELD THAT:- This Court is unable to come a conclusion different from that reached by the trial Court as well as the First Appellate Court on any of the above issues, in which concurrent findings have been rendered against the Appellants, both by the Trial court as well as the learned Single Judge. Indeed, the concept of unilateral cancellation of a sale deed, which has been duly registered, is unheard of. Even otherwise, it lacks legal sanctity. The only way to prove that a sale deed was not duly executed would be by leading evidence in the civil court. Despite being provided with sufficient opportunity, the Appellants- Defendants have been unable to establish their case that the registered sale deed in question had been executed through undue influence or coercion.The Court is unable to find any error committed by the learned Single Judge and therefore declines to interfere with the judgment and decree of the Trial Court.
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Customs
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2021 (12) TMI 1160
Rejection of request of provisional release of the goods - import of Black Pepper - prohibited goods or not - whether the value re-determined in the show-cause notice cannot be taken? - HELD THAT:- Even the fact that the final adjudication is yet to be done, we are of the opinion that the respondents are directed to quantify the duty and bond amount and communicate the same to the appellant and release the goods within a week on such remittance by the appellant. The appellant would remit the entire duty if not remitted already and furnish the bond to the satisfaction of the respondents in regard to the interest payable, penalty or charges that may be deemed necessary. The condition imposed by the Writ Court is modified regarding to furnish bank guarantee to furnish a bond to the same value. So far as the adjudication is concerned, the authorities are to proceed with the same without being influenced by this order as this order does not express any opinion in that regard. Appeal disposed off.
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2021 (12) TMI 1159
Maintainability of appeal - Jurisdiction of HC to entertain an appeal against the order of CESTAT - foreign-going vessel or not - scope of eligible order namely the duty of customs - Whether the order under appeal is an eligible order for appeal under Section 130 of the Act or not? - HELD THAT:- It is axiomatic that appeal is a statutory right conferred by Legislature on an aggrieved party. There is no inherent right of appeal to an aggrieved party and, in the case on hand, the right of appeal is covered by Sections 130 and 130E of the Act. The scheme of Customs Act envisages redressal mechanism by way of appeal under Section 128 from primary authority to Commissioner; further from the order of Commissioner to the CESTAT constituted under Section 129; from the order of CESTAT to the High Court under Section 130; or to the Supreme Court under Section 130E. The order of the High Court is again appealable under Section 130E to Supreme Court. An appeal is nothing but a proceeding where a higher Forum reconsiders the decision of the lower Forum on questions of fact and questions of law with jurisdiction authority to confirm, reverse, modify the decision or remand the matter to the lower Forum for fresh decision in terms of its directions. An appeal is a creature of Statute and there is no inherent right of appeal. The High Court while taking up an issue on the objection raised on the jurisdiction to maintain the appeal, as contended by respondent, cannot proceed that jurisdiction is conferred by the appellant or that the jurisdiction could be inferred in the circumstances of the matter. But, the principle is jurisdiction should be available. The decisions relied on by the appellant in support of its case that the jurisdiction of this Court cannot be invited to challenge the order under appeal are distinguishable. No decision on the point of foreign-going vessels having precedential value has been brought to our notice - The questions formulated by the appellant or such other questions that may be formulated by this Court under Section 130(3) of the Act, hear the parties and dispose of the appeal. We have taken sufficient care to hear and not advert to any of the circumstances in issue on the main question between the parties, and even reference is made in this order, the same is for the limited purpose of finding out whether this Court ought to proceed with hearing the appeal on merits or not. The question of limitation may also be one of the questions the Court may consider while disposing of the appeal. Application disposed off.
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2021 (12) TMI 1158
Valuation of imported goods - payment for the services, sought to be included by customs authorities in the assessable value of reactor set - enhancement of declared value - suppression of facts or not - invocation of extended period of limitation - penalty u/s 114A of Customs Act, 1962 - HELD THAT:- It is on record that the licence agreement for know-how and technical assistance and the purchase order for supply of the impugned goods, were both contracted separately with M/s Atofina France. Thereafter, M/s Arcil Catalyst Pvt Ltd, a producer of aluminum chloride anhydrous and intending to expand manufacturing capacity, placed order for reactor set from M/s Atofina France on 13th December 2000 which was assessed to duty on the contract value of the goods in bill of entry filed on 26th February 2001. Well before this, on 15th September 1999, the licence agreement for collaboration in debottlenecking of existing process and upgradation of facility was entered into; it is the payment due on invoice dated 10th December 2002 for technical knowhow and invoice dated 19th December 2002 for technical assistance raised by M/s Atofina France in pursuance of the agreement which was sought to be added to assessable value of the goods. It would appear to have been assumed that the qualifying expression, as a condition of sale , in rule 9(1)(c) and 9(1)(e), can be stretched limitlessly to encumber the transaction value of imported goods with any, and all, other outflows of the importer to the seller merely by being so. The mismatched concatenation of facts, contrived for confirming the demand in the impugned order, is mirrored in the confused categorization of the impugned payments under two different, and mutually exclusive, contingencies that permitted inclusion of services in assessable value. We cannot accord judicial sanction to a proposition that subsumes all commercial transactions between two entities merely for sharing commercial objective in common with a cross-border transaction in goods. The facts of the case must lead to that conclusion for approval of the proposed addition. The payment for the services, sought to be included by customs authorities in the assessable value of reactor set , became due well after the import and the obligation for providing the technical knowhow and technical assistance the services in question was contingent upon certificate of conformity with the basic engineering package or, in other words, the readiness of the facility for debottlenecking and upgradation in accordance with the agreement. It is seen that this certificate was issued on 13th September 2001 following which the payment contracted in the agreement was made due by M/s Atofina France - The certificate of conformity which, according to the adjudicating authority, is the pivot also clearly pertains to provision of service in India after import. None of these facts find fitment within the scheme of taxing of services rendered by an overseas provider at the rate of duty for assessment of imported goods as intended by rule 9 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 set out. The demand fails along with appeal of Revenue - Appeal allowed - decided in the favor of assessee.
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Corporate Laws
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2021 (12) TMI 1157
Approval of the Scheme of Amalgamation - Section 230 to 232 of Companies Act, 2013 read with the Companies (Compromise, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Upon considering the approval accorded by the members and creditors of the Petitioner companies to the proposed Scheme, and the report filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, report filed by the official liquidator and the report filed by Income Tax Department and also as no objection from any quarter against the Scheme has been received; there appears to be no impediment in sanctioning the present Scheme. The scheme is sanctioned - application allowed.
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2021 (12) TMI 1156
Sanction of Scheme of Amalgamation - Sections 230 and 232 and other applicable provisions of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- There is no reservation to grant sanction to the Scheme. The proposed Scheme of Amalgamation, which is annexed to the Company Petition stands approved and sanctioned. The Petitioner Companies are required to act upon as per terms and conditions of the sanctioned Scheme and the same shall be binding on all the Shareholders, Secured Creditors and Unsecured Creditors of the Petitioner Companies and also on the Petitioner Companies with effect from the Appointed Date, i.e., 1st day of April, 2020. Application allowed.
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Insolvency & Bankruptcy
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2021 (12) TMI 1155
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - respondent's case is that the cheque was issued as a security, which clearly indicates that the respondent/corporate debtor had agreed to pay GST additionally over the amount of consideration - HELD THAT:- There is nothing on record to show that the corporate debtor raised dispute over use of said Trademark sold by the applicant. The corporate debtor has failed to demonstrate that the GST was not payable by it, when a cheque for the same purpose was issued. The defense of corporate debtor regarding pre-existing dispute regarding payment of remaining amount is not supported by any documentary proof. Since the corporate debtor already-issued a cheque in order to clear its liability towards payment of GST, the claim of applicant deserves to be allowed. Application admitted - moratorium declared.
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2021 (12) TMI 1154
Approval of Resolution Plan - Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is noted that CoC in its 18th meeting held on 13.01.2021 with 100% voting right approved the Resolution Plan submitted by the Resolution Applicant. It is also noted that Resolution Applicant is not a related party of the Corporate Debtor. Resolution Applicant has filed an affidavit dated 25.09.2020 regarding its eligibility to submit a Resolution Plan under Section 29A of IBC, 2016. Resolution Applicant has also provided the performance security amounting to ₹ 1,00,00,000 crore as a Bank Guarantee. All contents of the Resolution Plan and all documents/compliance certificates as required under Section 30(2) of IBC, 2016 read with Regulations 36 to 39 of CIRP Regulations, 2016 which have been placed on record is perused. The Resolution Plan complies with all these provisions. The total outstanding debt claims by all stakeholders stand at ₹ 11, 209.74 Lakhs and Resolution Applicant has admitted claims totalling ₹ 10,927.29 Lakhs and amount provided under the plan is 1,019.40 which amounts to 9.09%of total outstanding debt. The Resolution Plan so approved can be successfully implemented - Resolution Plan approved - application allowed.
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2021 (12) TMI 1153
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Sub-standard goods or not - HELD THAT:- The Corporate Debtor categorically stated that the actual amount payable by the Respondent will be ₹ 3,28,800/-. According to the Corporate Debtor, the Oven supplied by the Operational Creditor was defective. It had burst in April, 2019. The fact that the goods were of sub-standard quality was already informed to the Operational Creditor. However, it is difficult for us to accept this defence. It is not in dispute that as per invoice dated 10.08.2018 (page No. 40-45), the goods were supplied. According to the Corporate Debtor, it got burst in April, 2019 i.e. almost seven months after its installation at the premises of the Corporate Debtor. There is every possibility that the Oven got burst due to want of proper maintenance by the Corporate Debtor. It is not in dispute that the Corporate Debtor did not reply demand notice under Section 8 of IBC. In earlier notice reply dated 22.05.2019, the Corporate Debtor admitted the debt. Not only that, as per the Corporate Debtor's own statement in reply, it has made payment of ₹ 9,91,200/- and it is ready to pay balance sum of ₹ 3,28,800/-. In such situation the Corporate Debtor's defence that goods received by it was sub-standard cannot be accepted. The Corporate Debtor had admitted that operational debt of ₹ 3,28,800/- is yet to be paid by it to the Operational Creditor. It had received demand notice but did not make the payment. This application is defect free - application admitted - moratorium declared.
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2021 (12) TMI 1152
Dissolution of the corporate debtor - Section 54 of the Insolvency and Bankruptcy Code, 2016, read with Regulation 14 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT:- It is noticed that since there is no possibility to continue the liquidation process of the corporate debtor in absence of any assets/documents/records and personnel of the corporate debtor. The present case fits in the provisions of Sec. 54 of IBC read with Rule 14 of Liquidation Regulations and it is just and equitable to allow the prayer of the applicant. It is hereby declared that not only it is just and equitable but because of the fact that no asset is available for the purpose of 'Liquidation', this is a fit case for order of dissolution. The corporate debtor M/s. Ajaz Nanda Designs Private Limited, stands 'Dissolved' from the date of this Order - Since the Company stands Dissolved vide this order and no proceedings are now pending, therefore the Registry is directed that the case file of proceedings be closed and be consigned to records. Application allowed.
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2021 (12) TMI 1151
Seeking liquidation of the Corporate Debtor - section 33(1) of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- RP has filed an application under section 33(1) of the Code, before the Adjudicating Authority for liquidation of the Corporate Debtor and appointment of RP as liquidator who has given his consent to act as liquidator which is placed in the present application. He is stated to have a valid authorization for assignment. The Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code read with sub-section (1) thereof - Application allowed.
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2021 (12) TMI 1150
Liquidation of the Corporate Debtor - Financial debt or not - Resolution Professional rejected the claim stating that the applicant is not a Financial Creditor and that Term Loan Agreement dated 22.03.2017 executed between the applicant and the corporate debtor was novated by the Settlement Deed dated 04.09.2019 - Section 33 (2) of I B Code - HELD THAT:- The pre-requisite for a debt to qualify as a financial debt is that there must be a disbursal of money against the consideration for time value of money. The Hon ble Supreme Court in Anuj Jain IRP for Jaypee Infratech Limited V. Axis Bank Limited [ 2020 (2) TMI 1259 - SUPREME COURT ] has affirmed the above contention by holding that transactions under Section 5(8) would be falling within the ambit of Financial Debt only if they carry the essential element of disbursal , and that too against the consideration for time value of money. The Hon ble Supreme Court in Pioneer Urban Land and Infrastructure Limited v. Union of India [ 2019 (8) TMI 532 - SUPREME COURT ] has held that for a debt to correspond to the definition of a Financial Debt under the Code, there must be disbursal which must be a disbursal of money and which must be against consideration for the time value of money. The Hon ble Supreme Court has conclusively affirmed that there must be actual disbursal of money for a debt to be a financial debt. It is clear that the applicant s claim falls under the preview of Financial Debt as defined under Section 5(8) of I B Code, 2016, which is disbursed against the consideration for the time value of money - Resolution Professional cannot reject a claim stating that financial debt of the applicant originating from the term loan agreement dated 22.03.2017 is merged with the amount settled under the Settlement Deed dated 04.09.2019 without classifying identity of financial debt. The merger of the financial debt and other multi claims emanating under different business transactions into a single settled amount between the parties are so complex making it impossible to cull out or identify the interfused financial debt from other claims or settled claims. The Resolution Professional cannot deny the claim of the applicant stating that a debt lost its character as a financial debt on the basis of amount settled under the Settlement Deed dated 04.09.2019. In the present case, the Interim Resolution Professional acted as an adjudicating authority and gone into the factual scenario between parties and determined their rights and liabilities. The task of the Interim Resolution Professional was to limit itself to confirm that the claims received by him are true and correct. Here, he failed to clear the contingency existed in the amount and to the best estimate of the amount of the claim based on the information available with him. Instead, the Interim Resolution Professional out-rightly rejected the claim of the applicant without verifying the claim. The application filed by the Interim Resolution Professional for Liquidation of the Corporate Debtor under Section 33 (2) of I B Code has been rejected - Application dismissed.
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PMLA
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2021 (12) TMI 1149
Seeking grant of Bail - Smuggling - rule of presumption of innocence - Section 45(1) of the PML Act - constitutional validity of the provision - HELD THAT:- This Court is of the opinion that the declaration by the Supreme Court in Nikesh Tarachand Shah's [ 2017 (11) TMI 1336 - SUPREME COURT ] would render the twin conditions prescribed in Section 45(1) of the PML Act for release of an accused on bail to be void in toto ; such conditions have to be disregarded of any legal force from its inception. They cease to be law and are rendered inoperative to the extent that they are to be regarded as if they had never been enacted. That being so, the twin conditions for grant of bail under Section 45(1) of the PML Act as are now sought to be pressed into service by the ED cannot be considered to have revived or resurrected only on the prospective substitution of the words punishable for a term of imprisonment of more than three years under Part A of the Schedule with the words under this Act especially without there being any amendment with regard to the twin conditions for grant of bail which had specifically been declared to be unconstitutional as also in the absence of any validating law in this regard with retrospective effect. It was also brought to this Court s notice that the Petitioner has been in custody for a period of about 8 years. Justice delayed is justice denied is the cornerstone in delivering justice and a speedy trial forms the essence of the entire criminal justice system. At the same time, justice hurried is justice buried and therefore, there has always existed a need to strike a balance between the two adages in the delivery of justice to the people. The fundamental right to speedy trial is a result of judicial activism shown in respect of Article 21. In USA, the right to speedy trial has been guaranteed by the VI Amendment of the US Constitution. The VI Amendment of the US Constitution says that in all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial - The fundamental right to speedy trial is peculiar in character and is generically different from other constitutional rights of the accused. The right is in the interest of the accused if he is innocent. He does not suffer unduly for a long period. But it also works against him if he is actually guilty of the offence. The right is also in the interest of prosecution because it does not face the problems such as non-availability of witnesses and disappearance of evidence etc. But sometimes, it also goes against the prosecution specially when the prosecution does not have hundred per cent foolproof case against known or hardened criminals. It is a matter of great concern that the Petitioner has been in detention for more than 8 years as on today, however, the trial in the instant case has not yet been commenced. The longevity of detention of the under-trial prisoners without commencement of trial defeats the very purpose of Criminal Justice System. It is directed that the Petitioner be released on bail with some stringent terms and conditions as deemed just and proper by the learned court in seisin over the matter with further conditions imposed - application allowed.
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Central Excise
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2021 (12) TMI 1148
Recovery of CENVAT Credit - fraudulent availment of CENVAT Credit on the strength of Cenvatable invoices - reliance placed on statements recorded by the third parties upon the documents recovered from the third party premises - Rule 11 of Central Excise Rules, 2002 - penalty on on Shri Pradeep Kumar Aggarwal whose statement has mainly been relied upon - HELD THAT:- There is no evidence to prove that the appellant have not received material from M/s. Sypher Impex Alloys Pvt. Ltd through the invoices No. 67, 69 and 90 dated 8.6.2012, 10.6.2012 and 2.7.2012 respectively. Irrespective Shri Yogesh Singh Director would have been involved in the practice of issuing fake invoices for permitting the purchasers of raw material to have fraudulent CENVAT Credit but there is no iota of any positive evidence for involvement of the present appellant in the said fraudulent availment. The Department has failed to falsify the statement of Shri O P Sharma and to falsify the documents produced by them for proving the transactions of impugned invoices as genuine. Resultantly it stands clear that the confirmation of demand against the appellant has been confirmed based on the third party evidence. Since the sole challenge to the order is its reliance upon third party evidence, it is necessary to check the evidentiary value of the third party evidence - It is well settled law that there has to be some concrete evidence which would show clandestine manufacture of goods, as was reiterated by Tribunal, Delhi in the case of C.C.E. S.T. -RAIPUR VERSUS P.D. INDUSTRIES PVT. LTD. [ 2015 (11) TMI 455 - CESTAT NEW DELHI] . The document recovered from the appellant premises shows that the appellant had maintained a record about the invoices being received from various companies whereupon the appellant has availed the Cenvat Credit. Merely because the company issuing invoice was found non-existent, the appellant could not be denied the availment of Cenvat Credit thereupon unless and until his involvement in terms of his knowledge about such non-existence and about the invoice to be bogus is not proved on record. Otherwise also there is no denial that the appellant has cleared his final product on payment of duty. In such circumstances and that the invoices were containing all the particulars as are required under Rule 9 of Cenvat Credit Rules and that the appellant was also making the record of all those details. The allegations based on the statements given by other manufacturers, first or second stage dealers or even by the transporters cannot be read against the appellant - Once assessee is found to have acted with all reasonable diligence in its dealings within the meaning of Rule 9 (3) of Cenvat Credit Rules, 2004 will amount to casting an impossible or impractical burden on the assessee and same would be contrary to the rules. Levy of penalty on Shri Pradeep Kumar Aggarwal - HELD THAT:- The companies involved herein i.e. High Tides Infra Project Pvt. Ltd., RMS Steel Tech Pvt. Ltd., Jetking Trading and Agencies, Singh Materials Infratech etc. were the companies in the said decision wherein it has been held that when sufficient document is produced by the appellant to prove the physical entry of inputs in the assessee s premises along with the ledger account and RG-23 A Register maintained by the assessee along with the invoices. the burden is upon the Revenue to prove that it was merely a paper transaction and goods were not received by assessee appellant. It was held by this Tribunal in the said Final Order that Revenue has failed to produce such a record. Per contra, there is apparent compliance of Rule 9, CCR 2004 on part of the appellant. The allegations based on the fact that manufacturers as that of M/s.High Tides Infra Project Pvt. Ltd are found non-existent have been set aside. The entire case of the Department is on the basis of statements of witnesses who were never allowed to be cross examined by the present appellants. There is no other material with the Revenue to justify its findings against the appellants. Withholding the opportunity to cross examination to the appellants definitely amounts to violation of principles of natural justice and the statutory mandate of section 9D of Central Excise Act, 1944 which becomes another reason for nullifying the impugned order. Hon ble Apex Court has also in the case of ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [ 2015 (10) TMI 442 - SUPREME COURT] has held that non compliance of the provisions of section 9D and section 33 of Central Excise Act, 1944 nullify the order confirmed in demand. Appeal allowed - decided in favor of appellant.
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2021 (12) TMI 1147
CENVAT Credit - eligibility to avail suo moto Cenvat Credit of Central Excise duty, without sanction by the proper department - invocation of extended period of limitation contained in the proviso to Section 11A of the Central Excise Act, 1944 - HELD THAT:- The period in dispute involved in this case is October 2005 and the show cause notice was issued on 09.03.2009 i.e. much after the normal period prescribed under Section 11A ibid. Insofar as invocation of the proviso to Section 11A ibid is concerned, it has been mandated that only in the eventuality of happening of fraud, collusion, wilful mis-statement etc., such proviso clause can be invoked and not otherwise. On perusal of the case records, it is found that the availment of suo moto Cenvat Credit was highly disputed at the material time, which was subsequently settled by the Larger Bench of the Tribunal in the case of BDH INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX. (APPEALS), MUMBAI-I [ 2008 (7) TMI 78 - CESTAT MUMBAI] . Since, the appellant had entertained the bona fide belief at the time of taking suo moto Cenvat Credit that it is entitled for the same as per the statutory provisions, in my considered view, the charges levelled against them regarding involvement in the activities, concerning fraud, collusion, wilful mis-statement etc., cannot be sustained. Hon ble Delhi High Court in the case of COMMISSIONER OF C. EX. VERSUS WONDERAX LABORATORIES, IPL. [ 2007 (10) TMI 388 - DELHI HIGH COURT] has held that when conflicting views were taken with regard to interpretation of Notification etc., the proviso clause appended to Section 11A ibid cannot be invoked, justifying recovery of the short levied duty etc. beyond the normal period of limitation. The department in this case has not specifically adduced any evidence to substantiate that the appellant had really indulged into fraudulent activities in wrongly availing the Cenvat Credit - the extended period of limitation invoked in this case for initiation of show cause proceedings cannot stand of judicial scrutiny.
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Indian Laws
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2021 (12) TMI 1146
Dishonor of Cheque - insufficiency of funds - whether revisional powers can be exercised by this Court to compound the offence under Section 138 of the Act after conviction of the petitioner by appellate Court? - HELD THAT:- The legal position in this behalf was fluid until the judgment rendered in Damodar S. Prabhu Vs. Sayed Babalal H. [ 2010 (5) TMI 380 - SUPREME COURT ] by the Supreme Court. In the said verdict, Supreme Court has examined the provisions of Section 138 and 147 of the Act threadbare and observed that compensatory aspect of the remedy should be given priority over the punitive aspect - While switching on to examine Section 147 of the Act, Supreme Court has observed that this being an enabling provision, it can serve as exception to the general rule incorporated in subsection ( 9) of Section 320 Cr.P.C. The Court, while laying emphasis on non-abstante clause under the aforesaid Section, further held that Section 147 inserted by way of amendment to special law will override the effect of Section 320(9) Cr.P.C. Applying the ratio decidendi of Damodar S.Prabhu and the guidelines framed therein, on the strength of compromise arrived at between petitioner and the complainant, It is felt persuaded to exercise revisional jurisdiction for doing real and substantial justice in the matter for the administration of which alone the Courts exist. Compounding of offence under Section 138 of the Act, obviously, entails acquittal of the petitioner - the instant revision petition is allowed.
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