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TMI Tax Updates - e-Newsletter December 31, 2020 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles GST: NEW RULE 86(B) AND ITS IMPACT BOARD’S CIRCULARS ARE BINDING ON DEPARTMENT SO LONG AS THEY REMAIN IN OPERATION News Auto-population of e-invoice details into GSTR-1/2A/2B/4A/6A Year End Review 2020 - Department of Commerce, Ministry of Commerce & Industry Cabinet approves Industrial Corridor nodes at Krishnapatnam and Tumakuru under CBIC IFSCA permits Banking Units to transfer of assets through participation agreements Income Tax Department conducts searches in Delhi Notifications Customs 114/2020 - dated 30-12-2020 - Cus (NT) Seeks to amend Notification No. 113/2020-CUSTOMS (N.T.), dated 17th December, 2020 DGFT 52/2015-2020 - dated 30-12-2020 - FTP Incorporation of policy condition under Exim Code 05040039 of Chapter 05 of ITC (HS), 2017, Schedule – I (Import Policy) GST - States G.O.MS.No. 376 - dated 17-12-2020 - Andhra Pradesh SGST Amendment in Notification G.O.Ms.No.469, Revenue (Commercial Taxes-II) Department, dated 21.11.2019 G.O.MS.No. 357 - dated 17-11-2020 - Andhra Pradesh SGST Andhra Pradesh Goods and Services Tax (Eleventh Amendment) Rules, 2020 G.O.MS.No. 320 - dated 10-11-2020 - Andhra Pradesh SGST Extension of period to pass order under Section 54(7) of APGST Act G.O.MS.No. 319 - dated 10-11-2020 - Andhra Pradesh SGST Notification issued for amendment of certain Rules in G.O.Ms. No.283, Revenue (CT-II) Department, Dated. 29.09.2020- Appointment of date from which provisions of the amended rules shall come into force 74/2020 - State Tax - dated 28-10-2020 - Chhattisgarh SGST Prescribe the due date for furnishing FORM GSTR-1 for the quarters October, 2020 to December, 2020 and January, 2021 to March, 2021 for registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year 05/2020 - State Tax (Rate) - dated 28-10-2020 - Chhattisgarh SGST Amendment in Notification No. 12/2017-State Tax (Rate), dated the 28th June, 2017 91/2020-State Tax - dated 18-12-2020 - Gujarat SGST Amending notification no- 35-2020-ST to extend due date of compliance under Section 171 which falls during the period from 20-03-2020 to 30-03-2021 till 31-03-2021 89/2020-State Tax - dated 17-12-2020 - Gujarat SGST Waiver of penalty payable for noncompliance of the provisions of Notification No-142020-ST-2020 regarding QR Code F. 1-11 (91)-TAX /GST/2020 (Part-III) - dated 29-12-2020 - Tripura SGST Seeks to notify class of persons under proviso to section 39(1) F. 1-11 (91)-TAX /GST/2020 (Part) - dated 29-12-2020 - Tripura SGST Seeks to bring into force Sections 3, 4, 5, 6, 7, 8, 9, 10 and 14 of the TSGST (Third Amendment) Act, 2020 Highlights / Catch Notes GST Attachment of cash credit account - Section 83 of the GST Act - the interest of the revenue could be said to be secured for the time being with the provisional attachment of the immovable properties - We are of the view, having regard to the balance in one of the current account that the writ applicant should be permitted to operate the current account - The provisional attachment is ordered to be lifted. - HC Visit to Get Source Income Tax Addition under the head SPV charges - Whether part of Corporate Social Responsibility (CSR) activity - sale proceeds of overburden dumps outside sanctioned lease areas - In our view contributing 10%/15% to SPV account on account of Category ‘A’/ ‘B’ respectively, would be application of income, and therefore should be considered as expenditure incurred for carrying out its business activity. - Provisions of Explanation 1 to sec.37 will not apply to these payments. - AT Visit to Get Source TDS u/s 194C - transportation charges paid during the year - The need to furnish declaration from the contractor’s being owners of less than 10 vehicles has been inserted by way of amendment which is effective from 01/06/2015. - The objection raised by Ld.CIT(A)/AO in this regard therefore does not hold any waters in eyes of law. Categorically assessee had provided PAN of 5/7 transporters, before Ld.AO. We therefore do not find any reason to uphold disallowance in respect of payments made to 5 transporters whose PAN were submitted by assessee. - AT Visit to Get Source Computation of income from house property - deduction of interest on subsequent loan which was borrowed to repay earlier loan - The proviso only carves out an exception to section 24(b) of the Act, in so far as it relates to property used for residential purposes and does not deal with or curtail the right of an assessee to get deduction on interest paid on loans borrowed for the purpose of constructing commercial property. Both the AO and CIT(A), in our view, fail into an error in applying the 3rd proviso to section 24(b) of the Act to the case of the assessee. - AT Visit to Get Source Penalty proceedings u/s 271C - Failure to deduct TDS u/s 194C - the payment of EDC is not for carrying out any specific work to be done by HUDA for and on behalf of the assessee but rather DTCP which is a Government Department which levies these charges for carrying out external development and engages the services of HUDA for execution of the work. - There was no TDS liability and, therefore, the impugned penalty was not leviable - AT Visit to Get Source Disallowance u/s 40(a)(ia) in respect of depreciation on intellectual property rights - Failure to deduct TDS - The depreciation is an allowance and not an expenditure, loss or trading liability. The Commissioner of Income Tax (Appeals) has held that the payment has been made by the assessee for an outright purchase of Intellectual Property Rights and not towards royalty and therefore, the provision of Section 40(a)(ia) of the Act is not attracted in respect of a claim for depreciation - HC Visit to Get Source TP Adjustment - Arms length price adjustment on account of interest on external commercial borrowings - the rate of interest has been accepted by the Assessing Officer for the years 2002-03 to Assessment Year 2008-09 except the Assessment Year 2006-07. Therefore, the tribunal has rightly held that the revenue cannot be allowed to make a departure in case of rate of interest for Assessment Year 2006-07. - HC Visit to Get Source Corporate Law Seeking directions for reactivation of their Director Identification Numbers (DIN) and Digital Signature Certificates (DSC) - while leaving the questions of law open, in the facts and circumstances of these two cases, in order to enable the Petitioners/Directors to avail of the Scheme, this Court directs that the DINs and DSC of the Petitioners be reactivated within 24 hours. - HC Visit to Get Source Central Excise Reversal of cenvat credit - It is now a settled proposition that reversal of cenvat credit even after manufacture of the goods and/or clearance thereof amounts to not taking of the credit on the exempted goods and that in case of common inputs and input services used in or in relation to the manufacture of dutiable and exempted final products, credit proportionate to use of inputs and input services in exempted products, if reversed, the assessee is not required to make payment of an amount in terms of Rule 6(3)(i) of the Cenvat Credit Rules - AT Visit to Get Source VAT Principles of natural justice - Validity of revision of assessment orders - The counter affidavit filed by the respondent has not answered the grounds raised by the petitioner that the impugned assessment orders have been passed in a mechanical fashion without verification of the petitioner's books of accounts, but, just relying upon the web report maintained by the respondent. - The matter is remanded back to the respondent for fresh consideration - HC Visit to Get Source Case Laws: GST 2020 (12) TMI 1165 Attachment of cash credit account - Section 83 of the GST Act - the interest of the revenue could be said to be secured for the time being with the provisional attachment of the immovable properties - HELD THAT:- So far as the provisional attachment of the cash credit account maintained with the Canara Bank is concerned, the same should not continue. This Court in many matters has taken the view that the cash credit account cannot be attached in exercise of the power under Section 83 of the GST Act. We take notice of the fact that there are two current accounts maintained with the Canara Bank and rest are the Fixed Deposits. We are not touching the Fixed Deposits for the time being. We are of the view, having regard to the balance in one of the current account that the writ applicant should be permitted to operate the current account - we intend to pass an ad- interim order directing that the Cash Credit Account two accounts at Sr. Nos.1 and 2 are ordered to be defreezed. The provisional attachment is ordered to be lifted. Post this matter along with the Special Civil Application No. 11209 of 2020 in the third week of January, 2021. 2020 (12) TMI 1164 Grant of Regular Bail - illegal and wrongful availment of input tax credit - Revenue submits that the amount illegally availed is huge running into more than ₹ 9.00 crores - HELD THAT:- Perusing the material placed on record and taking into consideration the facts of the case, nature of allegations, gravity of offences, role attributed to the accused, without discussing the evidence in detail, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail. The applicant is ordered to be released on regular bail on executing a personal bond of ₹ 10,000/- (Rupees Ten Thousand only) with one surety of the like amount to the satisfaction of the trial Court and subject to the conditions - Application allowed. 2020 (12) TMI 1163 Principles of Natural Justice - Validity of Demand notice - HELD THAT:- As mutually agreed, the instant petition stands disposed of in terms of judgment M/S GAYA MARKETING VERSUS THE STATE OF BIHAR THROUGH THE PRINCIPAL SECRETARY CUM COMMISSIONER, THE JOINT COMMISSIONER OF STATE TAXES, THE ASSISTANT COMMISSIONER OF STATE TAXES, GAYA. [ 2020 (1) TMI 1355 - PATNA HIGH COURT] and the directions contained therein shall also govern the instant case mutatis mutandi - It was held in the case that The order to be not assigning any reasons whatsoever. Also, it is noticed that prior to passing of the impugned order, no opportunity of hearing was ever afforded to the writ-petitioner. As such, there was gross violation of principles of natural justice in passing of the impugned order, which is hereby quashed. Application disposed off. 2020 (12) TMI 1162 Grant of Regular Bail - alleged input evasion is to the extent of ₹ 29 lakh and odd in respect of Shringar Jewellers - HELD THAT:- Without expressing opinion on merits and arguments canvassed by the learned advocates on either side, this is a fit case to exercise the discretion and enlarge the applicant on regular bail. Hence, the present application is allowed and the applicant is ordered to be released on regular bail. Income Tax 2020 (12) TMI 1161 Computation of deduction u/s 10A - telecommunication expenses and traveling expenses incurred in foreign currency reduced from export turnover has to be reduced from total turnover for computing deduction - HELD THAT:- The first substantial question of law has already been answered against the revenue by a decision of the Supreme Court in HCL TECHNOLOGIES LTD.' [ 2018 (5) TMI 357 - SUPREME COURT ] . The aforesaid aspect of the matter could not disputed by the learned counsel for the revenue. In view of the decision of the Supreme Court, the first substantial question of law involved in this appeal is answered against the revenue and in favour of the assessee. TP Adjustment - Arms length price adjustment on account of interest on external commercial borrowings - loans or external commercial borrowings between the cross border entities resulting in an international transaction and each transaction has to be considered every year with respect to the arms length price - HELD THAT:- It is equally well settled that rate of interest should be determined on the basis of rate of interest prevailing at the time of availing the loan. From perusal of the order passed by the tribunal, it is evident that before the tribunal, the assessee had filed the copy of show cause notice issued by Transfer Pricing Officer, the assessee's submission in response to the same and order of the Transfer Pricing Officer for Assessment Year 2008-09. The tribunal has further found that the loans were obtained by the assessee in the year 2000-01 at the rate of 7.5% and 8.49% respectively. The tribunal has further recorded the finding that assessee has obtained the loans in the year 2001 and the issue has been considered by the Transfer Pricing Officer for the Assessment Years 2004-05 and 2005-06 and also for the Assessment Year 2008-09. It has further been held that Transfer Pricing Officer after considering the assessee's submission has accepted the rate of interest fixed in the loan agreements. It is also pertinent to mention here that the rate of interest has been accepted by the Assessing Officer for the years 2002-03 to Assessment Year 2008-09 except the Assessment Year 2006-07. Therefore, the tribunal has rightly held that the revenue cannot be allowed to make a departure in case of rate of interest for Assessment Year 2006-07. The Supreme Court in RADHASOAMI SATSANG Vs. COMMISSIONER OF INCOME-TAX [ 1991 (11) TMI 2 - SUPREME COURT ] has held that even though principles of res judicata do not apply to income tax proceedings, but where a fundamental aspect permeating through the different Assessment Years has been found as the fact one way or the other and the parties have allowed the position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in subsequent year. For this reason also, in the facts of the case, a different view cannot be taken. 2020 (12) TMI 1160 Disallowance u/s 40(a)(ia) in respect of depreciation on intellectual property rights - Failure to deduct TDS - HELD THAT:- Section 40 refers to the outgoing amount chargeable under this Act and subject to TDS under Chapter XVII-B. The deduction under Section 32 is not in respect of the amount paid or payable which is subjected to TDS; but is a statutory deduction on an asset which is otherwise eligible for deduction of depreciation. Section 40(a)(i) and (ia) of the Act provides for disallowance only in respect of expenditure, which is revenue in nature, therefore, the provision does not apply to a case of the assessee whose claim is for depreciation, which is not in the nature of expenditure but an allowance. The depreciation is not an outgoing expenditure and therefore, provisions of Section 40(a)(i) and (ia) of the Act are not applicable. In the absence of any requirement of law for making deduction of tax out of expenditure, which has been capitalized and no amount was claimed as revenue expenditure, no disallowance under Section 40(a)(i) and (ia) of the Act would be made. It is also pertinent to note that depreciation is a statutory deduction available to the assessee on a asset, which is wholly or partly owned by the assessee and used for business or profession. The depreciation is an allowance and not an expenditure, loss or trading liability. The Commissioner of Income Tax (Appeals) has held that the payment has been made by the assessee for an outright purchase of Intellectual Property Rights and not towards royalty and therefore, the provision of Section 40(a)(ia) of the Act is not attracted in respect of a claim for depreciation. The aforesaid finding has rightly been affirmed by the tribunal. The findings recorded by the Commissioner of Income Tax (Appeals) as well as the tribunal cannot be termed as perverse. Substantial question of law framed by a bench of this court is answered against the revenue and in favour of the assessee. 2020 (12) TMI 1159 Reopening of assessment - deduction of an amount pertaining to property tax relating to rectification entry of Assessment Year 2005-06 - Whether the said amount pertained to Assessment Year 2005-06, the same should not have been claimed in the computation for the Assessment Year 2006-07? - HELD THAT:- AO not only initiated the reassessment proceedings, but also made an addition of this amount under the notion that assessee had claimed a deduction in this year although, this was not any deduction but only a rectification entry for writing back the impugned amount which pertained to Assessment Year 2005-06. Thus, apparently this rectification was tax neutral and no addition/disallowance was warranted for the reason that this amount was never claimed or allowed as a deduction in the earlier year. CIT (A) dismissed the assessee s appeal on an altogether mis-appreciation of the facts of the case as well as law - He went on to observe that if a liability was wrongly provided in a particular Assessment Year, the assessee should have filed revised return for that year. The Ld. CIT (A) also observed that the assessee did not substantiate the working of this amount of ₹ 15,41,18,249/-. In our considered opinion, the Ld. CIT (A) has entirely misdirected himself by making observations which were entirely out of context and leading to an incorrect conclusion being guided by entirely irrelevant logic. Therefore, while setting aside the order of the Ld. CIT (A) on the issue, we hold that the impugned addition was unwarranted in as much as the rectification entry made by the assessee in Assessment Year 2006-07 was tax neutral. We direct the deletion of this addition. - Decided in favour of assessee. 2020 (12) TMI 1158 Penalty proceedings u/s 271C - Failure to deduct TDS u/s 194C - 2% of the EDC amount paid to HUDA on which tax was alleged to be deducted at source u/s 194C - HELD THAT:- Undisputedly, the payment of EDC was issued in the name of Chief Administrator, HUDA. It is also not in dispute that HUDA has shown EDC as current liability in the balance sheet, but in the Notes to the Accounts Forming part of the Balance Sheet, it has been shown that EDC has been received for execution of various external development works and as and when the development works are carried out, the EDC s liabilities are reduced accordingly. It is also not in dispute that HUDA is engaged in acquiring land, developing it and finally handing it over for a price. It is also not in dispute that EDC is fixed by HUDA from time to time. However, the fact of the matter remains that payment has been made to HUDA through DTCP which is a Government Department and the same is not in pursuance to any contract between the assessee and HUDA. Thus, the payment of EDC is not for carrying out any specific work to be done by HUDA for and on behalf of the assessee but rather DTCP which is a Government Department which levies these charges for carrying out external development and engages the services of HUDA for execution of the work. Therefore, it is our considered view that the assessee was not required to deduct tax at source at the time of payment of EDC as the same was not out of any statutory or contractual liability towards HUDA and, therefore, the impugned penalty was not leviable. - Decided in favour of assessee. 2020 (12) TMI 1157 Income accrued in India - Management services fee claim - royalty receipt - eligibility for benefits of Indo-Netherland DTAA - assessee claimed the same as managerial services, as it did not make available any technical knowledge, experience, skill, know-how or process - HELD THAT:- We fallow the judicial precedence and ratio of the decisions the Hon ble Tribunal [ 2017 (11) TMI 1912 - ITAT MUMBAI ] payments received by the assessee as per the service agreement dated 01.04.2004 does not come into the nature of royalty as defined Article 12(4) India Netherlands Tax Treaty. Accordingly, we set aside the order passed by the Assessing officer and allow the grounds of appeal of the assessee. 2020 (12) TMI 1156 Deduction u/s 80IA - disallowance of deduction as assessee is a contractor not a developer HELD THAT:- As decided in own case [ 2020 (11) TMI 469 - ITAT CHANDIGARH ] deduction u/s 80IA of the Act for the relevant projects i.e. Thural and Dehra has already been allowed in the earlier years and this year being a subsequent year, the findings arrived for the same project in earlier years will mutatismutandis apply to thesubsequent assessment year also with the condition that the total number of years for claiming deduction will be subject to the other conditions relating to the time period of claiming deduction and percentage of the deduction as provided u/s 80IA of the Act. Disallowance u/s 14A - HELD THAT:- It is noticed that the Ld. CIT(A) decided this issue by following the judgment of the Hon'ble Jurisdictional High Court in the case of CIT Vs. Lakhani Marketing Inc. [ 2014 (7) TMI 44 - PUNJAB AND HARYANA HIGH COURT ] wherein it has been held that when there is no exempt income, no disallowance under section 14A of the Act can be made. Ld. CIT(A) also followed the judgment of the Hon'ble Supreme Court in the case of Principal CIT Vs. Oil Industry Development Board [ 2019 (3) TMI 1571 - SC ORDER ]. We therefore in the absence of any contrary decision brought on record, do not see any valid ground to interfere with the view taken by the Ld. CIT(A). 2020 (12) TMI 1155 Additional ground be admitted in the interest of advancement of natural justice - HELD THAT:- There is no necessity of investigation of any fresh facts on this issue and there is good and sufficient reason for not raising this ground in earlier occasion. Accordingly, by placing reliance on the judgment of Supreme Court in the case of NTPC [ 1996 (12) TMI 7 - SUPREME COURT] we admit the additional ground for adjudication. Disallowance of travelling expenditure - Major portion of payments relating to Director s credit card payment - According to the AO, there was personal element involved in this expenditure incurred by the Director - HELD THAT:- The assessee has not substantiated the travel expenditure as it is wholly and exclusively made out for business. There is every chance of personal element attached to this expenditure. It is the duty of the assessee that the expenditure is wholly and exclusively incurred for the purpose of business. Though the AO disallowed expenditure on adhoc basis, the CIT(A) confirmed the same without passing speaking order. In our opinion, it is appropriate to remit the issue back to the file of AO to pin point the exact expenditure which is personal in nature and where the Directors are benefitted by such expenditure. Accordingly, this issue is remitted to the AO for a fresh consideration. Disallowance of business development expenditure AND Club expenses - HELD THAT:- As discussed in the earlier para, the assessee has to establish that this expenditure was incurred only exclusively for the purpose of business by placing necessary evidence so as to entertain the foreign buyers. Accordingly, this issue is remitted to the file of AO for fresh consideration. Suppressed income of assessee - Sale receipts from sale of scrap silk yarn - difference between the value determined by AO and the value declared by assessee - HELD THAT:- There are various scraps like sale of acrylic yarn, sale of noil yarn, sale of silk yarn, sale of sleever, sale of spun silk yarn, sale of viscose yarn. Each one s value is different and the AO uniformly taken the value of each item per kg. at ₹ 1200/- per kg. which is not proper. Accordingly, we direct the AO to consider each type of item separately to determine the value of it and then there is difference between value adopted by the assessee and to the value computed by the AO, he can sustain the addition on this count. With this observation, we remit this issue to the file of AO for fresh consideration. Addition of interest income from other sources - contention here is that there is a brought forward loss and depreciation in the return of income and this interest income should be set off out of the brought forward loss and depreciation and the net result will be considered to determine the income of the assessee - HELD THAT:- The order of the CIT(A) on this issue is very cryptic. She has not dealt the issue in proper prospective. The AO is not correct in not considering the set off of brought forward loss and depreciation while computing the income of the assessee. Hence, we remit this issue to the file of CIT(A) to pass a speaking order on this issue and decide accordingly. 2020 (12) TMI 1154 Deduction u/s 35(2AB) - expenses on in-house R D (being the 200% of R D expenditure) - HELD THAT:- CIT(A) has allowed the claim of the assessee on the basis of decision of Meco Instruments Pvt. Ltd. [2010 (8) TMI 484 - ITAT, MUMBAI] - In this case also, the expenses incurred on in-house R D was allowed. The expenses incurred for in-house R D unit of appellant company are supported by bill and vouchers and duly verified by the AO. The facts are not distinguishable at this stage. There is nothing on record to which it can be assumed that the law settled in Meco Instruments Pvt. Ltd. (supra) has been changed or varied, therefore, in the said circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is decided in favour of the assessee against the revenue. 2020 (12) TMI 1153 Bogus purchases - Estimation of income - search and seizure operation u/s. 132 - HELD THAT:- Just because the assessee had made payments through banking channels to the vendors and recorded the diamonds purchased in its stock book does not make the transactions to be genuine with conclusive evidence. Further there is no materials on record to justify that the stock is reconciled with respect to purchases, sales and closing stock item wise. There is every possibility for the assessee to make payment through banking channel and receive the same back by way of cash and obtain bogus purchase bills. It is also obvious that in the nature of business carried out by the assessee, 0.33% net profit declared by the assessee is too low and cannot be accepted. Further even if 24% of the turnover is estimated as the income of the assessee, the assessee should have earned net income of approx. ₹ 98,00,000/-. In the case of the assessee it has only declared net profit of ₹ 1,33,921/-. Considering these facts and circumstances of the case and the report of the Investigation Department of the Revenue, we are of the considered view that the addition made by the Ld. AO for ₹ 98,69,702/- is justifiable when there is a corroborative evidence from the records maintained by the vendors of the assessee that the purchases made by the assessee is bogus. - Decided against assessee. 2020 (12) TMI 1152 Addition on account of deemed dividend u/s. 2(22)(e) - assessee company has obtained unsecured loan from Gaurav Securities Pvt. Ltd - One main shareholder of the assessee company was also holding substantial shareholder in the Gaurav Securities Pvt. Ltd. from whom the assessee has obtained the loan - HELD THAT:- For the applicability of section 2(22)(e), it is required that the assessee company must be a shareholder in the company from whom the loan or advance has been taken and it does not provide that any shareholder in the assessee company who had taken any loan or advance from another company in which such shareholder is also a shareholder having substantial interest. Since the facts of the case of the assessee are squarely covered by the decisions of Mahavir Inducto Pvt Ltd. [ 2017 (1) TMI 1159 - GUJARAT HIGH COURT] the impugned addition is deleted. Accordingly, this ground of the assessee is allowed. Disallowance of office expenses - assessee has shared common business premises with its associate concern M/s. Gaurav Securities Pvt. Ltd. and in the profit and loss account assessee company has debited substantial expenses related to the office building and its maintenance - AO show cause to assessee why 50% of these expenses should not be disallowed because of sharing of common business premises - HELD THAT:- On perusal of the profit and loss account of M/s. Gaurav Securities Pvt. Ltd it is noticed that during the year under consideration it has shown only indirect income in the form of dividend income and interest income which demonstrate that no major activities was carried out during the year under consideration. The Assessing Officer has also failed to controvert the claim of the assessee with specific finding that its associate concern had not carried out any business activity at the premises. The aforesaid facts demonstrates that no major activities has been carried out in the case of M/s. Gaurav Securities Pvt. Ltd. therefore we consider that disallowance of expenses to the extent of ₹ 25% of the amount is reasonable in this case. We restrict the disallowance to the extent of ₹ 25% of the expenses - Decided partly in favour of assessee. 2020 (12) TMI 1151 Computation of income from house property - deduction of interest on subsequent loan which was borrowed to repay earlier loan - assessee has claimed deduction under section 24(b) as interest paid on capital borrowed for the purpose of construction of the property- interest paid on the loans borrowed for the purpose of construction of a commercial building - CIT(A) allowed the claim of the assessee for deduction of interest paid to Corporation Bank but did not allow the claim of the assessee for deduction on account of interest paid to Kaveri Bai - HELD THAT:- The CBDT in Circular No. 28 dated 20-8-1969 has explained that when a loan is taken to repay loan taken for construction of a property interest paid on such loan is also deductible in computing under the head income from house property. CIT(A) held that this circular is not applicable because the same was issued when erstwhile Sec. 24(1)(vi) of the Act was in force and that by the Finance Act, 2001 w.e.f. 1.4.2002 Sec. 24 of the Act was reframed is not correct on the part of the CIT(A) to conclude that the aforesaid circular is not applicable as it was issued under the erstwhile provisions of Sec. 24 as it stood prior to 1.4.2002. The new provisions of Sec. 24 are also on the same lines with regard to the scheme of determination of income under the head income from house property and in particular with regard to allowability as deduction of interest paid on loans borrowed for the purpose of constructing the property. Therefore one of the reason given by the CIT(A) for not allowing the claim of the Assessee is therefore unsustainable. Denyi ng deduction of interest paid to Mrs. Kaveri bai is by applying the 3rd proviso to Sec. 24(b) - The expression used in Sec. 24(b) is 'property' and not residential or commercial property. Therefore, irrespective of the nature of the property whether it is residential or commercial, deduction has to be allowed under section 24(b) of the Act. As far as the 3rd proviso to section 24(b) of the Act is concerned, all the provisos to Sec. 24(b) of the Act deal with property referred to in section 23(2) of the Act which refers to a residential property. The proviso only carves out an exception to section 24(b) of the Act, in so far as it relates to property used for residential purposes and does not deal with or curtail the right of an assessee to get deduction on interest paid on loans borrowed for the purpose of constructing commercial property. Both the AO and CIT(A), in our view, fail into an error in applying the 3rd proviso to section 24(b) of the Act to the case of the assessee. None of the reasons assigned by the revenue authorities for denying the claim of the Assessee for deduction of interest paid to Mrs. Kaveri Bai, while computing income under the head income from house property can be sustained. We, therefore, direct that the deduction claimed by the assessee should be allowed. 2020 (12) TMI 1150 Disallowance u/s 40(a)(i)/(ia) - assessee has claimed the amount of provision for expenses so reversed as deduction - A.R. submitted that the assessee had voluntarily disallowed a sum in AY 2006-07 u/s. 40(a)(i)/(ia) of the Act for non-deduction of tax at source - HELD THAT:- As per the provisions of the Act, if the assessee has got any benefit from an amount, which was claimed as deduction in an earlier year, then such benefit is taxable. When the assessee has not claimed the amount as deduction at all in an earlier year, any benefit obtained from it cannot be subjected to tax under the Act. In the instant case, the assessee has disallowed the provision amount of ₹ 9.71 crores while computing total income for AY 2006-07, meaning thereby, the assessee has not claimed the amount of ₹ 9.71 crores as deduction in AY 2006-07. The assessee has reversed the entire amount of ₹ 9.71 crores in the year relevant to AY 2007-08 by crediting the same to expenditure account/P L a/c. Out of the amount so reversed, the assessee has incurred expenses to the tune of ₹ 4.17 crores. The assessee has not incurred expenses for the balance amount of ₹ 5.54 crores and hence it has increased the profit/total income of the assessee. Since it was not claimed as deduction in AY 2006-07, the same cannot be subjected to tax during the year under consideration. Accordingly, we are of the view that the Ld CIT(A) was justified in deleting the disallowance - Decided in favour of assessee. 2020 (12) TMI 1149 TP Adjustment - comparable selection - HELD THAT:- Acropetal Technologies Limited - There is no objection with regard to this comparable however the DRP suo moto excluded the above company from the list of comparables though it satisfies all the criteria adopted by the TPO. In our opinion, suo moto exclusion of this company by DRP is not proper and there is also no objection from the assessee. Accordingly, we direct the TPO to include this company as comparable in the list of comparables for determining the ALP. E-Infochips Limited - In the present case, the assessment year involved is 2011-12; as rightly pointed out by the ld.AR, the revenue from software development services is less than 75% and it is having revenue both from software development and software services and also segmental data was not available. In these circumstances, it cannot be included as comparable in the list of comparables. Accordingly, the exclusion by the DRP is justified. L T Infotech Limited - This company is not functionally comparable to the assessee's case as the company L T Infotech Limited is predominantly engaged in onsite software development - Accordingly, the exclusion of this company from the comparison list by DRP is justified. R S Software Limited - when the assessee as well as the TPO excluded it as comparable without any objection by the assessee, it cannot be excluded by the DRP. Accordingly, this company is to be included as a comparable. The exclusion of this company as comparable suo moto by the DRP cannot be approved. We direct the TPO to include this company in the list of comparables. Acropetal Technologies Limited - We direct the TPO to exclude this company from the list of comparables. Jeevan Scientific Technologies Ltd. and I-Gate Global Solutions Limited - No serious argument was put forth by the ld. DR. Accordingly the exclusion of these two comparables by the DRP is justified. We direct the TPO to exclude these two companies as comparables from the list of comparables. Net profit margin realized by the tax payer in the international transactions - foreign exchange transactions to be considered as operating in nature - HELD THAT:- This issue was considered by this Tribunal in Cisco Systems Services BE [ 2014 (10) TMI 852 - ITAT BANGALORE ] wherein it was held that the foreign exchange fluctuation gain arising to the assessee on realization of trade debtor, payment to creditor, etc. were nothing but operational income. On the same analogy, we are of the opinion that the foreign exchange gain or loss relating to the trading transaction of the assessee should be considered as operating income/expenses. Being so, we are upholding the finding of the DRP on this issue. The ground of appeal taken by the Revenue is rejected. 2020 (12) TMI 1148 Reopening of assessment u/s 147 - exemption under section 11 and 12 denied - AO has noticed that since 85% of the income for the year under consideration was not applied by the assessee for charitable purpose, therefore, the assessee was not entitled to exemption u/s. 11 - HELD THAT:- We are not convinced with the arguments of the assessee that the assessee has fully and truly disclosed all material facts necessary for his assessment. It is apparent from the assessment order dated 13.2.2014 that the assessee did not disclose fully and truly the very material fact that the assessee had not applied 85% of the income/receipts of the year for charitable purposes which was a pre-condition for grant of exemption u/s. 11. Had the assessee disclosed this material fact to the AO, the Assessing Officer would not have accepted the return of the income of the assessee. In view of this, we do not find any merit in ground No. 1 of the appeal and the same is, therefore, dismissed. Deduction u/s. 11 - alternative claim u/s. 10(23C)(iiiad) was also made before the Assessing Officer and the Assessing Officer was supposed to consider the same - HELD THAT:- We find force in the above contention of the assessee. If the assessee otherwise is eligible for deduction under the provisions of section 10(23C)(iiiad) of the Act, the said claim of the assessee, in our view, is required to be examined by the AO. The issue is, therefore, restored to the file of the AO with a direction to consider the alternative claim of the assessee of its eligibility to claim exemption from taxation under the provisions of section 10(23C)(iiiad) of the Act if the assessee otherwise qualify for the same irrespective of the fact whether or not the assessee had made a specific claim in the original return of income in this respect. This issue is accordingly restored to the file of the Assessing Officer. As contested the denial of claim of exemption under the provisions of section 11 of the Act. Admittedly, the assessee did not apply 85% of the income/receipt on charitable purposes as required under the provisions of section 11 of the Act. Therefore, there is no merit in this ground of appeal, and the same is accordingly dismissed. 2020 (12) TMI 1147 Penalty levied u/s 271(1)(c) - addition made u/s 68 - HELD THAT:- Admittedly the question of penalty u/s.271(1)(c) arises with respect to the addition made during the assessment proceeding. In the case on hand the quantum addition made u/s 68 of the Act for ₹ 70 lacs had been deleted by us in the quantum order as discussed above. Accordingly we are of the view that the penalty u/s.271(1)(c) is not sustainable. Thus the penalty levied by the AO is hereby deleted. Hence the ground of appeal of the assessee is allowed. 2020 (12) TMI 1146 Long term capital gain arising on the sale of land u/s. 50C - CIT(A) has dismissed the appeal of the assessee stating that there was no categorical request made by the assessee before the Assessing Officer that the valuation may be referred to the departmental valuation officer - HELD THAT:- We consider that the assessee has categorically brought to the notice of the Assessing Officer that the value adopted by the stamp valuation authority in his case exceed the fair market value of the property as on the date of transfer because the circumstances cited as supra in this order. Therefore, we consider that to verify the facts reported by the assessee, the Assessing Officer could have referred the issue for valuation of the sold capital asset to a Departmental Valuation Officer under the provision of section 50C(2) We restore this case to the file of the Assessing Officer for deciding the issue of long term capital gain earned on sale of the impugned land afresh after referring the matter to the departmental valuation officer. Therefore, this appeal of the assessee is allowed for statistical purposes. 2020 (12) TMI 1145 Accrual of income - Revenue recognition - sale proceeds from declared and undeclared stock - case was selected for scrutiny and notice under section 143(2) on the basis of revised return filed - HELD THAT:- Recognition of sale proceeds from declared stock received by assessee - Accrual of income must be judged, depending facts and circumstances of each case. Sale proceeds from disclosed stock accrued to assessee during the year under consideration and has to be considered for determining income under the head profits and gains from business for year under consideration. We have already noted that assessee has offered the above sale consideration on subsequent assessment years, and income tax act does not permit to assess same income twice. Hence in our view assessee may move appropriate petition before the authorities below for exclusion of above sale proceeds from declared stock in the relevant assessment year. Addition of sale proceeds of undeclared stock - what could be considered under section 37, are probable expenditure for purposes of earning income? - On perusal of decision in case of Prakash Cotton . [ 1993 (4) TMI 3 - SUPREME COURT] . Hon ble Court was considering determination of real income in case of finance lease that forms part of lease Rentals . Hon ble Karnataka High Court following decision of Hon ble Delhi High Court in case of CIT Vs. Virtual Soft Systems Ltd[ 2012 (2) TMI 120 - DELHI HIGH COURT] held that, only financing charges represents real income, and not capital receipt, though both have been accrued and received. In present facts there is no doubt that sale proceeds from undeclared stock assume character of income in the hands of assessee. Merely because sale proceeds were not parted to assessee, it cannot be considered as probable expenditure u/s 37(1). Whether to be treated as diversion of income by overriding title or Trading Loss? - There is no doubt that, sale proceeds arises out of dump considered by assessee to be not saleable that was generated in course of its regular business. Therefore, such undeclared stock, in principle belongs to assessee and sale proceeds of such undeclared stock assume character of income in the hands of assessee when sale proceeds are recovered by assessee. Hence in principle, such income should be considered as accrued to assessee on the date of sale by MC - even if the receipt is considered as taxable on accrual basis, the same is deductable as trading loss. Addition under the head SPV charges - Whether part of Corporate Social Responsibility (CSR) activity - addition on account of Category A-10% of confiscated sale proceeds utilised towards SPV and addition on account of Category B-15% of confiscated sale proceeds, utilised towards SPV - HELD THAT:- We note that 10%/15% of sale proceeds was payable to SPV account, after it accrued to assessee, and the fact that, assessee was obliged to part with such portion of income, by virtue of directions of Hon ble Supreme Court in case of Samaj Parivartana Samudaya Ors. Vs. State of Karanataka Ors. [ 2011 (8) TMI 1339 - SUPREME COURT] as a precondition to resume mining operations under Category A and B . At this juncture we also emphasise that, but for the intervention by Hon ble Supreme Court, assessee would not have contributed 10%/15% to SPV account for implementation of reclamation and rehabilitation scheme on its own, as there was no statutory requirement to do so under relevant statutes that regulate mining activities. In our view contributing 10%/15% to SPV account on account of Category A / B respectively, would be application of income, and therefore should be considered as expenditure incurred for carrying out its business activity. Provisions of Explanation 1 to sec.37 will not apply to these payments. We also note that Hon ble Supreme Court at page 171 observed that, these payments are necessary to be made by the mining lease holders. Hence there is merit in the submission of Ld.Counsel that, without making these payments, assessee could not have resumed the mining operations. Hence, these expenses are incidental to carrying on the business and hence allowable u/s 37(1) of the Act. Based on above discussions and analysis, we are of opinion that contribution to SPV being 10%/15% of sale proceeds, under category A/B, is to be allowable as expenditure for year under consideration. Disallowing the expenditure paid to the department of Mining and Geology on the premise that the said payment is in the nature of penalty for breach of law under Explanation 1 to section 37 - Assessee contested that, expenditure was incurred as compensatory/compounding fee, and paid as commercial expediency to regularise pending issues and by doing so, assessee was allowed to commence its business operations - Assessee claimed it as expenditure in the original return of income and excluded the same from Sales revenue in the revised return of income contending that the same is diversion by overriding title.- HELD THAT:- As relying on NMDC Ltd vs ACIT [ 2018 (10) TMI 1120 - ITAT AHMEDABAD] Payment made is compensatory in nature only as these funds are meant to be used for public purposes and the assessee could not have commenced its operations without paying the same, the same is allowable as revenue expenditure. We are therefore of the view that payment made as compensation is not hit by Explanation 1 to Section 37(1) and is an allowable expenditure. Disallowance of probable expenditure for R R retained/deducted by monitoring committee under Category B - assessee has not submitted any details with regard to R R expenditure and its nature and for what purpose the amount was spent - HELD THAT:- Assessee was directed to make such payments in order to resume the mining activity. It is also clear that payment intimations may be issued as and when found necessary by the Department of Mining. Assessee cannot ignore such intimations for its smooth functioning of business. We therefore are of the opinion that these are expenditure incurred by assessee in lieu of business. We therefore reject the argument of revenue that such payment is hit by Explanation to section 1 to Section 37. Assessee submitted that in lieu of above directions, assessee was refunded ₹ 1,21,94,000/- out of Rs,1,48,97,000/-, during the financial year relevant to the assessment year 2019-20, which has been offered to tax. This fact supports the submission of assessee that, it did not have any control over the amount so deducted. Accordingly, demand raised by the Department of Mining in its letter would create a liability on assessee. Assessee was therefore justified in creating provision for this expenditure. Since the provision for expenses so made is related to the business activities of assessee, the same is allowable as deduction. Accordingly, we Ld.AO to delete the disallowance of ₹ 1,48,97,000/-. Disallowance expended towards Corporate Social responsibility - AO disallowed the said sum by holding that it was not incurred for purposes of business - Assessee s claim of above said expenses were disallowed on the ground that it was not incurred in the course of business but for philanthropic purposes - HELD THAT:- Assessee has contributed funds at the specific request of local administration, which is meant to be used for the benefit of public. As observed in the above said case, the assessee would also be required to approach the appropriate Government and its authorities for grant of permits, licenses. Hence it is a prudent decision of the assessee to oblige to the appeal made by the local administration and incurred the expenses for public purposes. Hence the assessee has incurred expenses not only on account of social responsibility, but also keeping in mind the goodwill and benefit it would yield in the long run in earning profit. Hence this expenditure would be in the realm of business expenditure . Accordingly, we hold this expenditure is allowable as deduction. Accordingly, we set aside the order passed by Ld.CIT(A) on this issue and direct the AO to delete this disallowance. Addition of unaccounted receipts being the difference between books of accounts and Form No.26AS - HELD THAT:- There is no estoppel against law. Hence, if the assessee proves that any transaction does not belong to it, then no addition is called for. Hence acceptance of any addition, which is against law, will not bar the assessee from contesting the same. However, it is the responsibility of the assessee to substantiate its claim. It is also quite possible that some of the companies might have rectified their Statement of TDS in order to correct mistakes, if any. Hence the position available in Form 26AS as on today may depict different picture. Accordingly, we are of the view that the assessee may be provided with an opportunity to reconcile the differences in respect of two companies cited above and also to prove that it did not have transactions with other companies. Accordingly, we set aside the order passed by Ld.CIT(A) on this issue and restore the same to the file of the AO for examining it afresh. 2020 (12) TMI 1144 TDS u/s 194C - transportation charges paid during the year - Addition u/s. 40(a)(ia) of the Act for non-deduction of tax at source - immunity from obligations of TDS by filing of PAN of payee transporters - HELD THAT:- Present year under consideration before us AE s assessment year 2013-14 and therefore unamended provision of clause 6 is to be considered. On perusal of unamended clause 6, it is clear that, if the sub contractor s have supplied their PAN to assessee in respect of hiring/leasing/of vehicles during the course of its business, then assessee shall not deduct any TDS. Thus, as per Clause 6, as it stood prior to amendment, applicable for the year under consideration, in order to get immunity from obligations of TDS, filing of PAN of payee transporter is sufficient, and no confirmation letter as required by Ld.AO is needed. The need to furnish declaration from the contractor s being owners of less than 10 vehicles has been inserted by way of amendment which is effective from 01/06/2015. AR in the paper book, filed Explanatory notes to the Provisions of Finance Act 2015 at page 75, wherein, applicability of amendment to section 194C(6) has been said to take effect from 01/06/2015. Therefore, amended provision of clause 6 to section 194 cannot be applied retrospectively. Thus the intention of legislature was very clear to apply the amended clause 6 prospectively. The objection raised by Ld.CIT(A)/AO in this regard therefore does not hold any waters in eyes of law. Categorically assessee had provided PAN of 5/7 transporters, before Ld.AO. We therefore do not find any reason to uphold disallowance in respect of payments made to 5 transporters whose PAN were submitted by assessee. Accordingly we delete the disallowance made in respect of transporters whose PAN was submitted by assessee. Payments to M/s.Precicse Carrier and M/s.KPR Transport - As submitted assessee was not required to deduct TDS as the same was within the limit prescribed under section 194C(5) - We direct Ld.CIT(A) to verify whether any TDS is to be deducted on payments made by assessee to M/s.Precicse Carrier amounting to ₹ 34,650/- and M/s. KPR Transport, amounting to ₹ 7,230/-. In the event submissions by assessee are found to be correct, no disallowance shall be made. 2020 (12) TMI 1143 Disallowance of prior period expenses - HELD THAT:- It is clear from the Assessment Order that this issue has not been properly examined. Therefore, we deem it fit to remit this issue to the AO for a fresh examination. The assessee shall lay relevant evidence/material in support of its contention and comply with the requirements of the AO in accordance with law. The AO on due examination and after affording due opportunity to the assessee, shall decide the issue on merits Disallowance of employee's contribution to the PF - assessee paid belatedly u/s. 36(1)(va) but before the due date of filing the return of income - HELD THAT:- We allow the claim of the assessee for deduction towards employees contribution to PF which was deposited late beyond due date as prescribed under relevant statute governing PF, but the same stood deposited to the credit of employees with relevant fund before the due date for filing of return of income as prescribed u/s. 139(1). 2020 (12) TMI 1142 Disallowance u/s 14A r.w.r. 8D(2)(ii) - HELD THAT:- On perusal of the financials of the assessee, which is enclosed in the paper book filed by the assessee, it is clear that the interest free funds in possession of the assessee far exceeded the investments made during the current year and even in the immediately preceding assessment year. For the year ending 31.03.2016, the assessee s share capital, reserves and surplus together is ₹ 33,70,22,076, whereas, the current year s investment is only ₹ 11,07,43,921. The only justification of the CIT(A) was that the investments are from a common pool, and therefore, a portion of the interest disallowance is warranted. Hon ble jurisdictional High Court in the case of CIT v. Microlabs Ltd [ 2016 (4) TMI 219 - KARNATAKA HIGH COURT] had held that even in a situation where investments are from common pool, if non-interest bearing funds are more than the investments in tax free securities, no disallowance can be made u/s 14A of the I.T.Act r.w.r. 8D(2)(ii) - we delete the disallowance made by the A.O. u/s. 14A of the I.T.Act r.w.r 8D(2)(ii) - we delete the disallowance made by the A.O. u/s. 14A of the I.T.Act r.w.r 8D(2)(ii) of the I.T.Rules - Decided in favour of assessee. 2020 (12) TMI 1141 Unexplained cash deposits in his bank account - HELD THAT:- The affidavits so filed in absence of necessary corroboration therefore don t support the creditworthiness of these persons. Further, it has been stated that the cash advance has been given towards purchase of flat, however, there is no mention about the locality, area, etc of such flat for which such amount has been given. The assessee in his return of income has also not disclosed any transaction towards sale of flats. The affidavits so filed therefore don t represent a clear picture of the actual transaction which is claimed by the assessee in absence of necessary corroboration. The assessee was asked to produce these persons for necessary verification and having failed to produce these persons, it cannot be assumed that the AO has accepted the affidavits so filed. Assessee has failed to discharge the initial onus cast on him in terms of satisfying the test of creditworthiness and genuineness of the transactions so claimed by him and unless the initial onus cast on the assessee is discharged, the burden doesn t shift on to Revenue to prove otherwise and mere non-issuance of summons doesn t support the case of the assessee - There is no infirmity in the findings of the ld CIT(A) where the cash deposit has been found not satisfactorily explained and brought to tax in the hands of the assessee as his unexplained income. Appeal of the assessee is dismissed. 2020 (12) TMI 1140 Reopening of assessment u/s 147 - Due to non-service of notices assessment has been passed ex-parte - additions have been made under Section 69 and 68 which were on account of unexplained cash Credit in the bank account and undisclosed amount invested in the purchase of land - HELD THAT:- Initiation of proceedings under Section 147/148 of the Act and the assessment order has been passed without service of statutory notices and without giving any opportunity to the assessee there is gross violation of natural justice. Even before the first appellate authority the matter has been decided ex-parte, without any opportunity to represent as notices could not be served. Therefore, in the interest of substantial justice the matter is restored back to the file of Assessing Officer to be decided afresh in accordance with law on all the issues raised before us including the legal issues are kept open and the assessee is directed comply with the notices and substantiate her case before the Assessing Officer. 2020 (12) TMI 1121 Revision u/s 263 - investment in Tata Sons Ltd - AO allegedly failed to verify the applicability of section 13(1)(c), 13(1)(d) and 13(2)(h) - what is the nature of scope of the provisions of Explanation 2(a) to Section 263 to the effect that an order is deemed to be erroneous and prejudicial to the interests of the revenue when Commissioner is of the view that the order is passed without making inquiries or verification which should have been made ? - HELD THAT:- The true test for finding out whether Explanation 2(a) has been rightly invoked or not is, therefore, not simply existence of the view, as professed by the Commissioner, about the lack of necessary inquiries and verifications, but an objective finding that the AO has not conducted, at the stage of passing the order which is subjected to revision proceedings, inquiries and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant that the Assessing Officer is expected to be. In exercise of his powers under section 263, the Commissioner may as well direct the Assessing Officer that related addition to income or disallowance from expenditure be made, or remedial measures are taken. The second category of cases could be when the Commissioner finds that necessary inquiries are not made or verifications not done, but, based on material on record and in his considered view, even if the necessary inquiries were made or necessary verifications were done, no addition to income or disallowance of expenditure or any other adverse action would have been warranted. Clearly, in such cases, no prejudice is caused to the legitimate interests of the revenue. No interference will be, as such, justified in such a situation. That leaves us with the third possibility, and that is when the Commissioner is satisfied that the necessary inquiries are not made and necessary verifications are not done, and that, in the absence of this exercise by the Assessing Officer, a conclusive finding is not possible one way or the other. That is perhaps the situation in which, in our humble understanding, the Commissioner, in the exercise of his powers under section 263, can set aside an order, for lack of proper inquiry or verification, and ask the Assessing Officer to conduct such inquiries or verifications afresh. In the present case the assessee trust has made investments in Tata Sons Ltd, but that does not mean that Tata Sons Ltd is a property of the assessee trust- a proposition blatantly erroneous in law and in concept. What has been paid to the persons holding office as trustees, though in consideration for other roles played by them such as former directors and employees, has nothing to do with the determination of benefits to the trustees. The pension payments to Ratan N Tata and N A Soonawala, for example, have been held to be wholly and exclusively for the purposes of the business of Tata Sons Ltd and, therefore, the stand that these payments amounted to benefit to the trustees is ex facie incorrect. In any case, as we have noted earlier, all these aspects were duly examined at the assessment stage, and the defects that the learned Commissioner has pointed out in the said examination during the assessment proceedings, for the detailed reasons we have set out earlier, cannot meet our judicial approval. We are, therefore, of the considered view that learned Commissioner was not justified in subjecting the assessment order to revision proceedings on the ground that the Assessing Officer did not examine the matter regarding assessee s control over Tata Sons Ltd, and whether, by virtue of such alleged control, any of the specified persons under section 13(3) received any benefits, and whether the investments made by the assessee trust were in violation of Section 13(2)(h). Non-verification of accumulation of unspent surplus under section 11(2) was wrongly stated to be allowed though the same was neither asked nor required as the surplus was less than 15%. Learned Commissioner has been fair enough to state that though the order is erroneous on this issue, it is not prejudicial to the interest of the revenue . He has, however, also added that the claim of deduction of 15% of income under section 11(1)(a) is subject to verification of other issues . That, however, is irrelevant inasmuch as once it is not a legitimate ground on which revision proceedings can be initiated, inasmuch as to subject an order to revision proceedings it should be erroneous as also prejudicial to the interest of the revenue - which is admittedly not the case, there is no room for any other riders on verifications as a result of revision proceedings. This nonverification also, even if that be the correct position, cannot be ground enough to invoke the revision proceedings. Non-verification of interest income details about the entities from which the interest was earned were reported in Schedule VI to the financial statements, and interest income from each of these investments was also separately reported in Schedule XIII and XIV of the financial statements. The details were also before the Assessing Officer in form 26AS. In any event, it is not even in dispute that all the investments made by the assessee trust were in conformity with Section 11(5) requirements. In these circumstances, we are unable to see any reasons for holding the suspicion that some of the interest income may be from sources that are not qualified for exemption under section 11, and, for that reason, the verification about sources of interest income is required to be done extensively. Once all these details were on record, and there is not even a suggestion that any part of interest income is not qualified for exemption under section 11, we are unable to uphold the stand of the learned Commissioner that the subject assessment order was erroneous and prejudicial to the interest of the revenue for want of verifications of interest income sources. We disapprove of the action of the learned Commissioner on this point as well. Commissioner has also noted that even though the income from dividend was treated as exempt under section 10(34), the Assessing Officer should have nevertheless examined whether the entire income of the assessee trust was applied for the purposes of the assessee trust.The observations so made by the learned Commissioner show that he has not even applied his mind to the undisputed facts of the case. If he had cared to look at paragraph 8 of the subject assessment order, he would have noticed that the Assessing Officer has already included the dividend income of ₹ 95,63,30,094 in the available gross receipts of the assessee trust and examined the application of the said income. That is beside the point that such an action was contrary to the claim of the assessee that once this income of ₹ 96,63,30,094 is held to be exempt under section 10(34), it cannot be brought to taxation under section 11 of the Act, and the rejection of the said claim is the subject matter of assessee s appeal before the CIT(A). What was being directed by the learned Commissioner was already done by the Assessing Officer, and, therefore, these directions clearly show that there was a clear and glaring non-application of mind to even undisputed material facts of the case. We, therefore, cannot approve justification of the subject assessment order being held to be erroneous and prejudicial to the interests of the revenue for this reason as well. No other reason is pointed out to us. We hold the impugned revision order as devoid of legally sustainable merits - Decided in favour of assessee. Customs 2020 (12) TMI 1139 Maintainability of petition - availability of alternative remedy of appeal - Petitioner did not prefer any such appeal before that Appellate Authority, but has instead filed Writ Petition - HELD THAT:- Hon'ble Supreme Court of India in ASSISTANT COLLECTOR OF CENTRAL EXCISE, CHANDAN NAGAR VERSUS DUNLOP INDIA LIMITED AND OTHER [ 1984 (11) TMI 63 - SUPREME COURT ] has succinctly explained the legal position relating to the exercise of discretionary powers under writ jurisdiction where it was held that It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article 226 of the Constitution. There is no acceptable explanation from the Petitioner for not having resorted to that alternative remedy provided under the statute. It is also not the case of the Petitioner that the contentions raised in this Writ Petition could not be agitated in the appeal before the Appellate Authority - this Court is not inclined to delve into the merits of the controversy involved in this case, touching upon disputed questions of fact for effectual and complete adjudication of the matter. Petition dismissed. 2020 (12) TMI 1138 Maintainability of petition - availability of alternative remedy of appeal - Petitioner did not prefer any such appeal before that Appellate Authority, but has instead filed Writ Petition - HELD THAT:- Hon'ble Supreme Court of India in ASSISTANT COLLECTOR OF CENTRAL EXCISE, CHANDAN NAGAR VERSUS DUNLOP INDIA LIMITED AND OTHER [ 1984 (11) TMI 63 - SUPREME COURT ] has succinctly explained the legal position relating to the exercise of discretionary powers under writ jurisdiction where it was held that It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article 226 of the Constitution. There is no acceptable explanation from the Petitioner for not having resorted to that alternative remedy provided under the statute. It is also not the case of the Petitioner that the contentions raised in this Writ Petition could not be agitated in the appeal before the Appellate Authority - this Court is not inclined to delve into the merits of the controversy involved in this case, touching upon disputed questions of fact for effectual and complete adjudication of the matter. Petition dismissed. Corporate Laws 2020 (12) TMI 1137 Seeking directions for reactivation of their Director Identification Numbers (DIN) and Digital Signature Certificates (DSC) - non-compliance and non-filing of balance sheets and returns of the Company for several years - disqualification from acting as Directors, under Section 164(2)(a) of the Companies Act, 2013 - HELD THAT:- In the present cases, the first period of disqualification has already ended. The second period of disqualification of five years as per notice dated 15th September 2017 ends on 31st October 2021. A substantial period of the disqualification has already been undergone by the Petitioners. Re-appointment of new directors, seeking approval for the same and then filing documents of the Company under the Scheme, would be an impractical solution. Thus, while leaving the questions of law open, in the facts and circumstances of these two cases, in order to enable the Petitioners/Directors to avail of the Scheme, this Court directs that the DINs and DSC of the Petitioners be reactivated within 24 hours. Since the ld. counsel for the Registrar of Companies (ROC) are appearing before this court today, the ROC need not wait for a copy of this order in order to reactivate the DINs/ DSCs - Petition disposed off. 2020 (12) TMI 1136 Required expenditure for CSR not made - Wilful Default or not - reason for not spending the CSR amount have not been disclosed in Board Report of Financial Year 2014-15 - violation of section 134 (3) (o) r/w Section 135 (5) of the Companies Act, 2013 - HELD THAT:- It is noticed that the Company had made the default good by opening a Foundation in the name of Anil Arjun Foundation and has also transferred an amount of ₹ 30, 43,162/- to the Bank Account of the Trust - It is also noticed that the Trust Anil Salgaocar Foundation has donated a sum of ₹ 75,000/- to Dadapir G. Chauri Trust for Handicapped. The Trust has also donated a sum of ₹ 25, 00,000/- to Bahujan Hitay for Construction of Girls Hostel in Mapusa, Goa. The said receipts of proof are on record. After considering the submissions made, a Compounding Fee of ₹ 50,000/- by the Company and ₹ 50,000/- by the 2 Directors herein i.e. ₹ 1,50,000/- in total shall be sufficient as a deterrent for not repeating the impugned default in future. The imposed remittance shall be paid by way of Demand Draft drawn in favour of RoC Mumbai within 30 days from the receipt of this order - Compounding application disposed off. 2020 (12) TMI 1135 Restoration of name of the Petitioner Company on the Register of Companies maintained by the Registrar of Companies - section 252 of the Companies Act, 2013 - HELD THAT:- Though, the impugned order striking off the Company was in accordance with law, the Tribunal has to take into consideration the bonafide contentions of Petitioner seeking to restore the name of Company, by taking a lenient view of the issue in the interest of justice and ease of doing business, instead of rigidly interpreting the law on the issue. It is also not in dispute that the instant Company Petition is filed in accordance with law; there are no investigations pending against the Company; the Respondent has not opposed the Petition and has left the issue to the Tribunal to consider the case subject to certain terms and conditions. It has been submitted that the Company is a going concern and it had a turnover of ₹ 47,61,996/- for the YE 31.03.2011. Striking of its name would affect the Petitioner as well as its shareholders and suffer hardship and irreparable loss. No prejudice would be caused to any party if the Company's name is restored, as prayed. The Members of the Company have undertaken that post restoration of the name of the Company in the Register of the Registrar of Companies, Bangalore, the Company will complete the Annual filings due for the past years and carry on the business in its ordinary course. The interest of justice would be met if the name of Company is restored as prayed for - application allowed. 2020 (12) TMI 1134 Seeking restoration of the name of the struck off company in the Register of Companies maintained by the ROC - Section 252(3) of the Companies Act, 2013 - HELD THAT:- It is noted that company has failed to file returns from 2010-11 to 2015-16 which prompted ROC, Gwalior, Madhya Pradesh to strike off the name of such company from its Register of Companies. Although, Financial Statements do not enable us to conclusive hold that the company is having operations/trading activities. From the perusal of the Financial Statements however, it could be said some activities exist. Further, the representative of the Applicant has categorically stated that intend to increase the volume of operations in future - Considering this, it is just and proper to restore the name of the company in the Register of Companies maintained by ROC, from the date of its striking off subject to payment of suitable cost for noncompliance of filing requirements without any reasonable explanation. The Registrar of Companies, Gwalior, Madhya Pradesh the respondent herein, is ordered to restore the original status of the Applicant Company as if the name of the Company has not been struck off from the Register of Companies with resultant and consequential actions like changing status of Company from 'struck off to Active - Application allowed. Insolvency & Bankruptcy 2020 (12) TMI 1133 Appointment of Fresh Valuer - Disputes were raised with regard to the valuation of tangible and intangible assets - HELD THAT:- It appears to us that it was not appropriate to keep shuttling the matter on an issue on which the Resolution Professional has acted after the Orders were passed by the third Hon ble Member. The Corporation Bank had objections with regard to the valuation done earlier and thereafter another Valuer has been appointed and it appears that Report has been filed. Still Appellant is objecting. When such developments have taken place, on technical issues, we do not intend to interfere with the Impugned Order. There is no reason to interfere with the Impugned Order. It would further prolong the delayed CIRP proceedings which would not be in the interest of the Corporate Debtor - appeal dismissed - decided against appellant. 2020 (12) TMI 1132 Resolution by CoC for its Replacement of IRP by RP - scope of Section 22 of the I B Code and Section 27 of I B Code - appeal on the ground that there was no occasion for the Adjudicating Authority to have granted time to Interim Resolution Professional to file any objection/ reply to the resolution of Committee of Creditors - HELD THAT:- In the instant case, it is not in controversy that in the first CoC Meeting appointment of IRP as RP failed to garner any support. Thereafter, the bid made by the IRP offering himself for appointment as RP also did not cut any ice with the CoC. Ultimately, IRP was replaced by Mr. Gangaram Agarwal in terms of resolution passed in second CoC Meeting with 78% vote share of the Committee of Creditors. It is indisputable that these actions are permissible only within the ambit of Section 22 of I B Code. Therefore, invoking of Section 27 and adopting a protracted procedure in that regard, as appears to have been done by the Adjudicating Authority, is unwarranted. This only has resulted in wastage of time and prolonging the CIRP Process. In the face of CoC resolution passed with more than the requisite majority, it cannot lie in the mouth of IRP that any of his legal rights have been infringed. It would have been wise on his part to bow to the commercial wisdom of the Committee of Creditors and quit gracefully. Be that as it may, there was no merit in the case set up by IRP before the Adjudicating Authority and the same was required to be dealt with without insisting upon filing of affidavit by the IRP in regard to the provision of law invoked to pass the resolution. The Adjudicating Authority is directed to carry forward the Resolution Process in regard to the Corporate Debtor with Resolution Professional Mr. Gangaram Agarwal discharging functions as the Resolution Professional in terms of resolution passed by the CoC - appeal allowed. 2020 (12) TMI 1131 Prayer to classify the Applicant as the Financial Creditor - Section 60 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is found that the Applicant has annexed the letter dated 30.11.2018 issued to AMW Motorworks Limited. Vide said letter, the Applicant demanded ₹ 10 Crores from AMW Motorworks Limited paid on 24.10.2007 through Cheques along with 18% interest per annum. The said letter was issued by Chief Operating Officer. Apart from that, no other document such as an agreement or any promissory note is annexed, so as to infer the date of disbursement of the loan - on comparison with the demand notice dated 30.11.2018 (at page no. 43 of the application) with that of the Ledger Account from the period 01.04.2007 to 31.03.2008 (at page no. 52 of the application), it is found that Cheque no. 001291 is of ₹ 4 Crores whereas the date of cheque clearance is of 25.10.2017 and for other two cheques, the clearance date is of 2007 when the Ledger Account is of the period 01.04.2007 to 31.03.2008. Hence, the document so filed by the Applicant is/ are contradictory to the statements made in the application, in as much as, the cheque which was issued in 2007, how it could be cleared in the year 2017. Under such circumstances, it is difficult to assess the bonafide of the Applicant. Furthermore, apart from these documents, Applicant has annexed the statement of account at page no. 53 of the application showing the period 2005 to 2014. However, on perusal of the said statement, it is found that it is originating from 16.11.2013 to 18.11.2013 only, which in our opinion is an irrelevant document which does not reflect the date of disbursement of loan amount - Evidently and admittedly, as per their own document in the application annexed at page no. 43, reflects the said amount is paid on 24.10.2007 through three cheques. To that effect, no agreement/ promissory note has been entered into. The claim is not free from iota of doubt. Accordingly, the instant application is rejected. However, with regard to the ₹ 5 Crores which is acknowledged by the Corporate Debtor maybe taken in to account by the IRP, as Claims other than Operational Creditor and Financial Creditor. Application dismissed. 2020 (12) TMI 1130 Seeking extension of time limit for completion of Insolvency Resolution Process of the Corporate Debtor - HELD THAT:- Since there is a possibility of getting a resolution plan and since the CoC members have approved extension of 90 days beyond 180 days with 100% voting majority as required under Sec 12(3) of IBC read with Regulation 40 of CIRP Regulations, 2016, it is humbly submitted that an extension of 90 days be permitted along with exclusion of 115 days on account of lockdown - It is submitted that in view of the aforementioned facts and circumstances, the Hon'ble Adjudicating Authority may be pleased to extend the period of the Corporate Insolvency Resolution Process of the Corporate under Section 12(2) of the IBC 2016 by a further period of 90 days from the date of completion of 180th day i.e. from 4th September 2020 to 3rd December 2020. The extension of CIRP by 90 days is granted and the period of 98 days from March 25,2020 to June 30, 2020 is also considered for being excluded while calculating the number of available days for CIRP calculation. PMLA 2020 (12) TMI 1129 Grant of pre-arrest bail - petitioner submitted that the relief of anticipatory bail sought by the petitioner is not premature and that the petitioner's reliance on a news article of a reputed news agency for apprehension of arrest by the respondent cannot tantamount to being speculative - whether the petition filed under Section 438 of the Cr.P.C. before the High Court without exhausting remedy before the Court of Sessions Court is maintainable or not? - HELD THAT:- It is trite law that in case of economic offences, which is having an impact on the society, the Court must be very slow in exercising the discretion under Section 438 of Cr.P.C. But on perusal of the factual matrix of the case on hand, prima facie, there is no material to come to the conclusion that the act of the petitioner is having impact on the financial status of the country as a whole and in that light the ratio laid down in P.Chidambaram [ 2019 (12) TMI 186 - SUPREME COURT ] is not applicable to the facts of the present case. The power under Section 438 of Cr.P.C. is an extraordinary power which was incorporated before other provisions for granting of bail under Section 437 and 439 of Cr.P.C. and judicial discretion is a matter regard and required to be exercised with due care and caution. Grant or refusal of bail is entirely discretionary and discretion should depend upon the facts and circumstances of each case. Certain parameters have to be kept in mind while considering or dealing with the application for anticipatory bail. On perusal of the factual matrix on hand, the allegation leveled against the petitioner has to be considered and appreciated during the course of trial. The only consideration which has to be looked into for the purpose of granting or refusing bail is whether the accused would be readily available for trial and whether he is likely to abuse the discretion granted in his favour by tampering with evidence. If there is no prima facie case, there is no question of considering other circumstances. Even where a prima facie case is established, the approach of the Court in the matter of bail is not that the accused should be detained by way of punishment, but whether the presence of the accused would be readily available for trial or that he is likely to abuse the discretion granted in his favour. Section 438 Cr.P.C. clearly stipulates in the beginning statement itself that when a person has a reasonable apprehension to believe that they can be arrested on an accusation for commitment of a non-bailable offence, they can move the High Court or the Court of Sessions for grant of an anticipatory bail. The approaching of the petitioner to the High Court has been discussed earlier and held that the petition for anticipatory bail filed before this Court is very well maintainable - The power to grant anticipatory bail must be exercised by the Court in very exceptional cases. The Court must be satisfied that there is a reasonable cause and a reasonable ground for grant of anticipatory bail. Section 438 Cr.P.C. protects the right to life and personal liberty of such persons by providing them with a remedy against frivolous detention. In a country where rifts and rivalries are common, its citizens should have a remedy which prevents disgracing their right to life and personal liberty. When a person apprehends arrest and approaches a Court for anticipatory bail, his/her apprehension has to be based on concrete facts relatable to a specific or particular offence. Petition seeking anticipatory bail should contain clear and essential facts relating to the offence, and why the applicant reasonably apprehends his/her arrest, as well as his/her version of the facts - In the present case, the apprehension expressed by the petitioner is based on news item and the respondent also admitted that there was news item and they have initiated investigation under the Prevention of Money Laundering Act against the petitioner. Since the news item appeared in the online news is pursuant to the CBI investigation, in which the petitioner has got anticipatory bail, now the apprehension stated by the petitioner is bona fide and as stated supra, the respondent themselves admitted that they have initiated investigation against the petitioner under the Prevention of Money Laundering Act. Thus, this Court is of the opinion that the apprehension of arrest by the respondent Directorate Enforcement is well founded and reasonable as the petitioner is a public person. This Court cannot lost sight of the fact that the news article had received wide publication/coverage in the media, both electronic and print. In the aforesaid facts and circumstances of the case, the interest of justice warrants grant of anticipatory bail to the petitioner in the investigation being conducted by the respondent under the Prevention of Money Laundering Act. Further, the petitioner is duty bound to co-operate with the investigation by the respondent at all stages. The petition is allowed - the petitioner is granted anticipatory bail in connection with the respondent investigation. 2020 (12) TMI 1128 Grant of Bail - Money laundering - fraud with home/flat buyers - siphoning off/diversion of funds - conspiracy and huge loss of public funds - HELD THAT:- But for the Supreme Court's intervention and undertaking painful and strenuous exercise to secure and protect the interest of innocent home/flat buyers, the fraud played by the accused-applicant and other accused in cheating and defrauding thousands innocent home/flat buyers of their hard earned money, could not have been unearthed - The Supreme Court is monitoring the investigation. The Supreme Court had been in pain to note the conduct of the accused-applicant and other accused. They had even violated the Supreme Court orders and did not comply the directions issued on several occasions. The forensic auditors appointed by the Supreme Court had meticulously flagged the fraud and cheating by the accused-applicant and other coaccused in creating bogus and sham companies and diversion of funds of the flat buyers money and creating assets etc. PMLA is a special statute enacted by Parliament for dealing with money laundering. Section 5 of the Cr.P.C. clearly lays down that the provisions of Cr.P.C. will not affect any special statute or any local law. In other words, the provisions of the special statute will prevail over the general provisions of the Cr.P.C. in case of any conflict - The economic crime of such scale and magnitude are carefully and meticulously planned and executed. It is well settled that economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. While granting bail, the court has to keep in mind the nature of accusations, magnitude and gravity of offence and nature of evidence in support of the accusations. The object of PMLA is to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering. Section 44 of the PMLA confers jurisdiction on special court to deal with the offences under PMLA. Section 45 of the PMLA makes the offence of money laundering cognizable and nonbailable notwithstanding anything contained in Code of criminal Procedure, 1973. Money laundering is a serious economic offence and serious threat to the national economy and national interest and, these offences are committed with cool calculation with the motive of personal gain regardless of the consequences on the society. The plea for bail is refused and the bail application is rejected. Service Tax 2020 (12) TMI 1127 Seeking extension of time limit for compliance of action under the Custom Excise and Service Tax - Failure to make payment against the SVLDRS3 for the purpose of availing the benefit under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- The writ applicant should take up this issue with the Chairman, CBIC by filing an appropriate application or representation. Mr. Nainawati, the learned counsel has shown his inclination to deposit ₹ 15 lakh with the Registry of this Court to show his bona fide. We are of the view that the Registry of this Court should not be involved in such type of matters. Let the Chairman, CBIC look into the issue at the earliest and take an appropriate decision. This writ application stands disposed of 2020 (12) TMI 1126 Quantification of service tax demand - Sabkha Vishwas (Legacy Dispute Resolution) Scheme, 2019 opted - quantification prior to 30.06.2019 - it is the stand of the Department that such quantification was also served on the Petitioner - HELD THAT:- It is clear that the Petitioner falls within the category of persons who is entitled to approach the authorities under the Scheme. Consequently, the order of rejection would have to be set-aside and the Respondents shall consider and pass orders on the application of the Petitioner, in accordance with the terms of the Scheme, within a period of six weeks from the date of receipt of this order. Petition disposed off. 2020 (12) TMI 1125 Levy of service tax - Petitioner is foreman of chit fund business for the period from October 2014 to May 2015 - HELD THAT:- Hon'ble Supreme Court of India in UNION OF INDIA AND ORS. VERSUS M/S. MARGADARSHI CHIT FUNDS (P) LTD. ETC [ 2017 (7) TMI 224 - SUPREME COURT ] has held that service tax cannot be levied on the foreman of chit fund business for the period from 15.06.2007 to 14.06.2015. Having regard to the said authoritative pronouncement of the Hon'ble Supreme Court of India, which holds the field, it is not possible to sustain the impugned order, which shall stand set aside - Petition allowed - decided in favor of appellant. Central Excise 2020 (12) TMI 1124 CENVAT Credit - common input services for taxable as well as exempt goods - maintaining separate accountal of input and input services used in or in relation to manufacture of exempted and dutiable final products - alteration of option exercised under Rule 6(3) of the Cenvat Credit Rules in mid 2012-13 - time limitation - equivalent penalty under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Act. Whether for the purposes of Rule 6(2) and Rule 6(3) of the Cenvat Credit Rules it was obligatory on the part of the appellant to maintain separate accountal of input and input services used in or in relation to manufacture of exempted and dutiable final products prior to manufacture of the final products or reversal of the cenvat credit of the duty and tax involved in respect of exempted inputs and input services on proportionate basis after manufacture of the final products also satisfies the requirement of Rule 6(2) of the Cenvat Credit Rules? - Whether, in the facts and circumstances of the instant case, the appellant is required to make payment of an amount equal to 6% of the value of the exempted goods and 7% of the value of the exempted services in terms of Rule 6(3)(i) of the Cenvat Credit Rules? - HELD THAT:- It is acknowledged both in the impugned order and the show cause notice that the appellant had reversed on proportionate basis the duty/tax paid on inputs and input services which were used, to the extent they related to exempted final products. There is no denial of this fact although issues have been raised regarding alleged discrepancies in the quantum of the reversals made, which we find had been duly attended to by the appellant by way of reversal with interest. It is also acknowledged in the impugned order that in all such cases of reversal, wherever required, the same has been effected along with payment of interest - It is now a settled proposition that reversal of cenvat credit even after manufacture of the goods and/or clearance thereof amounts to not taking of the credit on the exempted goods and that in case of common inputs and input services used in or in relation to the manufacture of dutiable and exempted final products, credit proportionate to use of inputs and input services in exempted products, if reversed, the assessee is not required to make payment of an amount in terms of Rule 6(3)(i) of the Cenvat Credit Rules - The demand of ₹ 58,96,13,230/- confirmed by the impugned order is unsustainable since the appellant has reversed the cenvat credit on input and input services attributable to the exempted product, including in some cases with interest if applicable - Reliance can be placed in the case of M/S GAYA MARKETING VERSUS THE STATE OF BIHAR THROUGH THE PRINCIPAL SECRETARY CUM COMMISSIONER, THE JOINT COMMISSIONER OF STATE TAXES, THE ASSISTANT COMMISSIONER OF STATE TAXES, GAYA. [ 2020 (1) TMI 1355 - PATNA HIGH COURT] . Whether the appellant had altered the option exercised under Rule 6(3) of the Cenvat Credit Rules in mid 2012-13 and whether the same was not permissible as per Explanation I of Rule 6(3)? - HELD THAT:- The materials on record clearly establishes that in this case the appellant had not exercised at any point of time during the period 2012-13 the option in terms of Rule 6(3)(i) of the Cenvat Credit Rules prior to July, 2020. No document to the contrary has been disclosed either in the show cause notice SCN or in the impugned order. In the impugned order it has been acknowledged by the Commissioner also that Explanation I to Rule 6(3) of the Cenvat Credit Rules does not bar exercising option in the middle of a financial year. However, according to him such option has to be exercised by physically writing to the Range Officer with assessee particulars and Cenvat Account Balance, which has not been done in the instant case - there has been no violation of the provisions of Explanation I to Rule 6(3) of the Cenvat Credit Rules. Whether the demand confirmed is barred by limitation? - penalty - HELD THAT:- At all material point of time the Department was fully aware of and/or was made aware of by the appellant of all relevant facts, including the manner of compliance by the appellant with the requirements in terms of Rule 6(2) of the Cenvat Credit Rules. In these circumstances, as per principles laid down by the Apex Court consistently, there can be no case of suppression of any material fact or wilful misstatement or contravention by an assessee of any provision of the Act or the rules made thereunder with intent to evade duty/tax and hence there can be no invocation of the extended period of limitation in terms of the Proviso to Section 11A(1) or Section 11A(4) of the Act. The demand in such cases can only be for the normal period under Section 11A(1) of the Act - For the same reasons no penalty can be imposed upon an assessee in such cases in terms of Rule 15(2) of the Cenvat Credit Rules or Section 11AC of the Act. Whether in the facts and circumstances of the case penalty equivalent is imposable upon the appellant under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Act? - HELD THAT:- The demand of interest in terms of Section 11AA of the Act and penalty imposed under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Act are also unsustainable. Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2020 (12) TMI 1123 Principles of natural justice - Validity of revision of assessment orders - allegation of petitioner is that without verifying the petitioner's books of accounts, completed assessments were revised - assessment years from 2006-07 to 2014-15 - HELD THAT:- In all the replies sent by the petitioner to the proposal made by the respondent to revise the completed assessment under Section 27 of TNVAT Act, 2006, they have undertaken to cooperate with the respondent by furnishing all the records/books of accounts, called for by the respondent. In all the replies sent by the petitioner to the respondent, they have also referred to the decision of this Court in M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [ 2017 (3) TMI 536 - MADRAS HIGH COURT ] . However, as seen from the impugned assessment orders, the respondent has not adhered to the settled procedure laid down by this Court, while passing the impugned assessment orders under Section 27 of the TNVAT Act, 2006. The counter affidavit filed by the respondent has not answered the grounds raised by the petitioner that the impugned assessment orders have been passed in a mechanical fashion without verification of the petitioner's books of accounts, but, just relying upon the web report maintained by the respondent. While that be so, it is clear that the procedure contemplated as per the decision in JKM GRAPHICS SOLUTIONS PRIVATE LIMITED has not been adhered to by the respondent, while passing the impugned assessment orders. Therefore, the impugned assessment orders have been passed arbitrarily and in gross violation of principles of natural justice and contrary to the settled procedure of law. The matter is remanded back to the respondent for fresh consideration - Petition allowed by way of remand. Indian Laws 2020 (12) TMI 1122 Dishonor of Cheque - legally enforceable debt or not - rebuttal of presumption or not - several factual aspects /triable issues which are to be decided by the trial Court on concluding the trial - HELD THAT:- The petitioners are not disputing the signatures on the said cheques. According to the petitioners, the said cheques were issued towards collateral security, but not towards legally enforceable debt. According to the second respondent, the said cheques were issued towards discharge of legally enforceable debt. The said issue is a triable one and the Court below will decide the same on conclusion of trial. The CC is of the year 2016. The present petition is filed under Section 482 of Cr.P.C. is also of the year 2016 and it is pending since then. The petitioners are not disputing the signatures on the said cheques. According to the petitioners, the said cheques were issued towards collateral security, but not towards legally enforceable debt. According to the second respondent, the said cheques were issued towards discharge of legally enforceable debt. The said issue is a triable one and the Court below will decide the same on conclusion of trial. The CC is of the year 2016. The present petition is filed under Section 482 of Cr.P.C. is also of the year 2016 and it is pending since then. The Apex Court in KAMAL SHIVAJI POKARNEKAR VERSUS THE STATE OF MAHARASHTRA AND ORS. [ 2019 (2) TMI 1894 - SUPREME COURT] categorically held that quashing criminal proceedings is called for only in a case where complaint did not disclose any offence, or was frivolous, vexatious, or oppressive. If allegations set out in complaint did not constitute offence of which cognizance had been taken by Magistrate, it is open to High Court to quash the same - Defences may be available, or facts/aspects which when established during trial, may lead to acquittal, were not grounds for quashing complaint at threshold. At that stage, only question relevant is whether averments in complaint spell out ingredients of a criminal offence or not. The correctness or otherwise of the allegations had to be decided only in trial. At initial stage of issuance of process, it is not open to Courts to stifle proceedings by entering into merits of the contentions made on behalf of accused. Criminal complaints cannot be quashed only on the ground that allegations made therein appear to be of a civil in nature. If ingredients of offence alleged against accused are prima facie made out in complaint, criminal proceeding shall not be interdicted. Coming to the facts on hand, the only contention of the petitioners that the cheques in questions were issued by them towards collateral security but not legally enforceable debt, is a triable one. The Court below will decide the said issue basing on the evidence both oral and documentary available on record. Therefore, the proceedings cannot be quashed on the above said issue which is a triable issue in exercising of its powers under Section 482 of Cr.P.C. The petitioners have failed to establish any ground to quash the proceedings on the file of the II Special Metropolitan Magistrate, Cyberabad at Kukatpally. Petition dismissed.
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