TMI Tax Updates - e-Newsletter
December 7, 2020

Case Laws in this Newsletter:

GST Income Tax Corporate Laws Securities / SEBI Insolvency & Bankruptcy FEMA PMLA Service Tax Central Excise Wealth tax Indian Laws

Articles

1. CENTRAL GOODS AND SERVICES TAX (THIRTEENTH AMENDMENT) RULES, 2020

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Due dates for filing of Form GSTR-3B for the Tax Periods from October, 2020 till March, 2021

2. All States choose Option-1 to meet the GST implementation shortfall

3. Shri Piyush Goyal and Shri Shripad Yasso Naik review the current status of AYUSH Trade and Industries in the country

4. Statement on Developmental and Regulatory Policies

5. Monetary Policy Statement, 2020-21 Resolution of the Monetary Policy Committee (MPC) December 2-4, 2020

Notifications

FEMA

1. FEMA 6 (R)/ (3)/2020-RB - dated 3-12-2020 - FEMA

Foreign Exchange Management (Export and Import of Currency) (Second Amendment) Regulations, 2020

GST - States

2. CCST Ref. No.CCW/GST/74/2015 - dated 4-11-2020 - Andhra Pradesh SGST

Further extension of due date for filing return under Section 44 for the financial year 2018-2019 till 31.12.2020

3. CCST Ref. No. CCW/GST/74/2015 - dated 4-11-2020 - Andhra Pradesh SGST

Prescribing return in FORM GSTR-3B of APGST Rules, 2017 along with due dates of furnishing the said form for October, 2020 to March, 2021

4. CCST Ref. No. CCW/GST/74/2015 - dated 4-11-2020 - Andhra Pradesh SGST

Prescribing the due date for furnishing FORM GSTR-1 by such class of registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year, for each of the months from October, 2020 to March, 2021

5. F. 3(63)/FD(Rev-I)/2020-21/DS-IV/196 - dated 4-12-2020 - Delhi SGST

Lieutenant Governor of the NCT of Delhi, is pleased to reconstitute the Delhi State level Screening Committee on Anti Profiteering

6. 88/2020-State Tax - dated 21-11-2020 - Gujarat SGST

Implementing e-invoicing for taxpayers having aggregate turnover exceeding ₹ 100 Cr from 01.01.2021

7. 85/2020-State Tax - dated 21-11-2020 - Gujarat SGST

Seeks to notify special procedure for making payment of 35% as tax liability in first two month

8. 84/2020-State Tax - dated 21-11-2020 - Gujarat SGST

Seeks to notify class of persons under proviso to section 39(1)

9. 81/2020-State Tax - dated 21-11-2020 - Gujarat SGST

Implementation of section 7 of GGST Amendment Act 2019 w.e.f. 10.11.2020 regarding return and payment under section 39

10. 77/2020-State Tax - dated 26-11-2020 - Himachal Pradesh SGST

Seeks to amend Notification No. 47/2019–State Tax dated the 1st November, 2019

11. 76/2020-State Tax - dated 26-11-2020 - Himachal Pradesh SGST

Seeks to prescribe return in FORM GSTR-3B of CGST Rules, 2017 along with due dates of furnishing the said form for October, 2020 to March, 2021

12. 75/2020-State Tax - dated 26-11-2020 - Himachal Pradesh SGST

Seeks to prescribe the due date for furnishing FORM GSTR-1 by such class of registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year, for each of the months from October, 2020 to March, 2021

13. 74/2020 - dated 26-11-2020 - Himachal Pradesh SGST

Seeks to 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

14. CT/LEG/GST-NT/12/17/2510-15/2020 - dated 13-11-2020 - Nagaland SGST

Seeks to rescind Notification No. 11/2020, dated the 15th October, 2020

15. CT/LEG/GST-NT/12/17/2509-14/2020 - dated 10-11-2020 - Nagaland SGST

Seeks to extend the due date for furnishing of FORM ITC-04

16. 14/2020 - dated 20-11-2020 - Telangana SGST

Seeks to rescind Notification No. 10/2020-State Tax, dt. 07-11-2020

Circulars / Instructions / Orders

Income Tax

1. 21/2020 - dated 4-12-2020

Clarifications on provisions of the Direct Tax Vivad se Vishwas Act, 2020

FEMA

2. 08 - dated 4-12-2020

External Trade– Facilitation- Export of Goods and Services

Highlights / Catch Notes

GST

• Fabrication and Painting of Steel Structures Classified as Mixed Supply Under GST, Subject to 12% Tax Rate, Section 8(b).

  Case-Laws - AAR : Rate of tax - mixed supply or not - Job work activity or not - applicant does job work on the materials and design belonging to another registered person - The applicant supplies a mixed supply constituting of the job work of fabrication of steel structures and the works contract of applying paint to the erected steel structures. It is taxable @ 12% in terms of the provisions under section 8(b) of the GST Act. - AAR
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• Waste Disposal Services Classified as Pure Service: No Transfer of Goods Involved in Execution.

  Case-Laws - AAR : Exempt service or not - conservancy service - pure services or not - The applicant performs waste disposal activities by engaging garbage lifting vehicles and other cleaning equipment. There is, however, no reference to any supply of goods in the course of executing the work. The vehicles used and the fuel consumed and the machinery used do not result in any transfer of property in goods to the recipient. Based on the above documents, it may, therefore, be concluded that the applicant’s supply to the recipient is a pure service. - AAR
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Income Tax

• Section 132 Search and Seizure Proceedings Validated: Sufficient Reasons Recorded for Authorization, Operations Deemed Legal Under Income Tax Act.

  Case-Laws - HC : Valid search - proceedings initiated under Section 132 - Note of satisfaction does record reasons calling for necessary authorization to carry out search and seizure operation. The search and seizure operations carried out by and in terms of Section 132(1) of the Income Tax Act cannot be said to be illegal and ultra vires the Statute. - HC
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• Tribunal Remits Case on Cash Payments u/ss 40A(3) and 40(a)(ia) of Income Tax Act for Further Review.

  Case-Laws - HC : Addition u/s 40A(3) - Disallowance u/s 40(a)(ia) - payment in cash to SNBT for raw material purchases and SNBT making the said amount to the suppliers - Since both the issues are inter-related and since the matter stood remitted by the learned Tribunal vide para 12 aforequoted for Section 40A(3), the issue with regard Section 40(a)(ia) of the Act also ought to have been restored to the file of the CIT (A). - HC
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• Assessee Appeals Penalty u/s 271D; Case Remanded for Fresh Adjudication, No Estoppel Against Statute.

  Case-Laws - AT : Penalty u/s.271D - there is no estopel against the statute and therefore, it is open to the assessee to claim before the authorities that a particular item of income is not taxable despite having offered the same in its return of income or even having accepted the same as taxable before the authorities or even in the books of accounts - This appeal filed by the assessee against penalty u/s.271D of the Act for A.Y.2007-08 requires to be remanded back to the file of the ld. CIT(A) for denovo adjudication in accordance with law. - AT
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• Section 194A TDS Rules Not Applicable: Interest Payment Deduction Cannot Be Disallowed u/s 40(a)(ia.

  Case-Laws - AT : TDS u/s 194A - There is no quarrel on the point that the provision to section 194A are not applicable in respect of the payment in question and consequently the claim of deduction cannot be disallowed by invoking the provision to section 40(a)(ia) - AT
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• Incorrect Donation Classification by AO; Exemption u/s 11 Upheld Due to Lack of Source Inquiry.

  Case-Laws - AT : Exemption u/s 11 - AO in this case without looking into this issue, straightaway treated as the donation income of assessee. AO has failed to carryout necessary enquiry with regard to sources from which such donors have donated the amount to the present assessee and are unable to comment on this aspect. - Benefit of exemption cannot be denied - AT
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• Assessee Wins Section 80G Exemption: Active Educational Institution Status Recognized by Tax Authorities.

  Case-Laws - AT : Exemption u/s 80G denied - assessee clearly demonstrated that assessee has been running the educational institution and it is not dormant and assessee being so, we direct the CIT(E) to grant the recognition under section 80G - AT
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• Court Orders Deletion of Fair Market Value Clause for Long-Term Capital Gains Due to Lack of Valid Reference.

  Case-Laws - AT : Capital gain computation - Without going into the merits of the basis of valuation so adopted by the registered valuer and subsequently by the department’s valuation officer, in absence of a valid reference to the valuation officer, the addition so made under the head “long term capital gains” so far as it relates to cost of acquisition as substituted by fair market value as on 1.4.1981 is directed to be deleted. - AT
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• Tax Officer Can't Dictate Business Management; Notional Interest Additions Deleted Under Business Discretion.

  Case-Laws - AT : Addition of notional interest income - the Income Tax Officer (ITO) cannot decide affairs of businessman as to how the businessman should incur the expenses or earn the interest. It is the sole discretion of businessman to manage its affairs and not the ITO. - Additions deleted - AT
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• Section 80IB(9) Deduction: Calculate Profits of Eligible Business Only, Exclude Unrelated Expenses Per Section 80IA(5.

  Case-Laws - AT : Deduction u/s.80IB(9) - Disallowance on aborted blocks - the deduction u/s 80IB(9) has to be computed after ascertaining profits and gains of eligible business in terms of sec. 80IA(5) of the Act. Hence there is no scope to adjust expenses relating to other “undertaking” while computing deduction u/s 80IB(9) of the Act. - AT
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• Tax Avoidance Allegations Lacking Evidence; Dispute Over Section 50C Application and Valuation Report in Capital Gains Case.

  Case-Laws - AT : Computation of Long Term Capital Gains - There is nothing on record to substantiate the allegation of intention to avoid tax in the guise of transfer of shares. Ld.CIT(A) on one hand holds that there was no transfer of Capital Asset, whereas on the other hand, refers to DVO report to allege tax avoidance by assessee. Ld.CIT(A) once rejected application of sec.50C cannot rely on DVO report to hold that assessee adopted a colourable device to avoid tax. - AT
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Indian Laws

• No Court Permission Needed for Cheque Dishonor Cases with Legal Remedy u/s 138 of Negotiable Instruments Act.

  Case-Laws - HC : Dishonor of cheque - if the applicant has a remedy under law, then permission from the Court is not necessary. Further, the offence under Section 138 Negotiable Instruments Act is a bailable offence and, the applicant may surrender before the court concerned and furnish bail bonds and thereafter, he may take recourse to the remedy as may be available to him in accordance with law - HC
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Central Excise

• No Interest on Delayed Central Excise Refund Between Tribunal Order and Sanction Date, Court Rules.

  Case-Laws - AT : Interest on delayed refund of pre-deposit - demand of interest from the date of deposit till its realization - Admittedly, in the case in hand, the refund claim was sanctioned on 04.11.2019, whereas the order of this Tribunal was passed on 05.09.2019; therefore, no interest is payable to the appellant. - AT
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Case Laws:

• GST

• 2020 (12) TMI 190
  Rate of tax - mixed supply or not - Job work activity or not - applicant does job work on the materials and design belonging to another registered person - applicant submits that the activities in terms of the above contract should be treated as job work. HELD THAT:- The applicant s activities can be segregated into (1) job-work of fabrication on the material provided by the Principal and delivery thereof, (2) supply of paint on the fabricated structures and (3) works contract involving the application of a coat of paint on the erected structures and thereby improving / maintaining an immovable property. It appears from the payment schedule (Clause 29) that the applicant receives 80% of the payment on delivery of the fabricated structures at the site. At the same time, the balance amount shall not be released till the applicant applies the final coat on the erected structures and the competent authority issues the completion certificate. Moreover, although the applicant is not responsible for erection of the fabricated structures, retention money @ 5% of the value of the work, deducted from each running bill, will be released only after successful completion of each span, which includes erection/launching of the spans (Clause 30). Therefore, the works contract part of the contract is inseparably linked with the job-work portion, and they cannot be treated as two separate contracts. Notification No. 5050-F(Y) dated 16/08/2017 of the Government of West Bengal clarifies that works involving the supply of taxable goods along with the labour to any movable property (e.g. servicing of motor vehicles with motor parts, AMC for computers or AC machines or generator, repair of furniture etc.) are composite supplies, as the supply of goods and labour are naturally bundled and made in conjunction with one another. The principal supply, according to the said notification, is determined by the predominant nature of the contract. For example, in the case of servicing of motor vehicles or AMCs, the principal supply is service . On the other hand, in a contract for supply-cum-installation of an AC machine, the principal supply will be the AC machine. The contract combines two separate services: (1) the job work of fabrication of steel structures and delivery thereof at the site with incidental supply of paint, and (2) works contract of applying a coat of paint to the steel structures after erection. Although they are supplied in conjunction with each other at a single price, they are not naturally bundled. The job work of fabrication ends with the delivery of the fabricated structures at the site. The works contract of applying paint to the erected structures is a separate supply made in conjunction with the job work. It is, therefore, a mixed supply. The taxability of the mixed supply depends on the applicable rate of tax on each of the two supplies. Being supply of the manufacturing service (SAC 9988) to a registered taxable person, the supply of the job work is taxable @ 12% in terms of Sl No. 26 (id) of the Rate Notification - The applicant s works contract service, being that of a sub-contractor engaged by the main contractor, therefore, is taxable @ 12% in terms of Sl No. 3(ix) of the Rate Notification. The mixed supply is, therefore, taxable @ 12% in terms of the provisions under section 8(b) of the GST Act.

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• 2020 (12) TMI 189
  Exempt service or not - waste disposal activities - pure services or not - conservancy service to Station Commander, Bagrakot Military Station, Office of Chief Medical Superintendent N.F. Railway, Alipurduar Junction and Sukna Military Station - Sl No. 3 or 3A of Notification No. 12/2017 Central Tax (Rate) dated 28/06/2017 (corresponding State Notification No. 1136 FT dated 28/06/2017) - HELD THAT:- In the work orders issued to the applicant, the recipient describes the nature of the work as removal, collection and disposal of garbage, rubbish, filth etc., sweeping and clearing of roads, drains and open areas, cutting and pruning of tree including removal of undergrowth and foliage on drain and roads, and lifting of dead animals. The applicant performs waste disposal activities by engaging garbage lifting vehicles and other cleaning equipment. There is, however, no reference to any supply of goods in the course of executing the work. The vehicles used and the fuel consumed and the machinery used do not result in any transfer of property in goods to the recipient. Based on the above documents, it may, therefore, be concluded that the applicant s supply to the recipient is a pure service. Furthermore, Article 243W of the Constitution that discusses the powers, authority and responsibilities of a municipality, refers to the functions listed under the Twelfth Schedule as may be entrusted to the above authority. Sl No. 6 of the Twelfth Schedule refers to public health, sanitation, conservancy and solid waste management - The applicant s supply is a function mentioned under Sl No. 6 of the Twelfth Schedule. The Applicant s supply to Bagrakote and Sukna Military Stations, therefore, is exempt under Sl No. 3 of the Exemption Notification. As no agreement is available regarding supplies to the Railways, this authority offers no comment thereon.

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• Income Tax

• 2020 (12) TMI 188
  Deduction u/s 80IC - income earned from sale of scrap - assessee in the present case is a company which is engaged in manufacture and sale of insulated wires, cables, etc - HELD THAT:- As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to the earlier years including A.Y. 2014-15, we respectfully follow the orders of Tribunal for the said years and uphold the order of ld. CIT(A) directing the Assessing Officer to allow the claim of assessee for deduction u/s 80IC of the Act in respect of sale of scrap. The appeal of the Revenue dismissed. Disallowance u/s 14A read with rule 8D - HELD THAT:- As the issue involved in the year under consideration as well as all the material facts relating thereto are similar to A.Ys.2008-09 to 2011-12, we respectfully follow the common order of the Tribunal [ 2017 (11) TMI 1929 - ITAT PUNE] deciding a similar issue in favour of the assessee for the said years by relying inter-alia, on the decision of the Hon ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Ultra Tech Cement Ltd. [ 2017 (2) TMI 1005 - BOMBAY HIGH COURT] and delete the disallowance made by the Assessing Officer and confirmed by the ld. CIT(A) u/s 14A of the Act read with Rule 8D of the Rules. - Decided in favour of assessee.

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• 2020 (12) TMI 186
  Valid search - proceedings initiated under Section 132 - whether satisfaction does record reasons calling for necessary authorization to carry out search and seizure - sufficiency and adequacy of the reasons recorded in the note of satisfaction in terms of Section 132 - HELD THAT:- Search and seizure proceedings, place considerable power in the hands of the Revenue Department. Hence it becomes essential that a consistent system of checks and balances be maintained against it. This power empowers the Revenue Department to bypass the privacy of an assessee or any individual, whom the Revenue has a reason to believe, would hold some information regarding tax evasion activities. The search and seizure procedure requires the authority to apply their mind and pay heed to all relevant facts while concluding that a warrant of authorization must be issued. The authority, ought to record their reasons in reaching the conclusion that such proceedings ought to be initiated against the assessee. The jurisdiction of this Court merely extends to keeping a check on the relevance of the reasons recorded and not go beyond in assessing the sufficiency or adequacy of the reasons provided. The Satisfaction Note was clearly concerned with tax evasion activities conducted by various companies and persons mentioned therein and the same has been relied upon by the authority to initiate the proceedings under Section 132. Further it must be kept in mind that the Court cannot substitute its own opinion in this regard. Petitioner s assertion of having resigned from the Company and nothing to do with the same, cannot be accepted as a disputed fact in writ jurisdiction, more so when records of the Registrar of Companies reflected the position to be otherwise. In any event, whether Petitioner, any which way was connected with the Company or not; or the documents reflecting huge amounts of cash transactions stood reflected in the books of accounts and was not an undisclosed income is again a question of fact which can be easily taken before the authorities in the adjudicatory proceedings. The same was allowed to be completed by this Court by way of the interim order dated 21st of April, 2010 with the only restraint of not passing a final order. The impugned action is neither malafide nor arbitrary or capricious. Note of satisfaction does record reasons calling for necessary authorization to carry out search and seizure operation. The search and seizure operations carried out by and in terms of Section 132(1) of the Income Tax Act cannot be said to be illegal and ultra vires the Statute.

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• 2020 (12) TMI 185
  Addition u/s 40A(3) - Disallowance u/s 40(a)(ia) - payment in cash to SNBT for raw material purchases and SNBT making the said amount to the suppliers - HELD THAT:- Since the matter stood remitted by the learned Tribunal with regard to Section 40A(3) of the Act, to first determine whether there was a contract of Agency Agreement between the Appellant/Assessee, an individual viz., Mr.R.Venugopal and the Company by name M/s.Srinivas Buildtech Pvt Ltd (SNBT) where the Assessee was the Managing Director, therefore, unless such contractual relationship is established, both the issues with regard to disallowance under Section 40A(3) of the Act for Assessee having made cash payments to the Company for the alleged purchases of raw materials and building materials and also applying Section 40(a)(ia) of the Act for Service Charges paid by the Assessee to the Company for such agency work of purchasing those materials without deduction of Income Tax at Source cannot be determined. Since both the issues are inter-related and since the matter stood remitted by the learned Tribunal vide para 12 aforequoted for Section 40A(3), the issue with regard Section 40(a)(ia) of the Act also ought to have been restored to the file of the CIT (A). No substantial question of law.

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• 2020 (12) TMI 184
  Vivad Se Vishwas Scheme - assessee has filed the declaration/ undertaking under the Vivad Se Vishwas Scheme on 20.11.2020 ie. today and is awaiting orders to be passed in Form No.3. - HELD THAT:- In the light of the subsequent event, the Competent Authority shall process the application/declaration in accordance with the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) and pass appropriate orders as expeditiously as possible. The assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration to be filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal.

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• 2020 (12) TMI 183
  Rectification u/s 254(2) - assessee submits that during the course of hearing on 08.04.2019 he had relied heavily on the decision in Lotus Investments Ltd. [ 2019 (3) TMI 467 - ITAT MUMBAI] and Elde Electricals Agencies Pvt. Ltd. v. CIT [ 2015 (7) TMI 16 - BOMBAY HIGH COURT] and it is stated by him that while disposing the appeal, the above decisions were not taken into consideration - HELD THAT:- Tribunal missed the above decisions, while framing the order. Not considering the above decisions, though it was cited before it, is a mistake apparent from record in view of the judgment of the Hon ble Supreme Court in Honda Siel Power Products Ltd. [ 2007 (11) TMI 8 - SUPREME COURT]

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• 2020 (12) TMI 182
  Undisclosed/unexplained credits in the bank account - HELD THAT:- Assessee has taken loans from several persons, which was partly repaid during the year under consideration and again the loans were taken from the same persons. AO has simply seen credits in the bank account without realising that the same amount is recycled. We find that detailed explanation alongwith re-conciliation has been furnished by the assessee before the CIT(A) but the same was dismissed out-rightly. Similar is the fate of expenditure treated by the AO as paid in cash in excess of cash withdrawals. We find that out of the alleged difference, most of the payments have been made by account payee cheques on account of salaries and wages, tyre purchases and diesel expenses, which totalled to Rs. 24.65 lakhs. These details were also furnished before the CIT(A) but such details received the same fate. We are of the considered view that when the assessee has explained everything with evidences, the CIT-A should not have rubbished those evidences without recording any specific findings. Cash purchase of the impugned property - HELD THAT:- AO has grossly erred in simply believing the contention of the counsel of Shri Ram Babu. It appears that Rs. 97 lakhs was deposited in cash in the bank account of Shri Ram Babu and to explain the source, the ld. counsel simply stated that Shri Ram Babu has received the same from the assessee. Interestingly, Shri Ram Babu died in on 14.11.2013 as per the death certificate exhibited at page 18 of the paper book. Assessment proceedings of Shri Ram Babu took place subsequent to his death. A pertinent question arises as to how the counsel of Shri Ram Babu knew that Rs. 97 lakhs were received by Shri Ram Babu from the assessee when he has left for heavenly abode on 14.11.2013. Order sheet entries are placed at pages 1 to 3 of the paper book. Assessment proceedings are dated February 2014, which means that the assessment proceedings in the case of the assessee were much after the date of death of Shri Ram Babu. Entire addition has been made on assumptions and surmises and on the statement of counsel of Shri Ram Babu which do not have any evidentiary value keeping in mind that Shri Ram Babu died in 2013. Considering these facts in totality, addition of Rs. 97 lakhs is directed to be deleted We remit both these issues to the file of the Assessing Officer. The assessee is directed to furnish all necessary evidences which were furnished before the CIT(A) and the Assessing Officer is directed to examine each and every evidence/explanation and decide these two issues afresh after affording reasonable opportunity of being heard to the assessee. Addition on account of difference of interest as per bank statement and as per books of account - HELD THAT:- The assessee is directed to reconcile the same and explain the difference, if any, and the Assessing Officer is directed to examine the issue afresh and decide the same after giving opportunity of being heard to the assessee. This ground is, accordingly, treated as allowed for statistical purposes.

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• 2020 (12) TMI 181
  Addition u/s 68 - Bogus LTCG - treating the entire sale receipts as income u/s 115BBE - HELD THAT:- Assessee has successfully discharged the onus cast upon him by provisions of section 68 of the Act and as mentioned elsewhere, such discharge is purely a question of fact. We, accordingly, direct the Assessing Officer to accept the long term capital gain on sale of shares of LDPL declared as such. Since we have accepted the genuineness of long term capital gain, we do not find any merit in the consequential addition and the same is also directed to be deleted. - Decided in favour of assessee.

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• 2020 (12) TMI 180
  Levying penalty u/s 140A(3) - tax was not paid till the date of finalisation of assessment under section 143(3) AO proceeded to levy penalty under section 140A(3) read with section 221(1) - scope of amendment - HELD THAT:- In our view, the fact that the amended section 140(3) with effect from 01.04.1989 does not envisage any penalty for non-payment of self-assessment tax, the Assessing Officer was not justified in levying the impugned penalty by making recourse to section 221 of the Act. We, accordingly, direct the Assessing Officer to delete the penalty imposed under section 140A read with section 221(1) of the Act. - Decided in favour of assessee.

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• 2020 (12) TMI 179
  Deduction u/s.80P(2)(a)(i) denied - assessee is engaged in the business of providing the credit facilities to its members. It accepts deposits from its members and provides credit facilities to its members - HELD THAT:- From the definitions provided for the expression primary Co-operative bank and for the expression banking as per the Banking Regulation Act 1949, it could be safely concluded that unless the person collects deposits from the general public and provides credit facilities to the general public (both members and non-members), they cannot fall within the category of co-operative bank , primary co-operative bank or said to have engaged in the business of banking. In the instant case it is undisputed that assessee does not have any transaction with non-members of the credit society - assessee had collected deposits only from its members and had provided credit facilities to its members, in consonance with the powers provided in its bye laws. Hence, it could be safely concluded that the provisions of Section 80P(4) cannot be made applicable to the assessee society in the instant case. Hence, the assessee being a co-operative society would fall within the ambit of Section 80P(2)(a)(i) of the Act and hence, would be eligible for deduction thereon. Status of the assessee should be considered only as a co-operative credit society and not as a co-operative bank. Accordingly, the assessee is entitled for deduction u/s. 80P(2)(a)(i) of the Act for A.Y.2010-11 and we direct the ld. AO accordingly. Penalty u/s.271D - We find that assessee on realising its mistake had preferred an appeal before us against that order (though it is not aggrieved on the result of the order but aggrieved on the observations made thereon) for penalty u/s.271D of the Act for A.Y.2007-08, which is also listed alongwith these main appeals for other assessment years. It is trite law that no addition or denial of any deduction could be made by the revenue authorities merely based on admission of any person much less the authorised representative of the assessee without going into the actual charter documents i.e. in the instant case, objects of the society to ascertain and understand the status of the assessee. The objects of the society (bye laws of the assessee) which are enclosed in page 5 of the paper book filed before us categorically states that assessee society could transact only with its members. Hence, by no stretch of imagination, it could be considered as a co-operative bank. At the cost of repetition, a co-operative bank is one which transacts with general public which includes both members as well as non-members. In this regard, we would like to state that there is no estopel against the statute and therefore, it is open to the assessee to claim before the authorities that a particular item of income is not taxable despite having offered the same in its return of income or even having accepted the same as taxable before the authorities or even in the books of accounts - This appeal filed by the assessee against penalty u/s.271D of the Act for A.Y.2007-08 requires to be remanded back to the file of the ld. CIT(A) for denovo adjudication in accordance with law.

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• 2020 (12) TMI 178
  TDS u/s 194A - disallowances of finance charges on hire purchase u/s 40(a)(ia) - HELD THAT:- There is no dispute that the payment in question was in respect of hire charges paid by the assessee to M/s Tata Capital Ltd. (a NBFC) under the hire purchase agreement. It is also not in dispute that the assessee has not acquired any title for ownership of the asset under the hire purchase agreement but the assessee is under no obligation to buy the asset. Thus, it is only an option with the assessee either to return the goods or to become its owner by payment in full of the hire charges. Therefore, this transaction of payment of hire charges and financial charges do not fall in the ambit of section 194A of the Act. There is no quarrel on the point that the provision to section 194A are not applicable in respect of the payment in question and consequently the claim of deduction cannot be disallowed by invoking the provision to section 40(a)(ia) - AO has invoked the provision to section 194A r.w.s. 40(a)(ia) as specified in the impugned order and hence there is no question of applying the section 194I of the Income Tax Act. Alternative plea of the ld. AR of the assessee, it is noted that the amendment by which the 2nd Proviso to section 40(a)(ia) is brought into Statute and the same is remedial in nature as held in the case of CIT vs. Calcutta Export [ 2018 (5) TMI 356 - SUPREME COURT] . Thus it is settled proposition that the 2nd Proviso to section 40(a)(ia) shall have retrospective effect. Once the recipient of the charges has considered this amount as part of its income and filed the return of income then the question of invoking of section 40(a)(ia) does not arise - Decided in favour of assessee.

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• 2020 (12) TMI 177
  Revision u/s 263 - assessee did not furnish approval granted by DSIR in Form 3CL before the AO in support of its claim made u/s 35(2AB) till the date of completion of assessment - HELD THAT:- There was two possible views with regard to the question as to whether furnishing of Form 3CL is mandatory or not for claiming deduction u/s 35(2AB) of the Act. Hence, it has to be held that the AO has followed one of the possible views in which case, the impugned assessment order cannot be termed as prejudicial to the interests of the revenue. In that view of the matter, one of the two conditions would fail and hence the impugned revision order cannot be sustained. We have noticed earlier that the co-ordinate bench has also decided this issue in favour of the assessee in AY 2013-14 and 2015-16. Accordingly, we set aside the revision order passed by Pr. CIT for AY 2015-16. - Decided in favour of assessee.

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• 2020 (12) TMI 176
  Exemption u/s 11 - tax-payer trust is not registered u/s 12A - corpus fund receipt - HELD THAT:- The assessee produced the receipt issued by itself to various parties wherein it is mentioned that it has been received as a corpus donation. There is no evidence regarding specific direction given by the donor treating that the said amount was given towards corpus fund of present assessee. In the absence of any material to show that the provisions is abused and if it is demonstrated that the educational institution has collected money in the form of voluntary contributions from public and may be from the parents or the students who are studying in the institution and when they have issued receipts acknowledging the said amount towards building fund and made requisite entries in the books and deposited the same in the bank, if the court is satisfied with the genuineness of the transaction, it is well within the power of judicial authority to hold that the requirement of section 11(1)(d) fulfilled and assessee is entitled to be exempted. In the present case, it is nobody s case that donors herein have collected any donation on behalf of the present assessee from the students or from parents for giving the admission in the institutions run by the present assessee - AO in this case without looking into this issue, straightaway treated as the donation income of assessee. AO has failed to carryout necessary enquiry with regard to sources from which such donors have donated the amount to the present assessee and are unable to comment on this aspect.- Appeal of the Revenue is dismissed.

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• 2020 (12) TMI 175
  Addition u/s 68 - unsecured loans as well as share application money received from all the 6 entities was held to be non-genuine and a sham claim made by the assessee - assessee must prove the identity, creditworthiness of the lenders / investors to advance such monies and genuineness of the transactions - Whether AO has erred in not following the instruction of CBDT and has scrutinized and made addition on the issue which was not covered under the CASS while selecting the case under Scrutiny - HELD THAT:- The perusal of bank statement would reveal that the funds have been transferred to the assessee through banking channel, there being no immediate cash deposit before transfer of funds to the assessee. Its financial statements are likewise audited and it has sufficient reserves of more than Rs. 579.50 Lacs to make further investments. Primary onus of establishing the identity of the investor entities, proving their respective creditworthiness and to establish the genuineness of the transactions was duly been discharged by the assessee. The assessee was not required to prove the source of source for this year. Therefore, the onus was on revenue to rebut these evidences by bringing on record cogent material to dislodge assessee s evidences Except for the fact that summons remained un-served, there is nothing in the armory of revenue to unsettle the assessee s claim. The allegations are not supported by any corroborative evidences. Once the initial onus was discharged by the assessee, it was incumbent upon revenue to carry out further investigation to support the allegation that the credits were unexplained - nothing of that sort has been shown to have been carried out. So far as the information of DGIT (Inv.) is concerned, we find that these were merely third party statements which were never confronted to the assessee and those statements on standalone basis could not form the basis of making additions in the hands of the assessee. AR, during the course of hearing, advanced arguments for the submissions that the case of the assessee was selected for scrutiny under CASS for the reason that there was large interest expenses relatable to exempt investments u/s 14A. No such additions were made by Ld. AO in the assessment order and therefore, the scope of scrutiny could not be enlarged to make additions of unexplained cash credit u/s 68. However, these arguments do not convince us much since upon perusal of page no. 17, it is quite evident that the type of scrutiny was complete and it was not a limited scrutiny case - AO was quite empowered to make correct assessment of assessee s income considering all the facts and issues. There is nothing on record which would show that there was any defect in the jurisdiction of Ld. AO, in any manner. - Decided partly in favour of assessee.

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• 2020 (12) TMI 174
  Rectification u/s 154 - assessee said to be claimed depreciation on plat and machinery @ 60% against the applicable rate of 10% - Assessee disclosed the office equipment under separate head entitled for 60% depreciation - whether these office equipment computers or computer parts are entitled for depreciation at 60%? - HELD THAT:- If the AO applied the wrong provision of law in the original Assessment or applied wrong rate of depreciation, it could be rectified in proceeding under section 154 of the Act. In our opinion, this view of the DR is justified. We find that as per entry No.5 in the new Appendix I attached to Income Tax Rules, 1962, w.e.f. Assessment Year 2006-07 onwards, applicable rate of depreciation for computer or computer parts is at 60%. Accordingly, we direct the AO to grant depreciation on these items at 60%, and we uphold the order of CIT(A) on this issue. Disallowance u/s 14A r.w.r. 8D - Suo moto disallowance by assessee - AO has to go through various components like interest bearing funds, average value of investment, average value of total assets as appeared in the Balance Sheet of the assessee on the day and last day of the previous year, amount of expenditure directly relating to income which does not form a part of the total income. Being so, the issue is very debatable, the disallowance cannot be proceeded under section 154 of the Act. As rightly pointed out by CIT(A) that rectification under section 154 of the Act can only be made with regard to mistake of fact or law committed by the officer passing the order becomes apparent from the record, rectification is not possible if the question is debatable. A point which was not examined on facts or in law cannot be dealt with as a mistake apparent from the record. Interest on delayed payment of TDS - Allowable expenditure - HELD THAT:- In our opinion, it is compensatory in nature and not penal in nature as held by Co-ordinate Bench in the case of M/s. IDS Next Business Solutions Pvt. Ltd [ 2018 (6) TMI 1730 - ITAT BANGALORE] . Accordingly, it is an allowable expenditure. In this issue, CIT(A) has taken correct view and no interference is called for.

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• 2020 (12) TMI 173
  Exemption u/s 80G denied - assessee duly registered under section 12AA - CIT(E) was of the opinion that it is not possible to verify the genuineness of the objects and activities of the trust since there is no sufficient activities carried on by the assessee - HELD THAT:- Presently in the institution totally 400-450 students are studying from LKG to 7th Standard. The appellant has provided details of the fee collection and expenditure spent from Assessment Year 2017-18, 2018-19 and 2019-20 - It can be rightly said that the assessee is carrying on its objects. Being so, there is no merit in the finding of CIT(E) that there are no sufficient activities carried on by the assessee. The original objects continue to exist and assessee is a charitable institution and assessee is eligible for continuation of recognition under section 12A/12AA of the Act. Principle of consistency is also in favour of the assessee as based on the factual position. The assessee is carrying on the same objects as approved by the Department. Being so, there is no justification for rejecting the application for renewal under section 80G The judgment relied on by the CIT(E) in its order is with regard to the fact that approval is not automatic since no charitable activities were being carried on by that assessee. In the present case, assessee filed details wherein assessee clearly demonstrated that assessee has been running the educational institution and it is not dormant and assessee being so, we direct the CIT(E) to grant the recognition under section 80G - Decided in favour of assessee.

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• 2020 (12) TMI 172
  Capital gain computation - application of provision of section 50C - adopting the valuation of land on the basis of valuation of District Valuation Officer (DVO) - assessee also made request for referring the matter to the valuation officer for arising on correct value of the land sold - AO made reference to the Valuation Officer for determining the fair value of the land sold by assessee - assessee submits that assessee was Co-owner of land having 50% share therein - HELD THAT:- As perused the first and second proviso attached with section 50C of the Act and we do not find any distinction of registered or unregistered agreement fixing the amount of consideration. Therefore, the submission of Sr. DR has no force. CIT(A) affirmed the action of AO by taking view that the assessee himself asked to adopt the value of DVO. In our view the there is no estoppel against the law. Further, the revenue cannot the benefit of ignorance of assessee, if otherwise the assessee is entitled for the benefit of First and Second Proviso of section 50C. In view of the factual and legal discussion, we are of the view that Stamp Duty Valuation as on 21.02.2012 has to be considered for the purpose of section 50C of the Act. Since we have accepted the primary contention of the AR of the assessee, therefore, discussion on the area of land / plot will become academic. In the result, Ground No.1 of the assessee is allowed. Disallowance of deduction under section 54F - Lower Authorities rejected the claim of the assessee on the ground that assessee owned more than one residential house other than new residential house on the date of transfer of original asset - HELD THAT:- In the present case, the assessee failed to substantiate by cogent evidences that Ashirwad Palace Flat is being used for commercial purpose. Similarly, in Sanjeev Puri Vs DCIT [ 2016 (8) TMI 907 - ITAT DELHI] the assessee in the said case was using one of the properties for professional office. Thus, both the case laws relied by the AR is not helpful to assessee. In our view the assessee was having more than one residential property besides Muktanand Co.op Housing Society, when the capital gain invested for purchase of new residential property in Raj Abhishek City Homes. The assessee was having more than one residential property, when the capital gain was invested for purchase of another residential house, therefore discussion on status of other properties for the purpose of considering the claim of deduction u/s 54F of the Act have become academic. - Ground of assessee is dismissed.

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• 2020 (12) TMI 171
  Capital gain computation - justification of reference made to the DVO in contravention of the legal position under section 55A - Whether DVO not qualified to carry out valuation of agricultural land as per the condition prescribed in Rule 8(A)(3) of Wealth Tax Act? - HELD THAT:- In the present case the assessee has shown the value of asset at a higher rate than the fair market value and the amendment to the section 55A( a) i.e. substitution of the words is at variance with the fair market value were inserted with effect from 1st July 2012 and the same is not applicable retrospectively, further the assessing officer has to form an opinion that fair market value as on1st April 1981 as claimed by assessee is not fair value. As decided in Tribunal in Jignesh Kumar S Modi (HUF) [ 2019 (6) TMI 1571 - ITAT SURAT] while relying on the decision of jurisdictional High Court in CIT Versus Gauranginiben S Shodhan [ 2014 (2) TMI 78 - GUJARAT HIGH COURT] the value of the land shown by the assessee as on 1.4.1981 based on the registered valuer report is considered, it would reveal that the same was in fact even higher than the value subsequently determined by the valuation officer and therefore, the AO was not empowered to refer the matter to the valuation officer even as per erstwhile provisions of section 55A(a) prior to amendment by the Finance Act, 2012. Without going into the merits of the basis of valuation so adopted by the registered valuer and subsequently by the department s valuation officer, in absence of a valid reference to the valuation officer, the addition so made under the head long term capital gains so far as it relates to cost of acquisition as substituted by fair market value as on 1.4.1981 is directed to be deleted. In the result, the appeal of the assessee is allowed Considering the decision of co-ordinate bench of Tribunal on almost similar set of fact while considering the similar contention of assessee in the said held that when the transaction of sale of land was taken during the financial year 2011-12 relevant to the assessment year 2012 -13, the amended provision of section 55A(a) would not be applicable and one shall be guided by the wrest while provision of un-amended section 55 A(a) of the Act. We allow the ground No. 1 raised by the assessee.

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• 2020 (12) TMI 170
  Deduction u/s 80IB(10) denied - date of sanction of project from Surat Development Authority as on 05.02.1997 is gathered by the A.O. from the sale deeds of the land where the assessee undertaken the development of project - permission was granted to earlier owners - assessee has not fulfilled the condition laid down in section 80IB(10) of the Act has the completion of project was not within Four (04) years from 01.04.2004 as laid down under section 80IB(10) - HELD THAT:- Considering the decision of Co-ordinate Bench of Tribunal in assessee s case for A.Y. 2010-11 [ 2017 (4) TMI 1522 - ITAT AHMEDABAD] on identical set of facts, on identical grounds of appeal and respectfully following the same, we do not find any illegality or infirmity in the order of the ld. CIT(A) wherein the ld.CIT (A) followed the order of his predecessor for A.Y. 2010-11, thus, we affirm the order of Ld. CIT(A). Moreover, the AO has not disputed the fact that the sanction of development of housing project was granted to the assessee only on 23.02.2007 and that the assessee completed the project well within time from 23.02.2007. In the result, appeal of Revenue in Ground No.1 and 2 are dismissed. Addition u/s 68 - HELD THAT:- Almost in all cases substantial payments are made by cheques. Therefore, there is no logic to treat those advances as unexplained. Before us assessee also explained that all amounts were received as advance. The assessee executed sale deeds of various units / flats, copy of sale deeds are placed before us. We find that the ld. CIT(A) passed the order after considering all those documentary evidences. Before passing the order the ld.CIT(A) granted opportunity to the AO to furnish his remand report. In the remand report, the AO made a general remark despite the fact that the complete details were available on the registered sale deeds. In view of the above discussion, we do not find any infirmity in the order passed by the ld.CIT(A) in deleting the addition under section 68 - Decided in favour of assessee. Unexplained deposits - HELD THAT:- No adverse material is brought against the documentary evidence nor was any contrary submission made by the ld. DR for the revenue. Therefore, keeping in view that the sale deed is registered before Government Authorities and has direct relevance with the fact in issue, therefore the additional evidence admitted. Considering the evidence in the form of registered sale deed in favour of Sandeep Poonamiya for purchase of flat No. B-502, we are in principle agree that the assessee has fully explained this deposit. Thus, we direct the AO to verify the facts and delete this addition - Hence, this part of addition is allowed for statistical purpose.

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• 2020 (12) TMI 169
  Directly passing the final assessment order under section 143(3) without passing the draft assessment order - HELD THAT:- Assessing Officer while passing the order giving effect of ITAT order should follow the procedure as envisaged under Section 144C(1) of the Act and pass a draft assessment order and as against the draft assessment order the assessee has right to file objections to the DRP. But in the present case, the assessing Officer has passed the order dt. 8-8-2017 giving effect to ITAT order and raised the demand u/sec. 156 of the Act without passing Draft Assessment order, which cannot be sustained. Accordingly, we set aside the CIT(A) order and quashed the order passed by the Assessing Officer and allow the additional ground of appeal of the assessee.

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• 2020 (12) TMI 168
  Rectification u/s 254 - deduction u/s 80IB - HELD THAT:- As perusal of Audit Report noted that the same is unsigned and undated and that further held that there is no evidence to corroborate manufacturing activities commenced on 28.03.2004. All the material placed before our predecessor, were duly considered and on consideration has taken a plausible view. Assessee is now seeking the rectification of the order which is based on appreciation of evidence placed before the Tribunal. Assessee failed to bring any fact to our notice which may be considered as mistake apparent on record. The case laws relied for assessee in Nisha Synthetics Ltd. [ 2016 (12) TMI 1413 - SC ORDER] is not helpful to the assessee as the same is based total different set of facts. In the said case, there was a dispute whether the documents were filed before the Tribunal or not, the Hon ble Court after considering the contention of the assessee directed Tribunal to consider the documents and pass the order afresh. In the present case, all the evidences furnished by assessee were duly considered and appreciated, therefore, the facts of the present case are quite different. Tribunal failed to advert even to basic facts and disposed of the appeal in in summary interfering with the order passed by authority. With utmost regards to the decisions of Hon ble Apex Court we have seen that in the cases in hand our predecessor passed the order considering the facts of the cases and the evidenced furnished by the assessee. Thus, we do not find any merit to interfere in order dated 17.02.2017 by invoking the provision of section 254(2) of the Act. Miscellaneous Application filed by the assessee is dismissed.

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• 2020 (12) TMI 167
  Reopening of assessment u/s 147 - Deduction u/s 80IB - HELD THAT:- As gone through the order of lower authorities and the order of Co-ordinate Bench of Tribunal for AY.2007-08 [ 2015 (9) TMI 1183 - ITAT AHMEDABAD ]. We have seen that the Assessing Officer reopened the case for assessee for the year under consideration on the ground that similar claim of deduction under section 80IB was disallowed in AY.2007-08. The Assessing Officer in reassessment order dated 20.03.2015 disallowed deduction under section 80IB of Rs. 3.11 crore. CIT(A) allowed relief to the assessee by following the order of Tribunal above. Considering the fact that on identical ground of appeal on similar set of fact the assessee was allowed relief by Co-ordinate Bench of Tribunal. Respectfully following the same we do not find any merit in the ground of appeal raised by revenue.

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• 2020 (12) TMI 166
  Addition of notional interest income - CIT(A) made addition of interest income on notional basis on different aspects holding that if undisclosed income declared by assessee would have been available in the books of accounts of assessee, notional interest of approximately 14% of average interest rate of such available unaccounted on money , the assessee would have been earned interest - HELD THAT:- CIT(A) made addition of Rs. 70 lakhs on different aspect by taking view that undisclosed income would have been available in the books of the assessee. CIT(A) presumed that if Rs. 5 crore were available with the assessee, the notional interest of Rs.@14% on such average account, the assessee must have earned Rs. 70 lakhs and thereby added Rs. 70 lakhs. Assessee vehemently submitted that there is no concept of notional income and that no addition can be made or no presumption basis that assessee would have earned notional interest on surplus available with them. If interest free funds are available, it is the choice of businessman/assessee to arrange his business affairs. The Hon ble Gujarat High Court in CIT Vs. Arihant Avenue Credit Ltd. [ 2014 (10) TMI 790 - GUJARAT HIGH COURT] held that no addition on account of notional interest is warranted. Similarly, the Hon ble Delhi High Court in Shivnandan Buildcon (P.) Ltd.[ 2015 (5) TMI 192 - DELHI HIGH COURT] also held that in absence of any specific provisions under Income Tax Act, no notional interest is warranted. We are conscious of the settled position in law that the Income Tax Officer (ITO) cannot decide affairs of businessman as to how the businessman should incur the expenses or earn the interest. It is the sole discretion of businessman to manage its affairs and not the ITO. Considering the aforesaid facts and the case laws referred through, we are of the view that no addition on account of notional interest in absence of any co-gent evidence, against the assessee.

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• 2020 (12) TMI 165
  Addition of sales tax incentive/subsidy holding it as capital in nature - HELD THAT:- This issue is covered in favour of the assessee by a catena of decisions of ITAT in assessee s own case as well as several other decisions. He further referred that ITAT Special Bench in assessee s own case. [ 2003 (10) TMI 255 - ITAT BOMBAY-J] decided the issue in favour of assessee. DR could not dispute the above said proposition. The ITAT in assessee s own case in a number of orders for preceding years has decided the issue in favour of the assessee and the same order has not been reversed by Hon ble Jurisdictional High Court. Accordingly, we follow the doctrine of stare-decisis and uphold the order of learned CIT(A). Hence, Revenue s appeal on this issue stands dismissed. Allowance of depreciation as claimed by the assessee by holding that the claim of depreciation for the year was optional in nature - Assessee had not claimed depreciation in earlier years on the aforesaid plant/units on the ground that the claim for depreciation was optional - HELD THAT:- CIT(A) has granted relief following earlier orders of ITAT. He had noted that it was held that the claim for depreciation cannot be thrust upon the assessee. AOhas consistently rejected the claim of the assessee based on the stand taken at assessment stage in earlier year. CIT(A) noted that current year issue is consequential. Accordingly, following earlier orders of ITAT in assessee s own case, he decided the issue in favour of the assessee. It is not the case that earlier years decision of ITAT has been reversed by Hon ble High Court. DR also did not dispute that this issue is covered in favour of the assessee. Hence, we uphold the order of learned CIT(A). The Revenue s ground is dismissed. Disallowance u/s. 14A of the I.T. Act read with Rule 8D(2)(iii) - CIT-A restricting addition to 5% by taking average value of investment which have yielded dividend during the year under consideration and also under the provisions of Sec. 115JB - HELD THAT:- We find that the direction of learned CIT(A) is in consonance with earlier year ITAT order as regards disallowance u/s 14A is concerned. Hence, in this regard, we uphold the order of CIT(A). As regards importing disallowance u/s 14A to Section 115JB of the Act is concerned, we are dealing with the same in assessee s appeal. Deduction u/s.80IB(9) - Disallowance on aborted blocks - assessee was engaged in the business of exploration and production of mineral oil - AO reduced the amount being the abortive cost of wells incurred in contract areas other than KGD while computing deduction u/s.80IB(9) of the Act in respect of KGD undertaking - HELD THAT:- In assessee s own case [ 2003 (10) TMI 255 - ITAT BOMBAY-J] deduction u/s 80IB(9) of the Act has to be computed in terms of sec. 80IB of the Act. Sec. 80IB(13) of the Act provides that the provisions of sec. 80IA(5) shall apply and under the provisions of sec. 80IA(5) of the Act, the profits and gains of eligible business, for the purposes of sec. 80IB, shall be computed as if such eligible business were the only source of income of the assessee. In view of these provisions, the deduction u/s 80IB(9) has to be computed after ascertaining profits and gains of eligible business in terms of sec. 80IA(5) of the Act. Hence there is no scope to adjust expenses relating to other undertaking while computing deduction u/s 80IB(9) of the Act. Hence, we are of the view that the decision rendered by Ld CIT(A) does not call for any interference and accordingly we uphold the same. Allowance of deduction u/s. 80IB(9)(ii) - CIT(A) decided the issue by holding that similar issue has been allowed to the assessee in the immediately preceding year i.e. A.Y. 2012-13 and held that mineral oil for the purpose of claiming deduction u/s. 80IB(9) of the Act include natural gas condensate - HELD THAT:- Since facts are identical, following the precedent, we uphold the order of learned CIT(A). TP Adjustment on provision of support services to Associated Enterprise-REPDMCC - CIT(A) deleted the addition - HELD THAT:- In assessee s own case [ 2003 (10) TMI 255 - ITAT BOMBAY-J] We notice that the assessee has collected for the supply of materials and equipments and also for providing services in accordance with the PSC entered with foreign governments. Said decision of assessee is supported by the provisions of Rule 10B(2)(d) of the I.T. Rules. We further noticed that the TPO did not bring any other comparable to prove that the amount charged by the assessee is not at arm s length. Instead, he had simply marked up the transactions by 12.50%. Following the same, we uphold the order passed by learned CIT(A) on this issue. Transfer pricing adjustment in respect of debts receivable from AE - HELD THAT:- CIT(A) has decided the issue by referring to earlier years order in assessee s own case correctly wherein the arm s length rate of interest in respect of delayed realization of receivable was determined at Libor plus 1.05%. CIT(A) deleted the adjustment done by TPO, by holding that benchmarking done by assessee is accepted. - Since the ITAT has already accepted the interest charged at the rate Libor plus 125 bps for delayed payment in earlier years, we do not find any reason to interfere with the delayed realization of receivable at Libor plus 1.50%. Accordingly, we uphold the order of learned CIT(A) deleting the addition. TP Adjustment on interest on investment in preference stock of associated enterprises - HELD THAT:- We note that as submitted no fresh investment is made during the year. That the shares were allotted in earlier years. The new issue raised by Revenue on the theory of preponderance are not sustainable as nothing has been cogently brought on record. As pointed out by the learned Counsel of the assessee the examples mentioned in the grounds above do not relate to current year and it is trite that every year is different for transfer pricing purpose. Subsequent year instances cannot give a carte blanche to the Assessing Officer to make adjustment and render the Tribunal decision ceasing to be a precedent. Accordingly in the background of the aforesaid decision and precedent we uphold the order of learned CIT(A) deleted the addition. Addition at 1.5% charged by the TPO in arriving at corporate guarantee fees - HELD THAT:- CIT(A) noted the submissions that the issue was covered in favour of the assessee by the ITAT order in assessee s own case for earlier year. Learned CIT(A) held that the yield spread approach has to be accepted. He further held that the ITAT in assessee s own case for A.Y. 2005-06 to A.Y. 2009-10 the ITAT has restricted the arm s length price at the rate of commission or guarantee to 0.38%. Considering these facts learned CIT(A) held that the arm s length price or rate of commission determined at 0.38% for share term guarantees long term guarantee learned CIT(A) upheld the yield spread approach based upon the ITAT order in A.Y. 2011-12 2012-13. Long term guarantee - HELD THAT:- As the assessee yield base approach has been upheld by the ITAT. Further the yield based approach is adopted considering the letter of bank issued for year 2012-13. Hence, the objections of the Revenue are not sustainable. Accordingly, we uphold the order of learned CIT(A). Deemed payment of sales tax disallowance u/s 43B - HELD THAT:- Assessee fairly accepted that this issue is covered against the assessee. Disallowance of depreciation on the capitalized value of goods purchased from Durga Iron Steel Ltd. and Surajbhan Rajkumar Pvt. Ltd. - HELD THAT:- Assessee fairly accepted that this issue is covered against the assessee. Assessee shall be eligible to claim deduction u/s. 80IB(9) of the Act in respect of profits not allowed as deduction u/s. 10AA. Expenditure towards CSR expenditure - AO has disallowed this claim under section 37(1)1 of the IT act but allowed the same under section 80G (50%) - HELD THAT:- Assessee has incurred expenditure on the activities relating to corporate social responsibility. The act specifically debars such expenditure from under section 37(1) with effect from 1/04/2015. The ITAT in Jindal Power [ 2016 (7) TMI 203 - ITAT RAIPUR] has taken exactly this view. On the facts and circumstances of the case it cannot be said that the expenditure incurred by the assessee is not relating to corporate social responsibility. Another reason for adverse inference by the authorities below for disallowance under section 37(1) is that assessee has incurred these expenditures through trusts. We find that there is no bar in the act in this regard. No cogent case has been made out that these expenditures are not covered under the statutory obligation under section 135 of the companies Act. It is also not the case that relevant authorities in this regard have rejected them as not meeting the statutory obligation u/s. 135 of the Companies Act. Moreover, AO has himself noted that he has verified the respective document and found them to be correct in connection with allowance under section 80G of the Act. Hence, the veracity is not in doubt. Accordingly we set aside the orders of authorities below and allow the ground raised by the assessee. Exempt u/s.10(15)(iv)(h) - under normal provisions of the Act as well as for the purposes of sec. 115JB - HELD THAT:- The claim of the assessee is that the above said interest income of Rs. 21.79 crores was earned on tax free bonds and the same is exempt u/s.10(15)(iv)(h) of the Act . In any case, an item of income, which is exempt under the Act cannot be brought to tax by the A.O. Since the claim of the assessee requires verification, we restore this issue to the file of the A.O. for examining the same both for the purpose of computing total income under normal provisions of the Act as well as under sec. 115JB. Disallowance under section 14A cannot be added under section 115JB . See M/S. BENGAL FINANCE INVESTMENTS PVT. LTD. [ 2015 (2) TMI 1263 - BOMBAY HIGH COURT] Grant the deduction under section 10 AA with reference to the profit and gains as determined by the honourable Supreme Court in the case of Vijay Industries [ 2019 (3) TMI 171 - SUPREME COURT] Comparable selection - Companies functionally dissimilar with that of assessee need to be deselected. Rate duly approved under 80 IA(8) to be changed for Transfer Pricing purposes - HELD THAT:- Definition of the market value shall change for the purpose of domestic transfer pricing regimen is not at all sustainable. Accordingly, in the background of the aforesaid discussion and precedent, we set aside the orders of the authorities below and decide issue in favour of the assessee.

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• 2020 (12) TMI 164
  Rectification u/s 154 - Disallowing set off of brought forward losses/unabsorbed depreciation against the total income declared by the assessee - application u/s. 154 immediately after the assessment order, praying for set off of business losses/unabsorbed depreciation against the total income for the assessment year 2005-2006 - HELD THAT:- In view of section 72(2)(i), 32(2) and in the case of CIT v. Yokogawa India Ltd. [ 2016 (12) TMI 881 - SUPREME COURT ] the business loss and unabsorbed depreciation of AY 2002-03 to AY 2004-05 ought to have been set off against the business income remaining after claiming deduction under section 10A and against the Income from other sources of the subsequent years. The CBDT Circular No. 14 dated 11.04.1955 states that the income tax authorities are required to bring to the notice of the assessee any claim of relief, exemption, deduction etc. to which the assessee is legally entitled and allow the same even though the assessee may not have claimed the said relief, exemption, deduction etc. for any reason. It was further stated that the Officers of the Department must not take advantage of ignorance of an assessee as to his rights. In the light of the above CBDT Circular No. 14 dated 11.04.1955, the fact that the assessee inadvertently did not set off the business losses and unabsorbed depreciation of AY 2002-03 to AY 2004-05 against the remaining business income (after claiming deduction u/s. 10A) and Income from other sources of the subsequent years does not obviate the duty of the assessing officer in rectifying the said mistake and allowing set off for the same. If an assessee makes a mistake in submitting to be assessed on a particular income before the assessing authority, he is not estopped or precluded by law from preferring an appeal and showing to the appellate authority that the income is, in fact, either wholly or partly, not exigible to tax. If such a contention is taken, it is the duty of the appellate authority to examine the matter and determine the proper tax leviable. Hon ble Karnataka High Court in Wipro Limited v. DCIT [ 2015 (10) TMI 826 - KARNATAKA HIGH COURT ] had held that claims not made in the return of income are also allowable by the assessing officer as placing reliance of the CBDT Circular No. 14 dated 11.04.1955. We are of the view that the matter needs to be considered afresh by the A.O. The A.O. is directed to consider the assessee s claim of set off of unabsorbed losses/depreciation against the declared income for assessment year 2005-2006. The A.O. shall afford an opportunity of hearing to the assessee. - Appeals filed by the assessee are allowed for statistical purposes.

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• 2020 (12) TMI 163
  Penalty u/s 271(1)(c) - refusal of bonafide claim u/s 80IB(10) - HELD THAT:- In this case assessee had not even identified the customer from whom such unaccounted receipt i.e On money was received which could have helped to ascertain the proported existence of obligation to return the On money . Due to lack of this details, Coordinate Bench decided that the unaccounted money is to be taxed in the year of receipts itself. Whereas the facts of the appeal, we are dealing in are different as all details relating to specific flats were provided and were even found by Revenue authorities during the course of survey. The On money which was offered to revenue in subsequent assessment year were shown as liability as advance for sale of flat Due to these variation of facts Revenue will be unable to get any benefit out of this decision. Respectfully following the decisions of Co-ordinate Bench and in the case of Nilkanth Developers Vs ITO [ 2014 (12) TMI 928 - ITAT AHMEDABAD ] are of the view that as the Adinath project was eligible for housing project u/s.80IB(10) and there is no other business carried on by the assessee, it deduction u/s.80IB(10) has been rightly claimed on the On money . This issue is also decided in favour of assessee.

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• 2020 (12) TMI 162
  Disallowance of loss arising on valuation of inventory (which is nothing but accumulated expenses of earlier years included as part of work-in progress - A.R. submitted that the income tax is to be charged on real income thus submitted that the assessee has treated the revenue expenses as work in progress and did not write off the same, since no business income was available - HELD THAT:- CIT(A) has noticed that the expenditure of Rs. 2.51 crores consisted of only revenue expenses . He has further given a finding that, if at all these expenses are related to any abandoned project, the claim should have been made by the assessee in FY 2009-10, since the Joint Development Agreement was terminated in that year only. As earlier noticed that the assessee has treated these expenses as pre-operative expenses till 31.3.2010 and only in the financial year 2010-11, the assessee has converted the same as work in progress . It is a well settled proposition of law that the accounting treatment given in the books of account is not binding on the assessee/revenue to determine the correct amount of total income under the Income tax Act. However, in order to claim any amount as expenditure or loss, the conditions or procedures prescribed under the Income tax Act should have been followed by the assessee. A.R. submitted that the accumulated amount of Rs. 2.51 crores represented only revenue expenses and hence the assessee could have claimed the same as business loss in the earlier years. In that case, the brought forward business loss would have been allowed as deduction. This submission of the assessee appears to be attractive. However, the Income tax Act prescribes conditions for filing of loss returns and for carry forward of losses. None of those conditions have been followed by the assessee and no loss was claimed or determined in any of the past years. Hence it cannot be presumed or deemed that the claim of the assessee represented brought forward loss. Accordingly, this contention of the assessee is liable to be rejected. As noticed that the amount of Rs. 2.51 crores represented expenses incurred by the assessee upto 31.3.2010. As observed by Ld CIT(A), the claim should have been made by the assessee in FY 2009-10 relevant to A.Y. 2010-11, since the Joint development agreement was terminated in that year. Hence we agree with the view of the Ld CIT(A) that this amount cannot be claimed during the year under consideration. In view of the above, we do not find it necessary to interfere with the order passed by Ld CIT(A). - Appeal of the assessee is dismissed.

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• 2020 (12) TMI 161
  Disallowance u/s. 14A - AO took the view that the assessee has not computed disallowance as per Rule 8D, thus accordingly he computed the disallowance - Suo moto addition by assessee - HELD THAT:- As during the year under consideration, the assessee has received dividend income of Rs. 8.47 crores and it has voluntarily disallowed a sum of Rs. 28.56 crores u/s. 14A - from the computation of income assessee has also earned Long term capital gain of Rs. 13 crores and claimed the same as exempt. Thus aggregate amount of exemption claimed was Rs. 21.47 crores. We also notice that the dividend income was received from one group company named M/s. Mindtree Limited and the long term capital gain was also earned on sale of shares of M/s. Mindtree limited. As in the earlier year, the disallowance made by the assessee voluntarily is more than the amount of exempted income. Hence,disallowance voluntarily made by the assessee would meet the requirements of sec. 14A of the Act. Accordingly, following the order passed in AY 2013-14, we are of the view that further disallowance made by the AO and confirmed by ld CIT(A) is not warranted in the facts and circumstances of the case. - Decided in favour of assessee.

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• 2020 (12) TMI 160
  Computation of Long Term Capital Gains - Applicability of provisions of section 50C - CIT-A directing AO to adopt the valuation of the properties made by the DVO vis- -vis the value of the shares transferred for the purpose of computation of Long Term Capital Gains - HELD THAT:- In the present facts, of the case we note that Company had no rights to sell superstructure. Company is permitted only to sublet or sublease or assign or nominate any portions thereof falling to its share to one or more parties in one or more than one deeds for the period of lease. We have also perused Scheme of allotment by the Esteem Arcade Pvt. Ltd., wherein, the members enrolled under this scheme would be allotted commercial space/unit There was an embargo on assessee to sell their units as it emanates from there scheme adopted by the company. Authorities below have disputed or doubted the scheme of company under which the assessee could only transfer the shares and or deposits held in the company which is subject to fulfilment of certain conditions. There is nothing on record to substantiate the allegation of intention to avoid tax in the guise of transfer of shares. Ld.CIT(A) on one hand holds that there was no transfer of Capital Asset, whereas on the other hand, refers to DVO report to allege tax avoidance by assessee. Ld.CIT(A) once rejected application of sec.50C cannot rely on DVO report to hold that assessee adopted a colourable device to avoid tax. Facts in present case are different as compared to facts considered in M/S CARLTON HOTEL PVT LTD [ 2017 (1) TMI 1471 - ALLAHABAD HIGH COURT] . In our view, assessee cannot blow hot and cold at the same time. There is no documentary evidence brought on record by authorities below to establish such allegation. We note that individual members cannot enjoy the units allotted in respect of shares and deposits held with the company beyond a period of 85 years starting from 11/07/2002. We also note that number of units held by a particular member is proportionate with 12 times the face value of shares as security deposit in order to get entitlement of enjoyment of the unit to be allotted. Further clause 11 of the scheme allows a member to sell or dispose of his/her shares along with deposits subject to payment of full amount due to the company towards shares/or deposit in accordance with the rules and regulations subject to Articles of Association of the company. - Decided in favour of assessee.

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• 2020 (12) TMI 159
  Validity of Reopening of assessment - notice issued to assessee as deceased - HELD THAT:- As notice issued by the AO under section 148 is invalid notice because the same was issued in the name of the deceased assessee inspite of this fact that the factum of death of the assessee was duly intimated to the Department much prior to the issue of notice under section 148 of the Act in the name of the deceased assessee and the consequent Assessment Order is also invalid and the same is hereby quashed. - Decided in favour of assessee.

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• Corporate Laws

• 2020 (12) TMI 158
  Restoration of name of the company which was struck off from the Register of Companies - Section 252(1) of the Companies Act, 2013 - HELD THAT:- The grounds contemplated under Section 252 of Companies Act, 2013, are that the company was carrying on business or was in operation at the time of striking off its name or where it appears just to the Adjudicating Authority that the name of the company is to be restored to the Register of Companies and the Section 252(1) further contemplates that one of the three conditions are required to be satisfied before exercising jurisdiction to restore the company to its original name on the register of the Registrar of Companies. Taking into consideration the provisions of Section 252(1) of the Companies Act, 2013, which vests this Tribunal with a discretion where the Company, whose name has been struck off, and such Appeal is able to demonstrate that it is just to do so, can restore the name of the Company, in the Register and in the interest of all stakeholders, including the Appellant itself, who seeks restoration of the name of the Company in the register maintained by Registrar of Companies, the company deserve to be restored. The Public Notice of Registrar of Companies, striking off the name of the company, is hereby declared illegal and set aside. The restoration of the company s name to the Register of Registrar of Companies is ordered subject to its filing of all outstanding documents - Appeal allowed.

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• Securities / SEBI

• 2020 (12) TMI 157
  Violation of provision of SEBI Act v/s IPC - Bail application - offence punishable under other Act such as IPC - Whether amount taken from the clients was deposit or fees - invoking the principles of M.P. Nikshepakon Ke Hiton Ka Sanrakshan Adhiniyam, 2000 - HELD THAT:- Section 26 of SEBI Act only prohibits cognizance of offence which is punishable under SEBI Act, but does not prevent cognizance in respect of offence punishable under other Act such as IPC. It is true that the police has come to know about the complainants after communicating with SEBI and after obtaining particulars from the same agency and in the FIR the names of the complainants have been given, but under Section 154 of Cr.P.C, it is not imperative that the aggrieved person is only authorized to lodge FIR. FIR has been lodged by SHO on the directions of ASP who after obtaining relevant information from SEBI regarding duped customers has directed the SHO to lodge FIR. The FIR contains the names of customers. After lodging of FIR, statements of such complainants have been recorded which reflect offences as laid down in the FIR and which are cognizable in nature. Thus, it is not that there is violation of provision of SEBI Act only, but provisions of IPC are also prima facie attracted for investigation of which police is the only appropriate authority. Investigation by police is not excluded in view of Section 32 of SEBI Act. For invoking the principles of M.P. Nikshepakon Ke Hiton Ka Sanrakshan Adhiniyam, 2000, it should be shown that the amount which has been taken by the company from its client was in the form of deposit. There is substance in the prosecution case that the aforesaid company, was though on papers was an advisory company rendering advice to consumers on payment of fees, was in fact involved in receiving money from investors and such money could not be termed as fees but was more in the nature of deposit - such advisory companies registered with SEBI have mushroomed in various parts of the country. However, instead of doing their business by charging fees, are involved in taking lump sum amounts from their clients, assuring them with the promise of huge returns, but are indulging in malpractices resulting in huge loss to investors. On papers such company appears to be properly constituted, showing to be acting as per their given ambit and scope of business, but in reality the consumers are given a raw deal. It is also found that the whole operation is run by persons who are not qualified as per set out norms. The applicant in the present case, although an employee of Flanking Research Investment Company is an E-Commerce Company, was looking after the complete operations at Indore and was also involved in recruiting ill equipped employees who were as many as 114 in numbers. Such firms/companies, are not only causing immense hardship to the citizens, but also causing loss to the Government and Financial and Banking Institutions in a big way. The activities of such advisory firms have to be dealt with an iron hand. Further, Tarun Chandani, the main owner of this company is still absconding - no case is made out for grant of bail to the applicant. The same stands rejected.

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• 2020 (12) TMI 156
  Fraudulent use of the mutual funds units of the complainant - Applicant seeking the grant of regular bail - applicant herein malafidely facilitated the accused director Awanish Kumar Mishra and AFSPL in using the said fraudulently transferred mutual fund units for margin - applicant seeking interim bail on the account of his wife s illness - HELD THAT:- Applicant was in a fiduciary capacity and has allegedly committed gross breach of trust in relation thereto in alleged connivance with other co-accused persons of an alleged amount of INR 344.07 crores, and it has to be taken into account the factum that the complainant is a public limited company, and that the members of the public have also consequently been allegedly defrauded of the amount of INR 344.07 crores by alleged fraudulent use of the mutual funds units of the complainant of INR 344.07 Crores by the accused persons inclusive of the applicant arrayed as the accused no.4 by inter alia creation of 350 shell companies. Applicant is alleged to have committed an economic fraud which affects the moral fabric of society, coupled with the factum that economic offences corrode the very fabric of democratic governance and probity in public life and are considered to be the gravest offences against the society and the persons alleged to have committed such offences are necessarily required to be treated differently in the matter of bail. What is brought forth through the observations therein is to the effect that merely because a person who was not arrested by the police or Investigating Agency during investigation nor produced in custody as envisaged in Section 170 of the Cr.P.C., 1973 ought not to be taken into custody merely because the charge sheet has been filed, the same however, does not spell out an embargo on the Court to reject a prayer made for bail by such an accused not arrested during investigation or not produced in custody, to be taken into custody in the circumstances where the facts of a case as alleged bring forth the gravity and magnitude of the alleged commission of an offence and consequently negate the grant of bail. As regards the contention raised on behalf of the petitioner that the petitioner was not a flight risk and there is no scope of his tampering evidence and influencing the witnesses, the same per se does not suffice to grant bail to the applicant in view of the magnitude of the alleged commission of breach of fiduciary trust placed. In the circumstances the bail application filed by the applicant seeking the grant of regular bail is rejected and as regards the prayer made by the applicant seeking the grant of interim bail for the reasons that his wife is unwell, it cannot be overlooked that the proceedings in the present application are pending since institution in June 2020 and apparently there is no urgency qua the treatment of the applicant s wife required - The bail application in the circumstances is dismissed.

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• Insolvency & Bankruptcy

• 2020 (12) TMI 155
  Return of Demand Draft - validity of the said demand draft has expired after not being encashed by the opponent - main petition was withdrawn - present petition is filed by the Director of the respondent No. 2 company - HELD THAT:- Apart from the fact that there was no order sought at the time of withdrawal of the said petition by the learned Advocate for the petitioner with regard to the said demand draft furnished on behalf of the respondent No. 2 Company (original petitioner), as rightly submitted by the learned Advocate Mr. Dossani appearing for the respondent Canara Bank, the applicant who claims to be the Director for the respondent No. 2 Company would not have any locus standi to file the present application, more particularly when the management of the respondent no. 2 Company has already been suspended in view of the order passed by the NCLT in Company petition (IB) No. 299 of 2018, and the Resolution Professional is the only competent person to represent the Company. The present application is dismissed as being not maintainable and the applicant being not competent to file the present application.

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• 2020 (12) TMI 154
  Maintainability of application - initiation of CIRP - recovery proceedings under the SARFAESI Act, 2002 by taking possession of the property under Section 13(4) of the SARFAESI Act, 2002 is already in process - validity of initiation of parallel proceedings under IBC, 2016 to recover the said sum from the Corporate Debtor - HELD THAT:- The identical issue fell for consideration before the Hon ble NCLAT in the matter of Rakesh Kumar Gupta -Vs- Mahesh Bansal Anr. [ 2020 (6) TMI 688 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] where it was held that The pendency of actions under the SARFAESI Act or actions under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 does not create obstruction for filling an Application under Section 7 of Insolvency and Bankruptcy Code 2016, specially in view of Section 238 of IBC. The Application is more to bring about a Resolution of Corporate Debtor than any penal action or any recovery proceedings. Thus, it is now trite that pendency of actions under the SARFAESI Act by the Financial Creditor is not a bar for filling an Application under Section 7 of IBC, 2016, especially in view of Section 238 of IBC. Further, the proceedings under IBC, 2016 cannot be said to be a parallel proceedings since the Application under Section 7 of IBC, 2016 is filed to bring about a Resolution for the Corporate Debtor, on the other hand the proceedings under SARFAESI Act, 2002 is for recovery of the amount which is due and payable to the Financial Creditor. Thus, there is a debt and default on the part of the Corporate Debtor and the Corporate Debtor is unable to repay its dues to the Financial Creditor - this Application as filed by the Applicant - Financial Creditor is required to be admitted under Section 7 (5) of the I B Code, 2016. Application admitted - moratorium declared.

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• 2020 (12) TMI 153
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - it is pleaded by the learned senior counsel for Bourn Hall that all the requirements of the Code and the Rules, 2016 are complied with in the present case and since the Form-6 is complete, the Tribunal has no jurisdiction to entertain the intervention application - HELD THAT:- Section 10(1) of the Code states that application for initiating CIRP by a corporate debtor can only be filed where the corporate debtor has committed a default. In the present case, Bourn Hall has stated that it is evident from the several e-mails, legal notice for repayment of operational debt due, and the recovery suit filed by an operational creditor for recovery of debts due to the said operational creditor that Bourn Hall has committed a default in repayment of its debt - The statement of affairs as on 20.10.2018 has been filed to show that as against capital account balance of Rs. 29,46,031.64, there is a debit balance in the P L Account of Rs. 109,085,467.13. The net worth is therefore, clearly negative. Therefore, Bourn Hall has satisfied the condition that default has been committed by it. The names and addresses of the members of Bourn Hall with details of their respective shareholding was not furnished in the petition and that notice of defect in this regard was given on 13.06.2019. The affidavit of compliance was filed by Diary No. 3052 dated 18.06.2019 and thereby, the defect was removed - In Part-II of Form-6, Shri Madan Gopal Jindal has been proposed as Interim Resolution Professional (IRP). His IBBI Registration No. is stated to be IBBI/IPA-002/IPN00137/2017-18/10352. The written consent of the IRP in Form 2 is stated to be attached at Annexure A-5 at Page No. 697. In the Form 2, the proposed IRP has certified that there are no disciplinary proceedings pending against with him with the Board or ICSI Institute of Insolvency Professionals. Therefore, the requirements of Section 10(3)(b) of the Code are also satisfied. Section 10(4)(a) of the Code provides for admitting the application, if it is complete and no disciplinary proceeding is pending against the proposed Resolution Professional - It is already discussed that the application is complete and that the proposed Resolution Professional has furnished Form No. 2 stating that there are no disciplinary proceedings pending against him with Board or ICSI Institute of Insolvency Professional. Application admitted - moratorium declared.

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• FEMA

• 2020 (12) TMI 187
  Permission for Direct Investment in certain cases - Remittance of equity subscription/loan/corporate guarantee/bank guarantee or through other permitted mode - additional financial commitment in JSPML by way of equity subscription/loan/corporate guarantee/bank guarantee, etc. - Denial of grant permission to the petitioner to make additional commitment/payment - respondent have rejected the application of the petitioner and have not granted permission for making the additional financial commitment/payment of USD 300 million on account of the objection raised by the Enforcement Directorate - HELD THAT:- Respondent RBI by a cryptic non-speaking order has rejected the application of the petitioner without giving any reasons whatsoever. The said order fails to give any reasons as to why the application of the petitioner is being rejected. The order has serious consequences for the petitioner inasmuch as the commitments undertaken abroad with the prior consent of the respondent would go into default causing huge losses to the petitioner. The reasons given latter in the counter-affidavit would normally not be accepted. It is settled position of law that the respondent cannot improve its case in this manner. In the reasons that have been given for rejecting the application of the petitioner, there is absolutely no reference to any of the aforesaid factors stipulated in Regulation 9(3) of the 2004 Regulations as a ground for rejecting the application of the petitioner. The criteria stated in Regulation 9(3) may not be exhaustive and other issues may be taken into account if facts so warrant. However, no such facts are stated by the respondent. It is manifest that the said order dated 30.12.2019 is wholly contrary to Regulation 9 in question. Can RBI, the respondent while dealing with an application filed under Regulation 9 reject the same at the behest of any other statutory agency like CBI, Enforcement Directorate, etc.? - only basis for passing the impugned order is the objections raised by the ED. It is settled position of law that an authority cannot share its power with someone else or allow someone else to dictate to it by declining an act or by submitting to their wishes or instructions. In this context reference may be had to the judgment of the Supreme Court in the case of Chintpurni Medical College Hospital Anr. [ 2018 (7) TMI 2153 - SUPREME COURT] where the Supreme Court noted that the State Government appears to have withdrawn the essentiality certificate acting on the dictates of the Medical Council of India. The Court observed that this itself would vitiate the withdrawal of the essentiality certificate by the State. Hence, where the authority which is given to a functionary is exercised, at least in part, by the wrong authority, the resulting decision is ultra virus and void. Admittedly the commitments and transactions carried out earlier by the petitioner with its wholly owned subsidiary were done with the prior consent and permission of RBI. By the impugned order, RBI seeks to take a uturn and seeks to refuse permission to the petitioner to complete transactions which have already been cleared earlier by the respondent. No plausible explanation is sought to be given as to why this volte face has taken place except relying upon the communication received from the ED.Clearly, there is no explanation why RBI seeks to set at naught the earlier permission given in this manner. The matter is remanded back to RBI to reconsider the application made by the petitioner afresh as per law and in accordance with the principles noted above. Needful be done by RBI expeditiously. The transactions carried out pursuant to the interim orders of this court shall be treated as valid and in order

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• PMLA

• 2020 (12) TMI 152
  Continuation of attachment during the pendency of the appeal - money laundering - siphoning of funds - loss of Rs. 2654.40 crores to a consortium of as many as eleven banks - HELD THAT:- It has to be considered that the attachment orders by the Prevention of Money Laundering authorities came to be issued subsequent to the Central Bureau of Investigation having filed the F.I.R. and chargesheet against M/s.DPIL and after thorough investigation. When prima facie case has been made out under the Prevention of Money Laundering Act, attachment of the properties as per the orders passed by the authorities could not be said to be unjustified in law. Section 2(1)(u) of the PML Act, 2002 defines the proceeds of crime as a property derived out of criminal activity or even the value of any such property. The submission on behalf of the appellants was acceptable that Section 71 of the PML Act gives an overriding effect to the provisions of the Act over any other law. The whole object of the law of money laundering is to prevent the money laundering and to confiscate the properties derived from and involved in the money laundering or which are those held incidental thereto. The powers exercised for attachment of the properties by the appellants herein have to be justified in that view. If the attachment is released while the appeal is pending, it would render the appeal virtually meaningless from the backdoor, which cannot be permitted. The order dated 18th June, 2019 passed by the Appellate Tribunal, PMLA, New Delhi, which is impugned in this appeal whereby attachment of the properties of M/s.DPIL is released shall remain stayed till the final outcome of this appeal - Application allowed.

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• Service Tax

• 2020 (12) TMI 151
  Permission for withdrawal of petition - appropriate forum - mixed question of law - Levy of Service Tax - Services availed by the Bank viz., Indian Bank, Adyar, Chennai from the foreign parties for providing Performance Bank Guarantee in Iraq to the customer - HELD THAT:- The Appeals are disposed off with a liberty to the Appellant to withdraw the Writ Petition itself - appeal disposed off.

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• 2020 (12) TMI 150
  Refund of Service tax - Rejection on the ground of time limitation - HELD THAT:- In this case, it an admitted position that in the earlier round of litigation this Tribunal has held that the refund claim is not barred by limitation and the order of the Ld. Commissioner (Appeals) dated 12.03.2019 passed in earlier round of litigation was upheld by dismissing the appeal filed by the Revenue under the litigation policy. The Revenue came with an application for rectification of mistake on the ground that the appeal cannot be dismissed under litigation policy as it involves a substantial question of law, therefore, the order dated 20.11.2019 be recalled. The said application for rectification of mistake has been dismissed. Time Limitation - HELD THAT:- As the issue has been settled that in such a cases, the refund claim is to be given directly to the service recipient i.e Garrison Engineers (MES), therefore, the refund claim is allowed along with interest after three months from the date of filing the refund claim till its realization as held by the Hon ble Apex Court in the case of Ranbaxy Laboratories Ltd. Vs. Union of India [ 2011 (10) TMI 16 - SUPREME COURT ]. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (12) TMI 147
  Interest on delayed refund of pre-deposit - demand of interest from the date of deposit till its realization - HELD THAT:- As the issue has been decided by this Tribunal in M/s Modern Dairies Ltd [ 2020 (12) TMI 122 - CESTAT CHANDIGARH ] that the assessee is entitled to claim interest on refund of the amount of pre-deposit in terms of the Section 35F of the Central Excise Act, 1944, after three months from the date of communication of the order of the appellate authority till its realization. Admittedly, in the case in hand, the refund claim was sanctioned on 04.11.2019, whereas the order of this Tribunal was passed on 05.09.2019; therefore, no interest is payable to the appellant. Appeal dismissed.

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• Wealth tax

• 2020 (12) TMI 149
  Wealth tax assessment - exemption claimed under Sec.5(vi) of the Wealth Tax Act in respect of residential flat at Mega Polls denied - assessee had not filed the documentary evidence in support of the exemptions claimed - Addition to the returned wealth on account of cash on hand - HELD THAT:- Assessee had claimed exemptions of two properties citing the provisions of Wealth Tax Act. Though the Assessing Officer mentioned that in the absence of evidence in support of the exemptions claimed, denied the exemptions but it is not clear as to what details were required to grant the relief as claimed by the assessee. Addition to the returned wealth on account of cash on hand, the material on the record suggests that the cash was seized in the Financial Year 2009-10, whereas, we are concerned for the Financial Year 2010-11. There is no reference to any material suggesting the availability of cash on hand on 31.03.2011. Thus in the interests of the justice, the matter is remanded back to the file of Assessing Officer for fresh adjudication in accordance with law after affording a reasonable opportunity of being heard to the assessee. - Appeal filed by the assessee is partly allowed for statistical purposes.

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• 2020 (12) TMI 148
  Wealth tax assessment - assessing the value of land at Kelambakkam and Navalur - exemption of 500 sq.metres of any plot u/s.5(1)(vi) of the Wealth Tax Act - HELD THAT:- Since the assessee is not having a residential house and has not claimed any exemption u/s.5(1)(iv), then he is entitled to claim exemption u/s.5(1)(vi), any of the plot within the limits of 500 sq.metre area. The area of the land at Kelambakkam is very well within the limit specified, therefore, the AO is directed to exempt the value of Kelambakkam land u/s.5(1)(vi) of the Wealth Tax Act - Assessee s appeal is allowed.

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• Indian Laws

• 2020 (12) TMI 146
  Dishonor of Cheque - legally enforceable debt or not - the petitioner was supposed to prove preponderance of probability that at the time of legal notice - HELD THAT:- Vide the present petition under Section 482 Cr.P.C., the petitioner has sought to combine the Civil Execution Proceedings pending before the Learned Additional District Judge, Tis Hazari Court, Delhi, and the criminal proceedings pending before the Learned Metropolitan Magistrate. The said reliefs cannot be granted since both proceedings are mutually exclusive and are pertaining to different reliefs since one is pending before the Additional District Judge for execution of the settlement decree dated 29.01.2015 and the other is before the Learned Metropolitan Magistrate for compliance of the order of conviction and which has been disposed of vide order 18.01.2020 whereby the petitioner has been declared an absconder after due procedure under Section 82 Cr. P.C. was followed. The present petition is liable to be dismissed since the Petitioner has not come before this Court with clean hands especially as the Petitioner has defaulted on payments, eventually, it was required to make efforts to satisfy settlement decree dated 29.01.2015. The said settlement decree has attained finality and is liable to be complied with. Hence, the petitioner through the present petition cannot seek to override/appeal/modify the contents of the said Settlement Decree. The presumption of law, though rebuttable, works in favour of the complainant. However, the presumption gets rebutted if the defence raises a reasonable suspicion in the prosecution story by raising a probable defence. In other words, provided the facts required to form the basis of a presumption of law exist, no discretion is left with the court but to draw the statutory presumption. However, this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary - the onus is upon the accused to rebut the presumption raised under Sections 118(a) and 139 of the said Act and the same can be done by accused by either bringing out loopholes in the case of the complainant or by bringing a reasonably probable defence in his favour. Since such case attracts a criminal liability, the burden of proof upon the complainant is to the extent of proving his/her case beyond all reasonable doubts whereas the accused is required to create preponderance of probabilities in this favour. Admittedly, there has been default, in making payment, on the part of petitioner since July 2011. Despite the decree passed by this Court and conviction by the Trial Court, till date respondent has not received the payment due. The legal fight of the respondent had started from the legal notice dated 11.08.2011 and continued till date. Thus, the respondent was compelled to run from pillar to post. In such circumstances as in the present case, the petitioner deserves no leniency or sympathy. There is no illegality or perversity in the orders passed by the Trial Court and Appellate Court as well - Petition dismissed.

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• 2020 (12) TMI 145
  Validity of Lookout Circular (LOC) issued by the respondents against the petitioner - siphoning off funds - illegal transfer of valuable foreign exchange - when the petitioner was intending to travel to Singapore, he was detained at the Indira Gandhi International Airport, Delhi and was informed that an LOC has been issued against him - case of respondents is that that the petitioner has not cooperated with the investigation and his conduct is highly evasive and non-cooperative, thereby justifying issuance of LOC and extension thereof - HELD THAT:- As held by the Supreme Court in MANEKA GANDHI VERSUS UNION OF INDIA [1978 (1) TMI 161 - SUPREME COURT] the right to travel abroad is a fundamental right guaranteed under Article 21 of the Constitution of India. In Karti P. Chidambaram [2018 (7) TMI 2000 - MADRAS HIGH COURT], the High Court of Madras held that the mandate of the Office Memorandum dated 27.10.2010 would necessarily require the request for issuance of LOC to contain reasons for such request. The condition precedent for issuance of an LOC is therefore, existence of reasons, which should be disclosed in the request for issuance of LOC. The High Court, after referring to Sections 41,41A and 41B of the Code of Criminal Procedure, 1973 further held that the legality and/or validity of LOC has to be adjudged having regard to the circumstances prevailing on the date on which the request for issuance of LOC had been made. It was further held that the LOCs cannot be issued as a matter of course, but when reasons exist, where an accused deliberately evades arrest or does not appear in the Trial Court. In the present case, there is no doubt that the allegations made against the petitioner are of a grave nature. The petitioner has submitted that the same are false and unsubstantiated, however, this Court need not detain itself on the examination of such allegations. For the purposes of the Impugned LOC, what is relevant to be noted is that the FIR was registered on 08.10.2018. Based thereon, the Enforcement Directorate registered ECIR on 02.07.2019. In undue haste, on 25.07.2019, the Impugned LOC was issued against the petitioner - The only allegation made is that the conduct of the petitioner is evasive and non-cooperative. This cannot be a ground for issuance of a LOC. Similarly, reliance of the respondents on the amendment made to the Office Memorandum is also unfounded. Though, the said amendment allows a LOC to be issued even in cases not covered by the Guidelines and in economic interest of India, no such case has been made out against the petitioner. It has not been explained how the travel of the petitioner would in any manner prejudice the economic interest of the country. Mere mention of the power in the counter affidavit cannot take the place of giving reasons for exercise of the same. The Impugned LOC and the extension thereof issued against the petitioner is set aside and quashed - Petition allowed.

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• 2020 (12) TMI 144
  Grant of Regular Bail - petitioner is in judicial custody for the last more than one year and four months and despite the fact that charges were framed on 18.12.2019, out of total 21 prosecution witnesses, not even a single witness has been examined till date - HELD THAT:- Learned State counsel has not disputed the fact that petitioner is on bail all the three other FIRs as well as the fact that petitioner is in judicial custody for the last more than one year and four months and despite the fact that charges were framed in December, 2019, out of total 21 prosecution witnesses, none has been examined so far. Without commenting upon the merits of the case, considering the submissions of learned counsel for the parties, the instant 3 of 4 petition is allowed - The petitioner is ordered to be released on regular bail on his furnishing bail/surety bonds to the satisfaction of the trial Court/Duty Magistrate/Illaqa Magistrate, concerned.

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• 2020 (12) TMI 143
  Dishonor of Cheque - acquittal of the accused - rebuttal of presumption - Offence took place or not - HELD THAT:- The trial court acquitted the accused mainly for the reason that, according to the complainant the alleged transaction was in 2003 and the cheque was issued during that period. But the accused submitted that, during that period he was not conducting any textiles business and he proved it. After perusing the entire oral and documentary evidence, the trial court concluded that, the accused rebuttted the presumption. Therefore, the accused is acquitted. The trial court after considering the entire oral and documentary evidence came to a definite conclusion that, the appellant is not able to proved the offence - the accused was acquitted. The acquittal order upheld - appeal dismissed.

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• 2020 (12) TMI 142
  Dishonor of cheque - drawer of Cheque - submits that sign on the cheque is of Gudia Shukla and not of the applicant and, therefore, he is not the drawer of the cheque and, therefore, summons could not have been issued to him - application did not appear in the Court inspite of the Summons issued - HELD THAT:- It is not in dispute that applicant is the husband of Gudia Shukla. Specific averment has been made in the complainant that it is the applicant, who handed over the cheque in question to the complainant, which got dishonoured for insufficient funds. The question whether the applicant has put his signature on the cheque or not, is the question of evidence, which can be considered at an appropriate stage by the trial court - When the ingredients of Section 138 Negotiable Instruments Act are clearly established prima facie, this Court should not examine the evidence in detail inasmuch as it is for the trial court to examine the evidence whether the applicant has signed the cheque, which got dishonoured or not. This Court is of the opinion that if the applicant has a remedy under law, then permission from the Court is not necessary. Further, the offence under Section 138 Negotiable Instruments Act is a bailable offence and, the applicant may surrender before the court concerned and furnish bail bonds and thereafter, he may take recourse to the remedy as may be available to him in accordance with law - Application dismissed.

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• 2020 (12) TMI 141
  Hypothecation - recovery of dues - repossession of the hypothecated vehicle from the borrower as borrower defaulted in paying the EMI - Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 - HELD THAT:- The petitioner Madhab Kumar Das has admitted that he purchased the vehicles on loan granted by the PNB, after entering into a hypothecation deed, as indicated above. There is also no denial at all as regards the purchase of four vehicles by the petitioner from the loan sanctioned by the same Bank and about the dues amounting to Rs. 78,79,978.34 to the Bank. It is also an admitted position that the PNB has already filed the O.A. No.328/2018 before the DRT, Guwahati, which is pending at the stage of final hearing. The petitioner/borrower has not at all denied any of the documents referred above about the execution of the hypothecation deed, dated 10.12.2014, as well as taking of loan for four vehicles from the PNB and also about the filing of the claim petition by the PNB before the DRT, rather he has contested the said case also. In view of the fact that the petitioner/borrower is a willful defaulter, whose loan account turns NPA, the PNB after giving proper notice etc., has taken the possession of the vehicle through its recovery agent. So far as the conduct of the Bank, while taking possession of the vehicle, same cannot be held to be illegal one, as in view of the hypothecation deed entered into between the borrower and the financer, the purchaser is merely a trustee/ bailee and the ownership remains with the Bank, till full recovery of the loan amount - In case vehicle is seized by financier, no criminal action can be taken against him as he is repossessing goods owned by him, for violation of conditions of higher purchase agreement/ defaulted in making payment, etc. The impugned order reveals that the learned trial Court being aware of the fact that the Bank has ground for resuming the possession of the vehicle, has not taken any cognizance against them under Sections 420/406/120B of the IPC but has taken cognizance only against the offence under Section 323/506 of the IPC. That being so, the Court has erred in passing the order dated 28.11.2018, to accommodate the petitioner/borrower to take the interim custody of the vehicle on certain payment and other conditions. Such an order was passed even after objection raised by the Bank, as huge amount of dues was pending as against the borrower. This is more particularly so as because the matter was sub-judice before the DRT, Guwahati, for recovery of outstanding dues and the possession of the vehicle. The petitioner/borrower who is a willful defaulter, after repeated assurance/promise cannot be given indulgence again and again to repay his loan and the Bank is at liberty to go for legal recourse which they have already adhered to, by filing application before the DRT. The prayer of the petitioner Madhab Kumar Das, made in the instant petition indicates that he is still willing to get back the vehicles without any payment of dues as indicated in the order dated 28.11.2018, which sufficiently indicates that he is not willing to pay the amount due to the Bank but simply want to posses the vehicles without any condition, which however cannot be allowed to prevail. Petition disposed off.

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