TMI Tax Updates - e-Newsletter
December 8, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Central Excise CST, VAT & Sales Tax

Articles

1. NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT, 1961 IS MANDATORY AFTER FILING OF THE RETURN OF INCOME AFTER ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Department for Promotion of Industry and Internal Trade (DPIIT) recognizes 59,787 entities as startups in the last 5 years

2. Most sectors except certain strategically important sectors open for 100% FDI under the automatic route

3. Export of total number of automobiles increased from 41,34,047 in 2020-21 to 56,17,246 in 2021-22, registering a positive growth of 35.9%

4. One District One Product (ODOP) initiative operationally merged with ‘Districts as Export Hub (DEH)’ initiative

5. Monetary Policy Statement, 2022-23 Resolution of the Monetary Policy Committee (MPC) December 5-7, 2022

Notifications

GST - States

1. G.O. Ms. No. 174 - dated 24-11-2022 - Tamil Nadu SGST

Tamil Nadu Goods and Services Tax (Second Amendment) Rules, 2022

SEZ

2. S.O. 5682 (E) - dated 5-12-2022 - SEZ

Special Economic Zone for Aviation at Village Mamidipally, District Ranga Reddy in the State of Telangana - de-notifies an area of 8.90.

Circulars / Instructions / Orders

GST - States

1. ORDER No. 15/WBGST/PRO/2022 - dated 24-11-2022

Appointment of Nodal Officer for coordination between State tax authorities and Central tax authorities in respect of verification of claim of Transitional Credit

2. 181/13-HGST/2022/GST-II - dated 17-11-2022

Clarification on refund related issues

3. GST-17/2022 - dated 14-11-2022

Guidelines for verifying the Transitional Credit in light of the order of the Hon’ble Supreme Court in Union of India vs. Fileo Trade Centre Pvt. Ltd., SLP(C) No. 32709- 32710/2018, dated 22.07.2022 & 02.09.2022

Highlights / Catch Notes

GST

• Court Overturns Writ Court Decision on Costs Imposed on Department in GST Provisional Attachment Case.

  Case-Laws - HC : Imposition of costs on the Department - provisional attachment - a fine question of law has been raised by the assesses in their appeal arising out of the very same common order and the present appeals filed by the Revenue is confined only to that extent where cost has been imposed. Therefore, in the facts and circumstances of the case, we are of the view that it is not a case where cost has to be imposed, as directed by the learned writ Court. - HC
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• High Court Reconsiders Case on Unnotified Input Tax Credit Refund Due to Inverted Duty Structure Dispute.

  Case-Laws - HC : Refund of Input Tax Credit accumulated due to inverted duty structure - In the present case, the Petitioners have not only asserted that notice was not received by the Petitioners nor it was available on GSTN portal in the petition, but before passing the impugned order, the Petitioners had communicated to the Respondents that notice was not received nor it was available on portal. These facts have gone uncontroverted. - Matter restored back - HC
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Income Tax

• Loan from QNEI not taxable as deemed dividend u/s 2(22)(e) since Assessee isn't a shareholder. Common shareholding irrelevant.

  Case-Laws - AT : Deemed dividend u/s.2(22)(e) - loan received by the Assessee from QNEI - the Assessee is not a shareholder of QNEI, the amount received from QNEI will not be taxable in the hands of the Assessee as deemed dividend u/s.2(22)(e) of the Act and common shareholding in two companies would not attract the provisions of Section 2(22)(e) of the Act. - AT
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• Rental income from Cargo Agents, Airlines, and Banks qualifies for deduction u/s 80IA of the Income Tax Act.

  Case-Laws - AT : Deduction u/s. 80IA - eligibility of rental income - the rental income derived by the assessee from Cargo Agents, Airlines, Banks etc., is derived from the cargo business and eligible for deduction u/s. 80IA. The addition is deleted. - AT
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• Subscription Revenue in India Deemed Royalty; Permanent Establishment Question Moot as Income Taxed by Indian Entity.

  Case-Laws - AT : Income accrued in India - subscription/distribution revenue earned by the assessee - royalty receipt - the issue, whether the assessee had a PE in India in these two assessment years is purely academic in the nature, as, the entire income has been offered to tax by Indian entity - AT
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• Revision u/s 263: Assessing Officer's Failure to Enquire Leads to Erroneous Income Classification Decision.

  Case-Laws - AT : Revision u/s 263 - ‘business income’ OR ‘agricultural income’ - In the present case, neither any enquiry has been made by the Assessing Officer nor any questions were asked to the assessee nor any information was called for. Therefore, we have no hesitation to hold that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of revenue within the meaning of section 263 - AT
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• Assessee not in default for non-maintenance of accounts; reasonable cause shown u/ss 271A and 271B.

  Case-Laws - AT : Penalty u/s 271A - non maintenance of books of accounts - not furnishing tax audit report u/s 44AB - The commission being turnover/receipt for the purposes of 44AA and 44AB, which is far below the threshold limit prescribed for the relevant assessment year, the assessee can not treated as assessee in default in terms of S. 271A and S. 271B of the Act. The assessee thus has demonstrated reasonable cause for failure to maintain books of account as well as compliance of Section 44AB of the Act in term of Section 271B of the Act.- AT
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• EDC payments under HDRUA Rules aren't classified as duty, tax, cess, or fee per Section 43B; linked to HUDA facilities.

  Case-Laws - AT : Expenditure as covered u/s 43B - payment made by the assessee towards EDC under HDRUA Rules does not fall within the ambit of duty, tax, cess or fee. The impugned payment has been made by the assessee for acquiring the facilities on the land allotted to it by HUDA, which is not in the nature of duty, tax, cess or fee. - AT
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• Assessee qualifies for additional depreciation u/s 32(1)(iia) for manufacturing packing materials from plastic granules.

  Case-Laws - AT : Additional depreciation u/s 32(1)(iia) - manufacturing in term of section 2(29BA) - Vital fact, which is not disputed by revenue, that the assessee is purchasing plastic granule/raw material and manufacturing packing material therefrom such as jar/pouches/bottles make the assessee fully eligible for “additional depreciation”. - AT
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Customs

• Court Reviews Importer Exporter Code Requirement Under Service Exports Scheme; Petitioners May Address Grievances Separately.

  Case-Laws - HC : Service Exports from India Scheme - requirement of obtaining IEC - In view of the amendment made in the FTP 2015-20, this Court does not deem it fit to venture further on individual facts of the present case - It is now open to the Petitioners to raise their grievances before the authorities regarding other reliefs as prayed for in the instant Writ Petitions - HC
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Corporate Law

• NCLT Cannot Direct ICAI Disciplinary Actions; Must Follow Companies Act Section 213 and Ensure Due Process.

  Case-Laws - AT : Power of NCLT to investigate and direct the ICAI to take action against chartered accountant - no power exist with the Tribunal, to ask an Autonomous Professional Body (herein the Institute of Chartered Accountant of India) to take disciplinary action against its Member. - Tribunal ought to have taken into account the provision as contained in Section 213 of the Companies Act, 2013 and after following due process after hearing the company - AT
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IBC

• Interpretation of "Any Person Aggrieved" in Section 61(1) Requires Direct Legal Grievance for Appeals under Insolvency Code.

  Case-Laws - AT : Delay in Revival of the Corporate Debtor - This Tribunal, on going through the words, any person Aggrieved, occurring in Section 61 (1) of the I & B Code, 2016, is of the view that in Section 61 (1) of the Code, the words Party Aggrieved, are not employed. For an affected person, the Order of an Adjudicating Authority, must cause a Legal Grievance, by wrongfully depriving him of something and in the process, his Legal Right is breached, by the act complained of. - AT
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• Corporate Debtor's Reply Forfeited; Rs. 1 Crore Loan Confirmed as Financial Debt Under IBC Section 5(8).

  Case-Laws - AT : Forfeiture of right to file reply of Corporate debtor - Financial Debt or not - It is significant to mention that the Financial Creditor had not sought for enforcement of this promisory note and therefore, the question of it being stamped and the provisions of Indian Stamp Act, 1899 being applicable, does not arise in this case. The material on record evidences that the amount of Rs. 1 Crore disbursed to the Corporate Debtor has the essential ingredients of a Financial Debt as defined under Section 5(8) of the Code. - AT
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• Application Rejected if Demand Notice Invalid in CIRP u/s 9 of Insolvency and Bankruptcy Code.

  Case-Laws - AT : Initiation of CIRP - If the Appellant was not in a position to satisfy the Adjudicating Authority on the validity of the demand notice certainly application filed under Section 9 of the code was required to be rejected. - AT
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VAT

• Court Rules on Extending Time for VAT and Sales Tax Re-assessment Orders Due to Pandemic Delays.

  Case-Laws - HC : Jurisdiction and Validity/legality of re-assessment order - time limitation - when the assesses are permitted to file their returns beyond the period prescribed due to pandemic, in view of the judgment of the Hon’ble Supreme Court and circulars issued, we feel that the authorities also should be given time to pass orders during the pandemic. - HC
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• Supreme Court: High Court Shouldn't Entertain Writs Under Article 226 If Statutory Remedies Exist; State's Appeal Allowed.

  Case-Laws - HC : Maintainability of writ petition - alternate remedy of appeal - The Hon’ble Supreme Court held that the High Court ought not to have entertained the writ petition under Article 226 of the Constitution of India challenging the assessment order in view of the availability of statutory remedy under the Act and there was no exceptional reason. The appeal filed by the State Government was thus allowed on the ground that the High Court should not have entertained a writ petition inspite of alternate remedy. - HC
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Case Laws:

• GST

• 2022 (12) TMI 300
  Detention of goods alongwith vehicle - entire proceedings of search and seizure of the goods is in violation of the provisions of U.P.G.S.T. Act, 2017 and the rules, or not - HELD THAT:- The remedy before the petitioner is to file appeal under Section 107 of U.P.G.S.T. and C.G.S.T. Act, 2017 against the order passed under Section 129 whereunder the proper officer detaining or seizing goods passed order for payment of penalty under Clause (a) and (b) of Sub Section (1). In the alternative remedy available to the petitioner, all factual issues being raised herein can very well be agitated before the appellate authority. Petition dismissed.

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• 2022 (12) TMI 299
  Cancellation of part of E-way bill - Intent to evade tax present or not - driver was carrying part B of e-way bill in respect of which part A has been cancelled - whether this would tantamount to intention to evade payment of duty or with a view to clandestinely move certain goods? - HELD THAT:- In our prima facie view, it does not appear so and could be considered to be a bona fide error - The learned Advocate appearing for the appellant would submit that the conduct of the appellant in generating a fresh part B within two hours of detention would clearly show that there was no intention to evade payment of duty. The order passed by the appellate authority is a lengthy order and certain decisions of the High Courts have also been referred to. Partly, the appellant has contributed to such an exercise by the appellate authority by placing reliance on the decisions of the various High Courts, which in our view, may not have been required to have been done as the short point, which was required to be canvassed before the appellate authority was to establish the bona fides of the appellant and to prove that there was no intention to evade payment of duty. Appeal allowed.

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• 2022 (12) TMI 298
  Detention of goods alongwith the vehicle - e-Way bill had expired 41 hours before the time of interception - HELD THAT:- It is not in dispute that in the instant case, e-Way Bill had expired 41 hours before and the release of goods of conveyance and transit through the authority concerned - the detention is also on the ground that the goods are of expiration of the e-Way bill number, which had expired during the transit and the same cannot be the ground for detaining and seizure of M.S. Billet along with the vehicle truck. This Court in Govind Tobacco Manufacturing Co. vs. State of U.P., [ 2022 (5) TMI 1022 - ALLAHABAD HIGH COURT ] has held that as there is expiry of e-Way bill on transit, the seizure of said vehicle and the goods is not permissible under the law. In the case before the High Court of Madhya Pradesh at Jabalpur in M/s. Daya Shaker Singh vs State of Madhya Pradesh passed in Writ Petition No.12324 of 2022 on 10.08.2022, where also the Court had intervened considering the fact that the respondent could not establish any element of evasion of tax with fraudulent intent or negligence on the part of the petitioner. Delay was of almost 4 hours before the e-Way bill could expire. It appeared to be bona fide and without establishing any fraudulent intention. Here also what is found is that there is no fraudulent intention for this to happen. The impugned order dated 04.11.2022 demanding the sum of Rs.7,53,364/-is quashed and set aside - Petition allowed.

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• 2022 (12) TMI 297
  Imposition of costs on the Department - keeping the provisional attachment in state of continuance for a period from 5th June, 2019 when the first order of provisional attachment ceased to operate, till October, 2019 when fresh order of provisional attachment was passed - HELD THAT:- The imposition of costs on the department is purely a discretion of the Court and technically we are not required to hear the party concerned as to whether at all costs has to be imposed on the Department. In any event, a fine question of law has been raised by the assesses in their appeal arising out of the very same common order and the present appeals filed by the Revenue is confined only to that extent where cost has been imposed. Therefore, in the facts and circumstances of the case, we are of the view that it is not a case where cost has to be imposed, as directed by the learned writ Court. The appeals filed by the Revenue are allowed to the extent by deleting and vacating the observations, which led to imposition of cost as also the cost which has been imposed - Appeal allowed.

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• 2022 (12) TMI 296
  Territorial Jurisdiction - amount was recovered from the cash credit account of the appellants in a bank situated in the State of West Bengal - part of the cause of action arose within the territorial jurisdiction of this Court in the state of West Bengal - HELD THAT:- Under normal circumstances, this can be construed as one of the factors to consider whether part of the cause of action arose within the territorial jurisdiction of a particular Court. However, in the instant case the appellants are registered dealers in the State of Bihar and the project was executed by the appellants in Bihar and the proceedings had been initiated by the jurisdictional officer in Patna. Therefore, it is appropriate for the appellants to canvass all issues before the appropriate forum in the State of Bihar and a writ petition in the given facts and circumstances is not maintainable before this Court. The appeal is dismissed with liberty to the appellants to approach the appropriate forum in the State of Bihar and if the appellants does so, the period during which the writ petition was pending till receipt of the server copy of this order shall stand excluded for the purpose of computing limitation.

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• 2022 (12) TMI 295
  Refund of Input Tax Credit accumulated due to inverted duty structure - main contention of the Petitioners is that the Petitioners were not given any opportunity as required under the Rules nor any notice was given to the Petitioners and therefore, the impugned order is bad in law - principles of natural justice - HELD THAT:- The procedure for seeking refund is provided under chapter XI section 54 of the Central Goods and Services Tax Act, 2017 thereof. Section 54 (3) of the Act of 2017 provides for refund and states that a registered person may claim refund of any unutilised Input Tax Credit at the end of any tax period, except two categories stated therein no refund shall be allowed. According to the Petitioners, the Petitioners were in the category where credit is accumulated on the ground of rate of tax on inputs being higher than the rate of output supplies. The methodology in respect of dealing with the application for refund is provided under the Rules framed under the Act of 2017. In the present case, the Petitioners have not only asserted that notice was not received by the Petitioners nor it was available on GSTN portal in the petition, but before passing the impugned order, the Petitioners had communicated to the Respondents that notice was not received nor it was available on portal. These facts have gone uncontroverted. Proceeding on the basis that the notice was neither received by the Petitioners nor it was made available on GSTN portal, it will have to be held that the opportunity of hearing to the Petitioners as envisaged under Rule 92 of the Rules of 2017 was impaired. The impugned order will have to be quashed and set aside, and the application of the Petitioners needs to be restored directing the Respondents to follow methodology under Rule 92 of the Rules of 2017 - application disposed off.

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• Income Tax

• 2022 (12) TMI 305
  Reopening of assessment u/s 147 - Reasons to believe - alleged failure to disclose fully and truly all material facts in so many words - accrual of income - Reopening beyond period of four years - transaction of E-auction by the Monitoring Committee, the sale of ore, and the sale of 209,961 tons of ore by the Monitoring Committee - whether the amount had indeed accrued to the Petitioner during the AY 2012-13? - HELD THAT:- AO could have taken the view that even the amount of Rs.64.92 crores warrants tax payment because the same was accrued to the Petitioner during the AY 2012-13. Further, perhaps the Revenue could have explored the possibility of reopening the assessment within four years from the end of the relevant AY. However, for any attempt to reopen the assessment after four years from the end of the relevant AY, the Revenue had to establish failure on the part of the Assessee to disclose fully and truly all material facts necessary for its assessment for that relevant AY. In the absence of this jurisdictional parameter, the impugned notice seeking to reopen the assessment four years after the end of the relevant AY would not sustain. The question is not whether the Petitioner was right in not offering the amount of Rs.64.92 crores to tax during AY 2012-13, but the question is whether the Petitioner had disclosed, fully and truly all material facts concerning this amount of Rs.64.92 crores, which, incidentally, was never received by the Petitioner during AY 2012-13. Moreover, the Petitioner disclosed this material fact and explained why this amount was not brought to tax during AY 2012-13. Apparently, this explanation found favour with the Assessing Officer; therefore, this amount was not added to the returned income for the relevant AY. As noted earlier, the record also bears out that the Petitioner duly accounted for the above amount for the following AY 2013-14, and appropriate tax was paid thereon. AO for AY 2013-2014 did not object to this amount of Rs.64.92 crores being offered to tax in AY 2013-2014 or not being offered to tax in AY 2012-2013. For all the above reasons, we are satisfied that the impugned notice exceeds the prescribed jurisdictional parameters. The impugned notice is accordingly quashed and set aside. The rule is made absolute in terms of prayer clauses (a),(b) and (c), which read as follows: (a) Declare that the Impugned Notice issued under Section 148 of the Act dated 29 March 2019 (Exhibit A) and the Impugned Order on objections dated 07 December 2019 (Exhibit D) and the impugned reassessment proceedings for AY 2012-13 are wholly without jurisdiction, illegal, arbitrary and liable to be quashed. (b) Issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ, order or direction under Article 226 of the Constitution of India, quashing the Impugned Notice issued under Section 148 of the Act dated 29 March 2019 (Exhibit A) and the Impugned Order on objections dated 07 December 2019 (Exhibit D) and the impugned reassessment proceedings for AY 2012-13 as being wholly without jurisdiction, illegal and arbitrary.

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• 2022 (12) TMI 304
  Penalty u/s 271(1)(c) - assessee company has furnished inaccurate particulars of income while furnishing Income Tax Return for the year under consideration - disallowance under section 14A, disallowance on account of provision for gratuity,difference in interest as per Form 26AS and addition on account of short term capital gain - HELD THAT:- The word particulars used in section 271(1)(c) would embrace the meaning of the details of the claim made. The Hon ble Supreme Court Reliance Petroproducts (P) Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] further observed that the word inaccurate has been defined in Webster s Dictionary as not accurate, no exact or correct; not according to truth etc. . Reading the word inaccurate in conjunction with particulars would mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. Hon ble Supreme Court went on to observe further that merely because the assessee had claimed the expenditure which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty u/s 271(1)(c) of the Act. In Pr. CIT vs. Sesa Goa Ltd. [ 2021 (8) TMI 227 - BOMBAY HIGH COURT] , The Hon ble Bombay High Court held that an erroneous claim simplicitor does not automatically attract penalty and it is only when an erroneous claim is based on a deliberate misrepresentation of facts or deliberate suppression of relevant material facts that penalty is imposed after deduction is denied. In the backdrop of the principles of law as set out in the above precedent, it would be obvious that on facts none of the disallowance / addition justifies levy of penalty u/s 271(1)(c) for furnishing inaccurate particulars of its income. It is not in dispute that Tonnage Tax Scheme applies to the assessee as held by the Hon ble Delhi High Court in assessee s case [ 2012 (11) TMI 594 - DELHI HIGH COURT] pertaining to preceding years which has been followed by the Tribunal for AY 2013-14 as well. If that be so any disallowance u/s 14A would automatically be allowable while computing income under the Tonnage Tax Scheme. Moreover, since all details have been disclosed and no inaccuracy has been pointed out by the Revenue, it cannot be said that any inaccurate particular has been furnished by the assessee. Disallowance on account of provision of gratuity - CIT(A) has followed the decision of his predecessor for AY 2012-13 wherein it is observed that the claim per say may be incorrect but in view of tax audit report accompanying the Return, it cannot be said that the assessee has furnished inaccurate particulars inviting levy of penalty u/s 271(1)(c) - Facts remaining the same for AY 2013-14, penalty for furnishing inaccurate particulars is not warranted as the contention of the AR that the department has accepted the decision of the CIT(A) in the preceding year deleting the penalty has not been controverted before us. Addition of difference between interest declared in books and shown in Form 26AS - Explanation of the assessee may not be convincing but the facts remain that the amount of deposits have duly been reflected in assessee s books of account and a bonafide mistake on the part of the accountant not to tally the interest calculation with Form 26AS cannot lead to the conclusion that the assessee furnished inaccurate particulars of its income so as to justify levy of penalty under section 271(1)(c) of the Act. Declaration of long term capital gain instead of short term capital gain has been accepted by the Ld. CIT(A) due to error - As held in the case of Sesa Goa Ltd. [ 2021 (8) TMI 227 - BOMBAY HIGH COURT] an erroneous claim simplicitor does not automatically attract penalty unless there is deliberate misrepresentation of facts which has not been found in the case of the assessee and the error was rectified during assessment proceedings itself. CIT(A) has finally recorded a finding of fact that on the facts and in the circumstances of the case and in law, the impugned penalty is not imposable. We are inclined to concur with his findings. Accordingly, the appeal of the Revenue is rejected.

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• 2022 (12) TMI 303
  Unexplained cash credit u/s. 68 - partnership firm requirement to explain source of income for partners regarding amount contributed by them towards capital of firm - HELD THAT:- Assessee has filed all requisite details at the time of hearing before ld. CIT(A). The assessee has filed copies of return of the partners who introduced capital, their respective bank statements were furnished and the confirmations of the three partners were also furnished before CIT(A). CIT(A) made a specific noting that on examination of the bank account for each of the three partners, it is apparent that there was no cash deposit before the cheque/transfer of funds by the respective partners to the assessee firm. The CIT(A) has also made a nothing that the assessee firm has submitted name/address/bank statement/acknowledgement of ITR and also confirmation of ledger accounts of the respective partners. In the case of Principal Commissioner of Income-tax-4 v. Vaishnodevi Refoils Solvex [ 2018 (1) TMI 861 - GUJARAT HIGH COURT] High Court held that when assessee had furnished details with regard to source of capital introduced in firm and concerned partner had also confirmed such contribution, it could be concluded that assessee had duly discharged onus cast upon it. Therefore, if Assessing Officer was not convinced about creditworthiness of partner who had made capital contribution, inquiry had to be made at end of partner and not against firm. Notable, the SLP filed by the Department against the above order has also been dismissed by Hon ble Supreme Court [ 2018 (7) TMI 651 - SC ORDER] Again the High Court in the case of CIT v. M. Venkateswara Rao [ 2015 (3) TMI 153 - ANDHRA PRADESH HIGH COURT] held that contribution made by partners to capital of assessee-firm would constitute very substratum for business of firm and it is difficult to treat pooling of such capital, as credit. The High Court held that it is only when entries are made during course of business that can be subjected to scrutiny under section 68. Therefore, partnership firm is not required to explain source of income for partners regarding amount contributed by them towards capital of firm. Thus, in view of the above discussion, the assessee has sufficiently charged the onus against upon him in the instant set of facts. Accordingly, we find no infirmity in the order of CIT(A) who has taken into consideration all the details filed by the assessee and thereby deleted the additions. Appeal of the Revenue is dismissed.

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• 2022 (12) TMI 302
  Initiation of proceedings u/s. 153C instead of the proceedings u/s. 153A - capital gain - Joint Development Agreement (JDA) Entered - AR submitted that the AO in his order has admitted that there was a search in the residence of the assessee and that when the assessee is searched the assessment should have been done u/s.153A and not u/s.153C -HELD THAT:- We notice that the CIT (Appeals) has considered this contention of the assessee and held that though the place of the assessee was also searched, the warrant is in the name of M/s.Trans Global Power Pvt Ltd., and therefore the assessee cannot be considered as the person searched. We see merit in the observations of the CIT (Appeals) and see no reason to interfere with the decision of the CIT(Appeals). Whether the JDA found during the course of search is an incriminating material? - As if the AO is satisfied that if the documents seized have a bearing on the determination of the total income of such other person for the six assessment years preceding the year of search. The section does not use the word incriminating document, it is the various judicial decisions which have brought in the expression incriminating documents based on the facts specific to the case. However while determining whether a document seized is discriminating or not, the words used in the section need to considered i.e. if the documents seized have a bearing on the determination of the total income of such other person. In our considered view, if the document has a bearing on the determination of the total income of the assessee, then the same can be considered as incriminating. In assessee s case, the JDA is a document seized and is the basis on which the taxability of capital gain in the year under consideration is decided by the assessee. The claim of the ld AR that the amount of advance is already reflected in the books of accounts and that the amount is offered to tax in the subsequent years will not have a bearing since the question is whether for particular AY 2010-11, the JDA is an incriminating material with regard to the undisclosed income i.e. the capital gain on transfer of land. We see merit in the contention of the ld DR that if the said JDA has not been seized the capital gain would not have been taxed on the correct assessment year i.e. in AY 2010-11 and to that extent it is an incriminating material. In view of the above discussion and considering the decision of the coordinate bench in the case of M/s. Chaitanya Properties [ 2022 (5) TMI 1487 - ITAT BANGALORE] we are of the view that the JDA is an incriminating material. Year of assessability of capital gains arising on the property - whether it is assessable in the year in which the development agreement entered into or in the relevant subsequent year in which the area duly developed and constructed coming to the share of the assessee-land owner has been handed over to the assessee? - In assessee s case there is no mention in the JDA to this effect and as per Clause 1 extracted here the possession is given irrevocably by the assessee to the developer and the developer is given the irrevocable power of attorney to transfer or sell the developer s share in the undivided share of land which would mean that the developer is given the absolute possession of the land which in our considered view amounts to transfer within the meaning of section 2(47)(v) of the Act. One of the contentions of the Ld AR is that the plan approval for development of the property came only in the subsequent assessment year. According to section 53A whereby the transferee has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract. During the year under consideration the developer has made an application for plan approval which is an act in furtherance of the contract and that he is willing to perform his part of the contract. In view of the above discussion and based on the facts of the present case we are of the considered view that the CIT(Appeals) is correct in upholding the order of the AO whereby the capital gain is to be taxed in AY 2010-11 i.e. the year in which the JDA is entered into. Capital gain computation - adopting the guideline value @ Rs.520 per Sq.ft. - HELD THAT:- As perused the material on record In assessee s case the amount of Rs.2505/- per Sq.ft. is an estimated cost construction given by the developer and in our view the same cannot considered for the purpose of computation of capital gains. Further there is no loss to the revenue since the assessee would be paying the capital gain at the time of sale of flats at which time the gain already taxed i.e. the guideline value would be considered as the cost of acquisition. In the light of these discussions and considering the decision in the case CPC Logistics Ltd (supra) we uphold the decision of CIT(Appeals) in directing the AO to recompute the capital gain by adopting the guideline value @ Rs.520 per Sq.ft. We also see no reason to interfere with the order of the CIT(Appeals) in directing the AO to consider the built up area for the purpose of computing capital gains and to re-compute the capital gain for AY 2013-14 to 2017-18. The revenue appeal is therefore dismissed.

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• 2022 (12) TMI 301
  Deemed dividend u/s.2(22)(e) - loan received by the Assessee from QNEI is to be treated as deemed dividend and is to be assessed to tax u/s.2(22)(e) - HELD THAT:- Transactions between the Assessee along with its holding company were in the nature of current account and not in the nature of loans and hence does not fall under the scope of the deemed dividend u/s.2(22)(e). Same view taken in the case of Fairmacs Shipstores Private Limited [ 2015 (2) TMI 1382 - ITAT CHENNAI] - We noted that identically in this case also the payment should have been made by way of advance of loan to a shareholder of QNEI. The loan given by QNEI to the Assessee does not fall within the aforesaid provision. Also, in the decision of the Jurisdictional High Court in the case of PCIT Vs. Ennore Cargo Container Terminal Private Limited [ 2017 (4) TMI 615 - MADRAS HIGH COURT] it is held that, even if common shareholders are there in both the companies, the deemed dividend can be taxed only in the hands of the registered shareholder of the company and not in the hands of the company which has received the loan. Since, the Assessee is not a shareholder of QNEI, the amount received from QNEI will not be taxable in the hands of the Assessee as deemed dividend u/s.2(22)(e) of the Act and common shareholding in two companies would not attract the provisions of Section 2(22)(e) of the Act. In the light of the above, we are of the opinion that the reassessment made by the Assessing Officer stands null and void and the addition made u/s.2(22)(e) of the Act be deleted. Thus, the ground raised by the Assessee is allowed.

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• 2022 (12) TMI 294
  Reopening of assessment u/s 147 - objections to the reasons recorded - Notice beyond four years - treatment of share of profit in capacity of partner - HELD THAT:- AO had considered the very issue in respect of which subsequently he issued notice under section 148 seeking to reopen the assessment. The assessment order passed by assessing authority also reflected consideration of the same. Therefore, there was no basis for re-opening of the reassessment. It is trite principle that change of opinion could not be a ground to resort to reopening of process. AO in the present case could be said to have any new facts discovered to justify the re-opening. If it was a mere change of opinion on the part of the AO in issuing the order such course was not permissible in law. The entire assumption of jurisdiction to reopen the assessment was without any factual and legal basis. The present case offers a situation where powers u/s 148 of the Act were invoked after four years. Notice was issued on 30.3.2021 seeking to re-open the Assessment for the financial year 2014-2015. In the facts obtained in this case, there is nothing to suggest that the assessee had not disclosed fully and truely all material facts necessary for the assessment, rather it was otherwise. On that count itself, the notice was rendered bad.

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• 2022 (12) TMI 293
  Disallowance u/s 14A r.w. rule 8D - interest allocated on surmises and conjectures by treating even Public provident fund deposits as investments for earning tax exempt income - HELD THAT:- AO recorded the finding that the assessee cannot earn dividend without management of the investment. There are numerous precedents which support the view that even if the assessee claims that he has not incurred any expenditure in earning dividend income, the provisions of section 14A of the Act r.w. Rule 8D of the Rules would still apply, if the AO having regard to the accounts of the assessee is not satisfied with the correctness of the claim of the assessee. Both the Ld. AO as also the Ld. CIT(A), having regard to the accounts of the assessee reached the conclusion that the claim of the assessee that he did not incur any expenditure in relation to income which does not form part of the total income is not sustainable in the eye of law. If that be so, in our opinion, the Ld. CIT(A) was perfectly justified in holding that the provisions of section 14A r.w. Rule 8D of the Rules are attracted to the case of the assessee. We, therefore reject the ground No. 1 of the assessee. Disallowance of interest under rule 8D(iii) r.w.s. 14A ignoring that the assessee has capital and interest free fund far in excess of investments - As regards the alternate ground No. 2, it does not survive as the Ld. CIT(A) has already set aside the matter and restored it to the file of the Ld. AO with direction to him to decide afresh the quantum of disallowance in Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT] . We, however observe that the assessee has not made any suo-moto disallowance, therefore there will not be any occasion to limit the disallowance at a minimum as stated by the Ld. CIT(A) in the last sentence of his direction extracted above. In this view of the matter, the alternate ground No. 2 is also rejected.

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• 2022 (12) TMI 292
  Deduction u/s 54B - investments made in purchase of agricultural land - proof of investments etc not supported by the purchase deed - CIT-A allowed the deduction u/s 54B to the extent of that the lands were purchased through registered agreements - HED THAT:- We find from the impugned order that the ld. CIT(A) had gone through the material on record and directed the Assessing Officer to allow deduction u/s 54B in respect of investments made in purchase of agricultural land which is supported by registered sale deed. This finding of the ld. CIT(A) is fair and reasonable and does not require any interference. Hence, the appeal of the assessee stands dismissed.

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• 2022 (12) TMI 291
  Deduction u/s. 80IA - eligibility of rental income - concept of income derived from in contrast to other related concept like income attributable to - whether the rental income earned by the assessee is derived from the cargo business and thereby eligible for deduction u/s.80IA? - HELD THAT:- Providing cargo service as agreed between the assessee and BIAL includes cargo handling services, mailing services, post office mail services etc. We notice from the perusal of records that the assessee has entered into License Agreement for using of the space in the Cargo Terminal operated by the assessee with Cargo Handling Agents, Airlines, Banks, Post Office etc. The list of licensee from whom the assessee has received the rental income is given page 120 to 123 of paper book. In our view therefore the service commitment by the assessee to BIAL is directly related to the services provided by the licensees who have taken the space in the cargo terminal. We also see merit in the argument that in order to meet the requirement of cargo services 365* 7*24, it is essential for the licensees to operate within the cargo terminal so that the assessee can provide uninterrupted cargo service as committed to BIAL. From the perusal of the various terms of the sample agreements entered by the assessee with the licensees it is noticed that the licensees cannot use the facility for any purpose other than for supporting the cargo services. Renting of the space is an integral part of the cargo business of the assessee since the licensees are using the space to render services which are committed by the assessee to BIAL as part of Cargo services. Rental income is inseparably connected with the business carried on by the assessee and emanate directly from the business of the undertaking. Accordingly we hold that the rental income derived by the assessee from Cargo Agents, Airlines, Banks etc., is derived from the cargo business and eligible for deduction u/s. 80IA. The addition is deleted. Appeal by the assessee is allowed.

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• 2022 (12) TMI 290
  Rectification of mistake u/s 154 - capital gain computation - allowing the cost of acquisition while computing the capital gains - not reducing a sum from working of the profits of business or profession as the said sum represented sale proceeds of immovable property which had been credited to the Profit and Loss Account and while filing the return, the same had been duly considered under the head income from capital gains - HELD THAT:- As in the intimation u/s 143(1), there is an acknowledgment by CPC that the assessee has carried out said adjustment to the profit/loss account to the tune of Rs 19,90,000/-, however, while processing the return of income, adjustment has been reflected by CPC to an extent of Rs 5,79,703/- which has resulted in differential of Rs 14,10,297/- which has been retained as part of the profit/loss account and consequent net adjustment of Rs 14,10,297/-. At the same time,there is an acknowledgement by CPC that the assessee has offered net long term capital gains - therefore find that it is clearly a case where the sale consideration as credited in the profit/loss account has been reduced while computing the income under the head Profit/gains of business/profession and income under the head Capital gains has been computed separately taking into consideration the sale consideration and cost of acquisition offering net capital gains. CPC has however processed the return of income holding that the separate treatment towards capital gains is to the tune of Rs 579,703/- rather than of Rs 19,90,000/- effectively ignoring the cost of acquisition of Rs 14,10,297/- and thus making the adjustment to the tune of Rs 14,10,297/-.We find that the same is clearly a mistake emerging from the record as no two views are possible for allowing the cost of acquisition while computing the capital gains and that too, while processing the return of income in absence of any material to the contrary available on record. No useful purpose would be solved in remanding the matter and the adjustment so made by the CPC is hereby directed to be deleted. Appeal of assessee allowed.

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• 2022 (12) TMI 289
  Unexplained deposits in saving bank account - additional amount found deposited in his savings bank account with Andhra Bank, Medavakkam - unexplained cash deposit - HELD THAT:- We find that in the sworn statement, it was stated by the assessee that the total sale consideration was Rs. 2.58 crores against the sale consideration mentioned in the sale deed of Rs. 1.54 crores. AO has summoned the purchaser Shri D. Parthasarathy and recorded his statement, which reveals that the purchaser has paid only Rs. 1,54,21,000/- only as recorded in the sale deed and not the amount admitted by the assessee of Rs. 2.58 crores - we find that the assessee was not given an opportunity to cross examine the purchaser. Accordingly, we set aside the orders of authorities below and remit the matter back to the file of the AO to reconsider and decide the issue afresh in accordance with law by affording an opportunity to the assessee for cross examination of the purchaser before the Assessing Officer. Appeal filed by the assessee is allowed for statistical purposes.

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• 2022 (12) TMI 288
  Reopening of assessment u/s 147 - Reasons to believe - deposits in bank account - information of base sheet received by the Assessing officer that the assessee was having bank account with HSBC, Geneva, Switzerland and assessee was not filing return of income nor disclosed such foreign bank account to the department - CIT(A) confirmed the addition by taking a view that the assessee failed to discharge the onus lies upon him and has not furnished the required evidence and details required by the Assessing officer during the assessment - HELD THAT:- Considering the peculiar facts and circumstances of the case that the assessee has fully disowning his connection with the alleged bank account in HSBC, Geneva, Switzerland and has agreed to sign or undertake on any declaration for seeking further details of the bank account and ready to discharge his onus if all the documents and information in power and possession is provided to the assessee. Therefore, we deem it appropriate to restore the issue back to the file of Assessing Officer. The Assessing Officer is directed to provide all the information and evidence in his power and possession either received or gathered or collected to the assessee. The assessee is also directed to make full cooperation with the Assessing Officer and to file all the information, document or evidence with regard to his Passport, his various visit to foreign countries and the details of Visa (s). The assessee is further directed to give his consent for obtaining further information regarding the base sheet and to sign necessary declaration, undertaking or any other application or declaration as required by the Assessing Officer for obtaining information from foreign countries including impugned bank account with HSBC Bank, Geneva, Switzerland. So far as issue related with the reopening is concerned, we find that the learned Senior Counsel has not made specific submissions, therefore, those issue is treated as not pressed and dismissed as such. However, ground No. (II) is allowed for statistical purpose.

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• 2022 (12) TMI 287
  Income accrued in India - subscription/distribution revenue earned by the assessee - royalty receipt - Permanent Establishment (PE) in India so as to attribute any part of the profit to such PE - HELD THAT:- We are of the view that the approach of the departmental authorities in taxing the royalty income in these two assessment years is quite baffling. When, it is a fact on record that the entire distribution revenue generated in India from distribution of BBC World News Channel has been accounted for in the books of Indian entity and offered to tax in India, how a part of such income can be notionally attributed to the assessee and taxed in India. Firstly, as held by us earlier, the distribution revenue is not in the nature of royalty and secondly when the assessee has not received any part of such revenue, which has been offered to tax at the hands of BWIPL, no part of such income can again be attributed to the assessee notionally and taxed in India. Therefore, the addition made has to be deleted. Thus the issue, whether the assessee had a PE in India in these two assessment years is purely academic in the nature, as, the entire income has been offered to tax by Indian entity. Before we part, for the sake of completeness, we must deal with the submission of learned Departmental Representative that the distribution revenue earned by the assessee would otherwise qualify as equipment royalty and process royalty under Explanation 2(iva) of section 9(1)(vi) of the Act. In our view, such argument of learned Departmental Representative is preposterous as no such finding has been recorded either by the Assessing Officer or by learned Commissioner (Appeals) and DRP. - Decided in favour of assessee.

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• 2022 (12) TMI 286
  Disallowance of PF and ESI contribution deposited outside the statutory due date under said Act - amount paid before due date of filing the return - HELD THAT:- When the money is given by the employees, the employer is holding that money on behalf of the employees in the manner of good faith and trust. They are not part of the employers income, nor are they heads of deduction per se in the form of statutory pay out. In fact, they are others income, money, only deemed to be income with the object of ensuring that they are paid within the due date specified in that particular statute. Therefore, they have to be deposited in terms of such welfare enactment. It is open to deposit in terms of those statutes on or before the due date as mandated by such concerned law that the amount which is otherwise retained and is deemed income in the hands of the employer is therefore, treated as a deduction. Essentially the condition precedent for deduction is that therefore, such amounts which are held in trust for the employees should be deposited by the employer on or before the due date as prescribed under the relevant Statutes. The Hon ble Supreme Court CHECKMATE SERVICES P. LTD. [ 2022 (10) TMI 617 - SUPREME COURT] further held that if this approach and reasoning is adopted then the non-obstante clause u/s 43B or anything contained in that provision would never absolve the assessee-employer from its liability to deposit employees contribution on or before the due date as mentioned in the respective enactments as a condition for deduction. In view thereof, the Hon ble Apex Court upheld the findings of Hon ble Gujarat High Court and also stated that the decisions of other Hon ble High Courts holding to the contrary do not lay down the correct proposition of law. Reverting to the facts of the present case, it is an admitted fact that the payment of employees contribution to the provident fund was made before the due date of filing of return of income u/s 139(1) but beyond the due date as provided in the respective Statutes. Respectfully following the judgment of Hon ble Supreme Court (supra) we hold that the assessee-employer was duty bound to deposit the employees contribution to provident fund within the due date as mentioned in the respective Statutes. Since this was not done the assessee is not entitled for deduction u/s 36(1)(va) read with section 43B of the Act and the said amount has to be construed as deemed income of the assessee and added to his total income. We do not find therefore, any infirmity with the findings of the Revenue authorities and the Grounds No. 1, 2 and 3 of assessee s appeal of the assessee stands dismissed. Disallowance of deduction on Education cess and secondary and higher education cess - HELD THAT:- Following the aforesaid decisions and the Amendment taken place in the Statute with retrospective effect to section 40(a) we hold that payment of Education Cess including secondary and higher secondary education is not an allowable deduction. Ground No. 4 is dismissed.

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• 2022 (12) TMI 285
  Revision u/s 263 - business income OR agricultural income - AO examined the agricultural income admitted and accepted the same as exempted income - income derived from the above activity does not fall under the definition of agricultural income as defined u/s 2(1A) for which exemption is allowed and the said income should be treated as business income - HELD THAT:- The case was selected for scrutiny to verify whether the income claimed by the assessee was agricultural income or not. In the present case, no question was asked by the AO during the scrutiny assessment to verify whether the income disclosed by the assessee to an extent was an agricultural income. Nothing has been done by the AO and the AO without making any enquiry had allowed the claim of the assessee treating the same as agricultural income. In our view, the Explanation 2 to section 263 make it abundantly clear that the order passed by the AO would be erroneous and prejudicial to the interest of revenue, when no enquiry has been made by the AO. In the present case, neither any enquiry has been made by the Assessing Officer nor any questions were asked to the assessee nor any information was called for. Therefore, we have no hesitation to hold that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of revenue within the meaning of section 263 of the Act. In view of the above, we do not find any error in the order passed by ld.PCIT. Addition by treating the same as business income as against agricultural income claimed by the assessee - Similarly, for A.Y. 2017-18 the Assessing Officer after elaborate discussion had also concluded that the activities of the assessee do not fall within the realm of Agriculture and had held the amount as business income instead of agricultural income. It was submitted by the ld. AR that the appeals for these two assessment years were filed by the assessee before the ld.CIT(A). We notice that in the present case, a show cause notice was issued on 03.02.2020 i.e., much after passing of these orders for two assessment years u/s 263 and the ld.PCIT had come to conclusion that the assessee is not into agricultural activities. However, the ld.PCIT had thoroughly examined the activities of the assessee during 263 proceedings and had recorded the finding that the activities of the assessee though are in the nature of business however, the Assessing Officer has not recorded any finding in the assessment order despite the specific selection of the CASS for treating the income as agricultural income . In the light of the above, we do not find any merit in the appeal of the assessee and accordingly, the appeal of the assessee is dismissed.

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• 2022 (12) TMI 284
  Unexplained expenditure on commission - addition made on account of unexplained income being the commission earned for giving accommodation entry - HELD THAT:- We find that the A.O. after examining the records and for the detailed reasons given in the assessment order has made the addition and the same was upheld by the Ld. CIT(A). When appeal is filed before the Tribunal by the assessee against the order of lower authorities, it is expected that the assessee may put-forth some documentary evidences in support of his contentions to decide the appeal as it is the duty of the assessee to lead evidence in support of it s claim and for the adjudicating authority to decide upon the sustainability of the claim or the basis of the evidence led by the parties before it. In the instant case, at the time of hearing, the assessee neither appeared nor brought on record any material to substantiate it s claim. We, therefore, find no fallacy in the findings of Ld. CIT(A) and accordingly, the order of the Ld. CIT(A) is upheld. Resultantly, the ground of appeal raised by the assessee before the Tribunal is dismissed.

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• 2022 (12) TMI 283
  Penalty u/s 271A - non maintenance of books in infringement of S. 44AA - Penalty u/s 271B - not furnishing tax audit report enjoined by S. 44AB of the Act - HELD THAT:- We straightaway take notice of Circular No.452 dated 17th March, 1986 issued by the CBDT wherein the question of applicability of Section 44AB in the case of commission agents/arhatias was addressed. The Board has clarified that the turnover does not include the sales affected on behalf of the principals and only the gross commission has to be considered for the purposes of section 44AB where the agents act only as an agent of his constituent and never acts as a principal. In the instant case also, it is an admitted position that the assessee is only acting as a commission agent on behalf of the constituent. In view of such clarification, only the commission income is required to be reckoned for the purposes of determination of his obligation u/s 44AA of the Act as well as Section 44AB of the Act. The commission being turnover/receipt for the purposes of 44AA and 44AB, which is far below the threshold limit prescribed for the relevant assessment year, the assessee can not treated as assessee in default in terms of S. 271A and S. 271B of the Act. The assessee thus has demonstrated reasonable cause for failure to maintain books of account as well as compliance of Section 44AB of the Act in term of Section 271B of the Act. The penalty imposed u/s 271A and Section 271B of the Act is quashed. Appeal of assessee allowed.

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• 2022 (12) TMI 282
  Characterization of payment - Addition for External Development Charges - expenditure as covered u/s 43B - payment of EDC to HUDA is subject to TDS @ 2% u/s 194C - HELD THAT:- In the present case, from the Rules under which payments have been made by the assessee and the order of the AO, TDS, it is amply clear that it is a charge paid by the developer and builder for obtaining the services from the HUDA authority like sewage, roads, lighting, etc. and in case the assessee does not avail such facility, he is entitled for refund or adjustment of payment. AO himself noted that the payment of EDC to HUDA is subject to TDS @ 2% u/s 194C which clearly characterize the payment as made against the facilities availed by the developer/builder/colonizer which cannot be put in the basket of mandatory or compulsory payment of duty, tax, cess or fee, therefore, section 43B does not stand attracted in the present case to the payment of EDC by the assessee. Once we come to the conclusion that section 43B of the Act does not apply to the payment of EDC, the question of applying the rigor of payment within the time schedule viz., before filing the return of income u/s 139(1) of the Act will not decide the allowability or otherwise of such payment u/s 143B - Allowability of such payment would then depend upon the method of accounting followed by the assessee and if the assessee has made provision for its payment in its books of account and has claimed it as accrued liability in the relevant financial period, then, he is entitled to get the deduction in the relevant assessment year itself without any bar or application of section 43B. We conclude that the impugned payment made by the assessee towards EDC under HDRUA Rules does not fall within the ambit of duty, tax, cess or fee. The impugned payment has been made by the assessee for acquiring the facilities on the land allotted to it by HUDA, which is not in the nature of duty, tax, cess or fee. Provisions of section 43B is not applicable to the said payment. We are incline to hold that the AO was not correct in characterizing the payment falling within the ambit of section 43B and the CIT(A) was also not justified in confirming the same. The impugned payment made by the assessee towards EDC does not attract the provisions of section 43B and the same is allowable to the assessee. Appeal filed by the assessee is allowed.

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• 2022 (12) TMI 281
  Rectification of mistake u/s 154 - Delayed employee s contribution to the employee welfare funds - sum deposited beyond the due date specified in its respect u/s. 36(1)(va), even as the same stand deposited by the due date of filing the return of income u/s. 139(1) of the Act for the relevant year - scope of amendment - HELD THAT:- In view of the foregoing, no question of the said Explanations being read as retrospective, so as to apply for the relevant year, sustaining the impugned additions, which therefore fail. This is, however, subject to any decision/s by the Hon ble jurisdictional High Court, which would, where so, hold, even justifying a rectification u/s. 154/254(2), even where rendered after the date of the order sought to be rectified. See SAURASHTRA KUTCH STOCK EXCHANGE LTD [ 2008 (9) TMI 11 - SUPREME COURT] and SMT. ARUNA LUTHRA. [ 2001 (8) TMI 84 - PUNJAB AND HARYANA HIGH COURT] No such decision has been found, or otherwise pointed out by the parties, as was the case before the Tribunal in Nikhil Mohine [ 2021 (11) TMI 927 - ITAT JABALPUR] any such decision, even if discovered later, may operate to amend this order, or the order giving appeal effect thereto, to bring it in conformity or agreement with the said decision/s, of course, after allowing a fair opportunity of hearing to the assessee. The impugned additions, therefore, could not have been made under the given facts and circumstances of the case, and are directed for deletion. Decided in favour of assessee.

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• 2022 (12) TMI 280
  Disallowance u/s 14A r.w.r. 8D - necessity of recording of satisfaction by the AO - HELD THAT:- AO on an examination of accounts of the assessee was of the opinion that the assessee did not apportion any expenditure relating to the exempt income and not satisfied with the claim of assessee that no expenses were incurred to earn its exempt income, proceeded to work out by applying Rule 8D, disallowed expenditure under Rule 8D(ii) (iii), respectively. AO clearly recorded its non-satisfaction with regard to accounts of assessee of the assessment order. CIT(A) confirmed the view of AO recording of non-satisfaction regarding the accounts of assessee. On perusal of finding of AO regarding recording of non-satisfaction with regard to accounts of assessee relating to exempt income, we do not find any infirmity in the order of CIT(A) in holding that the AO recorded its satisfaction of the impugned order. Therefore, the submissions of AR are rejected and ground No. 1 raised by the assessee is dismissed. Seeking direction to AO to restrict the disallowance u/r 8D concerning the investments yielded exempt income - Disallowance under Rule 8D(ii) to an extent of Rs.1,78,490/- is not maintainable. Therefore, the order of CIT(A) is not justified in confirming the disallowance under Rule 8D(2)(ii) on account of interest expenditure and to that extent the order of CIT(A) is set aside. Coming to the disallowance under Rule 8D(2)(iii) to an extent of Rs.5,40,395/-, note that the ld. AR contended to remand the issue to the file of AO for computation of disallowance concerning the investments which yielded exempt income. AO did not examine the said disallowance on this aspect and proceeded to disallow at 0.5% on an average value of investments concerning the first day and last day of previous year to an extent of Rs.10,80,79,007/-. It is settled principle to restrict the disallowance to those investments earned dividend income. Therefore, following the same direct the AO to compute the disallowance taking into consideration those investments which yielded exempt income. The assessee is liberty to file evidence, if any, in this regard. Thus, alternative ground No. 3 raised by the assessee is allowed for statistical purpose.

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• 2022 (12) TMI 279
  Disallowance of additional depreciation u/s 32(1)(iia) - appellant has not fall within the purview of manufacturing in term of section 2(29BA) - Whatever process is applied by the assessee, the oil remains oil and the requirements of manufacture as defined in section 2(29BA) are not satisfied? - HELD THAT:- We observe certain facts from the submission of assessee made before lower authorities and also argued before us, which stand uncontroverted by revenue. Firstly the assessee is doing two distinguishable types of activities, viz. (i) purchasing oil from local/overseas market and reselling as such, which is a trading activity and (ii) purchasing raw-oil, applying technical-processes, converting the same into finished-oil of high nutritional value of different qualities/brands, which is a manufacturing activity . The proportion of manufacturing activity in the year was 98.93%. Secondly, the flow-chart of manufacturing activity depicts various step-by-step activities from purchase of raw-oil - storage of oil analytical observation segregation of oil according to quality / nutritional value mixing for enhancing quality / nutritional value lastly packing in jars/bottles of different brand names and qualities. Thirdly, the whole process requires application of labour, machinery and analytical lab. Fourthly, the chemical composition is changed in such a way that nutritional-values are enhanced and the finished product becomes edible for a longer period. Therefore, the final product is a commercially, physically and chemically different. Fifthly, a very important factor that the assessee has been consistently regarded as manufacture by various Government Department and Agencies. The process undertaken by the assessee have been treated as manufacture under Excise Act and allied tax laws. These factors clearly indicate that the assessee s case falls within the scope of manufacture as defined in sub-clause (b) of section 2(29BA) i.e. bringing into existence of a new and distinct object or article or thing with a different chemical composition or alternatively it qualifies to be treated as production . Hence the assessee is eligible for additional depreciation. Vital fact, which is not disputed by revenue, that the assessee is purchasing plastic granule/raw material and manufacturing packing material therefrom such as jar/pouches/bottles make the assessee fully eligible for additional depreciation . It is very much clear that the assessee is eligible for additional depreciation . Therefore, we uphold the claim of additional depreciation as made by assessee and direct the Ld. AO to allow the same. Appeal of assessee is allowed.

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• 2022 (12) TMI 278
  TP adjustment - reimbursement of expenses - HELD THAT:- As in the present case, no search was conducted to find out the independent entity in a comparable transaction and the arm s length price of the international transaction was treated to be NIL. In the present case, no doubts about payments made by the assessee have been raised by the AO u/s 37 of the Act. Further, accrual of benefit to assessee or the commercial expediency of any expenditure incurred by the assessee cannot be the basis for disallowing the same, as held in the case of EKL Appliances Ltd. [ 2012 (4) TMI 346 - DELHI HIGH COURT] Thus we are of the considered opinion that TPO as well as learned DRP were not justified in treating the value of international transaction of Reimbursement of Expenses to be NIL, in the present case. Accordingly, grounds raised in assessee s appeal are allowed. Disallowance of provision for costs incurred on completed contracts - HELD THAT:- The issue arising in the present case is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of the Tribunal forpreceding assessment years. Thus, respectfully following the orders passed by the coordinate bench of the Tribunal in assessee s own case cited 2006 07, [ 2019 (4) TMI 873 - ITAT MUMBAI] , 2007 08 [ 2020 (7) TMI 189 - ITAT MUMBAI] , 2009 10 [ 2020 (8) TMI 842 - ITAT MUMBAI] , we uphold the plea of the assessee and delete the impugned disallowance of provision for costs incurred on completed contracts. Accordingly, grounds raised in assessee s appeal are allowed. Taxability of excess of progress billings over accumulated costs incurred - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee s own case in Thyssenkrupp Industrial Solutions (India) Pvt. Ltd [ 2019 (4) TMI 873 - ITAT MUMBAI] decided similar issue in favour of the assessee. DR could not show us any reason to deviate from the aforesaid orders and no change in facts and law was alleged in the relevant assessment year. The issue arising in the present case is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of the Tribunal for preceding assessment years. Thus, respectfully following the orders passed by the coordinate bench of the Tribunal in assessee s own case cited we uphold the plea of the assessee and delete the impugned addition - Decided in favour of assessee.

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• Customs

• 2022 (12) TMI 277
  Service Exports from India Scheme - challenge to provisions of Clause 3.08 (f) of the FTP 2015-20, the vires of which in relation to the Parent Act, i.e., the FTDR Act - repugnant to the Parent Act or not - requirement of obtaining IEC - HELD THAT:- As rightly pointed out by Ld. ASG Mr. Balbir Singh, the principal grievance of the exporters that the Government cannot insist upon IEC at the time of export stands satisfied in light of the amendment in para 2.05 of the FTP 2015-20. This Court is also in agreement with the decision of the Bombay High Court in Smarte Solutions [ 2022 (8) TMI 186 - BOMBAY HIGH COURT ], where it was held that The respondents are directed to consider the petitioner s application without insisting for an active IEC number at the time of rendering services. However, it was brought to the notice of this Court during these proceedings, the said amendment pointed out by Ld. ASG was not brought to light before the Bombay High Court. In view of the amendment made in the FTP 2015-20, this Court does not deem it fit to venture further on individual facts of the present case - It is now open to the Petitioners to raise their grievances before the authorities regarding other reliefs as prayed for in the instant Writ Petitions and the authorities are directed to consider the grievances of the Petitioners, if any, and adjudicate upon them afresh, in accordance with law. Petition disposed off.

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• Corporate Laws

• 2022 (12) TMI 275
  Oppression and Mismanagement - Minimum qualification of shares for invocation of petition filed under Section 241 of the Companies Act, 2013 - registration of shares by means of transfer in favour of the Respondents under Section 58(5) of the Companies Act, 2013 - power of Tribunal to order for cost to be paid to the Respondents - power of Tribunal to cause investigation into the affair of the company under the Companies Act, 2013 - power of Tribunal to recommend to Institute of Chartered Accountant to take suitable disciplinary action on 9th Respondent (Chartered Accountant Firm on alleged collusion with the Appellants to falsify the record of the company. Whether the Respondents possessed minimum 10% shares in order to invoke petition filed under Section 241 of the Companies Act, 2013? - HELD THAT:- It has been brought out that the Joint Managing Director, Managing Director along with the 2nd Respondent handed over all the documents including Original Share Certificates along with Share Transfer Forms to the 9th Respondent (Chartered Accountants Firm of the company). However, no action was taken despite reminders being sent by the Respondents to the Appellants. It is noted that upon receiving a letter dated 26.04.2017 from the Respondents, the 9th Respondent i.e. Chartered Accountants Firm conveyed that the Managing Director of the company had collected back necessary documents from their office to take required action for transfer of shares - To settle the disputes after reconciliating meting among the shareholders, a Settlement Agreement was entered between the parties on 09.12.2017, wherein it was mentioned that the Appellants would transfer 4.5% shares of the company to the Respondents. The Settlement Agreement was recognized and approved by the board in its meeting on 12.12.2017. However, no such transfer was made. It is the case of the Appellants that non transfer of shares should be treated as inter se dispute and the Respondents herein should have approached appropriate Civil Court to enforce transfer of shares under Specific Relief Act, 1963. In this regard, this Appellate Tribunal observes that since the transfer of the shares were agreed upon between the parties which was approved in Board Resolution of the company and therefore the Tribunal had suitable power under Section 242 of the Companies Act, 2013 r/w Rule 11 of the National Company Law Tribunal, Rules 2016 - this Appellate Tribunal considered non transfer of shares in favour of the Respondents herein tantamount to the oppressions of the Respondents as per Section 242 r/w Section 58 of the Companies Act, 2013. Whether the Tribunal had the power to cause investigation into the affair of the company under the Companies Act, 2013? - Whether the Tribunal is empowered to recommend to Institute of Chartered Accountant to take suitable disciplinary action on 9th Respondent (Chartered Accountant Firm on alleged collusion with the Appellants to falsify the record of the company? - HELD THAT:- There is no power with the Tribunal to directly order, an investigation of the Company s Affairs by an independent Person / Firm (Mr. K. Venkitachalam Aiyer Company as Chartered Accountants) - Similarly, no power exist with the Tribunal, to ask an Autonomous Professional Body (herein the Institute of Chartered Accountant of India) to take disciplinary action against its Member. The Tribunal ought to have taken into account the provision as contained in Section 213 of the Companies Act, 2013 and after following due process after hearing the company herein, the Tribunal, could have asked the Central Government, to appoint the Inspector, to investigate and take further action as per process laid down in the Companies Act, 2013 - This Appellate Tribunal, therefore comes to the conclusion that the Tribunal erred on the aforesaid accounts of investigation and asking Autonomous Body for taking disciplinary action against the Chartered Accounts Firm - This Appellate Tribunal, is of the considered opinion that there is no error, in the impugned order dated 21.04.2020, passed by the Tribunal, w.r.t its order contained in Para- 29 (i), (ii) (v). Appeal disposed off.

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• Insolvency & Bankruptcy

• 2022 (12) TMI 276
  Delay in Revival of the Corporate Debtor - Resolution Plan was implemented in its entirety and that the Corporate Debtor was not functional for a long period and that the implementation of the Employee Engagement Programme, as contemplated in the Plan had commenced - delay in revival procedure - valuation of shares - HELD THAT:- The Resolution Professional, in tune with the ingredients of Section 30 (2) of the I B Code, 2016, is to examine each Resolution Plan, received by him, to affirm that the Resolution Plan, prescribes for the payment of Insolvency Resolution Process Costs, payments of Debts of Creditors, the management of affairs of the Corporate Debtor, implement and supervision of the Resolution Plan, other requirements as may be specified by the Board and does not violate any Section of Law, for the time being in force. As a matter of fact, the Committee of Creditors, may approve the Resolution Plan, by voting of not less than 75% of voting share on Financial Creditors, as per Section 30(4) of the I B Code, 2016. An Adjudicating Authority, can examine the reasoning of accepting or rejecting or any objection or suggestion and express his views in the matter. In tune with the ingredients of Section 31 of the I B Code, 2016, even an Adjudicating Authority, is satisfied with the Resolution Plan, being approved, by the Committee of Creditors, as per Section 30 (4) of the I B Code, that it fulfils the requirements, as visualised in Section 30 (2) of the Code, it shall by an Order approve the Resolution Plan, which shall be binding on the Corporate Debtor, Members, Employees, Creditors and other Stakeholders, involved in the Resolution Plan - If there is a Resolution Applicant, who can continue to run the Corporate Debtor, every endeavour is to be made, to try and see that is quite possible. There is no vested right in the Resolution Applicant, to get its / his Resolution Plan approved. Application of mind - HELD THAT:- A Judicial mind is to be applied by an Adjudicating Authority to the Resolution Plan submitted, and he may take a call for accepting or rejecting the Plan, ofcourse, within the parameters of law. In the instant case on hand, this Tribunal, points out that the 1st Respondent / Resolution Professional, had averred in his Counter, in the instant Appeal that the Fair Value and the Liquidation Value of the Corporate Debtor were arrived at by both the groups of Registered Valuers, were not significantly different and as such, there was no requirement to appoint another Registered Value, by the Resolution Professional, to submit an estimate of the Value, computed in the same manner, as per Regulation 35 (b) of the Corporate Insolvency Resolution Process Regulations. The scope of Judicial Review, by an Adjudicating Authority, revolves around a restricted and narrow field - It cannot be ignored, that the Commercial Wisdom of the Committee of Creditors, is not be interfered with, except in the limited ambit, as contemplated under Section 30 (2) of the I B Code, 2016, in respect of an Adjudicating Authority, and as per Section 61 (3) of the Code, in regard to an Appellate Tribunal. Besides these, in Law, it is not open to an Adjudicating Authority (Tribunal) or an Appellate Authority (Appellate Tribunal), to consider any other feature than the one mentioned in Section 30 (2) or Section 61 (3) of the I B Code, 2016, in the considered opinion of this Tribunal. The word Person, is defined as per Section 3 (23) (d) of the I B Code, 2016, which includes a Trust, therefore, there is no Fetter/ Embargo or a Legal Impediment, for a Trust, to be a Resolution Applicant, in submitting a Resolution Plan (in the present case), the candid fact, is that the Successful Resolution Applicant / Lessie Medical Institutions, being a Registered Charitable Trust, under the Indian Trust Act, 1882), in Corporate Insolvency Resolution Process, in the cocksure earnest opinion of this Tribunal. Looking at from that perspective, the contra plea taken on behalf of the Appellant is not acceded to by this Tribunal. This Tribunal, on going through the words, any person Aggrieved, occurring in Section 61 (1) of the I B Code, 2016, is of the view that in Section 61 (1) of the Code, the words Party Aggrieved, are not employed. For an affected person, the Order of an Adjudicating Authority, must cause a Legal Grievance, by wrongfully depriving him of something and in the process, his Legal Right is breached, by the act complained of. This Tribunal, taking note of the divergent contentions advanced on either side, entire gamut of the factual matrix and attendant facts and circumstances of the instant case, in an integral manner, comes to an inescapable conclusion that the Appellant has not made out a case in its favour and has not proved any of the grounds adumbrated in Section 61 (3) of the I B Code, 2016, for filing an Appeal, against theimpugned order, passed by the Adjudicating Authority, (National Company Law Tribunal, Kochi Bench, Kerala), in approving the Resolution Plan, under Section 31 of the I B Code, 2016. Appeal dismissed.

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• 2022 (12) TMI 274
  Seeking exemption from personally appearing before the trial court on each and every date of the said criminal proceeding on 9th March, 2021 - Section 205 of the Code of Criminal Procedure - HELD THAT:- Section 205 confers a discretion on the court to exempt an accused from personal appearance till such time his appearance is considered by the court to be not necessary during trial. It is manifest from a complaint reading of the provision that while considering an application under Section 205 of the Code, the Magistrate has to bear in mind the nature of the case as well as the conduct of the person summoned. It is the foremost duty of the trial court to examine whether any useful purpose would be served by requiring the personal attendance of the accused or whether the progress of the trial is likely to be hampered on account of his absence - It is obvious that no useful purpose would be served by requiring personal attendance of the petitioner because the fate of the trial would depend on complainant s success in establishing the charge against the accused persons beyond any shadow of doubt. Allegation made against the accused is not of such nature where personal attendance of the accused and his identification is absolutely necessary. Moreover, when the petitioner undertakes that he would not dispute his identity, this Court fails to understand as to why his application under Section 205 of the Cr.P.C was rejected. The learned trial judge failed to consider that the nature of offences attributed to the petitioner was not of such nature that the petitioner should be present before the court throughout the trial preferable on each and every date. In the impugned order, the learned trial judge observed that the nature of job of the petitioner is not that all monumental importance - The learned trial judge also failed to appreciate that no useful purpose would be served by requiring personal attendance of the petitioner and also the course of trial of the case would not hamper on account of his absence. An application under Section 205 of the Cr.P.C cannot be rejected on the plea that the accused has alternative remedy Section 317 of the Cr.P.C. The learned trial court also failed to consider that provision under Section 205 of the Cr.P.C is to be liberally construed. 24. In view of the above discussion the impugned order dated 19th May, 2022 passed by the learned Judge-in-Charge, 2nd Special Court, Calcutta is liable to be set aside. The application filed by the petitioner under Section 205 of the Cr.P.C is allowed.

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• 2022 (12) TMI 273
  Seeking quashing of the impugned show cause notices dated 22nd November, 2022 issued by South Eastern Coalfields Limited (SECL) - HELD THAT:- The admitted position on record is that the Petitioner is undergoing insolvency proceedings. It is also admitted that the project is yet to be commissioned. Under these circumstances, prima facie, there appears to be no extension beyond the date of 31st March, 2022, which has been given to the Petitioner. Moreover, a perusal of the show cause notices also shows that the Respondents have called upon the Petitioner to file a reply and to deal with the breach of various conditions in the CSA which required the Petitioner to commission the plant. This Court is not inclined to go into the merits of the petition as to whether there is any justifiable cause for non-commissioning of the plant and as to what would be the effect of the said non-commissioning. The SECL has already issued the show cause notices to the Petitioner. The replies are stated to have been filed. Let a hearing be granted to the Petitioner and an order be passed by the SECL in accordance with law. The Petitioner shall be given two weeks time to avail of its remedies in accordance with law before the NCLT which would be the appropriate forum in terms of Section 60(5) of the IBC. Section 60(5) vests jurisdiction in NCLT to entertain or dispose of an application, proceeding, claim made by or against the corporate debtor. In the aforementioned two weeks period, any order that may be passed shall not be given effect to - Petition disposed off.

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• 2022 (12) TMI 272
  Forfeiture of right to file reply - Financial Debt or not - financial assistance or loan - HELD THAT:- It is seen from the material on record that first notice was directed to be issued by the Adjudicating Authority on 09.12.2019 and Ms. Shivangi Agarwal had appeared before the Adjudicating Authority and offered to file her vakalatnama on 20.01.2020. On 06.02.2020 time was sought to file Reply and the matter was adjourned. On 05.03.2020, the Respondent Counsel was absent. On 08.02.2021, since the matter was taken up after the covid situation, the Counsel for the Petitioner was directed again to issue a notice informing the Respondent regarding the next date of hearing - there is no illegality in the Order of the Adjudicating Authority in forfeiting the right of the Appellant in filing a Reply. The amount is a Financial Debt or not - HELD THAT:- The Promisory Note only indicates that there was an acknowledgement of a debt to be repaid with interest. It is significant to mention that the Financial Creditor had not sought for enforcement of this promisory note and therefore, the question of it being stamped and the provisions of Indian Stamp Act, 1899 being applicable, does not arise in this case. The material on record evidences that the amount of Rs. 1 Crore disbursed to the Corporate Debtor has the essential ingredients of a Financial Debt as defined under Section 5(8) of the Code. It is submitted by the Resolution Professional that the Resolution Plan is under consideration and the time has expired on 09.10.2022. For the aforenoted reasons, we do not see any substantial grounds to set the clock back and hence this Appeal is dismissed accordingly.

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• 2022 (12) TMI 271
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - proper authorization for issuance of demand notice under Section 8 of IBC - existence of debt and dispute or not - HELD THAT:- The Adjudicating Authority on perusal of the record has recorded that both the demand notices, first dated 29.11.2018 and the second dated 10.10.2019 issued under Section 8 of the code which is pre-requisite for initiation of CIRP proceedings was signed and issued by one Mr. Surendra Prasad Shukla , in the capacity of whole-time Director and authorized signatory of the Applicant company, without there being any authorization. Once, the Ld. Adjudicating Authority had noticed that there was no specific authorization on record authorizing Mr. Surendra Prasad Shukla for issuance of demand notice under Section 8 of the code, such demand notice may not be termed in accordance with Section 8 of the code. If the Appellant was not in a position to satisfy the Adjudicating Authority on the validity of the demand notice certainly application filed under Section 9 of the code was required to be rejected. In absence of proper authorization for issuance of demand notice under Section 8 of the code such demand notice may not be termed as if it was in accordance with the provision contained in the code for admitting an application under Section 9 of the code, valid and legal demand notice under Section 8 of the code is pre-requisite. Appeal dismissed.

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• PMLA

• 2022 (12) TMI 270
  Money Laundering - scheduled offences - provisional attachment - cash - gold and silver ornaments - driver of the vehicle was one Suresh Kumar, the driver of the car, which was used for transporting illicit liquor - HELD THAT:- The remedy that is available to Suresh Kumar is to approach the Tribunal u/s.26 of the Prevention of Money Laundering Act, 2002 [PMLA] and thereafter, u/s.42 of the PMLA to the High Court. In the light of the order of the Adjudicating Authority passed u/s.8(3) of the PMLA confirming the provisional order of attachment, the ornaments cannot be handed over to Suresh Kumar. However, we are of the opinion that since the ornaments are not liable for confiscation u/s.14 of the Tamil Nadu Prohibition Act nor are they material evidence to connect the accused with the crime in question, no useful purpose will be served by keeping the ornaments in the custody of the learned District Munsif-cum-Judicial Magistrate, Thirukalukundram, as that would be an additional burden for the said Court. The learned District Munsif-cum-Judicial Magistrate, Thirukalukundram, are directed to hand over the ornaments in P.I.No.41/2015 dated 07.03.2015 in PEW Mamallapuram Crime No.96/2015 (now S.C.No.196/2017) on the file of learned Assistant Sessions Judge cum Principal Sub Judge, Chengalpet, to the Deputy Director, Directorate of Enforcement, Chennai, under proper receipt. Petition allowed.

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• 2022 (12) TMI 269
  Money Laundering - scheduled offences - proceeds of crime - allegation is that the property has been acquired by D.Sridhar s family via criminal activities - provisional attachment of properties - HELD THAT:- Admittedly, the Pothys had paid Rs.5,30,74,500/- as sale consideration to Kumari and Dhanalakshmi for purchasing the property. It is not the case of the Enforcement Directorate that the Pothys were benamies of Sridhar or Kumari or Dhanalakshmi. The Pothys have disclosed the entire payments that were made for the purchase of the said property. The Enforcement Directorate was not able to trace Rs.5,30,74,500/-, which had gone into the kitty of Kumari and Dhanalakshmi and therefore, they are now holding on to the property of the Pothys. When it is not the case of the Enforcement Directorate that the Pothys had purchased the property for a nominal consideration and that they are benamies of Sridhar and his family, the immovable property in the hands of the Pothys cannot be said to be proceeds of crime . At the risk of repetition, this Court has quashed the prosecution against Ramesh Pothy holding that he was not involved either directly or indirectly in the money laundering offence with Sridhar and his family members. Section 8(7) of the PMLA came up for consideration before a Division Bench of this Court in The Assistant Director v. Canara Bank [ 2021 (10) TMI 894 - MADRAS HIGH COURT ], wherein, this Court has held that Section 8(7) of the PMLA is a stand alone section and is not governed by the proviso to Section 8(8) of the PMLA, as the latter would come into effect only after the culmination of the trial, but, whereas the former could be invoked during the pendency of the trial, if it is found that the trial is not progressing for any other reason . In this case, there was no progress in the trial from 2017 onwards for various reasons - the property in question, which belongs to the Pothys cannot be confiscated in lieu of Rs.5,30,74,500/- in the hands of their vendors, to wit, Kumari and Dhanalakshmi. Of course, it would be open to the Enforcement Directorate to attach other properties of Kumari and Dhanalakshmi, if they are not able to trace the sum of Rs.5,30,74,500/-, but, that can, by no stretch of imagination, empower them to attach the buyers properties for the sin of having purchased the same for a valid consideration from a tainted seller. Criminal revision allowed.

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• Central Excise

• 2022 (12) TMI 268
  Maintainability of appeal - monetary amount involved in the appeal - HELD THAT:- The matter involving somewhat similar issue(s) i.e., CEAC 5/2022 was closed by us, whereupon a proposal was made by revenue to the Central Board of Indirect Taxes and Customs [in short Board ] to file a special leave petition (SLP). The Board, via its communication dated 19.10.2022, categorically indicated that an SLP should not be preferred, keeping in view, the monetary limit; however, the question of law could be kept open in terms of Section 35R of the Central Excise Act, 1944. Appeal closed.

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• CST, VAT & Sales Tax

• 2022 (12) TMI 267
  Jurisdiction and Validity/legality of re-assessment order - time limitation - sale of hair - genuineness of H Forms - denial of exemption on the ground that Forms were not issued by their Officers - It is claimed that the verification of Forms also ought to have been completed before the expiry of four years from the date of the assessment year - validity of revision of the order, five years after passing of the original order - violation of principles of natural justice - HELD THAT:- It is no doubt true that Government of India, Ministry of Finance has issued Circular dated 20.7.2021 extending the time limit for filing appeals by the Revenue, before quasi-judicial authorities or Courts in terms of the Supreme Court s order. In S. Kasi s case [ 2020 (6) TMI 727 - SUPREME COURT] , the Hon ble Supreme Court was dealing with an issue namely, as to whether limitation for filing charge sheet can be extended, thereby denying benefit under Section 167(2) Cr.P.C. Dealing with the same, the Apex Court, having regard to the factual situation and taking into consideration the liberty of an individual, did not agree with the argument of the respondents that statutory period for filing charge sheet under Section 167 Cr.P.C. also stands extended during the pandemic. As held by the Hon ble Apex Court in S. Kasi s case, the limitation for filing petitions/ applications/ suits/ appeals/ all other proceedings was extended only to obviate lawyers/litigants to come physically to file such proceedings in respective Courts/Tribunals. The order was passed to protect the litigants/lawyers whose petitions/applications etc., would become time barred if they are not being able to physically come to file such proceedings. The order was to the benefit of the litigants, who have to take recourse of law, as per the applicable statute. The law of limitation bars the remedy but not the right. The Division Bench of this Court in V-Guard Industries Limited [ 2022 (1) TMI 1012 - ANDHRA PRADESH HIGH COURT] extended the period of limitation even in respect of orders to be passed by statutory authorities also. Further, as the State is also a litigant, and if orders could not be passed within the time prescribed due to the prevailing pandemic, coupled with the difficulties faced by the authorities in passing orders due to pandemic, they would be barred by limitation - the Division Bench of this Court extended the period of limitation even in respect of orders to be passed by statutory authorities also. Further, as the State is also a litigant, and if orders could not be passed within the time prescribed due to the prevailing pandemic, coupled with the difficulties faced by the authorities in passing orders due to pandemic, they would be barred by limitation. Apart from that, when the assesses are permitted to file their returns beyond the period prescribed due to pandemic, in view of the judgment of the Hon ble Supreme Court and circulars issued, we feel that the authorities also should be given time to pass orders during the pandemic. While negativating the argument advanced by the petitioner with regard to limitation and having regard to the finding given in this Judgment, the Re-assessment Order, dated 24.02.2022, passed by Respondent No.1 is set aside and the matter is remitted back to the assessing authority to pass orders afresh after hearing the petitioner, in accordance with law, as early as possible - petition disposed off.

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• 2022 (12) TMI 266
  Maintainability of petition - alternate remedy of appeal available to the Petitioner - Validity of assessment order - HELD THAT:- Hon ble Supreme Court in the recent decision in the case of THE STATE OF MAHARASHTRA AND OTHERS VERSUS GREATSHIP (INDIA) LIMITED [ 2022 (9) TMI 896 - SUPREME COURT ] while deciding a challenge to the order of the Division Bench of this Court, where the Division Bench had entertained a writ petition inspite of availability of alternate remedy, no cogent reason the respondent therein had sought to support the decision of the Division Bench entertaining the Writ Petition against the Order of Assessment by relying on various decisions including that of the Hon ble Supreme Court in WHIRLPOOL CORPORATION VERSUS REGISTRAR OF TRADE MARKS, MUMBAI ORS. [ 1998 (10) TMI 510 - SUPREME COURT ] . The Hon ble Supreme Court observed that the assessee straightway preferred writ petition under Article 226 of the Constitution of India when it was not in dispute that the statutes provided for the right of appeal against the assessment order passed by the Assessing Officer and against the order passed by the first appellate authority, an appeal/revision would lie before the Tribunal - The Hon ble Supreme Court held that the High Court ought not to have entertained the writ petition under Article 226 of the Constitution of India challenging the assessment order in view of the availability of statutory remedy under the Act and there was no exceptional reason. The appeal filed by the State Government was thus allowed on the ground that the High Court should not have entertained a writ petition inspite of alternate remedy. Considering the dicta laid down by the Hon ble Supreme Court and the fact that the Petitioner has alternate remedy of Appeal, we dispose of the Writ Petition - petition disposed off.

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• 2022 (12) TMI 265
  Input Tax Credit - Works Contract - claim for the credit only for the tax period to which such purchases pertain based on the date indicated on the tax invoices - HELD THAT:- The fact that by mutual inter se arrangement the appellant was required to reimburse the tax component to the selling dealer at a point in time much which was later than when the tax invoices were raised, would not enable the appellant to take credit of the input tax paid on such purchases. The Tribunal has reached the right conclusion, although there is only reference to Section 9(3) of the 2004 Act. Rule 4(c) of the 2005 Rules, provides clarity as to how the expression arising in the tax period is required to be understood, for claiming credit of the input tax. The question of law, as framed, is decided in favour of the respondents/revenue and against the appellant/assessee - Appeal disposed off.

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• 2022 (12) TMI 264
  Maintainability of assessment / re-assessment order - existence of alternative remedy of appeal under Section 48 of the VAT Act - HELD THAT:- The question is what is the meaning to be ascribed to the date of order of assessment and assessment or re-assessment of a dealer has been made as appearing in Section 22 of the VAT Act. We are in accord with the view taken by the learned Single Judge. The provisions make it abundantly clear that an assessment or re-assessment of a dealer had to be made by way of an order before exercise of powers under Section 22 of the VAT Act can be made, that too, within the period of five calendar years from the date of order of assessment. It is only in the event of passing an order, period of five calendar years, which is the limitation period, can be reckoned from the date of order of assessment. Invocation of Section 22 is permissible only when assessment of a dealer (a) has been under assessed or has escaped assessment or (b) has been assessed at a lower rate or (c) any wrong deduction has been made while making the assessment or (d) a rebate of input tax has incorrectly been allowed while making the assessment or (e) is rendered erroneous and prejudicial to the interest of revenue consequent to or in the light of any judgment or order of any Court or Tribunal, which has become final. The aforesaid conditions precedent cannot be countenanced in absence of an order of assessment in writing and in that view of the matter, in respect of deemed assessment, recourse cannot be taken under Section 22 of the VAT Act. Rule 20 under Chapter VI of VAT Rules, 2006 relates to Returns. Rule 20(2)(d), on which reliance is placed by Mr. Sharma was inserted by notification dated 02.06.2011. Subsequently, by notification dated 21.10.2011, the words in two copies after the words form 17-A in Rule 20(2)(d) were inserted. Rule 20(2)(d) provides that after submission of electronic return, form 17-A in two copies be submitted along with copy of the challan of the tax deposited within thirty days in the relevant circle and acknowledgment has to be obtained. Rule 20(2)(e) provides that if the acknowledgment prescribed under clause (d) is not obtained, then it will be deemed that no return has been filed. Argument of Mr. Sharma that the date of acknowledgment of submission of electronic return is the date of the order of deemed assessment, and therefore, it is incorrect to say that there is no date of order of assessment, is misconceived. Appeal dismissed.

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