TMI Tax Updates - e-Newsletter
February 1, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

TMI SMS

• Valuation - GST - Independent transaction of purchase of land and construction contract for construction on such land - Interim relief granted - HC

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• The activity of job work of fabrication with bullet proof work done on chassis provided by the Principal is a supply of Service - GST @ 18% - AAR

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News

• Module wise new functionalities deployed on the GST Portal for taxpayers.

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• The Insolvency and Bankruptcy Board of India organises a Workshop on “Committee of Creditors: An Institution of Public Trust”.

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• Telangana gets additional ₹ 179 crore for capital expenditure ; Additional amount is given as incentive for completing reforms in three out of four citizen-centric areas

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• Sovereign Gold Bond Scheme 2020-21 (Series XI) – Issue Price

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Notifications

Customs

• 04/2021 - dated 30-1-2021 - ADD
  Seeks to impose anti-dumping duty on import of ‘Front Axle Beam’ and ‘Steering Knuckles’ originating in or exported from China for a period of thirty months

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• 08/2021 - dated 29-1-2021 - Cus (NT)
  Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seed, Areca nut, Gold & Silver

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• 12/2021-Customs (N.T./CAA/DRI) - dated 27-1-2021 - Cus (NT)
  Seeks to amendment in Notification No. 19/2017-Customs (N.T./CAA/DRI) dated 24.11.2017

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• 11/2021-Customs (N.T./CAA/DRI) - dated 27-1-2021 - Cus (NT)
  Seeks to amendment in Notification No. 12/2017-Customs (N.T./CAA/DRI) dated 24.10.2017

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• 10/2021-Customs (N.T./CAA/DRI) - dated 27-1-2021 - Cus (NT)
  Seeks to amendment in Notification No. 4/2017-Customs (N.T./CAA/DRI) dated 30.01.2017

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GST - States

• CCST Ref. No.CCW/GST/74/2015 - dated 28-1-2021 - Andhra Pradesh SGST
  Extension of the time limit for furnishing of the annual return specified under section 44 of APGST Act, 2017 for the financial year 2019-20 till 28.02.2021

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• G.O.MS. No. 6 - dated 7-1-2021 - Andhra Pradesh SGST
  Andhra Pradesh Goods and Services Tax (Twelfth Amendment) Rules, 2020.

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• CCST Ref.No.CCW/GST/74/2015 - dated 29-12-2020 - Andhra Pradesh SGST
  Amendment to proceedings of CCT’s Ref. No.CCW/GST/74/2015-A-1, dated 30-6-2017

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• CCST Ref. No. CCW/GST/74/2015 - dated 29-12-2020 - Andhra Pradesh SGST
  Rescind of Proceedings issued in CCST Ref.No.CCW/GST/74/2015, dated 04-11-2020

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• 87/2020 – State Tax - dated 27-1-2021 - Delhi SGST
  Extend the due date for furnishing of FORM ITC-04 for the period July- September 2020 till 30th November, 2020

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• 79/2020-State Tax - dated 11-1-2021 - Jharkhand SGST
  Jharkhand Goods and Services Tax (Twelveth Amendment) Rules, 2020.

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• FIN/REV-3/GST/1/08(Pt-1)(Vol.II)/26 - dated 1-12-2020 - Nagaland SGST
  Amendment in Notification No. F. No. FIN/REV-3/GST/1/08(Pt-1)/452 dated the 13th September 2017

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• FIN/REV-3/GST/1/08(Pt-1)(Vol.II)/25 - dated 29-11-2020 - Nagaland SGST
  Seeks to waive penalty payable for non compliance

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• FIN/REV-3/GST/1/08(Pt-1)(Vol.II)/24 - dated 10-11-2020 - Nagaland SGST
  Amendment in Notification No. FIN/REV-3/GST/1/08(Pt-1)(Vol.1)/65 dated 21st March 2020

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• FIN/REV-3/GST/1/08(Pt-1)(Vol.II)/20 - dated 10-11-2020 - Nagaland SGST
  Seeks to bring in force Section 7 of the Nagaland Goods and Services Tax (Amendment) Act, 2019

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Highlights / Catch Notes

GST

• Classification of supply - Works Contract Services or not - activities of supply installation, operation and maintenance of Greenfield Public Street Lighting System (GPSLS) carried out by the Applicant - The primary activity of the applicant is therefore, ‘supply of goods’ and not ‘supply of services’. Further, the said activity performed by the applicant is not related to the immovable property at any point of the time and hence the said activity does not qualify to be a ‘works contract’. - AAR
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• Levy of GST - Capital Subsidy (90 per cent of Project Capital Expenditure) received by the Applicant as per SIOM Agreement and Escrow Agreement from Odisha Government /ULBs for the Green Field Public Street Lighting System in the State of Odisha - The so called ‘capital subsidy’ cannot be a ‘subsidy’ by any stretch of the imagination, rather the same is a consideration as defined in Section 2(31) of the CGST Act in relation to the supply of goods and therefore, the said ‘capital subsidy’ shall certainly be liable to be included in the Transaction Value - AAR
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• Classification of supply of service - activity of bullet proof body building (in addition to fixing bullet proof windshield glass, bullet proofing of engine and fuel tank on the motor vehicles (2.5 Ton capacity) having Tarpaulin cover in the cargo compartment - the activity of job work consisting of fabrication including of bullet proof work done on chassis provided by the Principal (ownership of which always remains with Principal) is a supply of Service attracting GST @ 18%. - AAR
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• Valuation - Independent transaction of purchase of land and construction contract for construction of bungalow on such land - Interim relief granted - We permit the writ applicant to deposit the amount of tax as raised under the invoice without prejudice to his rights and contentions as raised in this writ application. - HC
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• Seizure of Goods - allegation of reuse of E-way bills - The appeal authority had no jurisdiction to examine fresh evidence at the behest of the revenue or record fresh reasons to support original order. The proper authority, had not recorded any reason to establish evasion of tax or attempt to evade tax or even reuse of the documents by the petitioner. Though he raised that issue in the seizure proceedings, he did not record any finding that effect in the final order - No useful purpose would be served to remand the proceeding now as that would amount to giving the revenue a second inning to built a fresh case - Order set aside - HC
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Income Tax

• Deduction u/s 80IA - Treatment to carbon credit receipt - Section 115BBG of the Act was introduced by Finance Act, 2017 with effect from 01.04.2018, prior to which, there was no such provision - assessees were under utter confusion as to under which provision of the Act, they should make a claim for deduction and having left with no other option, had been making the claim u/s 80IA - merely because the assessee due to uncertainty in the legal position, had made a claim under Section 80IA of the Act that cannot be a reason to deny a benefit granted in favour of the assessee. - HC
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• TDS u/s 195 - foreign commission expenses - CIT (A) has rightly deleted the addition made by the AO u/s 40(a)(ia) of the Act treating the same being not covered under the ambit of fee for technical services u/s 9 or 195 of the Act. - AT
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• Deduction u/s. 80IAB - developing SEZ by itself is the business contemplated u/s. 80 IAB of the Act and the SEZ itself provides that the lease rental income generated in the hands of a developer engaged in setting up of the SEZ, is the profits and gains derived from the business of developing a SEZ. - AT
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• Adjustment to the book profits on section 115 JB on Addition made u/s 14A - the computation under clause (f) of explanation 1 to section 115 JB (2) of the Act has to be made without resorting to the computation as contemplated under section 14A of the Act read with Rule 8D of the Rules. - AT
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• Unexplained Income - addition u/s 68 - Receipt of share application money from group companies - group companies invest in each other - Double additions - In this case huge additions were made in the hands of the share allottee companies in their scrutiny assessment u/s 143(3) of the Act. Again making the addition in the case of the assessee company would tantamount to double addition. - Additions deleted - AT
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• Long term capital loss/gain - loss on cancellation of flat booked - provisions of section 2(47) clause (vi) - extinguishment of assessee’s right in flat - the assessee has rightly calculated the long term capital loss upon the cancellation of letter of intent - AT
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• Addition u/s 69A - It is settled law that when assessing officer is rejecting the books of account and return of income filed by the assessee the best judgement assessment has to be based upon some reasonable criteria. The same has to be on the basis of rates applicable for earlier income shown by the assessee in the past or that operating in the concerned business. By not adopting any fair rate or estimate of income and adding the bank deposits partly only as undisclosed income or investment is not at all sustainable. - AT
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• Denial of deduction u/s 35AC on the basis of statement of Trustee - AO ought to have provided material used against the assessee apart from providing an opportunity to cross examine deponent whose statement was used against the assessee. Besides the said statement there is no substantive material to disbelieve the claim of assessee. - AT
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• Agricultural income - The finding of the CIT (A) is that the crops grown are commercial in nature. The definition of ‘Agricultural Income’ does not limit its application to any particular crops/produce. The only requirement is that the basic agricultural operations are to be carried out. The nature of the crop being commercial in nature will not therefore, disentitle the assessee from claiming the income as ‘agricultural income’. - AT
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• Disallowance of running and maintenance expenses of foreign office - This amount has been duly disclosed in the audited financial statements and no fresh material on the issue has been brought on record by the Assessing Officer. Undisputedly, the reassessment is beyond the period of four years and, therefore, it was incumbent upon the Assessing Officer to point out specifically as to how the escapement of income from tax on this issue could be attributed to any fault on the part of the assessee. - AT
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• Refunds claim along with interest accrued thereon u/s 244A - statutory alternate remedy - the Petitioner must only avail the remedy as provided for by the statute. The fact that we have a wide jurisdiction under Article 226 of the Constitution does not mean that we can disregard the substantive provisions of the statute and the mechanism provided thereunder. - HC
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• RTI Application seeking information against Private Parties - Allegation of tax evasion - Public interest - The provisions of the RTI Act are not meant to allow the parties to collect evidence from such Departments or Public Authorities to sub­serve their private interest - The sanctity of the Income Tax Assessment, filing of Returns, investigation and inquiry under the Act would be thrown open to third parties, if such 'information' was to be disclosed to third parties casually or carelessly. - RTI application was rightly rejected - HC
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• Condone delay in fling the application for exemption u/s 10(23C)(vi) - We feel that even at this stage petitioner may approach CBDT under section 119(2)(b) seeking a special order to respondent No.1 to condone the delay in fling the application for exemption under section 10(23C)(vi) of the Act for the assessment year 2019-20, there being admitted delay of 31 days in fling the application for the said assessment year, and thereafter to deal with the said application/ claim on merit in accordance with law. - HC
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IBC

• Initiation of CIRP - A deposit is something more than a mere loan of money - the Appellant’s status is that of a ‘Financial Creditor’ as per Section 5(7) read with Section 5(8) of the Code and that there is a default in payment of the accepted amounts by the Respondent/CD and in short, the Respondent / Corporate Debtor comes within the purview of the definition of ‘Financial Debt’ - AT
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Case Laws:

• GST

• 2021 (1) TMI 1100
  Classification of supply - Works Contract Services or not - activities of supply installation, operation and maintenance of Greenfield Public Street Lighting System (GPSLS) carried out by the Applicant - levy of GST under Entry 3(vi) of Notification No. 11/2017-CT(Rate) dated 28 June 2017 (as amended) - inclusion of capital subsidy received/receivable by the applicant in the Transaction Value for the purpose of calculation of GST payable in terms of Section 15 of the CGST Act, 2017 - HELD THAT:- In the agreement submitted by the applicant the major part of the contract is supply of goods. The price of these goods are supplied to the client by the applicant constitutes 98.58% of total contract price. Further we find that the goods that are supplied are used by the applicant to provide services like installation, commissioning and maintenance etc. Without these goods the services cannot be supplied by the applicant and therefore we find that the goods and services are supplied as a combination and in conjunction and in the course of their business where the principal supply is supply of goods. Therefore, the instant supply squarely falls under the definition of composite supply . Thus we find that there is a composite supply in the subject case since in the subject case there is no building, construction, fabrication, completion, erection etc of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of the contract - Besides, as per Para 1(c) of Schedule II of the CGST/OGST Act, any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods and not a service. Whether the supply of the applicant falls under the supply of works contract service ? - HELD THAT:- The salient features of the agreement indicate that the obligation on the applicant is in relation to the effective installation and functioning of the goods supplied by them and thereafter, they would undertake the activities of operation and maintenance of the same. The contract governing their supplies does not relate to building, construction, and fabrication etc. of any immovable properties, as envisaged in the definition of works contract . Their supplies are in the nature of movable property i.e. supply of goods which involves ancillary services such as installation, commissioning etc. All these services which are supplied to the clients are nothing but ancillary activities with the main activities of supply of goods. The primary activity of the applicant is therefore, supply of goods and not supply of services . Further, the said activity performed by the applicant is not related to the immovable property at any point of the time and hence the said activity does not qualify to be a works contract . Whether GST is liable to be paid under Entry 3(vi) of Notification No. 11/2017-CT (Rate) dated 28 June 2017 (as amended) on the supply and installation activities along with operation and maintenance activities to be undertaken by the Applicant? - HELD THAT:- The provisions of Notification No. 11/2017-CT (Rate) dated 28 June 2017 (as amended) are not applicable to the noticee s case. The principal supply as mentioned above in this case is a supply of goods and therefore the GST will have to be paid on the goods at the appropriate rate after classification under the appropriate heading. Whether in facts and circumstances of the case, the capital subsidy received/ receivable by the applicant for the subject transaction be liable to be included in the Transaction Value for the purpose of calculation of GST payable in terms of Section 15 of the CGST Act, 2017? - HELD THAT:- In view of Section 15(2)(e) of the CGST Act, the value of supply shall include subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. On perusal of the agreement/contract, we see that the capital subsidy received/ receivable by the applicant in the instant case is the actual cost incurred by the project SPV (the applicant in the instant case) in the project as approved by the Authority ULBs. It is not a subsidy which generally means grant/grant-in-aid or a benefit given to an individual, business or institution, usually by the government. It is also not a subsidy which typically given to remove some type of burden and to promote a social good or an economic policy for overall interest of the public. The so called capital subsidy cannot be a subsidy by any stretch of the imagination, rather the same is a consideration as defined in Section 2(31) of the CGST Act in relation to the supply of goods and therefore, the said capital subsidy shall certainly be liable to be included in the Transaction Value for the purpose of calculation of GST.

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• 2021 (1) TMI 1099
  Classification of supply - Works Contract Services or not - activities of supply installation, operation and maintenance of Greenfield Public Street Lighting System (GPSLS) carried out by the Applicant - levy of GST under Entry 3(vi) of Notification No. 11/2017-CT(Rate) dated 28 June 2017 (as amended) - inclusion of capital subsidy received/receivable by the applicant in the Transaction Value for the purpose of calculation of GST payable in terms of Section 15 of the CGST Act, 2017 - HELD THAT:- In the agreement submitted by the applicant the major part of the contract is supply of goods. The price of these goods are supplied to the client by the applicant constitutes 98.58% of total contract price. Further we find that the goods that are supplied are used by the applicant to provide services like installation, commissioning and maintenance etc. Without these goods the services cannot be supplied by the applicant and therefore we find that the goods and services are supplied as a combination and in conjunction and in the course of their business where the principal supply is supply of goods. Therefore, the instant supply squarely falls under the definition of composite supply . Thus we find that there is a composite supply in the subject case since in the subject case there is no building, construction, fabrication, completion, erection etc of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of the contract - Besides, as per Para 1(c) of Schedule II of the CGST/OGST Act, any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods and not a service. Whether the supply of the applicant falls under the supply of works contract service ? - HELD THAT:- The salient features of the agreement indicate that the obligation on the applicant is in relation to the effective installation and functioning of the goods supplied by them and thereafter, they would undertake the activities of operation and maintenance of the same. The contract governing their supplies does not relate to building, construction, and fabrication etc. of any immovable properties, as envisaged in the definition of works contract . Their supplies are in the nature of movable property i.e. supply of goods which involves ancillary services such as installation, commissioning etc. All these services which are supplied to the clients are nothing but ancillary activities with the main activities of supply of goods. The primary activity of the applicant is therefore, supply of goods and not supply of services . Further, the said activity performed by the applicant is not related to the immovable property at any point of the time and hence the said activity does not qualify to be a works contract . Whether GST is liable to be paid under Entry 3(vi) of Notification No. 11/2017-CT (Rate) dated 28 June 2017 (as amended) on the supply and installation activities along with operation and maintenance activities to be undertaken by the Applicant? - HELD THAT:- The provisions of Notification No. 11/2017-CT (Rate) dated 28 June 2017 (as amended) are not applicable to the noticee s case. The principal supply as mentioned above in this case is a supply of goods and therefore the GST will have to be paid on the goods at the appropriate rate after classification under the appropriate heading. Whether in facts and circumstances of the case, the capital subsidy received/ receivable by the applicant for the subject transaction be liable to be included in the Transaction Value for the purpose of calculation of GST payable in terms of Section 15 of the CGST Act, 2017? - HELD THAT:- In view of Section 15(2)(e) of the CGST Act, the value of supply shall include subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. On perusal of the agreement/contract, we see that the capital subsidy received/ receivable by the applicant in the instant case is the actual cost incurred by the project SPV (the applicant in the instant case) in the project as approved by the Authority ULBs. It is not a subsidy which generally means grant/grant-in-aid or a benefit given to an individual, business or institution, usually by the government. It is also not a subsidy which typically given to remove some type of burden and to promote a social good or an economic policy for overall interest of the public. The so called capital subsidy cannot be a subsidy by any stretch of the imagination, rather the same is a consideration as defined in Section 2(31) of the CGST Act in relation to the supply of goods and therefore, the said capital subsidy shall certainly be liable to be included in the Transaction Value for the purpose of calculation of GST.

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• 2021 (1) TMI 1098
  Levy of GST - Capital Subsidy (90 per cent of Project Capital Expenditure) received by the Applicant as per SIOM Agreement and Escrow Agreement from Odisha Government /ULBs for the Green Field Public Street Lighting System in the State of Odisha - composite supply or not - balance 10% of the Project Capital Expenditure and O M Fees received as Annuity Fee over the period of 7 years by the Applicant as per SIOM Agreement considering the Si. No. 3(vi) of the notification No. 11/2017 Central Tax (Rate), dt. 28-06-2017 as amended by Notification No. 31/2017 Central Tax (Rate), dt. 13-10-2017 and corresponding notifications of Odisha State Tax Rate as amended - time for raising GST Invoices for Capital Subsidy and Annuity Fee (consisting of 10% of Project Capital Expenditure and O M Fee) payable in 7 years - rate of tax on the supplies by the sub-contractor to the Applicant shall be 12 % GST in terms of serial no. 3 (ix) of Notification No.11/2017-Central Tax(Rate) dated 28.6.2017 as amended by Notification No.1/2018-Central Tax (Rate) dated 25.01.2018/ Odisha State Tax (Rate) dated 28.06.2017 as amended. Whether in the present case, the supply being undertaken or proposed to be undertaken by the applicant would qualify to be a supply of composite supply or works contract ? - HELD THAT:- On perusal of the SIOM agreement (supply, installation, operation and maintenance) Equipment Price Schedule for Cluster C, we see that the contract value for cluster C (urban Local Bodies in Balasore, Bhadrak, Jajpur, Baripada) is ₹ 42.35cr and the contract pricing is different for Equipment of Materials and O M Fee (operation and maintenance fee). Out of ₹ 42.35 cr, the price of Equipments is ₹ 38.23 Cr and the price for O M Fee is ₹ 4.12Cr only. Thus the contract price has clearly bifurcated the contract into a supply of goods and supply of services. Further clause No. 13 of the agreement deals with TERMS OF PAYMENTS. The said clause of the agreement envisages that separate payment for capital subsidy O M Fee. There appears to be a clear bifurcation in the agreement with respect to price of Equipments and O M Fees - the agreement that the contract is considering a clear demarcation of goods and services to be provided by the applicant but the supplies are naturally bundled and in conjunction with each other. It is found that in the agreement submitted by the applicant, the major part of the contract is supply of goods. The price of these goods supplied to the client by the applicant constitutes 90.23% of total contract price. Further we find that the goods that are supplied are used by the applicant to provide services like installation, commissioning and maintenance etc. Without these goods the services cannot be supplied by the applicant and therefore we find that the goods and services are supplied as a combination and in conjunction and in the course of their business where the principal supply is supply of goods. Therefore, the instant supply squarely falls under the definition of composite supply where the principal supply is supply of goods - here is a composite supply in the subject case since in the subject case there is no building, construction, fabrication, completion, erection etc of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of the contract - Besides, as per para 1(c) of Schedule II of the CGST/OGST Act, any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods and not a service. Whether the supply of the applicant falls under the supply of works contract service ? - HELD THAT:- The salient features of the agreement indicate that the obligation on the applicant is in relation to the effective installation and functioning of the goods supplied by them and thereafter, they would undertake the activities of operation and maintenance of the same. The contract governing their supplies does not relate to building, construction, and fabrication etc. of any immovable properties, as envisaged in the definition of works contract . Their supplies are in the nature of movable property i.e. supply of goods which involves ancillary services such as installation, commissioning etc. All these services which are supplied to the clients are nothing but ancillary activities with the main activities of supply of goods. The primary activity of the applicant is therefore, supply of goods and not supply of services . Further, the activity performed by the applicant is not related to the immovable property at any point of the time and hence the said activity does not qualify to be a works contract . Whether Capital Subsidy (90 per cent of Project Capital Expenditure) received by the Applicant as per SIOM Agreement and Escrow Agreement from Odisha Government / ULBs for the Green Field Public Street Lighting System in the State of Odisha is not liable to GST and if liable to GST, then at what rate of GST? - HELD THAT:- In view of Section 15 (2)(e) of the CGST Act, the value of supply shall include subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. On perusal of the agreement/contract, we see that the capital subsidy received/ receivable by the applicant in the instant case is the actual cost incurred by the project SPV (the applicant in the instant case) in the project as approved by the Authority ULBs. It is not a subsidy which generally means grant/grant-in-aid or a benefit given to an individual, business or institution, usually by the government. It is also not a subsidy which typically given to remove some type of burden and to promote a social good or an economic policy for overall interest of the public. The so called capital subsidy cannot be a subsidy by any stretch of the imagination, rather the same is a consideration as defined in Section 2(31) of the CGST Act in relation to the supply of goods and therefore, the said capital subsidy shall certainly be liable to be included in the Transaction Value for the purpose of calculation of GST. We are of the considered view that the applicant is liable to pay GST on Capital Subsidy ( 90% of the total capital expenditure). What shall be the GST rate for the balance 10% of the Project Capital Expenditure and O M Fees received as Annuity Fee over the period of 7 years by the Applicant as per SIOM Agreement considering the Sl. No. 3 (vi) of the notification No. 11/2017 Central Tax (Rate), dt. 28-06-2017 as amended by Notification No. 31/2017 Central Tax (Rate), dt. 13-10-2017 and corresponding notifications of Odisha State Tax Rate as amended ? - HELD THAT:- The supply being undertaken or proposed to be undertaken by the applicant would qualify to be a supply of composite supply in terms of definition under Section 2(119) of the Central Goods and Services Tax Act, 2017, where the principal supply is supply of goods not supply of service . Therefore, question of the applicability of concessional rate of tax in terms of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 and as amended does not arise. The GST will have to be paid on the goods at the appropriate rate after classification under the appropriate heading. What shall be the time for raising GST Invoices for Capital Subsidy and Annuity Fee (consisting of 10% of Project Capital Expenditure and O M Fee) payable in 7 years? - HELD THAT:- Since in the subject case there is a composite supply where the predominant supply/principal supply is supply of goods , we are of the opinion that the applicant should raise invoice as per the provisions of Section 31 of the CGST Act, 2017.

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• 2021 (1) TMI 1097
  Classification of supply of service - activity of bullet proof body building (in addition to fixing bullet proof windshield glass, bullet proofing of engine and fuel tank on the motor vehicles (2.5 Ton capacity) having Tarpaulin cover in the cargo compartment - whether classified under head 9988 (ic) or 9988 (id) of the GST tariff or not? - Since the applicant has already charged IGST @ 28% by classifying the supply as supply of goods under GST tariff for goods heading 8707, whether the customer should claim the refund from the department or the applicant should lodge the claim the refund, in the event of the above classification being upheld by the AAR? - HELD THAT:- The applicant is engaged in the manufacture of Bullet proof glass, bullet proof Vehicles, Lectern etc. in their factory. Besides, applicant is also undertaking armouring by body building on the chassis of vehicles supplied by the customers mainly the army/ police etc. using bullet proof steel and glass. Vehicles of 2.5 Ton or higher capacity owned by the customer (army/police) are supplied to the applicant and these vehicles have either metal (partial or full) or partially metal and partially Tarpaulin covered cargo compartments. The applicant for the purpose of bullet proofing of these vehicles, first of all removes the existing metal/ tarpaulin cover on the rear cargo compartment making the cargo compartment completely naked so to say except the flooring part. At this stage the vehicle resembles a chassis virtually and for all practical purposes so that the body can be built on the cargo portion as per the specific requirement of the customer with bullet proof steel, glass, and other fixtures to stack the weapons, seating for the personnel to be carried, providing firing ports, turrets etc. On the driver cabin, bullet proof windshield with bullet proof steel frame is fixed, driver cabin doors are fixed with bullet proof glass and bullet proof steel sheets on existing front body. In addition, bullet proofing of the engine compartment and fuel tank are also to be done. In view of Circular bearing No. 52/26/2018-GST, dated 09.08.2018, it is concluded and clear that the activity of job work consisting of fabrication including of bullet proof work done on chassis provided by the Principal (ownership of which always remains with Principal) is a supply of Service attracting GST @ 18%. Refund claim - HELD THAT:- Further it is observed that as per Section 97 (2) of CGST Act, 2017, Advance Ruling can be obtained only regarding taxability, classification, rate of tax, exemption notification, determination of time and value of supply, ITC and Registration etc. under GST for supply of goods and Services. Since, the applicant has sought ruling on issue of refund of tax which is outside the purview/scope of this Authority as defined under Section 97(2) of the act ibid.

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• 2021 (1) TMI 1096
  Constitutional validity of Section 16(4) of the GST Act, 2017 - Vires of Articles 14, 19(1)(g) and 300A respectively of the Constitution - HELD THAT:- Let Notice be issued to the respondents, returnable on 25th March 2021. The respondents shall be served directly through E mail. In the meantime, one set of the entire paper book be furnished to Mr. Devang Vyas, the learned Additional Solicitor General of India, who would be appearing for the respondents.

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• 2021 (1) TMI 1095
  Valuation - Independent transaction of purchase of land and construction contract for construction of bungalow on such land - Validity of Entry No.3(if) of the Notification No.11/217 -Central Tax (Rate) dated 28th June, 217 read with Para-2 of the said notification - HELD THAT:- The writ applicant has been able to make out a strong prima facie case to have an interim order in his favour in terms of para-27(F) of the writ application. We, accordingly, grant such relief. We permit the writ applicant to deposit the amount of tax as raised under the invoice without prejudice to his rights and contentions as raised in this writ application. Mr. Sheth, the advocate on record, shall furnish one set of the entire paper-book to Mr. Devang Vyas, the learned Addl. Solicitor General of India at the earliest so that he can obtain necessary instructions in the matter by the next date of hearing.

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• 2021 (1) TMI 1094
  Profiteering - benefit of input tax credit to its customers/homebuyers not passed on - Section 171 of the CGST Act and Chapter XV of the CGST Rules (more particularly, Rules 126, 127 133 of the CGST Rules) - HELD THAT:- Issue notice. Mr. Farman Ali, learned counsel for the respondent No.1 and Mr. Ravi Prakash, learned counsel for respondents No. 2 and 3 accept notice. Counter affidavits be filed within a period of two weeks. Rejoinder, if any, be filed before the next date of hearing. List along with other batch petitions on 15th February, 2021.

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• 2021 (1) TMI 1093
  Vires of Section 171 of the CGST Act, 2017 and other provisions under Chapter XV of the Act - composition of the Respondent No. 2/National Anti-Profiteering Authority under Rule 122 of the CGST Rules, 2017 - HELD THAT:- Although in the order passed in NESTLE INDIA LTD. ANR. VERSUS UNION OF INDIA ORS. [ 2020 (2) TMI 671 - DELHI HIGH COURT] the court has apparently not interdicted the suo moto investigation, but at the same time we notice that this Court has given protection to nearly all the Petitioners, faced with similar circumstances, i.e., wherever the authority has directed investigation in relation to products/services which were beyond the scope of original investigation. Therefore, we see no reason to deny the same relief to the Petitioner herein. Petitioner is therefore entitled to the interim protection, pending disposal of the present petition. Accordingly, it is directed that the directions given in the impugned order to Respondent No. 3 to investigate 14 projects of the Petitioner in the State of Haryana, shall remain stayed. It is however clarified that the investigation with respect to the Discovery Project at Faridabad shall continue in terms of the directions given in the impugned order. Issue Notice.

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• 2021 (1) TMI 1092
  Vires of Sections 69 and 132 of the Central Goods and Services Tax Act, 2017 and U.P. Goods and Services Tax Act, 2017, Section 135 of the Central Goods and Services Tax Act, 2017 and U.P. Goods and Services Tax Act, 2017 and Sections 16 (2) (c) of the Central Goods and Services Tax Act, 2017 and U.P. Goods and Services Ta Act, 2017 - HELD THAT:- Since, vires of provision of the Central Goods and Services Tax Act, 2017 and U.P. Goods and Services Tax Act, 2017 have been challenged, let issue notices be issued to Attorney General of India and the Advocate General of State of U.P. Sri Manish Kumar Niranjan, learned counsel for respondent no.1 and learned Standing Counsel for respondent no.2 pray for and are granted four weeks' time to file their respective counter affidavits. Learned counsel for the petitioner shall have one week thereafter to file rejoinder affidavit. Let this matter be listed along with Writ Tax No.688 of 2020, showing name of Sri Manish Kumar Niranjan, Advocate as counsel for the respondent no.1.

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• 2021 (1) TMI 1091
  Seizure of Goods - allegation of reuse of E-way bills - Since the e-way bills were not cancelled and the transportation of the goods commenced four days thereafter, it has been inferred that the said e-way bills had been reused - HELD THAT:- Rule 138(9) of the Rules does not prescribe that the dealer must necessarily cancel the e-way bill if no transportation of the goods is made within 24 hours of its generation. It certainly does not provide any consequence that may follow if such cancellation does not take place. On the contrary, the Rule permits a dealer to cancel the e-way bill only if the transportation does not take place and the dealer choses to cancel such e-way bill within 24 hours of its generation. Even if the dealer does not cancel the e-way bill within 24 hours of its generation, it would remain a matter of inquiry to determine on evidence whether an actual transaction had taken place or not. That would be subject to evidence received by the authority. As such it was open to the seizing authority to make all fact inquiries and ascertain on that basis whether the goods had or had not been transported pursuant to the e-way bills generated on 24.11.2019. Since the petitioner-assessee had pleaded a negative fact, the initial onus was on the assessing authority to lead positive evidence to establish that the goods had been transported on an earlier occasion. Neither any inquiry appears to have been made at that stage from the purchasing dealer or any toll plaza or other source, nor the petitioner was confronted with any adverse material as may have shifted the onus on the assessee to establish non-transportation of goods on an earlier occasion - the presumption could not be drawn on the basis of the existence of the e-way bills though there did not exist evidence of actual transaction performed and though there is no statutory presumption available. Also, there is no finding of the assessing authority to that effect only. Mere assertion made at the end of the seizure order that it was clearly established that the assessee had made double use of the e-way bills is merely a conclusion drawn bereft of material on record. It is the reason based on facts and evidence found by the assessing authority that has to be examined to test the correctness of the order and not the conclusions, recorded without any material on record. Though the petitioner-assessee has also disputed the correctness of the additional evidence, that issue is not required to be gone into in the present case - the order passed by the appeal authority is erroneous, being contrary to the provisions of law. The appeal authority had no jurisdiction to examine fresh evidence at the behest of the revenue or record fresh reasons to support original order. The proper authority, had not recorded any reason to establish evasion of tax or attempt to evade tax or even reuse of the documents by the petitioner. Though he raised that issue in the seizure proceedings, he did not record any finding that effect in the final order dated 3.12.2019 passed under Section 129(3) of the Act. He simply rejected the explanation furnished by the assessee without recording any reason and consequently imposed tax and penalty. No useful purpose would be served to remand the proceeding now as that would amount to giving the revenue a second inning to built a fresh case that too after being aware of the defense set out by the assessee in the first leg of the proceedings. The order dated 3.12.2019 passed by the proper authority under Section 129(3) of the Act is found to be perverse and is set aside - Petition allowed.

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• 2021 (1) TMI 1052
  Profiteering - Kiwi Shoe Polish Black 40 gm PSP - vires of Section 171 of the CGST Act read with Rule 126 of the CGST Rules - HELD THAT:- Mr.Ravi Prakash, learned standing counsel accepts notice on behalf of the Revenue. He prays for and is permitted to file a counter-affidavit within two weeks. Rejoinder-affidavit, if any, be filed before the next date of hearing. List on 04th January, 2021 along with connected matters.

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• Income Tax

• 2021 (1) TMI 1090
  Condone delay in fling the application for exemption u/s 10(23C)(vi) - extension of the limitation period - HELD THAT:- Neither of the two i.e. the order dated 27.09.2019 and the Circular dated 03.11.2020 deal with an application for exemption under section 10(23C)(vi) of the act in Form No.56D which has a definite time line i.e., upto 30th September of the relevant assessment year, in the instant case 30th September 2019. We do not find any provision for extending the time limit beyond 30.09.2019 though such a power is available with the CBDT. There is no provision for extension of the limitation period or for condonation of delay in fling the application for grant of exemption under section 10(23C)(vi) of the act by the CIT (Exemption) To that extent respondent No.1 was justified in rejecting the application for the assessment year 2019-20. As per the version of the respondents themselves the application for exemption of the petitioner was not confined to assessment year 2019-20 only. An application for grant of exemption from the assessment year 2019-20 onwards. While respondent No.1 was correct in rejecting the application for the assessment year 2019-20 as being time-barred, it certainly fell in error in not considering the said application for subsequent assessment years i.e. for assessment year 2020-2021 and onwards. Because even if the application was fled on 31.10.2019 which was belated for the assessment year 2019-20, it was before the prescribed date for the subsequent assessment year i.e. assessment year 2020-2021 and thereafter as it had been fled much before the cut of date of 30.09.2020. We feel that even at this stage petitioner may approach CBDT under section 119(2)(b) seeking a special order to respondent No.1 to condone the delay in fling the application for exemption under section 10(23C)(vi) of the Act for the assessment year 2019-20, there being admitted delay of 31 days in fling the application for the said assessment year, and thereafter to deal with the said application/ claim on merit in accordance with law. Since we have taken the above view, it may not be necessary to deal with the contention relating to alternative remedy. Having regard to the above and upon thorough consideration of the matter, we deem it appropriate to issue the following directions :- I) Petitioner shall file an application before the CBDT under section 119(2)(b) to authorize respondent No.1 to condone the delay in fling its application dated 31.10.2019 for exemption under section 10(23C)(vi) of the act, for the assessment year 2019-20 and to deal with the same on merit in accordance with law ; II) If such application is fled by the petitioner within a period of three weeks from today, CBDT shall pass an appropriate order in accordance with law within a period of four weeks thereafter with due intimation to the petitioner; III) Respondent No.1 shall consider the application of the petitioner dated 31.10.2019 for grant of exemption under section 10(23C)(vi) of the act for the assessment year 2020-21 onwards in accordance with law within a period of eight weeks from the date of receipt of a copy of this order;

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• 2021 (1) TMI 1089
  RTI Application seeking information against Private Parties - Allegation of tax evasion - Public interest - Single Judge held that Petitioner is not entitled to get the information in the form of his Income Tax Returns, Status of Agriculturists, disclosure as Business Income or not etc. and from the concerned Authorities of the Income Tax Department under provisions of the RTI Act with respect to private Respondent with whom the present Petitioner has some litigation with regard to the land in question, which the Petitioner claims to have purchased and was again sold by the same Seller in favour of private Respondents also who claimed to be the Agriculturists under a Will - HELD THAT:- We are satisfied that the order of the learned Single Judge does not require any interference in the present intra Court appeal and the same being without merit deserves to be dismissed. The Applicant - Petitioner in the present case firstly sought to emphasise that Section 6(2) of the RTI Act does not require any reasons to be given in the Application requesting for the information except those that may be available with him and necessary for contacting him. This, in the submission of the learned counsel for the Applicant - Petitioner, gives a larger latitude and platform to the Applicant under the said Act. The procedure for disposal of such request and application provided in Section 7 of the RTI Act, while the other provisions of remedial nature for further appeal, etc. are contained in Chapter 5 containing Sections 18 to 20 of the RTI Act. The overriding factor which enables such information to be disclosed notwithstanding the exemption under Section 8 of the RTI Act appears to be larger public interest in such disclosure of information. The tenor of the application filed by the Applicant shows it is in the nature of a complaint against the private Respondents to the Income Tax Department, rather than any bona fide public interest sought to be served by the disclosure of such information about the status of the private Respondents as agriculturists or not, whether their right to get such status by way of a Will executed by a Testator is sustainable in law or not, etc. Such personal or private information about the Assessees under the Income Tax Act are only meant to be dealt with, investigated, inquired or contested by the Assessees concerned before the Income Tax Authorities and they are not the 'information' in public domain to be made available to any third party The only interest of the Petitioner who has been fighting against these private Respondents at all possible forums including the RTI Act and criminal complaints appears to be the only private interest and the name of a public interest is just a ruse or excuse given to the public authorities calling upon them to disclose such 'information' to the Petitioner - Applicant. The provisions of the RTI Act are not meant to allow the parties to collect evidence from such Departments or Public Authorities to sub serve their private interest The sanctity of the Income Tax Assessment, filing of Returns, investigation and inquiry under the Act would be thrown open to third parties, if such 'information' was to be disclosed to third parties casually or carelessly. On the other hand, the Act provides for keeping such information guarded in confidence with the Authorities. Therefore, the bar under Section 138 of the RTI Act as well as the exemption against such disclosure contained in Section 8 of the RTI Act, more particularly under Section 8(1)(j) of the RTI Act, completely seals the fate of the Applicant - Petitioner in the present case. The learned Single Judge, in our opinion, was absolutely correct and justified in dismissing the writ petition at the threshold.

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• 2021 (1) TMI 1088
  Refunds claim along with interest accrued thereon u/s 244A - what remedies are available under the Act in respect of an error committed by the Tax Authority in calculating the refund? - statutory alternate remedy - HELD THAT:- Learned counsel for the petitioner is unable to point out any specific provision and submits that these remedies lie before this Court. We would not like to be drawn into the factual controversy. Particularly, since there is a dispute regarding the computation of refund amount, a mandamus, as prayed for, cannot be issued to the respondents. In our view the Income tax Act not only creates rights and liabilities, but also provides for a complete machinery for enforcing the same, as well as a mechanism to challenge the orders of the Revenue authorities. Thus, the Petitioner must only avail the remedy as provided for by the statute. The fact that we have a wide jurisdiction under Article 226 of the Constitution does not mean that we can disregard the substantive provisions of the statute and the mechanism provided thereunder. We are thus inclined to dispose of the present petition, observing that the petitioner shall be free to pursue its departmental/statutory remedy as available in law with respect to any grievance regarding the calculation of refund made by the respondents.

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• 2021 (1) TMI 1087
  Deduction u/s 80(P)(2)(a)(i) - AO disallowed the claims of the assessee on the ground that the assessees had lent monies to the members who were undertaking non-agricultural/ non-farm activities and had received the interest on par with commercial banks - HELD THAT:- As decided in own case [ 2016 (8) TMI 560 - MADRAS HIGH COURT] CIT (Appeal) and the Income Tax Appellate Tribunal has clearly held that the assessees are not co-operative bank and that their activities in the nature of accepting deposits, advancing loans etc., carried on by the assessees are confined to its members only and that too in a particular geographical area. Therefore, the respondent Societies are eligible for deduction under Section 80P (2) (a) (i) of the Act.. The contention of the appellants that the members of the assessee societies are not entitled to receive any dividend or having any voting right or no right to participate in the general administration or to attend any meeting etc., because they are admitted as associate members for availing loan only and was also charging a higher rate of interest at the rate of 14%, is not a ground to deny the exemption granted under Section 80P (2)(a) (i) of the Act. - Decided against the Revenue.

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• 2021 (1) TMI 1086
  Rectification of mistake - Gain on sale of property - Business income or capital gain - whether the Revenue authorities were justified in treating the gain on sale of properties by the assessee which was considered by the Assessee as a long term capital gain, as giving rise to business income/short term capital gain? - HELD THAT:- Tribunal has not adjudicated the main grievance of the assessee regarding conclusions of the AO that the gain on sale of property was short term capital gain and has adjudicated on the issue whether the income in question give raise to capital gain or business income. The findings of the AO are contradictory as already pointed out above and the CIT(A) has also not rendered any clear finding on the issue. In these circumstances, we are of the view that the order of the Tribunal suffers from mistake apparent from the face of the record in as much as ground No.5 and 6 raised by the Assessee remains undecided. Hence, the proper course would be to recall the entire order rather than deciding the other grounds as these grounds are interconnected or interlinked. The order of the Tribunal is recalled and registry is directed to fix the appeal for hearing afresh in due course after notice to parties. Assessee s Miscellaneous Petition is allowed.

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• 2021 (1) TMI 1085
  Determination of long term capital gain from sale of land - taking jantri value at ₹ 618/- - valuation of the property for the purpose of section 50C - which rate is to be deemed as full consideration for the sale of this property for purpose of section 48? - HELD THAT:- In the present case, the payments have been made through account payee cheque, and time gap between the presentation of the sale deed for registration vis- -vis revision of rates for the purpose of charging higher stamp duty is not substantive and considerable. The sale deed was presented on 24.5.2011 where as the rates were revised on 18.4.2011. The time gap between the agreement vis- -vis sale deed is also not substantive. Agreement is dated 31.12.2010 and sale deed was presented for registration on 24.5.2011. Considering this hardship for the vendors, section 50C was amended and second proviso has been brought on the statute book, which authorized an assessee to argue that where the amount of consideration or part thereof has been received by way of account payee cheque, then the appointing day for the purpose of valuation of the property for the purpose of section 50C is to be taken the date of agreement. This proviso has been held to be applicable with retrospective effect by case of Dharamshibhai Sonani [ 2016 (9) TMI 1259 - ITAT AHMEDABAD ] Assessee has submitted before the ld.CIT(A) that simultaneous sale deed was registered on survey no.932, 951, 899 and 894 where stamp duty valuation authority has also accepted the rate at ₹ 200/- per sq.meter and the sale agreement were entered on 30.12.2010. We are satisfied that for the purpose of computation of long term capital gain on sale of land, the value shown by the assessee at the rate of ₹ 200/- per sq.meter is to be adopted. We accordingly direct the AO to take value disclosed at the rate of ₹ 200/- per sq.meter, and thereafter calculate the long term/short term capital gain, if any, leviable in the hands of the assessee. First ground of appeal is accordingly allowed. Disallowance expenditure on account of banakhat agreement, land leveling and its fencing on the ground that the same are excessive - HELD THAT:- We find that disallowance of expenditure in respect of land leveling, fencing and banakhat expenses totaling to ₹ 37,55,750/- a meager amount of ₹ 34,567/- has been allowed by the Revenue, without any realistic consideration. Even before making such disallowance no explanation was called for by the Revenue, and the assessee was not given any opportunity to furnish the details of the expenses. It is not the case of the Revenue that the expenses incurred by the assessee were not related to the land or the expenses incurred for any other purposes, as he has not called for any details from the assessee. It seems that the disallowance has been made simply on the basis of some surmises that the assessee fabricated the expenses to reduce the tax effect, such assumption of the AO is not tenable. We, therefore, in the interest of justice and fair play remit the issue of disallowance back to the file of the AO for re-adjudication and to decide the issue on the basis of details furnished/to be furnished by the assessee.

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• 2021 (1) TMI 1084
  Disallowance of 30% deduction for repairs u/s 24 - rental income received by the appellant by holding that the relevant income was service charges and not rent - HELD THAT:- The issue under consideration in respect of the disallowance pertaining to income from house property is identical to earlier Assessment Years and there being no change in facts and circumstances, we see no reason to uphold the disallowance as upheld by the Ld. CIT (A). We also note that the identical issue was decided in favour of the assessee and against the Revenue in earlier orders of the Tribunal for Assessment Years 2001-02, 2002-03 2003-04. The copies of all these orders have been placed before us and no contrary material or any higher Court s orders have been placed on record to show that such earlier orders of the Tribunal have been reversed by any higher forum. Therefore, following the precedents as citied above in assessee s own case, we set aside the order of the Ld. CIT (A) on the issue and direct the deletion of disallowance. Disallowance of legal and professional fees - HELD THAT:- As following the order of the Tribunal in earlier assessment years as aforesaid in assessee s own case and on identical facts [ 2015 (8) TMI 38 - ITAT DELHI] , and [ 2010 (8) TMI 972 - ITAT DELHI] we set aside the order of the Ld. CIT (A) on the issue of disallowance of legal and professional charges and direct the deletion of the same. Disallowance of depreciation - HELD THAT:- The issue has been decided in favour of the assessee right from Assessment Years 2001-02 to Assessment Years 2012-13 and on this issue also there has been no reversal of the order of the Tribunal by any higher judicial forum. Thus, this issue has also attained finality. Respectfully following the same, we uphold that action of the Ld. CIT (A) in deleting this disallowance of deprecation.

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• 2021 (1) TMI 1083
  Disallowance of running and maintenance expenses of foreign office - as seen that these foreign expenses have been debited by the assessee company to the Profit Loss Account under the head manufacturing, administrative and other expenses under the sub-head miscellaneous expenditure in Schedule-13 of the audited accounts - HELD THAT:- A perusal of the assessment order passed u/s 147 of the Act shows that the Assessing Officer has based the addition merely on the reasons recorded for reopening wherein it has been stated that this expenditure was not allowable as per the provisions of the Act. How and why this expenditure was not allowable has not been specified by the AO. Before us also, the Ld. Sr. DR could not point out any perversity in the findings of the Ld. CIT (A) on the issue. This amount has been duly disclosed in the audited financial statements and no fresh material on the issue has been brought on record by the Assessing Officer. Undisputedly, the reassessment is beyond the period of four years and, therefore, it was incumbent upon the Assessing Officer to point out specifically as to how the escapement of income from tax on this issue could be attributed to any fault on the part of the assessee. Therefore, in view of the categorical findings recorded by the Ld. CIT (A) that no adverse inference was drawn by the Assessing Officer and that the payment was duly supported and evidenced by documentary evidences and that the genuineness of expenditure incurred was not doubted by the AO. Addition pertaining to quota expenses - the quota was allotted on year to year basis and, therefore, it had no enduring benefit - HELD THAT:- In the Assessment Order passed u/s 147 of the Act, the Assessing Officer has not pointed out any reason for treating this expenditure as capital expenditure but has only as referred to the reasons recorded for reopening and has disallowed the same. Even the Ld. SR. DR could not point out any perversity in the findings of the Ld. CIT (A) on the issue - CIT (A) has also placed reliance on case of M.S. Kandappa Mudaliar vs. CIT [ 1957 (3) TMI 62 - MADRAS HIGH COURT ] wherein it was held that the expenditure for acquisition of quota rights is not a capital expenditure. Therefore, on this issue also, the contention of the Department fails and the order of the Ld. CIT (A) is upheld. Addition on account of advance recoverable by way of income from financial transactions - CIT (A) has noted that the amount debited to income from financial transactions receivable was in respect of income already credited under the head income from financial transactions - HELD THAT:- CIT (A), while deleting the disallowances, has noted that this was a case of double taxation of income as the same was already part of the profit shown by the assessee in its income tax return and was again added back in the order passed in reassessment proceedings. The Ld. Sr. DR could not point out any perversity in the finding of the Ld. CIT (A) that this amount had come to be taxed twice. Accordingly, on this issue also we find that there is no reason to interfere with the findings of the Ld. CIT (A) and we uphold the same. Appeal of the Department stand dismissed.

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• 2021 (1) TMI 1082
  Agricultural income - Nature of land - income earned on leasing out agricultural land is agricultural income or not? - HELD THAT:- The undisputed facts of the case are that the assessee is the owner of agricultural land of 20 acres and 10 guntas. The Khasra Pahani also shows that these lands are agricultural lands and that the crop grown thereon is Mango. Therefore, these lands being agricultural land is not in dispute. In addition to these lands, the assessee has taken on lease agricultural lands in Ranga Reddy and Nalgonda Districts from two other persons. These lands also being agricultural lands is not in dispute Whether the agricultural operations have been carried on by the assessee in these lands? - As regards the agricultural operations carried on by Adisa Agro (P) Ltd during the relevant period is concerned, there is no information available on record nor is there any dispute raised by the authorities below, except for a finding by the CIT (A) that there is no evidence on record to state that the company had actually utilized the land wholly and exclusively for the purpose of cultivating on its own rather than sub-leasing it to outside parties. Therefore, no presumption can be drawn about the agricultural operations being or not being carried out by the company. Fact remains that assessee has earned lease rent income by leasing out the agricultural land. Whether such income is eligible to be taken as agricultural income is the question before the Tribunal. The term agricultural income has been defined u/s 2(1A) of the I.T Act and for the purpose of ready reference. From the lease deed, it is seen that the assessee had carried on agricultural operations during the previous year i.e. 2013-14 relevant to the A.Y 2014-15 and thereafter, the assessee has leased out this land to Adisa Agro (P) Ltd on 30.09.2013 i.e. during the previous year 2014-15 relevant to the A.Y 2015-16. Therefore, the assessee had carried on agricultural operations during the previous year 2013-14 and subsequently such agricultural land has been given on lease to a company which is also engaged in carrying on agricultural operations. The finding of the CIT (A) is that the crops grown are commercial in nature. The definition of Agricultural Income does not limit its application to any particular crops/produce. The only requirement is that the basic agricultural operations are to be carried out. The nature of the crop being commercial in nature will not therefore, disentitle the assessee from claiming the income as agricultural income . Thus, the finding of the CIT (A) that the assessee s intention of taking the agricultural lands on lease is to exploit them commercially is not sustainable to disentitle the assessee from making the claim of agricultural income. Having gone through the decisions relied by the learned CIT (A), that they are all are distinguishable from the facts of the case before the Tribunal and therefore, are not applicable. We set aside the order of the AO and direct him to treat the lease rent received by the assessee from Adisa Agro (P) Ltd for use of the agricultural land as agricultural income. - Decided in favour of assessee.

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• 2021 (1) TMI 1081
  Deduction u/s 80IA - Treatment to carbon credit receipt - revenue or capital receipts - income from generation of electricity and the carbon credit earned by the assessee are totally separate and the source of the income is also separate - assessee is not entitled for deduction in respect of the carbon credit - HELD THAT:- Assessee while preferring appeal before the CIT(A), has specifically raised a contention that the receipts from sale of carbon credit is a capital receipt and cannot be included in the taxable income. Though this ground raised by the assessee before the CIT(A) has been recorded in the order, the CIT(A) did not take a decision on the same. Similar ground was raised by the assessee before the Tribunal, which was not considered by the Tribunal, though the Tribunal refers to all the decisions relied on by the assessee, but would pin the assessee to his claim made under Section 80IA of the Act and accordingly, negatives it. This finding of the Tribunal is wholly erroneous and perverse. Tribunal was expected to apply the law and take a decision in the matter and if the CIT(A) or the Assessing Officer had failed to apply the law, then the Tribunal was bound to apply the law. This is so because, in the light of the decisions referred above, the receipt by way of sale of carbon credit has been held to be capital receipt. Therefore, it is of a little consequence as to the claim made by the assessee under Section 80IA of the Act or in other words, the question of taking a decision as to whether the deduction is admissible under Section 80IA of the Act is a non-issue. If the receipt from the sale of carbon credit is a capital receipt, then it will go out of the purview of the gross total income as defined under Section 80B(5) of the Act, which expression is found in Section 80IA of the Act. Thus, if the receipts by sale of carbon credit will not fall within the definition of total income, the same cannot be included under Section 80IA of the Act. Therefore, even if the assessee has made such a claim, that cannot be a reason for the Tribunal to non-suit the assessee. Section 115BBG of the Act was introduced by Finance Act, 2017 with effect from 01.04.2018, prior to which, there was no such provision and Mr.V.S.Jayakumar, learned counsel for the assessee would submit that the assessees were under utter confusion as to under which provision of the Act, they should make a claim for deduction and having left with no other option, had been making the claim under Section 80IA of the Act and merely because the assessee due to uncertainty in the legal position, had made a claim under Section 80IA of the Act that cannot be a reason to deny a benefit granted in favour of the assessee. The submission, made by Mr.V.S.Jayakumar, learned counsel for the appellant, in this regard, is well found and accepted. - Decided in favour of assessee. Disallowance of interest u/s 36(1)(iii) - AO held that the assessee, having provided interest free loans to subsidiary companies and obtained cash credits from two companies, had diverted the business loan for non-business purpose and proportionate disallowance of interest at 12% was calculated and added back to the income of the assessee - HELD THAT:- Tribunal had remanded the matter to the Assessing Officer for fresh consideration and on such remission, the Assessing Officer has allowed the relief on the ground that the assessee has adequate interest free funds to advance amounts to sister concerns. In the light of the same it is held that it is not necessary for the this Court to decide substantial question of law no.3, as relief has already been granted to the assessee. Disallowance u/s 14A - assessee had invested a sum of ₹ 9 Crores in the subsidiary companies and it had not claimed any expenditure - HELD THAT:- we find that this issue has not been adjudicated in the manner, in which, it is required to be done. The Tribunal, while remanding the issue with regard to interest disallowance under Section 36(1)(iii) of the Act, ought to have remanded the issue with regard to disallowance under Section 14A of the Act as well. But, however failed to do so and therefore, we are of the view that this issue needs to be remanded back to the Assessing Officer for fresh consideration. Accordingly, the finding rendered by the Tribunal with regard to the disallowance under Section 14A of the Act is set aside and the matter is remanded to the Assessing Officer for fresh consideration.

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• 2021 (1) TMI 1080
  TDS u/s 195 - foreign commission expenses - failure to deduct tax at source on remittance of commission - chargeability of Income u/s 9 of Income Tax Act, 1961 in the hands of the non- resident/foreign company - CIT-A deleted the addition while holding that service rendered by foreign company towards sales promotions, procurement of export orders etc. were not covered within the ambit of fees for technical services u/s 9 or 195 - HELD THAT:- As relying on case of DIT vs. Panalfa Autoelektrik Ltd. [ 2014 (9) TMI 706 - DELHI HIGH COURT ] when none of the services have been rendered by the foreign commission agent to the assessee in India and they have received their commission for rendering services as to procuring order from the foreign buyers/exporters, getting approval of samples of the assessee from the overseas buyers, negotiating orders on behalf of the assessee with the foreign buyers including negotiating rates of the assessee, helping the buyers to receive the goods from the assessee and reconciling the quantities and rates with invoices and packing list etc. and that foreign agents who have received the commission have been working for the assessee for the past many years and if at all foreign agents are liable for making payment of income-tax, they are liable to pay the same in their own countries where they are working for gains and earned their income by way of commission from the assessee. As relying on assessee's own case [ 2019 (5) TMI 1602 - ITAT DELHI ] we are of the considered view that ld. CIT (A) has rightly deleted the addition made by the AO u/s 40(a)(ia) of the Act treating the same being not covered under the ambit of fee for technical services u/s 9 or 195 of the Act. - Decided in favour of assessee.

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• 2021 (1) TMI 1079
  Unexplained jewelery - Search and seizure operations u/s 132 - gold ornaments weighing 7442.30 grams was found, which included bullion of 1500 grams - HELD THAT:- Since there was variation between the copy of stock register taken during the course of search and the copy submitted during the course of search, the AO has rejected the above said explanations. In our view, before rejecting the explanations of the assessee, the AO should have conducted necessary with regard to the veracity of the suspected entries made in the stock register. However, the AO did not conduct any enquiry to find out the veracity of alleged modifications made in the stock register. Accordingly, we are of the view that the AO was not justified in making this addition and the Ld CIT(A) was also not justified in confirming the same. If the stock register of M/s B B Jewellers and Finance Ltd has been accepted in its assessment by the concerned assessing officer and further, in the absence of any other credible material to support the view of the AO, we are of the opinion that there is no reason to take a different view in the hands of the assessee. Since this fact requires verification, we restore this issue to the file of the AO for the limited purpose of examining the view taken by the AO in the hands of M/s B B Jewellers and Finance Ltd. If the AO of the above said company has accepted the stock register, then we direct that the present addition should be deleted. Addition relating to 2668.390 grams of jewellery found during the course of search - assessee explained that they belong to his wife Smt. Teena Bethala and they were purchased in 2004 - HELD THAT:- In the instant case, the jewelleries have been found during the course of search. Hence it cannot be considered as a case of accommodation entry, as presumed by the AO. In any case, as rightly pointed out by Ld A.R, the AO has entertained this presumption only on surmises and conjectures. The evidence furnished by the assessee proves the factum of purchase of jewellery. Absence of description of jewelleries, in our view, cannot be ground to suspect the nature of transaction, since the bill could have been prepared on the basis of understanding of the parties and further other factors support the genuineness of the transactions. We notice that the AO has not conducted any enquiry with Smt Teena Bethala and hence he could not have drawn any conclusion on the basis of return of income filed by her. AO has not brought on record any credible material to disprove the explanations of the assessee and accordingly we are of the view that this addition could not be made in the hands of the assessee. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this addition Addition relating to 2308 grams relating to undisclosed investment in jewellery - assessee submitted that these jewelleries belong to various members of the family - HELD THAT:- When the assessee, his parents and brother are living in joint family, in our view, the credit should be given for all the members of the joint family. CIT(A) should have given credit for all the family members (including parents and brother s family) as per the CBDT instructions. Accordingly, we direct the AO to give credit for the parents and family members of assessee s brother also. In case, any jewellery still remains, the AO may consider giving further credit on the basis of family status of the assessee. With these directions, we modify the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO to follow the discussions made supra.

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• 2021 (1) TMI 1078
  Addition u/s 68 - share premium received - HELD THAT:- The assessee justified the share premium by referring to the turnover of the assessee company and the profit declared. The AO has not stated the reason as to why he is of the opinion that the share premium charge is excessive. We are of the considered opinion that the assessee has proved the identity and creditworthiness of the creditors as well as the genuineness of the transaction. Moreover, the Tribunal has held that no addition can be made of share premium only, in the case of M/s. Gateway Enclave Pvt. Ltd. [ 2019 (5) TMI 419 - ITAT KOLKATA] and in the case of M/s. Savera Towers Pvt. Ltd. [ 2019 (5) TMI 419 - ITAT KOLKATA] . Consistent with the view taken therein, we delete the addition u/s 68 of the Act and allow the appeal of the assessee.

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• 2021 (1) TMI 1077
  Entitled to deduction u/s 80P - Denial of deduction as assessee had not fulfilled the primary object of a Primary Agricultural Credit Society in so far as it was not providing financial accommodation to its members for agricultural purposes or for purposes connected with agricultural activities - HELD THAT:- A perusal of the decision of the Hon'ble Supreme Court in the case of The Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] clearly shows that the Hon'ble Supreme Court has set aside the decision of the Full Bench of the Hon'ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. [ 2019 (3) TMI 1580 - KERALA HIGH COURT] . The Hon'ble Supreme Court has also further explained the decision in the case of Citizen Co-operative Society Ltd. [ 2017 (8) TMI 536 - SUPREME COURT] in so far as the deduction that is given without any reference to any restriction or limitation cannot be restricted or limited by implication. In the circumstances in respectful obedience to the principles laid down by the Hon'ble Supreme Court in the case of The Mavilayi Service Co-operative Bank Ltd.[ 2021 (1) TMI 488 - SUPREME COURT] the AO is directed to grant the assessee the benefit of deduction under Section 80P as claimed. Appeal filed by the assessee is allowed.

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• 2021 (1) TMI 1076
  Exemption u/s 11 - Registration u/s.12AA denied - registration granted already earlier was cancelled by order dated 04.05.2012 and the same is pending before ITAT and also the commercial receipts of the assessee for this period exceeding 25% of the total receipts of the said period and the activity of the assessee is of not charitable activity - HELD THAT:- We find that the cancellation order passed by the Ld. CCIT(OSD) has been cancelled by Hon'ble ITAT [ 2020 (3) TMI 1018 - ITAT VISAKHAPATNAM ] wherein the Hon'ble ITAT categorically gave a finding that there is no material to say that the assessee is carrying the activities not in accordance with the objects or the activities of the assessee are not genuine. The Ld. CCIT has cancelled the registration on presumptions and assumptions without having proper material. The objects of the assessee are one and the same and there is no material before us to say that the assessee is carrying on its activities contrary to the objects and the activities are not genuine. The Department has not placed any material before us that the objects and activities are not genuine. Therefore, we are of the opinion that the Ld. CIT(Exemptions) is not correct in rejecting the registration applied by the assessee u/s. 12AA of the Act. Thus, we are of the considered opinion that the assessee is entitled for registration u/s. 12AA of the Act. Accordingly, we grant the registration to the assessee u/s. 12AA of the Act - Decided in favour of assessee.

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• 2021 (1) TMI 1075
  Transfer pricing adjustment made in respect of back office support services (ITES services) - Comparable selection - HELD THAT:- We direct exclusion of M/s. E-Clerx Services Ltd., ICRA online Ltd. and Infosys BPO Ltd. as functionally dissimilar with that of assessee. The ALP of the international transactions shall be computed afresh accordingly TP adjustment made in respect of distribution segment - Selection of MAM - HELD THAT:- As neither the TPO nor the Ld DRP has examined the T.P study of the assessee made by adopting Resale Price Method. Further, as noticed earlier, the TPO was under erroneous belief that the assessee has adopted TNM method for its distribution segment also, which is patently wrong. It is well settled principle that the TPO has to give cogent reason as to why the method selected by the assessee is not an appropriate method in the facts and circumstances of the case, before discarding it. Since the TPO had misdirected himself, there was no occasion for him to examine the Resale price method adopted by the assessee - entire issue relating to Transfer pricing adjustment made in respect of Distribution Segment needs to be examined afresh by duly considering the Transfer Pricing study conducted by the assessee. Computation of deduction u/s 10A - Assessee claimed deduction u/s 10A of the Act without adjusting loss from other units - AO adjusted business losses of other units against the profits of Coimbatore unit and accordingly allowed deduction u/s 10A - HELD THAT:- We set aside the order passed by the AO on this issue and direct him to compute the deduction u/s 10A without adjusting losses as held in M/S YOKOGAWA INDIA LTD. [ 2016 (12) TMI 881 - SUPREME COURT] .

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• 2021 (1) TMI 1074
  Assessment u/s 153C or u/s 143(3) - HELD THAT:- When revenue has not challenged the order of the learned CIT A on identical facts and circumstances in case of other assessee of the same group, the revenue cannot say that the order of the learned CIT A is incorrect as it has already accepted by the revenue is correct by not filing an appeal before the coordinate bench. See PRAKASH SACHDEVA [ 2014 (9) TMI 1224 - ITAT DELHI] Ground of the appeal of the assessee contesting that the assessment order made by the assessing officer was bad in law and void ab initio on the ground that it was to have been made u/s 153C of the income tax act and not, as was u/s 143 (3)/147 of the income tax act 1961 is allowed.

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• 2021 (1) TMI 1073
  Deduction u/s. 80IAB - assessee has claimed the said deduction on the rental income shown under the head income from house property - claim of deduction u/s. 80 IAB should not be denied as the claim is made on the rental income and not from any profits and gains of business - assessee strongly contended that the relevant factor is profit and gain should be derived from the eligible business irrespective of the head of the income - HELD THAT:- As per the scheme of the Income Tax Act the assessee has shown the rental income derived from its SEZ projects under the head income from other sources . Scheme of SEZ is governed by the provision of law contained under the SEZ 2005. Section 51 of the SEZ Act 2005 provides that the SEZ Act shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. In our considered opinion developing SEZ by itself is the business contemplated u/s. 80 IAB of the Act and the SEZ itself provides that the lease rental income generated in the hands of a developer engaged in setting up of the SEZ, is the profits and gains derived from the business of developing a SEZ. - Decided against revenue.

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• 2021 (1) TMI 1072
  Revision u/s 263 - deemed dividend u/s 2(22) - HELD THAT:- Provisions of section 2(22)(e) of the Act apply on the date of taking the loan and as mentioned elsewhere, on the date of acceptance of ICD of ₹ 50 lakhs from Eicher Ltd. Eicher Ltd was a listed company at BSE and NSE. Therefore, it can safely be concluded that on the date of the said loan, the lender company was a company in which public were substantially interested which make the transaction outside the purview of section 2(22)(e). Assessing Officer, while framing assessment u/s 143(3) of the Act has taken a possible view. Therefore, the ld. CIT cannot impose his view upon the Assessing Officer on wrong appreciation of facts. It is a settled position of law that powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. We find the Hon'ble Delhi High Court in the case of CIT Vs. Anil Kumar [ 2010 (2) TMI 75 - DELHI HIGH COURT] has held that where it was discernible from record that the A.O has applied his mind to the issue in question, the ld. CIT cannot invoke section 263 of the Act merely because he has different opinion. - Decided in favour of assessee.

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• 2021 (1) TMI 1071
  Depreciation on exchange fluctuation - assets acquired in India from the funds raised through Foreign Currency Convertible Bonds (FCCBs) in terms of section 43 (1) of the Act read with explanation 8 thereto and section 43A of the Act and section 36 (1)(iii) - HELD THAT:- Depreciation on exchange fluctuation on the assets acquired in India from the funds raised through Foreign Currency Convertible Bonds (FCCBs) in terms of section 43 (1) of the Act, in assessee s own case for the assessment years 2009-10 and 2012-13 [ 2020 (12) TMI 1190 - ITAT DELHI] and batch of appeals clearly shows that this aspect was considered in the assessment year 2009-10 and such a view was followed in the subsequent assessment years. The view taken by the Tribunal is followed in assessee s case for the assessment year 2012-13. It is, therefore, clear that the consistent view taken by the Tribunal in assessee s own case for the assessment years 2009-10 and 2012-13 goes in favour of the assessee and in the absence of any change is in the facts are in law, we find it difficult to deviate from the same or to take a different view, more particularly in view of the decision of Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] and Excel industries Ltd [ 2013 (10) TMI 324 - SUPREME COURT] in respect of taking consistent view on the same set of facts in the case of the same assessee. We hold grounds in favour of the assessee and direct the authorities to delete the addition. Adjustment to the book profits on section 115 JB on Addition made u/s 14A of the Act read with Rule 8D of the Rules - HELD THAT:- Assessee is placing reliance on the decision of the special Bench of the Tribunal in the case of ACIT vs. Vireet investments private Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] which in fact was relied upon by the Tribunal in assessee s own case for the earlier assessment years to hold that the computation under clause (f) of explanation 1 to section 115 JB (2) of the Act has to be made without resorting to the computation as contemplated under section 14A of the Act read with Rule 8D of the Rules. In view of this settled legal position, as has been followed by the Tribunal in assessee s own case for the earlier assessment years, we are of the considered opinion that the adjustment to the book profits under section 115 JB of the Act is not sustainable and the same has to be deleted. Decided in favour of the assessee.

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• 2021 (1) TMI 1070
  Unexplained Income - addition u/s 68 - Receipt of share application money from group companies - group companies invest in each other - Double additions - non compliance to Summons u/s 131 issued by the AO the directors of the assessee company and directors of all the investor companies - HELD THAT:- CIT(A) states that the directors of the appellate company complied with the summons issued u/s 131 of the Act by filling of letter dated 09.03.2015 along with details. He also records finding of facts that there are common directors and common shareholders and hence these are group companies which have invested - Assessing Officer has not considered any of these documents and that there is no adverse material with the AO, to controvert the information or document filed by the assessee. Under such circumstances, he held that money received from the shareholder companies cannot be considered as unexplained income. Most important finding of the Ld. CIT(A) is that scrutiny assessment order were passed u/s 143(3) of the Act, in respect of all the three share allottee companies. Copies of these assessment order filed before the Assessing Officer. This bench of the Tribunal as in the following cases held that no addition can be sustained u/s 68 of the Act where the assessment of the share allottee companies is completed u/s 143(3) See M/S. GOODPOINT COMMODEAL PVT. LTD. [ 2019 (6) TMI 600 - ITAT KOLKATA] and M/S. SANMIN TRADING AND HOLDING PVT. LTD. [ 2020 (11) TMI 606 - ITAT KOLKATA] In this case huge additions were made in the hands of the share allottee companies in their scrutiny assessment u/s 143(3) of the Act. Again making the addition in the case of the assessee company would tantamount to double addition. CIT(A) relied on the judgement of Gyscoal Alloys Ltd. [ 2018 (10) TMI 1725 - GUJARAT HIGH COURT] for the proposition that addition cannot be made of share capital received from group companies. We find no infirmity in the finding of the Ld. CIT(A). The Ld. DR could not point out any factual inefficiency in the order of the Ld. CIT(A). The order of the Ld. CIT(A) is in accordance with law - Decided against revenue.

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• 2021 (1) TMI 1069
  Long term capital loss/gain - loss on cancellation of flat booked - extinguishment of assessee s right in flat - treating the compensation received as income from other sources as against the same having been treated as part of the sales consideration by the assessee - HELD THAT:- Provisions of MOFA can not regulate the taxability of any income in the form of long term capital gain/loss which may raise from the cancellation of any letter of intent/agreement which is not registered. Therefore, we are inclined to hold that the assessee has rightly calculated the long term capital loss upon the cancellation of letter of intent dated 09.02.2010. We have also perused the provisions of section 2(47) clause (vi) and observed that transfer of capital asset includes transferring or enabling the enjoyment of any immovable property by way of becoming a member of or acquiring a share in a company or by way of any agreement or arrangement or in any other manner whatsoever. The case of the assessee is also squarely covered by the decision of Tribunal in the case of ACIT vs. Ashwin S. Bhalekar [ 2018 (5) TMI 1887 - ITAT MUMBAI] wherein has held that the extinguishment of assessee s right in flat in a proposed building is actually extinguishment of any right in relation to capital assets and accordingly held that the compensation receipt upon extinguishment of right which was held for more than 3 years falls under the head Capital gain under section 45 - direct the AO to allow the claim of the assessee on account of long term capital loss. - Decided in favour of assessee.

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• 2021 (1) TMI 1068
  Assessment u/s 153A - ad-hoc disallowance of various expenses - HELD THAT:- It is well settled principle of law that unless Assessing Officer makes out a case that expenditure debited to profit loss account is not genuine and which are not supported by necessary evidences, he cannot make ad-hoc disallowance on the ground that assessee has not produced necessary details and vouchers for verification. In this case, on perusal of assessment order passed by Assessing Officer, we find that Assessing Officer has failed to make out a case for ad-hoc disallowance of expenses, that too in the assessment framed u/s.153A -Considering facts and circumstances of this case and by following the decision of ITAT., Chennai in the case of M/s. Susi Auto Plaza Pvt.Ltd [ 2010 (1) TMI 975 - ITAT CHENNAI] , we are of the considered view that learned CIT(A) was right in deleting additions made towards ad-hoc disallowance of various expenses, hence we are inclined to uphold findings of learned CIT(A) and reject ground taken by Revenue Addition u/s. 40A(3) - cash payment made to M/s. Kokilam Foundations Pvt.Ltd. with whom assessee entered joint venture - HELD THAT:- We are of the considered view that transactions of investment in joint venture cannot be brought into ambit of provisions of section 40A(3) - CIT(A), after considering relevant facts and by following decision of ITAT., Chennai in the case of M/s. R.K.Powergen Pvt.Ltd.[ 2016 (6) TMI 1410 - ITAT CHENNAI] has rightly deleted additions made by AO towards disallowance of cash payment u/s. 40A(3) - No error or infirmity in the order of learned CIT(A) and hence, we are inclined to uphold the findings recorded by learned CIT(A) and reject ground taken by Revenue Addition towards profit and gains from business or profession - admission of revised statement of total income in absence of revised return - HELD THAT:- We find that restriction imposed by Hon ble Supreme Court in the case of M/s Goetz (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] is only on the Assessing Officer but not on the appellate authorities. Appellate authorities are empowered to admit any additional claim or ground, even if, such claim was not before Assessing Officer, but fact relating to such claim should be on record. In this case, facts with regard to claim of loss from business or profession was already on record and no new facts are required to be verified and hence, we are of the considered view that there is no merit in the ground taken by Revenue in light of Hon ble Supreme Court judgement in the case of M/s Goetz (India) Ltd. Vs. CIT (supra) and hence, the same is rejected. Declaration of loss from business or profession as against profit in the original return filed for relevant assessment year - CIT(A) has recorded categorical finding in light of revised profit loss account filed by assessee that after exclusion of purchase of land and stock in trade from books of account, the net profit from business or profession resulted into net loss. The facts of finding recorded by learned CIT(A) has not been controverted by Revenue with any evidences - assessee has filed necessary evidences to prove that transactions between the assessee and M/s. Kokilam Foundations Pvt. Ltd. was an investment transaction which has been regarded as purchase of land and stock in trade by inadvertent error and the same has been rectified by passing necessary entries in books of account. CIT(A) after considering relevant facts has rightly directed the Assessing Officer to consider revised statement of total income filed by assessee. No infirmity in the findings recorded by learned CIT(A) and hence, we are inclined to uphold the findings of learned CIT(A) and reject ground taken by Revenue.

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• 2021 (1) TMI 1067
  Estimation of income - bogus purchases - CIT-A restricted the addition to 17% of the bogus purchases - HELD THAT:- CIT(A) has based his findings on the decision of the coordinate Bench, rendered in the case of M/s. Hotel Mayfair Pvt. Ltd.,[ 2015 (7) TMI 1365 - ITAT MUMBAI] a group company of the present assessee in appeal filed by the assessee against the order passed by the Ld. CIT u/s. 263 of the Act, in which the AO had made addition of 17% of the total amount of bogus purchases. Thus we do not find any reason to interfere with the findings of the Ld. CIT(A). - Decided against revenue.

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• 2021 (1) TMI 1066
  Addition under section 36(1)(va) - delay in deposit of employee s contribution to provident fund - Assessee argued the same amount was duly paid before filing of income tax return and within the time limit specified u/s 139(1) - HELD THAT:- We find that the Ld. CIT(A) following the decision of the Hon ble Delhi High Court in the case of CIT Vs AIMIL Ltd [ 2009 (12) TMI 38 - DELHI HIGH COURT ] has accepted the claim of the deduction for payments of employees contribution to ESI/PF and accordingly restricted the disallowance for payments made after the date of the filing of the return of income. The sole issue before us is only of verification whether all the payments of ESI/PF contribution of the employees were made before the date of the filing of the return of income or not. We feel it appropriate to restore this issue to the file of the Ld. CIT(A) for verification of the claim of the assessee and decide accordingly. Appeal of the assessee are accordingly allowed for statistical purposes.

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• 2021 (1) TMI 1065
  Rectification of mistake - in Para 8 of the order the Tribunal inadvertently typed that the Assessing Officer disregarded application for admission for additional evidence submitted by the assessee, and there is no specific comment in the remand report filed by the Assessing Officer before the CIT(A) - HELD THAT:- There is inadvertent mistake in the Para 7 that of typographical and in Para 8 that of mistake regarding the facts of the case. Hence, the present misc. application is allowed and we modify both the paras as follows and the same should be read in the original order dated 23.10.2020 as under:- 7. We have heard both the parties and perused all the relevant material available on record. During the hearing the Ld. AR submitted that application under Rule 27 filed by the assessee has to be withdrawn. Therefore, we are dismissing the application under Rule 27 as withdrawn by the assessee Miscellaneous Application filed by the assessee is allowed.

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• 2021 (1) TMI 1064
  Addition u/s 68 / 69A - While deleting the addition u/s 68 CIT(A) enhanced the resultant assessment by retaining the addition made by the assessing officer u/s 69A - HELD THAT:- CIT(A) has erred in deleting the addition of section 68 of the Act but enhancing the resultant assessment by retaining the addition made by the assessing officer under section 69A of the Act and that also without any notice to the assessee in clear contravention of provisions of section 251(2) of the Act. Assessee having filed the return of income pursuant to the notice issued to the assessee has discharged the onus. The assessment made by the assessing officer by not commenting anything of the return of income filed but adding the random figure out of the bank deposit under section 68 is not sustainable. It is settled law that when assessing officer is rejecting the books of account and return of income filed by the assessee the best judgement assessment has to be based upon some reasonable criteria. The same has to be on the basis of rates applicable for earlier income shown by the assessee in the past or that operating in the concerned business. By not adopting any fair rate or estimate of income and adding the bank deposits partly only as undisclosed income or investment is not at all sustainable. CIT(A) has further erred in making the addition u/s 69A of the Act without giving the assessee any opportunity being heard. CIT(A) has also quoted a random figure of ₹ 24,38,819/- and held that the same should be treated as undisclosed investment. From the figures of deposits noted by the assessing officer hereinabove it is not discernible as to how this figure has arisen. This shows that authorities below have not applied their mind and considered random figures for addition. CIT(A) has erred in considering the entire submissions of the assessee as an afterthought and summarily rejecting the same. Thus we set aside the orders of authorities below and delete the addition. - Decided in favour of assessee.

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• 2021 (1) TMI 1063
  Estimation of income - Bogus purchases - assessee has failed to furnish stock register for the relevant period and the assessee has failed to produce the supplier before the AO - CIT-A sustained addition to 25% - HELD THAT:- Hon ble Gujarat High Court in the case of CIT vs. Simit P. Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT ] has upheld the addition of 12.5% of the total amount of bogus purchases sustained by the ITAT, holding that, only profit element embedded in such purchases could be added to the income of the assessee.In the present case, the Ld. CIT (A) has sustained the addition of 25%, which is not in consonance with the judgment of the Hon ble Gujarat High Court. No merit in the contention of the revenue that the Ld. CIT (A) ought to have sustained the addition made by the AO. The cases relied upon by the Ld. AR are distinguishable on facts and the ratio laid down in the said cases are not applicable to the present case. Hence, in our considered view, the addition of 12.5% is reasonable to meet the ends of justice. We therefore, modify the findings of the Ld. CIT (A) and restrict the addition to 12.5% of the total amount of bogus purchases determined by the AO.

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• 2021 (1) TMI 1062
  Dismissal of appeal of the assessee in limine by CIT-A - there was a delay of more than seven year in filing the appeal - AO has made Best judgment assessment with additions - Assessee submitted that CIT-A overlooked additional evidences filed in the course of appellate proceedings - HELD THAT:- We found strength in submissions of the Ld. AR and the Ld CIT(A) has only referred to the facts in respect of receipt of the assessment order by the assessee and no discussion of the additional evidences and affidavit filed by the assessee and passed the order on 16.11.2018. Prima facie, the material filed by the assessee goes to the root of the case. Accordingly, we set aside the order of the CIT(A) and restore the entire disputed issues to the file of the CIT(A) to adjudicate afresh considering the material, affidavit and details filed in the course of appellate proceedings and the assessee should be provided an opportunity to explain the delay in filing the appeal. The assessee should cooperate in submitting the information for early disposal of the appeal and allow the grounds of appeal for statistical purposes.

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• 2021 (1) TMI 1061
  Denial of deduction u/s 35AC on the basis of statement of Trustee - Assessee argued that opportunity to cross examine the Trustee was not provided to the assessee - HELD THAT:- It is a well settled law that a statement cannot be used against the assessee unless an opportunity is granted to the assessee to cross examine the person who has made such statement. Apex Court in the case of ICDS Ltd. [ 2020 (2) TMI 1424 - SUPREME COURT] held that where opportunity to cross-examine witness relied upon by the Assessing Officer is not extended to the assessee, the entire issue has to be adjudicated fresh by giving fair opportunity to both the sides. Nowhere it is emanating from perusal of assessment order that the statement recorded by the Department that was used to disallow assessee s claim was provided to the assessee or the opportunity to cross- examine the person whose statement was used against the assessee was afforded to the assessee. AO ought to have provided material used against the assessee apart from providing an opportunity to cross examine deponent whose statement was used against the assessee. Besides the said statement there is no substantive material to disbelieve the claim of assessee. The request of the assessee to cross-examine the person whose statement was used by the Revenue for making the addition was also declined by the CIT(A) - We restore the issue to the file of Assessing Officer for fresh adjudication after affording opportunity of cross examination to the assessee - Appeal of the assessee is allowed for statistical purposes.

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• Customs

• 2021 (1) TMI 1060
  Valuation of imported goods - related party transaction - Jurisdiction - power of Commissioner to interfere with the order and pass an order in review - HELD THAT:- In respect of valuation of imported goods, the price at which the foreign supplier sells the goods to the importers in other countries is not at all relevant. It is not open for the reviewing authority or Commissioner (Appeals) to conduct a fishing expedition and to raise questions without giving sufficient and enough reasons for entertaining such a reasonable belief. Neither the reviewing authority nor the Commissioner (Appeals) has cited proof whatsoever to indicate either that the prices declared by the appellants were influenced by their relation or that there was a certain amount of flow back to the foreign supplier in the one form or the other. In the absence of the above, no amount of questioning, though seemingly logical, would be of any help to the Revenue. It is a settled principle of law that the authority making the allegations has to prove with sufficient evidence. In the instant case, leaving alone the evidence, even reasons to entertain such a belief have not been properly brought forth or established. It is found that neither the reviewing authority nor the Commissioner (Appeals) has made out a case for striking down the order of the original authority. Therefore, the impugned order does not stand the scrutiny of law. The declared prices cannot be reviewed without any evidence to the effect that the relation between the appellant and the foreign supplier has influenced the declared price or to the effect that there was a flow back of money from the importer to the related foreign supplier. There are nothing to sustain the impugned order. Appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2021 (1) TMI 1059
  Maintainability of application - initiation of CIRP - Scope of the term 'Deposit' - Financial Debt under section 5(8)(a) and Section 5(8)(f) of the I B Code - stand of the Appellant is that his claim is that of a Deposit and not of a Financial Debt was never brought out by either the Respondent or the Adjudicating Authority as such, the Appellant never got an opportunity to respond to the said issue and was shocked by the impugned order - HELD THAT:- It must be borne in mind that a Financial Creditor is a person to whom the financial debt is owed. A Financial Creditor is a person who has a right to financial debt. A Financial Creditor can be either a secured creditor or an unsecured creditor - A Corporate Debtor is a person who owes a debt to any person. The term debt means a liability or an obligation in respect of a claim due from any person and includes (i) a Financial Debt (ii) An Operational Debt. As a matter of fact, Section 3(6) of the Code speaks of Definition of Claim meaning (a) a right to payment, whether or not such right is reduced to judgement, fixed, disputed, undisputed, legal, equitable, secured or unsecured. It cannot be gainsaid that the term deposit includes any receipt of money by a company either as deposit or loan or in any other form by it. Under the Companies (acceptance of deposits) Rules, 2014 the term Deposit is defined under Rule 2(1)(c) in an inclusive manner. The meaning of Deposit is enlarged by covering receipts of money in any other form. After all, a deposit is something more than a mere loan of money - For invoking the jurisdiction of the Tribunal as per Section 74(2) under the Companies Act, 2013, even a partial failure by the Company to repay the deposit was sufficient. In fact, Section 2(31) of the Companies Act speaks of the meaning of deposit. Also, that the Tribunal has vide discretionary powers regarding the repayment of Deposit (s) but it must exercise its discretion objectively taking into consideration all the relevant aspects in a conspectus judicial manner. In reality, the distinction between deposit and loan may not be a relevant factor for interpreting the term Deposit . To put it succinctly, under the new Companies Act, 2013, the definition of the term Deposit is of wider amplitude, as opined by this Tribunal. In view of the fact that the Respondent / Corporate Debtor had accepted certain amounts from the Appellant and credited the interest in a consistent manner against such amounts for a continuous period of five years, as pleaded by the Appellant and also that the Corporate Debtor had accepted money from the Appellant against the payment of interest and bearing in mind the payment of interest on the amounts borrowed by the Respondent Company is nothing but a consideration for the time value of money and in as much as the interest is the compensation paid by the borrower to the lender for using the lender s money over a period of time, this Tribunal comes to an inevitable and inescapable conclusion that the Appellant s status is that of a Financial Creditor as per Section 5(7) read with Section 5(8) of the Code and that there is a default in payment of the accepted amounts by the Respondent/CD and in short, the Respondent / Corporate Debtor comes within the purview of the definition of Financial Debt - the contra view taken by the Adjudicating Authority in coming to the conclusion that the application filed by the Appellant / Financial Creditor is not maintainable for initiation of Section 7 of the Code is clearly unsustainable in the eye of law, as held by this Tribunal, to prevent an aberration of justice. Appeal allowed.

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• 2021 (1) TMI 1058
  Approval of Resolution Plan - Seeking extinguishment of demand - Considering the claims not lodged before the approval of the Resolution Plan - HELD THAT:- After the Judgement of the Hon ble Supreme Court on COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT] on the issue we are of the considered view that the claims filed by the Respondents after the Resolution Plan is approved, is not tenable. Notice of CIRP / Moratorium of the CD was published in the News Paper as per the provisions of the IBC asking the stakeholders to lodge their claims, if any. Hence Prayer made by the Resolution Applicant/CD in this IA No.19 of 2020 [in CPIB No.20/GB/2017] is accepted to the following extent: (1) Claims of the Respondent not lodged before the approval of the Resolution Plan, including the claims filed on 10.09.2020 for ₹ 12.24,29,371.00 cannot be entertained and hence, the claims made by the Respondent are hereby set aside. (2) The Resolution Applicant / the Petitioner is hereby directed to strictly implement the Resolution Plan as approved in time without any violation. (3) The Petitioner is further directed to file a compliance report within 15 days of this order before the Registry stating that the Company has been paying all current statutory dues especially EPF, Income Tax, GST, CGST etc. in time.

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• Central Excise

• 2021 (1) TMI 1057
  Levy of Excise Duty - lime sludge obtained as residue - Department was of the view that appellant is liable to pay excise duty on the lime sludge as it is classifiable under CETH 3825 - HELD THAT:- The issue is with regard to demand of excise duty on lime sludge sold by the appellants. It is not the case of the department that the appellant has manufactured lime sludge. It is only generated in the process of manufacture of paper. The decision in the appellant s own case, SESHASAYEE PAPER AND BOARDS LTD. VERSUS COMMISSIONER OF C. EX., SALEM [ 2016 (12) TMI 1690 - CESTAT CHENNAI] , has held that lime sludge is not subject to excise. The demand cannot sustain - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (1) TMI 1056
  Concessional benefit of tax - purchase of High Speed Diesel from suppliers in other States - difficulty in obtaining C-Form - respondent fairly submits that the issue involved in this Writ Petition is squarely covered by a decision of this Court in the case of M/s. Dhandapani Cement Private Limited Vs. The State of Tamil Nadu, [2019 (2) TMI 1850 - MADRAS HIGH COURT] wherein on identical issue it was held that Petitioner in these Writ Petitions has stated on affidavit that it is unable to download the C forms from the websites as the same stand blocked from use. Upon enquiry with the Assessing Authorities, they have been informed that the benefit of the decision in M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] Ltd can be extended only to those dealers in that are party to the decision. This stand is unacceptable in so far as the decision of this Court as well as other High Courts, one of which has been confirmed by the Supreme Court, are decisions in rem, applicable to all dealers that seek benefit thereunder, of course, in accordance with law. HELD THAT:- The State has, after the date of the above order, filed a Writ Appeal challenging the decision in the case of Ramco Cements that has been considered and dismissed by a Division Bench of this Court in THE COMMISSIONER OF COMMERCIAL TAXES, CHEPAUK, CHENNAI, THE ADDITIONAL COMMISSIONER (CT) VERSUS THE RAMCO CEMENTS LTD. AND THE STATE TAX OFFICER, THE JOINT COMMISSIONER (CS) (SYSTEMS) VERSUS SUNDARAM FASTENERS LIMITED [ 2020 (3) TMI 450 - MADRAS HIGH COURT ] and it was held that Appellant State and the Revenue Authorities are directed not to restrict the use of 'C' Forms for the inter-State purchases of six commodities by the Respondent/Assessees and other registered Dealers at concessional rate of tax and they are further directed to permit Online downloading of such Declaration in 'C' Forms to such Dealers. Petition allowed.

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• Wealth tax

• 2021 (1) TMI 1055
  Exemption from wealth tax - whether 28 Acres of urban land comes under the ambit of the exemption clause of Section 2(ea) of the Wealth Tax Act, 1957? - person to be the owner - protective assessment - HELD THAT:- Leave granted. Pending further consideration, the effect and operation of the following observation made by the High Court in Para 78 of the judgment under challenge shall remain stayed: The Assessing Authority would be free to now proceed to make substantive assessments in the hands of the Respondent-Assessees.

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• Indian Laws

• 2021 (1) TMI 1054
  Maintainability of application - prosecution to draw second sample from the recovered case property - Smuggling - Heroin - HELD THAT:- The impugned order cannot be sustained and is bound to be set aside, since the case in hand is squarely covered by the judgments referred to by the learned counsel for the petitioner and in Amarjit Singh's case [ 2011 (3) TMI 1805 - PUNJAB AND HARYANA HIGH COURT ], this eventuality has been dealt with holding that re-drawing of sample cannot be got done by the prosecution simply because it is not satisfied by the report received with regard to the first sample sent to the FSL. Petition allowed.

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• 2021 (1) TMI 1053
  Smuggling - contraband narcotics - compliance of Section 50 of the Act or not? - HELD THAT:- Admittedly, the said contraband narcotic was recovered from personal search of appellant Munnan, concealed in his belly region below kurta and lunghi, worn by him. In addition to above, consent memo (Ex.Ka.4) was prepared in presence of police party and appellant Munnan. According to prosecution, the said recovery was made by S.I. Narendra Singh Yadav (PW-4) in presence of S.I. Kripa Shankar Dixit, S.I. Mukhram Yadav (PW-3), Constable 194 Chandrika Prasad and Constable Kamlesh Mishra (PW-2) who have put their signatures on recovery memo (Ex.Ka.5) but the consent memo (Ex.Ka.4), prepared by S.I. Kripa Shankar Dixit does not show the signature either of S.I. Mukhram Yadav (PW-3) or Const. Chandrika Prasad or Const. Kamlesh Mishra (PW-2). Mukhram Yadav (PW-3) has stated that the said consent memo (Ex.Ka.4) was prepared by S.I. Kripa Shankar Dixit which was read over to the appellant and thereafter the appellant put his thumb impression and S.I. Kripa Shankar Dixit had also put his signature. This witness has not stated that Narendra Singh Yadav (PW-4) had also put his signature on this consent memo (Ex.Ka.4), whereas, Narendra Singh Yadav has stated that on consent memo (Ex.Ka.4), prepared by S.I. Kripa Shankar Dixit, he had also put his signature - Admittedly, S.I. Kripa Shankar Dixit, who was star witness of the prosecution, who prepared the consent memo (Ex.Ka.4) and recovery memo (Ex.Ka.5) and the said recovery was made in his presence has not been examined by the prosecution and the prosecution has also not given any explanation, as to why, this important witness was not examined. Thus, in view of the above, the consent for search, given by the appellant, before his personal search as well as the preparation of consent memo is also doubtful. The prosecution has failed to prove the compliance of mandatory provision of Section 50 of the Act, whereby the prosecution story as well as said recovery, becomes doubtful. The prosecution has miserably failed to prove its case beyond reasonable doubt, against the appellant. The trial Court, without considering, the compliance of mandatory provision of N.D.P.S Act, has passed the said impugned judgment and order in cursory manner which is liable to be set aside - appellant is on bail. His bail bonds are cancelled and sureties are discharged - Appellant is acquitted and the appeal is allowed.

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