TMI Tax Updates - e-Newsletter
February 10, 2021

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. Separate registration within the State-Need of Transition provisions

   By: Sandeep Garg

2. ECONOMIC SURVEY, TAX PROPOSALS AND GST -A GLIMPSE

   By: Dr. Sanjiv Agarwal

3. AMENDMENT TO CUSTOMS (IMPORT OF GOODS AT CONCESSIONAL RATE OF DUTY) RULES, 2017

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. 4,73,131 number of Indian Companies and 1,065 number of Foreign Companies have been benefited by availing the Companies Fresh Start Scheme (CFSS), 2020

2. 187.03 Kisan Credit Cards with credit limit of ₹ 1.76 lakh crore sanctioned to farmers as on 29th January 2021

3. Rajasthan becomes the 12th State to complete One Nation One Ration Card system reform

4. 328 appeals have been filed before NCLAT from decisions of CCI

5. Various schemes launched by Government during COVID-19 pandemic for companies

6. 41.75 accounts opened under Pradhan Mantri Jan Dhan Yojana

7. Steps taken by Government to ameliorate impact of COVID-19 pandemic on Indian economy

8. Auction for Sale (Re-issue) of ‘4.48% GS 2023’, ‘GoI Floating Rate Bond 2033’, ‘6.22% GS 2035’, and ‘6.67% GS 2050’

9. Special Auction for Sale (Re-issue) of ‘5.15% GS 2025’, and ‘5.85% GS 2030’

10. Government follows “Minimum Government – Maximum Governance” principle as presented in Union Budget 2021-22: Finance Minister Smt. Nirmala Sitharaman

Circulars / Instructions / Orders

DGFT

1. 38/2015-2020 - dated 9-2-2021

Amendment in Appendix 2T and Appendix 2D of FTP, 2015-2020 regarding incorporation/change of details of Electronics and Computer Software Export Promotion Council

Highlights / Catch Notes

GST

• Works contract as composite supply: Earthwork over 75%, promotes urban forestry, recipient deemed Governmental Authority under IGST Notification 5(ix).

  Case-Laws - AAR : Works Contract - composite supply - earthwork exceeding 75% of the contract value - They broadly conform to the function of promoting urban forestry, protection of environment and ecology entrusted to a municipality under article 243W of the Constitution. The recipient is, therefore, a Governmental Authority within the meaning of para 5(ix) of the IGST Notification. - AAR
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• High Court Quashes Prohibition Order Due to Non-compliance with Notice Requirement under GST Act 2017, Section 67(7.

  Case-Laws - HC : Inspection, search, seizure and arrest - Prohibition Order - Subsection (2) of Section 67 of the GST Act, 2017 - No notice has been issued till this date as contemplated under Sub-section (7) of Section 67 of the Act. There has been no extension also of the time period as provided under the proviso. - It can be said that the impugned order outlive its life. The same is hereby quashed and set aside. - HC
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Income Tax

• Penalty Invalid if Assessing Officer Fails to Record Satisfaction u/s 271(1)(c); Not Correctable by Section 292B.

  Case-Laws - AT : Levy of penalty levied u/s 271(1)(c) - The failure of the Assessing Officer to record such satisfaction makes the order levying penalty invalid and bad in law and such mistake is not curable defect under section 292B of the Act as it goes to the jurisdiction of levy of penalty for concealment. - AT
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• Hundi Receipts as Corpus Donations: Exempt u/s 11 of Income Tax Act; Deemed Capital, Not Revenue.

  Case-Laws - AT : Exemption u/s 11 - hundi receipts embedded with specific purpose of corpus donation u/s. 11(1)(d) - The foregoing legal maxim also does not apply here. The clinching fact that emerges here is that assessee's 'hundi' receipts in cash from donors are not revenue items but capital receipts only. The relevant provisions of the 'Endowment Act' duly makes it clear that they are corpus donations which nowhere go against the provisions of tax law. - AT
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• Irrevocable trust registered u/s 12A qualifies for tax exemption; no violations of Sections 11(5) or 13(1)(c)(ii).

  Case-Laws - AT : Exemption u/s 11 - status of the assessee trust - The assessee trust is irrevocable trust which is duly registered under section 12A and thus, eligible for exemption u/s section 11 and 12 of the Act and during the period relevant to impugned assessment year, there was no violation of section 11(5) as well as section 13(1)(c)(ii) of the Act and thus, the exemption under section 11 and 12 has been rightly claimed by the assessee trust- AT
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• Entity Not Liable as "Assessee in Default" for Non-Deduction of TDS on Cash Medical Benefits u/s 192.

  Case-Laws - AT : TDS u/s 192 - non deduction of TDS on Cash medical benefit to employees - treating the assessee as, “assessee in default" - time limit for issue of notice u/s 201 - the belief of the assessee on that point was bona fide. Since the estimate made by the assessee has been held to be honest and bona fide, the assessee could not be treated as “assessee in default” - AT
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• Court Rules TDS Orders on Cash Medical Benefits Invalid Due to Exceeding Two-Year Limitation Period u/s 200.

  Case-Laws - AT : Validity of Orders passed u/s 201(1) and 201(1A) - period of limitation - retrospective applicability of the provisions - TDS u/s 192 - non deduction of TDS on Cash medical benefit to employees - “assessee in default" - Such orders having been passed after expiry of two years from the financial year wherein TDS statements were filed by the assessee under section 200 of the Act, is therefore barred by limitation, hence, has to be declared as null and void. - AT
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• Tax Authorities Failed to Properly Classify Repair and Maintenance Expenses; Reassessment Ordered by Assessing Officer for Correct Tax Treatment.

  Case-Laws - AT : Deduction of repairs & maintenance expenses - Revenue or capital expenditure - CIT(A) has deleted the disallowance without examining the details of expenses. In effect, both the tax authorities have not examined the nature of expenses incurred by the assessee under the head 'repairs & maintenance' - This issue also requires fresh examination at the end of the A.O. - AT
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• Section 263 Revision: CIT's Claim Unjustified as AO Conducted Proper Inquiry on Interest Accrual in Assessment.

  Case-Laws - AT : Revision u/s 263 - accrual of income - Decree recognized interest on the decretal amount - AO has made specific inquiry and there was material on record before framing assessment order. - CIT was not justified in holding that the Assessing Officer has not made specific enquiries with regard to interest income. - AT
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Customs

• Petitioner Not Liable for Demurrage Charges During Departmental Proceedings, Seizure to Conclusion Dates: Sept 24, 2019 - Feb 19, 2020.

  Case-Laws - HC : Levy of Demurrage Charges - the second respondent was insisting that the petitioner should pay even for the period during which the department proceedings were pending. It is beyond dispute that seizure was effected on 24.09.2019 and the proceedings got concluded only on 19.02.2020 - the petitioner cannot be made liable to pay any demurrage charges for this period. - HC
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Direct Taxes

• High Court identifies abuse of process as petitioners seek tax info to pressure opponents into settlement.

  Case-Laws - HC : Benami transactions/money laundering and evasion of income tax - Petitioners want to buttress their pleadings in the suit by extracting information from the Income Tax authorities regarding respondent nos. 6 to 15 who are opponents of petitioners by filing the instant Writ Petition; and also wish to use the forum of the High Court to probably coerce the respondent nos.6 to 15 for some settlement. - Filing of this Writ Petition is an abuse of process of Court - HC
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• Court Denies Petition to Investigate Registration Department, Citing Misuse for Coercion in Benami Property Dispute.

  Case-Laws - HC : Prohibition of Benami Property Transactions - Petitioner wants this Court to do a roving enquiry into the affairs of the Registration Department and the business affairs of respondent nos.14 to 35 and cull out, using this forum, information which could be used by him or the plaintiff in the above suit, to black mail or coerce the 18th respondent to some sort of settlement, if possible. This Court cannot allow itself to be used as a private investigator by the petitioners to prove their contentions in the civil suit or to coerce the respondents 13 to 35 in the Writ Petition. - HC
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Service Tax

• Refund Claim Denied: Service Tax Refunds Valid Only for Providers, Not Recipients; Re-Credit of Input Tax Credit Considered.

  Case-Laws - AT : Refund claim - time limitation - validity of refund only to the service provider and not to the party being the service recipient - The appellants for the processing of the refund claims have not debited the CENVAT account, but have debited the amounts from their Input Tax Credit Ledger. Hence in our view there is no case for cash refund of the amounts debited from the Input Tax Credit Ledger - the matter is remitted back to the original authority for considering allowing the re-credit of the amounts of ITC Credit debited by the Appellant for the processing of these refund applications, if permissible under the GST Law - AT
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Central Excise

• Party Denied Refund of Countervailing Duty on Re-Imported Goods Not Eligible for Cenvat Credit u/r 16.

  Case-Laws - HC : Refund of countervailing duty - Payment of CVD on return / re-import of goods - entitlement to take credit amount of CVD paid by them on return of the goods under Rule 16 of the Central Excise Rules, 2002 - As such finished goods were not brought into the factory for being re-made, refined, re-conditioned or for any other reason. If such goods were not inputs or raw materials upon which the assessee was entitled to claim Cenvat Credit upon payment of additional duty (CVD) under Customs Tariff Act, 1975, the assessee could not have claimed refund thereof - HC
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• Court Rules Excise Duty Recovery Unenforceable During CIRP Due to Section 14 Moratorium of Insolvency & Bankruptcy Code.

  Case-Laws - HC : Recovery of Central Excise Duty based on Audit Objections - CIRP Proceedings are pending - Upon hearing learned counsel for the parties and taking note of the Insolvency Resolution Process underway against this company and the moratorium on continuation of any pending proceedings under Section 14 of the of the Insolvency & Bankruptcy Code, 2016, the present writ petition cannot be entertained. - HC
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VAT

• High Court Rules No Tax Recovery During Pending Appeal and Stay Application; Section 152 Notice Deemed Premature.

  Case-Laws - HC : Recovery proceedings - We are of the view that as the appeal and the stay application is yet to be adjudicated by the Tribunal, there should not be any further proceedings under Section 152 of the Land Revenue Code. In fact, we may observe that no such notice under Section 152 of the Code could have been issued. Thus, at-least till the stay application is disposed of, the department should not initiate any action for the purpose of recovering the tax demand. - HC
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• Court Rules on VAT Refund Claims Beyond 180-Day Limit; Authorities to Reassess Petitioner's Request for Validity.

  Case-Laws - HC : Correctness of the rejection of the application seeking refund - Time limitation - The Prescribed Authority is given the liberty to entertain such claims that may be filed even after the expiry of prescribed period of 180 (one hundred and eighty days) from the date of assessment or reassessment on sufficient causes being shown by the dealer. - matter is remanded back to the respondent authorities to re-decide on the question of grant of refund as prayed for by the writ petitioner - HC
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Case Laws:

• GST

• 2021 (2) TMI 339
  Scope of Advance Ruling - Levy of GST - GST on combined value when the residential units are separately registered or not - whether the RWA can apply its own by-laws in apparent violation of the provisions in terms of the Circular No. 109/28/2019 GST dated 22/07/2019? - HELD THAT:- In terms of section 95(a) of the Central Goods and Services Act, 2017 or West Bengal Goods and Services Act, 2017 an advance ruling means a decision provided by this Authority or the Appellate Authority, as the case may be, on matters or on questions specified in section 97(2) or section 100(1) of the GST Act in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. The question is related to the supply of maintenance service by the RWA. The applicant is not supplying the maintenance service at the residential units in Sanjeeva Town . This Authority cannot, therefore, provide a decision to the applicant in the form of an advance ruling - Application is, therefore, rejected in terms of section 98(2) of the GST Act.

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• 2021 (2) TMI 338
  Works Contract - composite supply - earthwork exceeding 75% of the contract value - Government entity or not - contract of Rs. 148.5968 crore for increasing water holding capacity of Wular lake by way of earthwork excavation in all kinds of soils like earth, clay, silt, peat, sand etc. by mechanical means - HELD THAT:- It appears from Notification No. 311 dated 25/09/2012 of the Forest Department of State Government (now a Union Territory) that the recipient is constituted as an authority under section 3 (1) of the Jammu and Kashmir Development Act, 1970 for preservation and conservation of Wular Lake. The Board of the recipient, constituted the same day by Notification No. 314, ensures 100% control of the State Government (now a Union Territory). The powers and functions of the recipient are described in Govt Order No. 396 FST of 2012 dated 10/10/2012 of the Forest Department, Government of Jammu and Kashmir. They broadly conform to the function of promoting urban forestry, protection of environment and ecology entrusted to a municipality under article 243W of the Constitution. The recipient is, therefore, a Governmental Authority within the meaning of para 5(ix) of the IGST Notification. The applicant s supply, to the Wular Conservation and Management Authority is taxable under Sl. No. 3(vii) of Notification No 8/2017 Integrated Tax (Rate) dated 28/06/2017, as amended from time to time.

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• 2021 (2) TMI 337
  Maintainability of appeal - non-deposit of 1% of the court fees as per the KLBF - period April 2018 to May 2019 - HELD THAT:- Section 107 of CGST Act 2017 deals with appeals to Appellate Authority. Any person aggrieved by any decision or order passed under this Act can prefer an appeal to the designated appellate authority, within three months from the date on which such decision or order is communicated to him. The Appellate Authority, by virtue of Sub Section (4) of Section 107 of the Act is empowered to condone further delay of one month causing filing appeal provided sufficient cause for not presenting the appeal within the prescribed period of limitation is demonstrated. Thus, after further period of one month, the delay in preferring the appeal is not condonable. Bare perusal of this provision of CGST Act makes it clear that after making the assessment on the criteria best of the judgment by the Assessing Officer, a notice is required to be issued to the assessee along with the assessment order. The assessee is granted an opportunity of filing his returns. If such registered person furnishes valid returns in response to the best of the judgment assessment, then such assessment order is deemed to have been withdrawn. In the case in hand, despite receipt of assessment order under Section 62 of the Act, the petitioner registered person has not filed any valid return within 30 days from the receipt of the assessment order. This ultimately has resulted in issuance of demand notice in FORM GST DRC-07, mentioning the amount due and payable by the petitioner - The appeal as it stands is an appeal challenging the assessment made by the Assessing Officer to the best of his judgment as per the provisions of Section 62 of the GST Act. That assessment order is not deemed to have been withdrawn due to non-filing of valid return within 30 days of service of the assessment order under Section 62 of the Act. As such, it cannot be said that the appeals filed by the petitioner were in fact the appeals challenging the demand notice in FORM GST DRC-07. EVen during pendency of this appeals (Ext.P4), no amendment application was moved to delete the challenge so far as the Assessment Officer in order in FORM GST ASMT-13 is concerned or to incorporate the challenge to the orders in FORM GST DRC-07. Petition dismissed.

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• 2021 (2) TMI 336
  Continuation of attachment proceedings - HELD THAT:- The respondent informs that the father of the petitioner had visited the office of the Commissioner, Goods and Services Tax (GST) and has furnished all the requisite information and the transactions in the account of the petitioner were found to be pertaining to the petitioner only, without having any GST implications and the respondent is satisfied that there is no need to continue with the attachment. The respondent is directed to, on or before 3rd February, 2021, send a communication to the HDFC Bank of the petitioner, recalling the instructions earlier issued vide letter dated 7th December, 2020 for attachment of the said account - Petition allowed.

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• 2021 (2) TMI 335
  Inspection, search, seizure and arrest - Prohibition Order - Subsection (2) of Section 67 of the GST Act, 2017 - HELD THAT:- The plain reading of Sub-section (7) of Section 67 of GST Act would indicate that from the date of seizure under Subsection (2) if notice is issued within six months thereof, the seized properties will have to be returned to the person from whose possession they were seized. There is a proviso for the purpose of extending the said period on sufficient cause. Mr. Dave, the learned AGP upon instructions from the concerned department makes a statement that no notice has been issued till this date as contemplated under Sub-section (7) of Section 67 of the Act. There has been no extension also of the time period as provided under the proviso. It can be said that the impugned order outlive its life. The same is hereby quashed and set aside. The articles seized shall now be returned to the writ-applicant, if not returned till this date - Application disposed off.

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• 2021 (2) TMI 334
  Release the consignment along with the vehicle - Section 129 of the Goods and Services Tax Act - HELD THAT:- It is indubitable that the petitioner has a remedy of approaching the 1st respondent itself by offering a bank guarantee, which Authority, will thereupon, be obligated to consider it for release of the consignment in question. I am therefore, of the view that such a benefit must be given to the petitioner also. This writ petition to the limited extent of leaving liberty to the petitioner to approach the 1st respondent with a bank guarantee for the amounts covered by Exts.P3 to P3(c); and if this is done within a period of three days from the date of receipt of a copy of this judgment - Petition disposed off.

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• 2021 (2) TMI 333
  Confiscation of goods - appeal under Section 107 of the GST Act filed or not - status of such appeal, if any filed - any application under Section 67(6) of the Act for the provisional release of the goods, filed or not, pending the appeal - deposit of 10% of the total amount sought to be recovered under the Act, made or not - HELD THAT:- Today, when the matter is taken up for further hearing, Mr. Chintan Dave the learned Assistant Government Pleader appearing for the State respondents makes a statement that the writ applicants have preferred two appeals against the final order of confiscation passed in the FORM GST MOV-11. One Appeal is with respect to the goods in question and the other Appeal is with respect to the Vehicle in question. Matters remanded with a direction to the Appellate Authority to complete the hearing of both the appeals and pass the final order by JANUARY 31, 2021. We expect the Appellate Authority while deciding the Appeals to keep in mind the principles of law as explained by this Court in the case of Synergy Fertichem (P) Limited v. State of Gujarat [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT ] as well as the judgment rendered in the case of Insha Trading Co. v. State of Gujarat and Others [ 2019 (10) TMI 938 - GUJARAT HIGH COURT ]. Application disposed off.

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• 2021 (2) TMI 296
  Attachment of Bank Accounts of petitioner - HELD THAT:- In this view of the matter, Respondents would like to record the statement of the father of the petitioner to verify the stand taken by the Petitioner in the present petition in relation to the bank account for which the de-freezing orders are sought. Learned counsel for the petitioner states that he has no objection to the request made by the Respondents. He states that his client and her father are willing to render full assistance and cooperation in the investigation being carried on by the respondents. Accordingly, it is directed that the father of the petitioner shall visit the office of the Commissioner of GST, East on 27 th January, 2021 at 11:30 AM - List on 1st February, 2021.

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• Income Tax

• 2021 (2) TMI 331
  Interest on the refund amount u/s 244A - Petitioner is aggrieved and has again approached this Court contending that under Section 244A of the Act, interest for the period from 1st December, 2019 to 31st August, 2020 has still not been granted - As argued there is no statutory remedy under the Act for availing this relief - HELD THAT:- We would not like to keep the present petition pending and accordingly we direct the Respondent to look into the matter and process the request for interest on the refund amount under Section 244A within a period of four weeks from today. In case within the aforesaid period the Revenue comes to a conclusion that interest is not due or payable to the Petitioner, the same would be communicated by way of a speaking order to the Petitioner. Petitioner shall thereafter be at liberty to avail its remedy against such an order.

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• 2021 (2) TMI 330
  Alternate remedy - Second round of litigation - Petitioner had approached this court seeking credit for TDS as per TRACES site in 26AS - petitioner has filed rectification applications under Section 154 seeking the same reliefs as well as for interest under Section 244A - Petitioner makes a prayer for directions to the respondents to comply with the earlier directions given by this court and also claims reliefs which were sought in the first round - HELD THAT:- The present writ petition, is ex-facie not maintainable. The petitioner cannot seek the same reliefs, as were sought in the earlier petition. As regards failure on the part of the Respondent in complying with the directions, the petitioner has the remedy of invoking the contempt jurisdiction of this Court. In this view of the matter, the present writ petition is dismissed with liberty to the petitioner to avail its remedy available under law regarding non-compliance of the orders passed by this court.

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• 2021 (2) TMI 329
  Addition u/s 69 - On-money payment for purchase of property - admission in a statement recorded u/s.132(4) - during the course of search executive diary maintained by assessee was found and seized which indicates on-money payment for purchase of property and same has been confirmed by assessee in the statement recorded u/s.132(4) - assessee has filed retraction statement with necessary evidence and retracted from his earlier statement regarding on-money payment - HELD THAT:- No doubt, addition cannot be made only on the basis of statement recorded during the course of search. But, if admission in a statement recorded u/s.132(4) is corroborated with evidences collected during the course of search, then authorities are empowered to make additions on the basis of such statements. However, in this case, before making any addition, the Assessing Officer should have examined the claim of assessee in light of report/order of Chief Revenue Officer /Inspector General of Registration, Chennai or determine value of the property by conducting further enquiry or referring valuation to Departmental Valuation Officer (DVO). In this case, although assessee has filed order of Chief Revenue Officer /Inspector General of Registration, Chennai, but the Assessing Officer as well as learned CIT(A) has not taken said order into cognizance, while adjudicating the issue. Even the Tribunal has not considered the plea of assessee in light of the said evidences. In our considered view, order of Chief Revenue Officer /Inspector General of Registration, Chennai is not a relevant criteria to decide whether assessee has paid on-money or not, but it may be one piece of evidence to ascertain correct facts with regard to value of property Since, the assessee has taken a plea in light of said order/report of Chief Revenue Officer /Inspector General of Registration, the Assessing Officer ought to have considered the order before arriving at conclusion that assessee has paid on-money payment for purchase of property, even though the Assessing Officer is not bound to accept the order of Chief Revenue Officer /Inspector General of Registration, Chennai. Appeal needs to be set aside to the file of Assessing Officer to reconsider the issue - Appeal filed by the assessee is treated as allowed for statistical purposes.

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• 2021 (2) TMI 328
  Rectification u/s 254 - Tribunal allowed the appeal of the assessee on technical ground and deleted the penalty levied u/s 271(1)(c) - HELD THAT:- Proposition of applicant Revenue that the mistake in non striking of one limb is curable under section 292B of the Act does not stand since for levying penalty under section 271 (1 )(c) of the Act, dictate of section and various Courts implementing the section is that the Assessing Officer has to record satisfaction as to which limb of said section has not been complied with by the assessee and show cause the assessee in this regard while initiating penalty proceedings under section 271 (1 )(c) of the Act. The failure of the Assessing Officer to record such satisfaction makes the order levying penalty invalid and bad in law and such mistake is not curable defect under section 292B of the Act as it goes to the jurisdiction of levy of penalty for concealment. No mistake apparent from record within the purview of Section 254(2) of the Act and hence, Miscellaneous Application filed by the Revenue is dismissed on all counts.

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• 2021 (2) TMI 327
  TP Adjustment - comparable selection - selection of MAM - AO rejecting Resale Price Method (RPM) applied by the assessee as most appropriate method (MAM) for benchmarking the transaction of purchase of traded good - HELD THAT:- The contentions of the assessee failed to justify RPM as most appropriate method. Though the TPO in subsequent AY 2013-14 has accepted the Retail Price Method (RPM) adopted by the assessee for purchase of traded goods that cannot be treated as the threshold for allowing the correct appropriate method of benchmarking. In the present assessment year, there is no proper comparable available for allowing the RPM as the most appropriate method. In fact, the TNMM is proper in the present assessee s case because the said method is tolerant of functional differences as well as it is adaptive in nature while benchmarking the other comparables. So the Transfer Pricing will be more appropriate by adopting TNMM. Therefore, the TPO as well as the DRP rightly rejected RPM as most appropriate method (MAM). Objection for considering TNMM as most appropriate method over RPM - Since we have already answered the question as to which is the Most Appropriate Method (MAM) while dealing Ground No. 2 of the appeal and held that Resale Price Method taken by the assessee is not the Most Appropriate Method (MAM), the TNMM adopted by the TPO is correct. The contention of the assessee that there cannot be the consideration for diluting the standards of comparable transactions/entity, does not have practical approach as in the present case RPM fails the threshold of benchmarking while taking up the comparables which are not at all proper. Thus, the most appropriate method is TNMM as held by the TPO and the DRP. Hence, Ground No. 4 is dismissed. Rejection of search process of the assessee - HELD THAT:- It is pertinent to note that out of 6 quantitative filters used by the TPO for the new search process, 5 filters are same as that of the assessee which has been used for obtaining the comparables in its TP study report. But while not taking into account one filter and rejecting the same, the TPO has not given any proper reasons as to why the said filter is not applicable. The TPO was not right in rejecting the said filter as the same is very much relevant for the search process of the assessee for arriving at the correct margin. Hence, Ground No. 3.1.1 is allowed. Rejection of assessee s comparables - HELD THAT Having rejected the assessee s comparables on the basis of functionally dissimilar, the TPO subsequently stated in its order that the basis of rejecting the three comparables selected by the assessee namely Batliboi Ltd., Kirloskar Oil Engines Ltd. Greaves Cotton is that these failed in the filter of total income from trading activity more than 75% revenue . Thus the reason of functional dissimilarity of these comparables have been rightly justified by the TPO in the order. Thus, these comparables are not functionally similar in respect of the trading in tools and equipments for large industrial diesel engines to that of assessee company. Objection for not providing fresh search process to the assessee - HELD THAT:- It is pertinent to note that since the search process given by the assessee is held as not correct by us in the abovesaid paras, hence, Ground No. 3.1.3 is dismissed. Objections to TPO s comparables and cherry picking - AR submitted that all the comparables taken by the TPO for benchmarking the transaction of purchase of traded goods is related to auto sector that is provision of breaking part services which is not at all related to the business of the assessee as assessee is admittedly engaged in the trading of spare parts used in engine based power plant which cannot be equated with the engine used in auto sector - HELD THAT:- From the perusal of records it can be seen that the Ld. AR has contended that none of the comparables chosen by the TPO satisfy the comparability criteria of Rule 10(B)(2) and accordingly the contention of the Ld. AR that these comparables should be rejected appears to be genuine. But further, the Ld. AR contended that even if comparables obtained by the TPO are retained but the RPM method is applied for benchmarking, then also the international transaction of purchase of traded goods shall be at ALP, as GP margin of comparable i.e. 36.93% is less than the GP margin of the assessee i.e. 43.21%. Since we have already held that RPM is not the most appropriate method, we are not interfering with the comparables selected by the TPO. Treating goodwill written off as operating in nature for computing operating PLI as per TNMM - HELD THAT:- TPO has rightly pointed out that in assessee s FAR analysis, assessee has not depicted goodwill in assets employed. The reason given by the Ld. AR that because goodwill may result in increase in sales over the years but it certainly does not affect the operations which are required to be examined for the purposes of determining PLI of tested party for comparisons for TP analysis does not have any bearing to support the case of the assessee. Therefore, this contention of the assessee fails. As regards to without prejudice argument of the Ld. AR has submitted the calculation of PLI of the assessee after treating the amortization of goodwill as non-operating as well as operating in nature. As against the average PLI of the comparables of 10.09%, assessee PLI of the assessee is 9.08% which is within +/-5% range as per the proviso to Sec 92C of the Act. Thus these submissions of the Ld. AR are more practical in nature and are accepted and it appears that the goodwill written off of Rs. 1,99,27,211/- is an extraordinary expense which affects the normal profitability for the period in which it is amortized and should be adjusted for computing the PLI of the assessee company after taking into account whether the assessee claimed for depreciation or not on the goodwill. Therefore, we remand back this issue to the file of the TPO/AO for proper verification in light of the above findings. Aggregating the trading and service segments for benchmarking the transaction of purchase of traded goods - HELD THAT:- From the perusal of the record, it can be seen that the TPO has benchmarked the transaction of purchase of traded goods and correspondingly proposed an adjustment by aggregating the trading and service segment without appreciating the fact that purchase of traded goods is part of the trading segment, therefore the adjustment should be proposed by considering only the trading segment. AR has given the working of TP adjustment by considering only the trading segment. The said working represent that if the TPO would have proposed the adjustment on the transaction of purchase of traded goods by considering only trading segment then the adjustment should be restricted to Rs. 64,14,301/- only instead of Rs. 70,61,839/- as originally proposed by TPO. Thus, the contentions of the Ld. AR appears to be genuine but the same needs verification. Therefore, we direct the TPO to verify the same. Quashing of order passed by the AO/TPO/DRPTPO - HELD THAT:- While deciding the filters has given his own reasons and the same does not make an order bad in law or non-est void-ab-initio in totality.The case laws cited before us are not applicable in the present case as the assessee s factual aspect has been rightly pointed out by the TPO in the order which are not denied in toto by the Ld. AR and also not brought on record any contrary facts to that effect. Thus, the contention of the Ld. AR appears to be not correct.

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• 2021 (2) TMI 326
  Exemption u/s 11 denied - hundi receipts embedded with specific purpose of corpus donation u/s. 11(1)(d) - HELD THAT:- None of the lower authorities have disbelieved or rebutted the assessee s plea that the impugned sums are in the nature of a hundi receipts being donors donations in cash or kind only; as per the state endowment law. There can be no dispute in principle that in case of a general vis- -vis specific provisions, the latter prevails over the former as per maxim Generalia Specialibus Non Derogant . We, however, do not find the facts of the case attracting repugnancy qua the above state law vis- -vis tax law as per Article 251 of the Constitution of India. The foregoing legal maxim also does not apply here. The clinching fact that emerges here is that assessee s hundi receipts in cash from donors are not revenue items but capital receipts only. The relevant provisions of the Endowment Act duly makes it clear that they are corpus donations which nowhere go against the provisions of tax law. We therefore see no reason to sustain the learned lower authorities action treating the assessee s hundi receipts embedded with specific purpose of corpus donation u/s. 11(1)(d) of the Act are not entitled for exemption being revenue receipts. We thus direct the Assessing Officer to delete the impugned addition. - Decided in favour of assessee.

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• 2021 (2) TMI 325
  Undisclosed advances - Addition being made in respect of cash loan alleged to having being advanced in cash - addition solely on the basis of Annexure A seized during search operation - estimating interest @ 8% on the alleged advances - HELD THAT:- We find force in the contentions so advanced by the ld AR that each of the entries reflect individual transactions with either date of advancement or repayment or tentative date of repayment and therefore, a generalized conclusion cannot be drawn basis review of just two entries where other entries applying same hypothesis will give a very incomprehensible conclusion. Given that there is no other corroborative evidence on record that the assessee has advanced such amount during the year under consideration, merely basis the reading and analysis of the seized document as a whole, it cannot be held that the assessee has entered into a fresh and different transaction with M/s Columbus Overseas LLP, other than the one which is duly recorded in its books of accounts. Thus, the addition of Rs. 25 lacs and consequent addition of interest of Rs. 2 lacs is hereby directed to be deleted. - Decided in favour of assessee.

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• 2021 (2) TMI 324
  Nature of expenditure - expenses towards R D - revenue or capital expenditure - AR submitted that the R D expenses incurred for modification/adaption of existing products was claimed as revenue expenditure even though the same was accounted as intangible asset under development in the books of accounts - HELD THAT:- The assessee has treated the R D expenditure as capital expenditure by showing it as intangible assets in its balance sheet. However, it is not known whether the intangible assets shown by the assessee in its balance sheet includes revenue expenditure or not? In earlier assessment years, the CIT(Appeals) had made analysis of expenditure which are revenue or capital and the revenue expenditure was allowed as deduction. Being so, the Tribunal decided the issue in favour of the assessee in AYs 2007-08 2008-09 in assessee s own case. For assessment year under consideration, the R D expenditure which was treated as revenue expenditure in its Profit Loss account is not separately brought on record by the assessee before us. Hence, it is appropriate to remit the issue to the file of the CIT(Appeals) for proper classification of R D expenditure which is in the nature of revenue expenditure or capital expenditure. Thereafter the portion of revenue expenditure on R D to be allowed as business expenditure in these assessment years. On the other hand, the R D expenditure which is in the nature of capital expenditure has to be disallowed and depreciation to be granted. With these observations, we remit the issue in dispute in all these assessment years to the file of the CIT(Appeals) for fresh consideration. Appeal allowed for statistical purposes.

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• 2021 (2) TMI 323
  Exemption u/s 11 - status of the assessee trust - irrevocable trust or not? - Denial of claim by invoking provisions of section 13(1)(c)(ii) r.w.s.13(2)(g) - as per AO no clause of irrevocability mentioned in trust deed and also funds transferred by the trustee is the property of the founder of the trust as per trust deed - CIT-A allowed deduction - HELD THAT:- CIT(A) has returned a finding that the assessee trust is duly registered u/s 12A as well section 80G of the Act and as such, we find that the status of the assessee trust as irrevocable trust has been accepted by the Department. If for any reasons, the AO has any apprehension, which we find none in the instant case, on reading of Hindi version of the trust deed as against the English version, the matter could have been referred to the ld CIT(E) for taking appropriate action as per law. Therefore, the factual situation as far as the status of the assessee trust is concerned, it remains undisputed before us that it is a case of an irrevocable trust which is duly registered under section 12A and thus, eligible for exemption u/s section 11 and 12 of the Act. Violation of section 11(5) - CIT(A) has returned a finding that Lord Krishna Bank is a Scheduled Bank as per Schedule-II of Reserve Bank of India Act, 1934 and therefore, the amount deposited in such bank doesn t violate the provisions of Section 11(5) of the Act. We don t see any infirmity in the said findings and the same are hereby confirmed. Violation of section 13(1)(c)(ii) - CIT(A) has returned a finding basis review of the evidence/details regarding qualification of the specified persons and their working experience and valuable contribution toward attaining, the purpose and objects of the trustee that the assessee trust has satisfactorily demonstrated that salary paid to these persons were not excessive or not in violation of provisions of sec. 13(3) - said findings of the ld CIT(A) remain uncontroverted before us in absence of any adverse material brought on record by the Revenue and hence, the said findings are hereby confirmed. The assessee trust is irrevocable trust which is duly registered under section 12A and thus, eligible for exemption u/s section 11 and 12 of the Act and during the period relevant to impugned assessment year, there was no violation of section 11(5) as well as section 13(1)(c)(ii) of the Act and thus, the exemption under section 11 and 12 has been rightly claimed by the assessee trust - Decided in favour of assessee.

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• 2021 (2) TMI 322
  Addition u/s 56(2)(vii)(b) - bringing to tax the stamp duty value of the property purchased which exceeded the actual purchase consideration - HELD THAT:- No such on-money transactions are involved in the purchase of the property. The arguments advanced by the Ld.AR is also not disputed by the Revenue, but rather accepted by the Revenue after due verification in the case of the vendor Sri Mittapalli Naveen. Revenue having considered these facts, in the case of the seller of the property, had adopted the sale consideration at Rs. 2,03,65,854/- as against the stamp duty value of the property of Rs. 4,39,23,056/- while invoking the provisions of Section 50C in the assessment Order dated 29/12/2018. Therefore, it is obvious that a contrary view by the Ld.AO to adopt the stamp duty value of the property at Rs. 4,39,23,056/- in the case of the buyer (the assessee) of the property while invoking the provisions of Section 56(2)(vii)(b) of the Act is not appropriate because the Ld.AO had missed out to examine the entire facts of the case. We hereby direct the Ld.AO that, if by virtue of the Order of the Government the value of the property for the purpose of registering the sale deed has been enhanced and has not been interfered by any Judicial/Executive Authority during the relevant period, then adopt the stamp duty value of the property purchased by the assessee for the purpose of assessing the income of the assessee invoking the provisions of section 56(2)(vii)(b) of the Act - Appeal of the assessee is partly allowed for statistical purposes

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• 2021 (2) TMI 321
  Validity of Orders passed u/s 201(1) and 201(1A) - period of limitation - retrospective applicability of the provisions - TDS u/s 192 - non deduction of TDS on Cash medical benefit to employees - treating the assessee as, assessee in default - time limit for issue of notice u/s 201 - HELD THAT:- Applying principles laid down by Hon ble Supreme Court in number of cases and TATA TELESERVICES VERSUS UNION OF INDIA 1 [ 2016 (2) TMI 414 - GUJARAT HIGH COURT] and SODEXO SVC INDIA PVT. LTD. [ 2018 (4) TMI 316 - ITAT MUMBAI] Orders passed by Ld.AO under section 201(1) and 201(1A) for financial year 2010-11 (assessment year 2011-12) and 1st three quarters for financial year 2011-12 (assessment year 2012- 13), expired on 31/03/2014 under unamended section 201 (3)(i) of the Act. Such orders having been passed after expiry of two years from the financial year wherein TDS statements were filed by the assessee under section 200 of the Act, is therefore barred by limitation, hence, has to be declared as null and void. TDS on medical benefits - non deduction of TDS on bonafide belief - Under section 192(1), the assessee is expected to make an honest and fair estimate of income and deduct tax at source. For assessment year 2015-16 and 2016-17, clause (2D) was applicable, however in the absence of specific requirement under Rule 26C, assessee was not obliged to collect evidence/ proof from the employees for reimbursement of medical expenditure. The assessee has sought permission from CBDT vide letter dated 20/05/2002, regarding extending the exemption under Proviso(v) to Section 17(2) of the Act, based on satisfaction of the assessee. Assessee has been following this practice since the year 1991. Further the exemption at no time exceeded Rs. 15,000/- Stand of the assessee that the Cash medical benefit were only reimbursement of the expenditure incurred by the employees, and as such they could not form part of their income, could not be said to be without any basis. Therefore, the belief of the assessee on that point was bona fide. Since the estimate made by the assessee has been held to be honest and bona fide, the assessee could not be treated as assessee in default Therefore, the Ld.AO had no jurisdiction under section 201 to demand further tax from the assessee in respect of the short deduction made concerning Cash Medical Benefit for assessment year 2015-16 2016-17. As regards charging of interest under section 201(1A), since relief, as mentioned above, had been allowed, the Ld.AO is directed to modify the quantum of interest taking into consideration the said relief for assessment year 2015-16 2016-17.

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• 2021 (2) TMI 320
  Difference in turnover as per books of account and gross receipts as per Form 26AS - HELD THAT:- In this case, the assessee has filed explanation before the Assessing Officer regarding difference in turnover reported in books of account and turnover as per Form 26AS, but could not produce books of account to justify its claim. It is not the case of the AO that assessee has not filed explanation to explain difference in turnover reported in books of account and Form 26AS. Only reason for rejection of explanation furnished by the assessee is non-furnishing of books of account. Moreover, the learned AR for the assessee pleaded before us that assessee is ready to file necessary details to explain difference between turnover reported in books of account and Form 26AS. In order to give one more opportunity of hearing to the assessee, the appeal is set aside to the file of the Assessing Officer and direct him to redo the assessment, after considering necessary evidence filed by the assessee including reconciliation explaining the difference between turnover reported in books of account and Form 26AS. Needless to say, the assessee shall appear before the Assessing Officer without seeking any adjournment and file necessary details for speedy completion of assessment proceedings - Appeal is allowed for statistical purposes.

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• 2021 (2) TMI 319
  Claim of helicopter expenses maintenance expenses - Revenue or capital expenditure - A.O. took the view that the assessee has got enduring benefit by incurring the Repairs Maintenance expenses and hence they are capital in nature - HELD THAT:- A.O. was constrained to make ad hoc disallowance since the assessee has failed to furnish details called for by the A.O - assessee did not appear before Ld. CIT(A) also. In effect, the assessee did not furnish details of helicopter expenses as sought by the A.O. even before the Ld. CIT(A) - CIT(A) was not justified in deleting the disallowance - in the interest of natural justice, assessee may be provided with one more opportunity to furnish the details called for by A.O. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of the A.O. for examining it afresh. Claim of repairs maintenance expenses - A.O. has made the above said disallowance by entertaining a presumption that the repairs maintenance expenses incurred by the assessee has given enduring benefit to the assessee. A.O. has not examined critically the details of repairs maintenance expenses incurred by the assessee - CIT(A) has deleted the disallowance without examining the details of expenses. In effect, both the tax authorities have not examined the nature of expenses incurred by the assessee under the head repairs maintenance - This issue also requires fresh examination at the end of the A.O. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of the A.O. for examining it afresh.

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• 2021 (2) TMI 318
  Nature of Gain on property sold by HUF - guidance value as on the date of registration was higher than the agreement value because of which the difference was added in the hands of assessee - consideration paid by assessee HUF less than the stamp duty valuation - addition as income chargeable to tax u/s 56(2)(vii) - disallowance under section 50C - HELD THAT:- In present facts, there is a consideration paid by assessee HUF, to the vendor (individual member of HUF) in respect of the subject property that is less than the stamp duty valuation. As contended by the Ld. AR that, the transaction is exempt from tax as the transferor and transferee are relative as defined in Clause (e)(ii) to 3rd proviso to section 56(2)(vii) of the Act. By Finance Act, 2012, the definition of relative also include any sum or property received by a Hindu undivided family from its members. This contention of the Ld. AR that HUF can receive property without attracting tax liability from its members deserves to be upheld. Admittedly the transferor and the transferee in the present facts of the case is the Karta, his individual capacity and the HUF itself. Therefore, the argument that, property received by HUF from its members, is not chargeable to tax. CIT(A) relied on provisions of section 50C to consider the value adopted by stamp duty authority on the date of agreement. This provision is applicable in case of recipient of sale consideration. Present case, assessee is the purchaser. We therefore reject applicability of Section 50 C to present facts. Revenue is therefore debarred to hold the transaction under section 56(2)(vii)(b) as taxable. We thus delete the addition sustained by Ld. CIT(A). - Decided in favour of assessee.

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• 2021 (2) TMI 317
  Validity of reopening of assessment - re-opening beyond 4 years - Merger of the Order - applicability of the third proviso to section 147 - deduction u/s 36(1)(viia) on provision for bad and doubtful debts in respect of rural advances - assessment was re-opened on the allegation that the Assessee did not give details of rural branches and it had included various branches which are not rural as per the provisions of section 36(1)(viia) - HELD THAT:- We find that the reassessment proceedings were initiated by the AO by issue of notice dated 21.03.2013. The proceedings with reference to the original order of assessment passed under section 143(3) of the Act dated 19.11.2010 is pending before the Hon ble ITAT and in those proceedings, the very same issue of quantum of deduction under section 37(1)(via) of the Act was pending for consideration before Hon ble ITAT. Therefore, clearly the third proviso to section 147 of the Act was attracted. In this regard, we find that since the issue of deduction under section 36(1)(viia) of the Act was a subject matter of appeal before the CIT(A) and ITAT, it was no longer amenable to reassessment proceedings under section 147 of the Act. In the case of ACIT vs BSES Ltd. [ 2011 (9) TMI 135 - ITAT, MUMBAI] the Tribunal analysed the issue of merger and the applicability of the 3rd proviso to Sec. 147 of the Act and held additions made by the learned Assessing Officer all pertain to the matters which got merged with the order of CIT(A). Therefore, the same could not have been considered in the re-opened assessment as per the Third Proviso to section 147. Also see M/S. RELIANCE ENERGY LTD. [ 2013 (6) TMI 844 - BOMBAY HIGH COURT] - Decided in favour of assessee.

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• 2021 (2) TMI 316
  Revision u/s 263 - accrual of income - Decree recognized interest on the decretal amount - Addition of accrued interest on decree amount for the reason that the assessee was following mercantile system of accounting - HELD THAT:- Assessing Officer has made specific inquiry on the issue of recovery of decretal amount vide letter dated 03-02-2014 and the assessee has submitted the detail of not showing such interest income vide letter dated 12.02.2014 during the course of assessment proceedings. Such details are reproduced and discussed supra in this order. It is demonstrated from above discussion that in the case of the assessee, the Assessing Officer has made specific inquiry and there was material on record before framing assessment order. CIT was not justified in holding that the Assessing Officer has not made specific enquiries with regard to interest income. In the light of the facts and findings as elaborated supra in this order we consider that order passed under section 263 of the Act is not sustainable in law, therefore, order passed u/s. 263 is quashed. Accordingly, the appeal of the assessee is allowed - Decided in favour of assessee.

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• 2021 (2) TMI 315
  Revision u/s 263 - Proceedings initiated in the name of non-existent entity - scheme of amalagamtion initiated - HELD THAT:- Order passed by the Ld. PCIT u/s 263 on the ground that the same having been passed in the name of M/s. Keshri Towers Pvt. Ltd., a non-existent entity which had already merged / amalgamated with M/s. Tanuj Properties Pvt. Ltd. is bad in law.- Decided in favour of assessee.

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• Benami Property

• 2021 (2) TMI 314
  Adjudication under the Prohibition of Benami Property Transaction Act - provisional attachment order passed under section 24(4)(a)(i) of the Act - HELD THAT:- We are of the view that debatable questions do arise in the present writ petition. Question is, when the law requires obtaining prior approval for passing of an order of provisional attachment under section 24(4)(a)(i) of the Act, whether such an order can be sustained when approval is granted post-facto. The second issue of substance is whether the amended definition of benami transaction in section 2(9)(D) of the Act can be applied retrospectively or it would have a prospective application. The matter would require further consideration. Issue notice.

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• 2021 (2) TMI 313
  Benami transactions/money laundering and evasion of income tax - real-estate transactions allegedly undertaken by respondent nos.6 to 15 - seek monitoring of the investigation being conducted by respondent nos.1 to 5 relating to benami transactions, tax evasion and money laundering by respondent nos.6 to 15 as mentioned in the complain - Petitioners also seek a Writ of Mandamus directing the disciplinary authorities of respondent nos.2 to 5 to institute disciplinary proceedings against delinquent officers of the Income Tax Department who are found to be in collusion with respondent nos.6 to 15 under Rule 13 of the Central Civil Services (Classification, Control and Appeal) Rules, 1965 - HELD THAT:- Without knowing the defence of defendants in the suit (because Written Statement of the defendants has not been filed) it is difficult to get a complete picture to draw any conclusion in the matter. Also, petitioners by leading evidence in the suit and by cross- examining witnesses for respondent nos.6 to 15 could prove their contentions in the suit. This Court is not inclined to go into the several contentions advanced in the Writ Petition and conduct a parallel enquiry to that which would happen in the civil suit when it would go to trial. On the basis of the material placed before this Court by the petitioners, i.e., copies of complaints made by counsel for petitioners, plaint in O.S.No.26 of 2020 and copies of the sale deeds referred to above, no adverse inference can be drawn against respondent nos.3 to 5 of any collusion with respondent nos.6 to 15 at all. We are also of the opinion that aspersions cannot be cast on officers of Government Departments solely on the basis of suspicions and assumptions of the petitioners tarnishing their reputation. There are several disputed questions of fact which would arise for consideration in the suit filed by the petitioners against 350 defendants including respondent nos. 6 to 15 herein. Petitioners want to buttress their pleadings in the suit by extracting information from the Income Tax authorities regarding respondent nos. 6 to 15 who are opponents of petitioners by filing the instant Writ Petition; and also wish to use the forum of the High Court to probably coerce the respondent nos.6 to 15 for some settlement. Filing of this Writ Petition is an abuse of process of Court and this Court cannot allow itself to be used as a private investigator by the petitioners to prove their contentions in the civil suit or to coerce the respondents for a possible settlement under threat of a prosecution from respondents 1-5 under the various statutes referred to above. Writ Petition does not deserve to be entertained by this Court, and it is accordingly dismissed at admission stage with costs.

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• 2021 (2) TMI 304
  Prohibition of Benami Property Transactions - property got by succession - plaintiff entitlement of estate of deceased - plaintiff are joint owners, possessors and successors of property - fabricated document styled as a sale deed - As contended that the 18th respondent is a conspirator along with the vendors - According to petitioner, the 18th respondent and its Directors are not innocent and bona fide purchasers of the property under the registered Sale Deed - HELD THAT:- The Written Statement filed by the 18th respondent is filed as Annexure P.14 in the Writ Petition and it discloses a substantial defence to the claim in the suit made by Saheb Zadi Mubarak Begum. There are several disputed questions of fact which arise for consideration in the suit. Whether the plea of the plaintiff is true or whether the stand of the 18th respondent / 8th defendant in the above suit is true, are matters to be gone into in the said suit after trial, and it is not necessary for us to express any view in the matter.The petitioner is set up by the said Saheb Zadi Mubarak Begum/plaintiff to file this Writ Petition in order to avoid any suspicion against her and that he is colluding with her and supporting her in the suit. Petitioner and plaintiff in the above suit, by leading evidence in the suit, and by cross-examining witnesses for respondent no.18, can prove their contentions in the suit. This Court is not inclined to go into the several contentions advanced in the Writ Petition and conduct a parallel enquiry to that which would happen in the civil suit when it would go to trial. Nor is it inclined to express any view on the respective contentions of the parties. Petitioner wants this Court to do a roving enquiry into the affairs of the Registration Department and the business affairs of respondent nos.14 to 35 and cull out, using this forum, information which could be used by him or the plaintiff in the above suit, to black mail or coerce the 18th respondent to some sort of settlement, if possible. This Court cannot allow itself to be used as a private investigator by the petitioners to prove their contentions in the civil suit or to coerce the respondents 13 to 35 in the Writ Petition. Also, solely on the basis of suspicions and assumptions of the petitioner, we do not deem it appropriate to cast aspersions on officers of Government Departments like respondent nos.8 to 10. We are of the opinion that filing of this Writ Petition is an abuse of process of Court and that the Writ Petition does not deserve to be entertained by this Court.

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• Customs

• 2021 (2) TMI 312
  Provisional release of attached goods - export of cut and polished diamonds - Circular No.30/2013-Customs, dated 05.08.2013 and Circular No.1/11-Customs, dated 04.01.2011 - HELD THAT:- There are no impediment to exercise of power by the Commissioner of Customs under section 110A of the Customs Act, 1962. The Commissioner of Customs directed to pass order(s) for provisional release of the exportable goods of the petitioners in accordance with law within seven days from the date of receipt of a copy of this order - Stand over to 01.02.2021.

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• 2021 (2) TMI 311
  Levy of Demurrage Charges - whether the second respondent was justified in insisting on payment of demurrage charges when the petitioner approaches them for clearance of the goods? - issuance of waiver certificate or not - HELD THAT:- In the case on hand, the learned counsel appearing for the second respondent referring to the decision of the Hon ble Delhi High Court in TRIP COMMUNICATION PVT. LTD, M/S. KRISHNARAJ IMPORTS VERSUS UNION OF INDIA OTHERS [ 2014 (4) TMI 101 - DELHI HIGH COURT] contended that the aforesaid regulation would come to the rescue of the petitioner only if he can show that he was not at fault. I express my respectful disagreement with the aforesaid view. The language of the regulation is simple and plain. When the goods remain seized or detained by the Customs authority and the petitioner is not able to clear them, he should not be charged any rent or demurrage for the said period. The petitioner cannot be made liable to make any payment towards detention or demurrage for the period up to 19.02.2020. The petitioner would have become fully liable to pay the charges as demanded by the second respondent, if the second respondent had originally taken a reasonable stand. It is seen that the petitioner was ready to clear the goods then and there. But the second respondent was insisting that the petitioner should pay even for the period during which the department proceedings were pending. It is beyond dispute that seizure was effected on 24.09.2019 and the proceedings got concluded only on 19.02.2020 - the petitioner cannot be made liable to pay any demurrage charges for this period. Whether the first respondent should be directed to issue Detention Certificate recommending waiver of demurrage and detention charges as prayed for? - HELD THAT:- It has been the practice of the authority to issue certificate when the circumstances warrant and when directed by the Court. Since the petitioner has made out a case, the first respondent is directed to issue detention certificate as sought for. Such certificate will be issued within a period of twelve weeks from the date of receipt of a copy of this order. Petition allowed.

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• 2021 (2) TMI 310
  Admissibility of application - collection of samples - allegation is that the proceedings are to be conducted by the Executive Magistrate and the application was dismissed as being not maintainable - HELD THAT:- It is apparent that the sanctity of the provision of Section 52A(2) of the NDPS Act, 1985, for drawing of the samples in the presence of a Judicial Magistrate is fortified and strengthened by the provisions of Section 52A(4) of the NDPS Act, 1985. The section fortifies the sanctity of the proceedings before the Judicial Magistrate in relation to inventory, the photographs of narcotic drugs or psychotropic substances and any list of samples drawn under Section 52A(2) and certified by the Magistrate, as being primary evidence in respect of such offence. The impugned order is set aside and in view thereof the learned Judicial Metropolitan Magistrate on duty on 8.6.2020 is directed to take up the application under Section 52A(2) of the NDPS Act, 1985, in File No. VIII(AP)10/P I/2665-C/Arrival/2019 of the case for drawing the samples in accordance with law - Furthermore, in as much as the alleged recovery of the contraband in the instant case is 1957 gms of Heroine which falls within the ambit of the commercial quantity in terms of serial no. 56 of the table prescribed under Clause vii (a) and Clause xxxiii of Section 2 of the NDPS Act, 1985, the learned Additional Sessions Judge seized of the application under Section 36A(4) of the NDPS Act, 1985 which is to be taken up for consideration on 10.6.2020 shall dispose of the said application on the date fixed. Petition disposed off.

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• Corporate Laws

• 2021 (2) TMI 309
  Approval of scheme of Amalgamation - section 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamation) Rules, 2016 - HELD THAT:- Various directions regarding holding and convening of various meetings issued - various directions regarding issuance of notice for the meetings also issued. Application disposed off.

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• 2021 (2) TMI 308
  Seeking a direction to the Respondents to maintain STATUS QUO with regard to the constitution of the 3rd Respondent Company, its Directions and Bankers, in the interest of justice and equity - Rule 11 of NCLT Rules, 2016 - HELD THAT:- The Tribunal, after considering the issue has already passed exparte Interim Orders on 26.06.2020 in I.A. Nos. 197 200/2020 by directing the Respondents to issue prior notice, if any proposal is there to remove the Applicant/Petitioner, as Directress, and to follow the extant provisions of the Companies Act, 2013 etc. However, none appears for the Respondents so far. Since the Applicant/Petitioner is stated to be holding 38% of the shares of the Company apart from position of Directorship, she is entitled to participate in the affairs of the Company and she is also entitled to receive perks on par with other Directors. Since the Tribunal is not in a position to hear the Respondents till now, we cannot pass further exparte interim orders, at present as prayed for. However, the Respondent No. 3, in the meanwhile, cannot force the Applicant to subscribe to Rights issue as offered to her, vide letter dated 07th July, 2020 until further orders. Application is hereby disposed of by directing the Respondents not to force the Applicant/Petitioner to accept on the Right Issue offered vide letter dated 07th July, 2020 until further orders.

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• Insolvency & Bankruptcy

• 2021 (2) TMI 307
  Maintainability of application - initiation of CIRP - company defaulted in payment of the dues and the loan account was treated as Non-Performing Asset - HELD THAT:- Though the learned Senior Counsel appearing for the petitioner, as well as the learned Standing Counsel appearing for the 1st respondent Bank, impressed upon the Court to consider their rival claim as to the bar of limitation in respect of the application filed by the 1st respondent Bank, this Court is not inclined to go into the claim in the light of the well settled position of law that the issue relating to limitation is a mixed question of law and facts, especially in the light of the plea taken by the 1st respondent Bank in Para No.27 of their application. It is brought to the notice of this Court by the respective learned counsel for the parties that the 2nd respondent Tribunal is yet to entertain the application. This Court permits the petitioner, cited as Corporate Debtor in the said application, to raise the plea of limitation by also putting the 1st respondent Bank on notice, and the 2nd respondent Tribunal is requested to decide on the basis of the materials placed, as to the maintainability of the application, especially in the light of the plea taken by the writ petitioner/Corporate Debtor with regard to the bar of limitation, and decide the same in accordance with law - Petition disposed off.

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• 2021 (2) TMI 306
  CIRP Costs or not - whether the advance paid to Corporate Debtor for the supply of goods during CIRP, on failure to supply part goods, during CIRP can be treated as CIRP costs? - HELD THAT:- The Resolution Professional is duty-bound under Section 20 of the Insolvency and Bankruptcy Code to make every endeavour to protect and preserve the value of the Corporate Debtor s property manage the operations of the Corporate Debtor as a going concern. Section 20 of the Code imposes a duty on the Resolution Professional to preserve and protect the Corporate Debtor s assets, including the continued business operations of the Corporate Debtor. Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons Regulations) 2016 deals with the provision regarding Insolvency Resolution Process costs. Regulation 31 provides that amount due to suppliers of essential goods and services under Regulation 32 shall be treated as Insolvency Resolution Process costs - In the instant case, it is noticed that the Corporate Debtor raised proforma invoice during CIRP for the supply of 900 metric tons of Ferro Silicon Manganese at the rate of US$ 1040 per metric ton. But it supplied only 162 metric tons of Ferro Silicon Manganese. It is also on record that the Corporate Debtor received an advance of US$ 507,314 for the supply of industrial raw material Ferro Silicon Manganese. It is also undisputed that the goods worth Rs.1 US$ 168,480 could be supplied and US$ 338,834 remained left as advanced money with the Corporate Debtor. During Corporate Insolvency Resolution Process the Corporate Debtor was under Management and control of the Resolution Professional. In this case, Liquidator has filed its Reply stating that the Appellant had filed Form G relating to its claim on 03rd January 2020, and that there is no document on record showing that the transaction was authorised or approved by the IRP/RP. It is further stated that he is in the process of obtaining details of the transaction from Respondent No.3. If the Appellant is aggrieved by his Order, he must file an Appeal under Section 42 of the Code before the Adjudicating Authority. That by filing the present Appeal, the Appellant has jumped one forum which should not be permitted - It is admitted fact that the Liquidator received the claim on 03rd January 2020. Section 40(2) mandates the Liquidator to communicate its decision of admission or rejection of the claim to the Creditor and the Corporate Debtor within seven days of admission or rejection of the claim. Section 42 of the Code provides that a creditor may file an Appeal before the Adjudicating Authority against the Liquidator s decision to accept or reject the claim, within 14 days from receipt of such decision. The Liquidator cannot simply sit on the claim without deciding the same one way or the other. A perusal of Section 20 of IBC makes it clear that after the CIRP is initiated, the IRP/RP is required to manage the Corporate Debtor s operations as a going concern. Section 20(2) (e) gives power to the IRP (Subsequently RP) to take all actions as are necessary to keep the Corporate Debtor as a going concern. In such a process of managing the business operations of the Corporate Debtor, if advance payments for supply of goods is received, it cannot be treated as raising an interim finance. It is an advance for payment of goods which the Corporate Debtor as a going concern may be manufacturing. The goods are either to be supplied, or the amount should be returned. If the goods are not supplied, the purchaser cannot be made to run for his money. If this approach as in the present matter is not changed, it will become difficult to keep the Corporate Debtors as a going concern. Such amount received as an advance payment for the supply of goods during the CIRP would have to be treated as CIRP costs. As in the present matter, the Liquidator failed to take a decision, one way or the other on the lame excuse that the Liquidator is in the process of obtaining details of transactions from Respondent No. 3 and now wants to claim that the Appellants have jumped forum, we feel it appropriate to give certain directions while disposing the present Appeal. Appeal disposed off.

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• 2021 (2) TMI 305
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - Refund of token amount - existence of debt and default or not - HELD THAT:- The binding Term Sheet dated 2nd August 2018 is a mere understanding between the parties which captures the basic commercial terms and contend a specific clause that the parties would endeavor to execute the Development Management Agreement and that if the Development Management Agreement is not executed within the stipulated time, the binding Term Sheet would be automatically terminated. The binding Term Sheet thus demonstrates that the Petitioner had undertaken to provide the service to their Corporate Debtor and the same did not fructify and was thus terminated / cancelled. The execution of Development Management Agreement would have qualified the Petitioner to claim the Development Management Agreement fees which is an Operational Debt but since the Development Management Agreement was not executed, the termination of the binding term sheet thus triggers the liability of refund of moneys as agreed under Clause 13 of the Term Sheet. The token amount was agreed was transferred by the Petitioner to the Corporate Debtor upon execution of the Term Sheet and therefore, as such upon termination of the Term Sheet, the token amount is to be repaid as agreed under Clause 13 and can be construed as the part of the Operational Debt and part services rendered to the Corporate Debtor in accordance with mutual obligations set out in the Term Sheet. The binding Term Sheet dated 2nd August, 2018 clearly stipulates the obligation of the Petitioner to pay the money to the Corporate Debtor at the time of execution of the Term Sheet and hence, the liability of refund of such monies paid is well defined in the case of termination of the Term Sheet. Therefore, the Corporate Debtor is liable to refund the token amount to the Petitioner which is part of the services provided to the Corporate Debtor. The Petition filed by the Operational Creditor is on proper Form 5, as prescribed under the Adjudicating Authority Rules and is complete - Petition under sub-section (2) of Section 9 of I B Code, 2016 filed by the Operational Creditor for initiation of CIRP in prescribed Form 5, as per the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 is complete. The existing operational debt beyond the threshold limit against the Corporate Debtor and its default is also proved. Accordingly, the Petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of corporate insolvency resolution process against the Corporate Debtor deserves to be admitted. Application admitted - moratorium declared.

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• Service Tax

• 2021 (2) TMI 300
  Refund claim - time limitation - appeal not filed within 6 months from the date of the Finance Bill, 2016 received the assent of the President i.e. by 13.11.2016 - validity of refund only to the service provider and not to the party being the service recipient - relevant date for claiming Service Tax refund - output services in the instant case were fully tax exempt - retention of CENVAT Credit - refund of exports as provided under Rule 5 of the CCR, 2004 - Section 103 of the Finance Act, 1994 - HELD THAT:- Undisputedly the appellant in the present case is the service recipient, who has paid the service tax against the invoices issued to them by the service providers. The service providers have in turn collected the service tax and deposited the same as per the assessment made by them in their ST-3 return. These ST-3 returns which are self assessed have been filed by the service provider and there is no appeal filed by any person aggrieved by the said self assessment order. Counsel for the appellant submitted that what they are claiming is the refund of the accumulated CENVAT Credit which has accumulated in their credit account for the reason of the payment of service tax which was not due from them. The argument of the counsel though appears attractive but needs to be rejected at the first instant itself, because as per the CENVAT Credit rule the refund of accumulated CENVAT Credit is permitted only as per the Rule 5 of the CENVAT Credit Rules, 2004 and definitely the case under consideration cannot be said to be the case in terms of Rule 5 - Appellant submitted for getting the refund applications processed they had reversed the entire amount claimed as refund by them from their Input Tax Credit Ledger under GST regime. This fact is not in dispute. In fact the details of the debits made by the appellants from their ITC Ledger, have been recorded by the Assistant Commissioner in his order. Since we hold that the refund applications as such are not maintainable, Assistant Commissioner should consider restoring the input tax credit so debited by the appellant to them if permissible in the GST Law. With regards to the CENVAT Credit has been adjudged subsequent to changeover from the previous regime of Central Excise and Service Tax to the regime of GST. In all the cases the refund application or the rebate claim was filed before 01.07.2017 and determined subsequent to that date. It is not so in the present case. In the case of the appellant the CENVAT credit was available in the book of accounts of the appellant and had been carried forward by them to the GST regime, in manner as provided under the GST Law. The appellants for the processing of the refund claims have not debited the CENVAT account, but have debited the amounts from their Input Tax Credit Ledger. Hence in our view there is no case for cash refund of the amounts debited from the Input Tax Credit Ledger - the matter is remitted back to the original authority for considering allowing the re-credit of the amounts of ITC Credit debited by the Appellant for the processing of these refund applications, if permissible under the GST Law - Appeal disposed off.

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• Central Excise

• 2021 (2) TMI 303
  Refund of countervailing duty - Payment of CVD on return / re-import of goods - entitlement to take credit amount of CVD paid by them on return of the goods under Rule 16 of the Central Excise Rules, 2002 - Section 11B of the Central Excise Act - HELD THAT:- It is the Respondent s case that credit of CVD in this case is not admissible as the imported goods are clearly finished goods and cannot be input under the Cenvat Credit Rules, 2004. The appellant while pleading refund of Cenvat Credit under section 11B of C.E.A, 1944 read with Rule 16 of C.E.R, 2002, has neither categorically stated as to what happened to the goods after receipt in the factory, nor enclosed any document as are required to be furnished in terms of section 11B, to establish that the amount of duty of excise and interest paid by him had not been passed on by him to any other person. Evidently, the appellant received the finished goods on re-importation after paying additional duty before the Customs authorities at Kolkata. As such, finished goods were not within the meaning of inputs ,as per Rules 3, 4 and 7 of Cenvat Credit Rules, 2004. They were not brought to the factory for being remade, refined, re-conditioned or for any other reason in terms of Rule 16 of C.E.R, 2002. The analysis of the relevant provisions under Section 11B of C.E.A, 1944, Rule 16, 18 and 19 of C.E.R., 2002 and Rule 2, 3, 4, 7 of Cenvat Credit Rules, 2004, discussed above, leave no room of doubt that the receipt of finished goods upon re- importation in the factory of the appellant, as claimed, were not in the form of inputs / raw materials for use in the process of manufacture. As such finished goods were not brought into the factory for being re-made, refined, re-conditioned or for any other reason. If such goods were not inputs or raw materials upon which the assessee was entitled to claim Cenvat Credit upon payment of additional duty (CVD) under Customs Tariff Act, 1975, the assessee could not have claimed refund thereof from the Central Excise Authorities invoking Section 11B of C.E.A, 1944 read with Rule 16 of C.E.R, 2002. The application for refund of countervailing duty is maintainable under section 11B of Central Excise Act, provided it satisfies the conditions prescribed under Cenvat Credit Rules, 2004 as being treated as inputs and under Rule 16 of CER 2002 such goods / inputs have been brought into the factory for being re-made, refined, re-conditioned or for any other reason by the assessee - In the facts of the present case, since return of the finished goods in the factory of the appellant could not qualify as inputs and neither were such goods brought into the factory for re-conditioning, re-making and re- packaging, therefore claim of refund before the Central Excise authorities of additional duty (CVD) was rightly held to be not maintainable. The appellant assessee had not able to establish through accompanying documents and other evidence that such duty has not been passed on by him to any other person, as required under section 11B of Central Excise Act, 1944. Any refund of countervailing duty under section 11B of Central Excise Act, 1944 is maintainable only if the conditions prescribed under Cenvat Credit Rules, 2004 for treating it as inputs are fulfilled and such goods satisfy the conditions prescribed under Rule 16 of C.E.R, 2002. The application for refund of countervailing duty by the appellant under section 11B of Central Excise Act, 1944 was not maintainable - appeal dismissed.

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• 2021 (2) TMI 302
  Recovery of Central Excise Duty based on Audit Objections - CIRP Proceedings are pending - petitioner fairly submits that on account of the moratorium declared under Section 14 of the Insolvency Bankruptcy Code, 2016, the writ petition cannot be pursued any further at this stage - HELD THAT:- Upon hearing learned counsel for the parties and taking note of the Insolvency Resolution Process underway against this company and the moratorium on continuation of any pending proceedings under Section 14 of the of the Insolvency Bankruptcy Code, 2016, the present writ petition cannot be entertained. Petition disposed off.

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• 2021 (2) TMI 301
  Maintainability of appeal - case of Revenue is that there is no substantial question of law involved in the present appeal inasmuch as the appeal has been preferred regarding dismissal of a condonation application - HELD THAT:- The Appellate Tribunal ought to have condoned the delay in respect of the present appellant and also hear the appeal on merit rather than dismissing the application on the ground of delay. We have also gone through the cryptic order passed by the Appellate Tribunal in dismissing the application seeking condonation of delay which does not appear to be supported by reasons. This, in our view, amounts to substantial question of law as far as this issue is concerned in this proceeding. Appeal allowed.

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• CST, VAT & Sales Tax

• 2021 (2) TMI 332
  Restriction on use of C Forms for the inter-state purchases of six commodities - circular dated 05.09.2019 - HELD THAT:- Since as on date, the order made in the writ appeal is final, the writ petition has to be necessarily allowed. It is accordingly allowed. The petitioner is entitled to the inclusion of High Speed Diesel Oil as a commodity in the registration certificate. Let this exercise be carried out within a period of four (4) weeks from the date of uploading of this order. The request of the petitioner for issuance of C Forms is allowed as a consequence thereof. Petition allowed.

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• 2021 (2) TMI 299
  Recovery proceedings - Attachment of registered property of the petitioners - Section 152 of Bombay Land Revenue Code, 1879 - whether the impugned notice under Section 152 of the Bombay Land Revenue Code, 1879 could have been issued for the purpose of recovery of tax as determined, pending the appeal and the stay application before the Gujarat Value Added Tax Tribunal at Ahmedabad? - HELD THAT:- It is not in dispute that the appeal and the stay application is pending as on date before the Tribunal. We are of the view that as the appeal and the stay application is yet to be adjudicated by the Tribunal, there should not be any further proceedings under Section 152 of the Land Revenue Code. In fact, we may observe that no such notice under Section 152 of the Code could have been issued. Thus, at-least till the stay application is disposed of, the department should not initiate any action for the purpose of recovering the tax demand. The impugned notice dated 18.07.2019 issued by the respondent no.2 under Section 152 of the Land Revenue Code is quashed - application disposed off.

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• 2021 (2) TMI 298
  Refund the additional sales tax collected - Section 55 of TNGST Act - HELD THAT:- It goes without saying that the assessment made on the petitioner by the second respondent requires to be revised by following the law, which has been laid down in the aforesaid mentioned decisions. Therefore, we are of the view that the Tribunal should have exercised its jurisdiction and issued appropriate directions to the Assessing Officer instead of rejecting the application filed by the petitioner under Section 55 of the Act. The impugned order is set aside and the matter is remanded back to the Assessing Officer to apply the aforesaid mentioned decisions and pass fresh orders in accordance with law - Petition allowed by way of remand.

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• 2021 (2) TMI 297
  Correctness of the rejection of the application seeking refund - Time limitation - rejection on the ground that the same was filed beyond the prescribed period of 180 days without sufficient explanation being furnished explaining the delay in filing the application for refund - HELD THAT:- It is seen that Section 50 of the Assam Value Added Tax, 2003 provides that, if it is found on assessment or reassessment that a dealer has paid tax, interest or penalty in excess of what is due from him, the Prescribed Authority shall, on a claim being made by the dealer in the prescribed manner and within the prescribed time refund to the dealer the amount of tax, penalty and interest paid in excess by him - The Rule 29 of the Assam Value Added Tax Rules 2005 provides that a claim for refund as provided under Section 50(1) of the AVAT Act, 2003 shall be made in Form 37 within 180 (one hundred and eighty days) from the date of assessment or reassessment. The said Rule prescribes the manner in which the Form is to be filled and submitted seeking claim of refund. Provisio to Rule 29(1)(a) of the AVAT Rules gives a latitude to the Prescribed Authority to entertain an application seeking refund submitted even after the prescribed period of 180 (one hundred and eighty days) from the date of assessment or reassessment as the case may be. The Prescribed Authority may consider the refund claim if it is satisfied that the dealer had sufficient cause for not making an application within the said period. What will be sufficient cause has not been described in the statute. The Prescribed Authority is given the liberty to entertain such claims that may be filed even after the expiry of prescribed period of 180 (one hundred and eighty days) from the date of assessment or reassessment on sufficient causes being shown by the dealer. Accordingly, it is implied under the provisions of Section 50 of the AVAT Act 2003 read with Rule 29(1)(a) AVAT Rules 2005 that if cause(s) shown by a dealer are not considered to be sufficient then the Prescribed Authority must reflect and disclose the reasons therefor in the order passed by the Prescribed Authority rejecting any claim for refund made by a dealer, namely the petitioner company in the present proceeding. The impugned order is interfered with and is accordingly set aside and quashed - matter is remanded back to the respondent authorities to re-decide on the question of grant of refund as prayed for by the writ petitioner - Petition allowed by way of remand.

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