Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 10, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Provisional Attachment of Bank Account of petitioner - striking the balance in wake of the details which have come on record of M/s. Arsh Enterprise it would be apt to release the Bank account by directing the Bank to not permit the petitioner to operate so far as the tax amount in dispute - HC
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Jurisdiction of Inspection u/s 67 and collection of collected records/documents - Existence of reasons to believe - Necessarily the contentions of the petitioner as raised in this writ petition including questioning the jurisdiction of the second respondent to issue the intimation letters all dated 07.01.2023 has to be decided by the third respondent before passing final orders after affording an opportunity of personal hearing to the petitioner and also considering their reply, which they propose to send in due course - HC
Income Tax
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Settlement of a Case - Procedure u/s 245D - Non deposit of admitted tax u/s 245C on time - Payment of the taxes of additional income partly by way of adjustment against cash seized. - On receiving notice, petitioner paid the amount through challan and placed the same on file - The confusion and the error, if at all, arises only from the contents of letter dated 17.12.2018. The unambiguous impression that it conveys is that the entirety of the credit determined as balance in the PD account enured to the benefit of this petitioner. - Settlement application stands restored - HC
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Delayed filling Return of income - Disallowance of deduction u/s.80IA(7) - Since the assessee- HUF was required to get its accounts audited, the case falls in Explanation 2(a)(ii) to section 139(1), entitling the assessee to the extended date of 31-10-2019. As the return was filed before the extended due date, we hold that the assessee is entitled to the benefit of deduction u/s.80IA(7) and also carry forward of the short term capital loss as discussed above. - AT
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Weighted deduction u/s 35(1)(ii) in respect of donations paid to one NGO - the modus operandi and non-genuineness of the donation was brought to light - Since, we held that the doctrine of fraud is applicable to the facts of the present case, even the principles of natural justice have no application, therefore, we uphold the orders of the lower authorities and dismiss the ground of appeal filed by the assessee. - AT
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Addition u/s 68 - bogus LTCG - The principle of fraud can be squarely applied to the facts of the present case and principles of natural justice have no application. - the transaction of purchase and sale of shares under consideration before us is void ab-initio, this is nothing but sham, make believe and colourful device adopted with excellent paper work with intention bringing the undisclosed income into books of account. - AT
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Salary income - reduction in the salary income disclosed in the revised return filed - The assessee had made a refund of an amount on account of provisions contained in the confidentiality and noncompete agreement read with MOU between the assessee and Vedanta Ltd. and therefore, such refund cannot be construed as salary for the purpose of charging to tax. Such amount therefore, is not assessable as income. - AT
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House property - Disallowance of interest claimed on second loan u/s.24(b) - Applicability of DBDT circular - Ld. CIT(A) recorded categorical findings that the assessee has used second loan to re-pay existing loan and there is a nexus between loan borrowed from purchase of property and thus, the assessee is entitled for deduction towards interest paid on second loan. - Claim allowed - AT
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Additions towards written off of creditors - cessation of liability - there is no liability in the Books of Accounts as per the transfer of the projects to its sister concern. Therefore, the Assessing Officer has merely presumed that the assessee has written off these sundry creditors and he presumed that this falls under deemed income of the assessee. Ld. CIT(A) has verified the development agreement and came to the conclusion that the assessee has transferred the project along with the liability to its sister concern. - AT
Customs
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Smuggling - Prohibited goods or not - The appellate authority could not adjudicate on merits. Therefore, the balance needs to be struck by allowing the petitioner to approach the appellate authority by furnishing the amount of predeposits of the requisite amount. Resultantly, without making any interference with the OIO, all the petitioners are permitted to approach the appellate authority. - HC
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Revocation of Customs Broker License - Time Limitation for issuance of order - Since the notice in this case, was issued beyond the period of ninety days from the Offence Report, the impugned order cannot be sustained - It is also not disputed that the petitioner has not acted as a Customs Broker in respect of exports under the offending Shipping Bills. - HC
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Rejection of claim of duty drawback - Period of limitation - It is also not in dispute that the petitioner has satisfied all the statutory requirements for claiming duty drawback as per the provisions under Section 74 of the Customs Act, 1962. When the petitioner has given detailed reasons as to why they were unable to file the duty drawback claim within the prescribed time, the first respondent ought to have considered the said reasons objectively - HC
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Rejection of refund of Extra Duty Deposit - applicability of principles of natural justice - Extension of period of limitation as per the SC order - The respondents are bound to consider the orders passed by the Supreme Court notwithstanding that the same are not referred to by the applicants. - Matter restored back - HC
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Penalty u/s 112(a) of Customs Act, 1962 on steamer agent - hat the confiscation of the said vessel for alleged violations of chapter VI of Customs Act, 1962 as well as the duty liability arising from misuse of ‘ship stores’ and ‘bunkers’ had been set aside by the Tribunal. In such circumstances, the related act of wrong-doing has ceased to be and consequently there is no scope for imposition of penalty - No penalty - AT
IBC
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Recovery of outstanding tax dues - Validity of attachment orders issued by the Income Tax Department - since the Resolution Professional intimated the Appellants (IT Department) that the demand after finalization of appeal by CIT(A) would be payable by the new promoter, such written intimation of the Resolution Professional is to be read with the new resolution plan and the demand of the Appellants is duly considered and the Appellants have a right to lay its claim before the new promoter of the Respondent Company. - AT
SEBI
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Decision to write off Additional Tier 1 (AT-1) bonds - Validity of agreement - Scope of Master Circular of RBI - The covenant and the terms in the Information Brochure i.e. between the parties is based on statutory Master Circular. Information Memorandum and its clauses refer to Master Circular. The said Information Brochure has a statutory flavour. It is based on the statutory Master Circular. In that event, the agreement would have a statutory base and such an agreement can certainly be enforceable. - HC
Service Tax
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Extended Period of Limitation - The appellant alternatively claimed the benefit of Section 73 (3) of finance Act, 1994 on the ground that the entire service tax along with interest paid prior to show cause notice. Considering this position the demand for extended period is not sustainable hence the same is set aside. Demand for the normal period if any, is sustained along with interest. - AT
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Demand of service tax for the service provided to SEZ for the service wholly consumed within their SEZ - the service of erection, commissioning and installation is indeed used and wholly consumed in the SEZ therefore, the appellant is eligible for exemption under notification no.9/2009-ST as amended - AT
VAT
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Interest of refund of excess amount paid - Although the petitioner has not approached this Court immediately after the refund of tax became due, we are unable to accept that the same disentitles the petitioner from claiming what is rightfully due - this Court directs the respondents to process the petitioner’s claim for interest in accordance with law. - HC
Case Laws:
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GST
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2023 (2) TMI 323
Violation of principles of natural justice - Validity of assessment order - non-application of mind - no personal hearing was afforded to the petitioner before passing of the impugned Assessment Order - input tax credit has been reversed by the petitioner himself - non-response to SCN due to medical ailments - HELD THAT:- Admittedly, the show cause notice was issued only during the time when the petitioner was suffering from health ailments. The petitioner did not respond to the show cause notice dated 15.12.2021. Clause 4 of Circular No.1/2023-TNGST, dated 04.01.2023 states that proper officer shall first seek the details from the registered person regarding all the invoices on which ITC has been availed by the registered person in his FORM GSTR 3B but which are not reflecting in his FORM GSTR 2A. He shall then ascertain fulfillment of the following conditions of Section 16 of TNGST Act in respect of the input tax credit availed on such invoices by the said registered person - As seen from the impugned Assessment Order, it is not clear as to whether Clause 4 of Circular No.1/2023-TNGST, dated 04.01.2023 was adhered to by the respondent before passing the impugned Assessment Order. Even though the Circular came in later point of time, the instructions given in the said Circular ought to have been adhered to by the respondent before passing the impugned Assessment Order and only then, it can be construed that the respondent has adhered to the principles of natural justice. This Court is of the considered view that the principles of natural justice has not been adhered to by the respondent and the impugned Assessment Order is also a non speaking order with regard to the Annual Return submitted by the petitioner for the Assessment year 2018-19. Hence, the impugned Assessment Order has to be quashed and the matter will have to be remanded back to the respondent for fresh consideration on merits and in accordance with law - Petition disposed off.
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2023 (2) TMI 322
Provisional Attachment of Bank Account of petitioner - emphasis on the part of the petitioner is that the recourse to the powers of section 83 of the Act could be only in exception circumstances - HELD THAT:- The proper officer is always required to ensure that there are action of the provisional attachment may not hamper normal business activities of the taxable person. Of course, the summons had been issued against the petitioner after getting the inquiry made against M/s. Arsh Enterprise, the procedure that had been required to be followed as per the Circular and also on issuance of FORM DRC 01A had not been done before the provisional attachment of the Bank account had been made. There is no explanation as to why the FORM DRC-01A has been issued on 18.01.2023 could not have been done if, it was for ascertaining the preliminary details and for protecting the revenue. The guidelines issued by the Circular of CBEC on 23.02.2021 also make it amply clear that the remedy of attachment being by itself very extra ordinary needs to be resorted to with at most circumspection and maximum care and caution, which in the instant case appear to have been missing and hence, that order needs to be quashed and set aside - At the same time being aware of the inquiry which has been made against M/s. Arsh Enterprise and the purchase having been made by the present petitioner in 2018-19 from M/s. Arsh Enterprise for the goods worth Rs.37,21,420/-.However, striking the balance in wake of the details which have come on record of M/s. Arsh Enterprise it would be apt to release the Bank account by directing the Bank to not permit the petitioner to operate so far as the tax amount of Rs.3,95,568/- for the year 2018- 19 and tax amount of Rs.1,72,104/- for the year 2019-20. The amount of tax amount of Rs.3,95,568/- for the year 2018-19 and tax amount of Rs.1,72,104/- for the year 2019- 20 which the Bank is directed not to part with, let the said amount be parted once there is a direction subject to the crystallization of this liability of the petitioner and subject to the order of the Appellate Authority if any appeal is preferred within the time frame given under the statute. For the remaining amount of penalty and interest, the petitioner shall furnish the bond before the authority concerned. Petition allowed.
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2023 (2) TMI 321
Cancellation of GST registration of petitioner - non-filing of GST returns for a continuous period of six months - reply of the petitioner was found to be not satisfactory - appeal dismissed on the ground that the appeal was filed not only beyond the period of limitation but also beyond the extended period of limitation. HELD THAT:- Since no Tribunal has been constituted in the State of Telangana in terms of Section 112 of the Act, the present writ petition has been filed. Issue raised in this writ petition is no longer res integra . In M/S. CHENNA KRISHNAMA CHARYULU KARAMPUDI VERSUS THE ADDITIONAL COMMISSIONER APPEALS1 AND ANOTHER [ 2022 (7) TMI 82 - TELANGANA HIGH COURT] , which has been followed in subsequent decisions, this Court had remanded the matter back to the file of the primary authority to reconsider and pass appropriate order after giving opportunity of hearing to the petitioner - It was held that the issue pertains to cancellation of GST registration of the petitioner. In the facts and circumstances of the case, it would be just and proper if the entire matter is remanded back to respondent No.2 to reconsider the case of the petitioner and thereafter to pass appropriate order in accordance with law. The orders are set aside and matter remanded back for fresh consideration.
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2023 (2) TMI 320
Jurisdiction of Inspection u/s 67 and collection of collected records/documents - Existence of reasons to believe for carrying out inspection under Section 67 of the TNGST Act, 2017, or not - HELD THAT:- Admittedly, no final orders have been passed pursuant to the impugned intimation letters all dated 07.01.2023. When inspection has been carried out pursuant to the impugned authorisation dated 21.12.2022 and that too, when no final orders have been passed and only an intimation has been given to the petitioner about the proposal to levy taxes, interest and penalty and the petitioner has also been given an opportunity to submit a reply and has also been afforded with personal hearing, the question of entertaining this writ petition at this stage will not arise, as it is premature. However, necessarily the contentions of the petitioner as raised in this writ petition including questioning the jurisdiction of the second respondent to issue the intimation letters all dated 07.01.2023 has to be decided by the third respondent before passing final orders after affording an opportunity of personal hearing to the petitioner and also considering their reply, which they propose to send in due course. This writ petition is disposed of by directing the petitioner to submit a reply to the impugned show cause notice and the intimation letters all dated 07.01.2023 to the third respondent within a period of two weeks from the date of receipt of a copy of this order stating the contentions that have been raised in this writ petition.
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Income Tax
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2023 (2) TMI 319
Reopening of assessment u/s 147 - absence of service of notice u/s 142(1) - HELD THAT:- This Court is of absence of service of notice u/s 142(1) issued by the respondent on 21.2.2022 for being unavailable on the web portal and the order disposing of the objections on 19.3.2022 and also the order disposing of the objections of the petitioner. The chronology of events referred to the two orders of disposing of the objections one which is of 15.9.2021 against which objections were raised by the petitioner on 21.9.2021 which though was not responded to, the another speaking order of disposing of the objections had been received by the petitioner on 19.3.2022. What this Court is to be concerned with is non availability of the notice dated 21.2.2022 on webportal. The income tax department has already emplaned the technological advancement and its insistence also is for uploading the return of income and all documents on webportal. Any technological glitch of the software web-portal would surely prejudice the assessees seriously and therefore, when in the affidavit-in- reply also, nothing has been explained and in relation to the specific averments of non-service of this notice u/s142(1) can surely be noticed, this technical glitch is not permitting the respondent to fulfill its statutory obligation of serving the notice to the petitioner. Therefore, the order of assessment which has been passed subsequently in breach of the availability of opportunity of hearing which is required to be given to the petitioner, this action of the respondent would warrant interference. This Court needs to also hold that the Court cannot be oblivious of the fact that the assessment is filed on National Faceless Assessment Centre and the appeal also is required to be filed before the National Faceless Assessment Centre. The technical glitch would seriously prejudice the rights of the parties and therefore by quashing and setting aside the order of assessment, the matter needs to be relegated to the authority concerned from the stage of issuance of notice u/s 142(1). Let the reply be tendered by the petitioner within two weeks of service of notice.
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2023 (2) TMI 318
Validity of assessment - show-cause notice was issued by the Assessing Officer (AO) without taking into account the fact that the petitioner had filed a reply - HELD THAT:- Although the petitioner s reply dated 08.12.2022 was on record, a show-cause notice dated 09.12.2022 was issued, without having regard to the reply, we are inclined to quash the impugned notices and order. There was, to our minds, clearly a failure to adhere to the directions contained in Clause N.1.3 of the Standard Operating Procedure (SOP) for Assessment Unit (AU) dated 03.08.2022; which required a minimum timeframe of seven days to be given to the noticee i.e., the petitioner. It is directed accordingly. The impugned notices and order are quashed.
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2023 (2) TMI 317
Settlement of a Case - Procedure u/s 245D - Non deposit of admitted tax u/s 245C on time - Payment of the taxes of additional income partly by way of adjustment against cash seized. - On receiving notice, petitioner paid the amount through challan and placed the same on file - HELD THAT:- The provisions of Section 245C impose a pre-condition that the entirety of the admitted tax in respect of the amount offered be deposited along with the settlement application at the time of filing. The petitioner has proceeded in line with the contents of letter dated 17.12.2018 that convey that an amount of Rs.11.15 crores (approx.) is available to the credit of the petitioner in the PD account. It is thus that the petitioner has availed credit of a sum of Rs.9,23,01,365/- from the said amount towards the amount of tax due. The confusion and the error, if at all, arises only from the contents of letter dated 17.12.2018. The unambiguous impression that it conveys is that the entirety of the credit determined as balance in the PD account enured to the benefit of this petitioner. Immediately and coming to know of the same, the petitioner has remitted the sum of Rs.1.5 crores and this, in my considered view, constitutes substantial and adequate compliance of the statutory condition. The impugned order is thus set aside. The Settlement application stands restored to the file of the Settlement Commission (Interim Board) that shall hear the petitioner as expeditiously as possible.
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2023 (2) TMI 316
Bogus purchases - non personal appearance of Company from whom assessee made purchases - CIT-A deleted addition - HELD THAT:- No adverse inference can be drawn against the assessee merely because of non personal appearance of the Prop. of Bengali Chain Co. before the Ld. AO from whom the assessee had made purchases. Admittedly, in response to summons issued by the Ld. AO u/s 131 Shri Muni Ram Verma, Prop. of Balaji Chain Co. appeared before the Ld. AO on 15.02.2019 and his statement was duly recorded in which he confirmed having made sale of jewellery items to the assessee during the year. CIT(A) has observed appellate order that in the statement Shri Muni Ram Verma, Prop. of Balaji Chain Co. clearly states that he is furnishing bank statement and also furnished statement of copy of account and copy of bills as proof of transactions and sales and payment. CIT(A) also recorded finding of fact with which we agree that proper and satisfactory answers to all questions were given and documents required in terms of notice were already produced by Shri Muni Ram Verma, Prop. of Balaji Chain Co. We decline to interfere with the order of the Ld. CIT(A) holding that the impugned addition is not justified. Appeal of the Revenue is dismissed.
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2023 (2) TMI 315
Reopening of assessment u/s 147 - Reopening beyond period of four years - assessee wrongly claimed deduction towards TDS and provision for N.P.A.which were required to be disallowed - HELD THAT:- The original assessment in this case was completed u/s.143(3) and the notice u/s.148 was issued after a period of four years from the end of the relevant assessment year, namely, 2010-11. Proviso to section 147, at the material time, provides that when an assessment has been completed u/s.143(3) and the Assessing Officer seeks to reopen the assessment after a period of four years from the end of the relevant assessment year, it is incumbent upon the AO to first show that the income chargeable to tax had escaped assessment by reason of failure on the part of the assessee, inter alia, to disclose fully and truly all material facts necessary for assessment. The items of expenses, taken note of by the AO in the notice u/s.148, may lead to prima facie escapement of income, but such items cannot come within the ambit of section 147 after a period of four years from the end of the relevant assessment year. The assessee claimed the above two deductions ex facie the Profit and loss account, which got allowed by the AO in the assessment u/s.143(3). The inference of the AO that these two items did not qualify for deduction, does not fall within the realm of failure of the assessee to disclose fully and truly all material facts necessary for reassessment - we hold that the reassessment was wrongly initiated. The same is, therefore, quashed. Assessee appeal allowed.
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2023 (2) TMI 314
Delayed filling Return of income or not - Assessee was required to get its accounts audited - Disallowance of deduction u/s.80IA(7) - Non permitting carry forward of current year short term capital loss - Intimation u/s 143(1) - assessee filed return beyond the due date as prescribed u/s 139(1) of the Act - as per CIT-A held the assessee to be disentitled to the benefits on the ground that the extension did not apply to the assessee-HUF - HELD THAT:- Clause (a)(ii) of Explanation 2 to section 139(1) deals with `due date as concerning a person other than a company whose accounts are required to be audited under the Act or under any law for the time being in force. The accounts of the assessee were audited, which is an admitted position. CIT(A) has denied the benefit of the Board s Order by opining that an HUF cannot be considered as a `person . In our considered opinion, this interpretation is not in accordance with law. Clause (a)(ii) of the Explanation 2 to section 139(1) covers any person whose accounts are required to be audited. Such a `person may be Individual, HUF or a Body Corporate etc. Since the assessee- HUF was required to get its accounts audited, the case falls in Explanation 2(a)(ii) to section 139(1), entitling the assessee to the extended date of 31-10-2019. As the return was filed before the extended due date, we hold that the assessee is entitled to the benefit of deduction u/s.80IA(7) and also carry forward of the short term capital loss as discussed above. Assessee appeal is allowed.
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2023 (2) TMI 313
Profit earned from the sale of PSTL shares - Treatment of Business Income OR Long-Term Capital Gain - as AO noted that SEBI has found the assessee to have manipulated the share price of PSTL with ulterior motives and has banned the assessee from doing any trading in the stock markets - why the entire long-term capital gains be not taxed as income from business or profession on the basis that the assessee was engaged in the trading in shares of PSTL and made a profit on the transaction without earning any dividend or received a meagre dividend - HELD THAT:- In the present case, it is evident from the record that the assessee has been found to be involved in manipulating the prices of shares of PSTL by the SEBI. However, even thereafter the AO merely taxed the gains arising from the share transaction as business income. As is evident from the record, the AO never alleged in the present case that since the gains have arisen from the manipulative transaction of rigging the price by issuing the forged letter of SEBI, therefore, the entire long-term capital gain, claimed as exempt by the assessee from the transaction in shares of PSTL, is not genuine and thus added the same to the total income of the assessee. AO has based its order on the issue of treatment of long-term capital gain as business income . As per the assessee, he has two portfolios, (i) investment portfolio, and (ii) trading portfolio, and the shares of PSTL were always held under the investment portfolio. We find that the said fact is also evident from the relevant extracts of Schedule-4 to the balance sheet and profit and loss account, annexed to the impugned order, wherein PSTL is appearing under the head investment . From the details of the share transaction of PSTL scrip, on page 9 of the assessment order, it is evident that after purchasing the shares on 27/03/2006, the assessee held the shares for a period of more than 2 years before its sale in the year 2008. Further, nothing contrary has been brought on record to controvert the findings of the learned CIT(A) that these shares have been shown as an investment and the same were treated as an investment by the Revenue, in the preceding years. No infirmity in the findings of the learned CIT(A) in treating the profit earned from the sale of PSTL shares as a long-term capital gain. Since the SEBI has computed the unlawful gain of Rs.32,50,882 from the price manipulation of shares of PSTL, CIT(A) restricted the addition to the aforesaid amount by treating the same as income from unlawful activity. Thus, in view of the above, we find no infirmity in the impugned order passed by the learned CIT(A). As a result, all the grounds raised by the Revenue are dismissed.
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2023 (2) TMI 312
Penalty u/s 271(1 )(c) - changing method of recognition of income from project completion to percentage completion - Necessity to mention specific provision - income recognized had increased from zero in the return filed in response to notice issued u/s. 153A - HELD THAT:- In AO s penalty order that he has nowhere invoked the foregoing deeming fiction of furnishing of inaccurate particulars of undisclosed taxable income as per his detailed discussion comprising of nine pages. Revenue has further not placed on record any such notice to this clinching effect. Explanation 5A to sec.271(1)(c) is a special provision imposing deeming fiction of an assessee having both concealed particulars of his taxable income as well as furnishing of inaccurate particulars of such income, as the case may be, in an instance of a search carried out on or after 01.06.2007. Once the Assessing Officer had nowhere invoked the above specific provision, there is hardly any justification on Revenue s part to quote general principles of furnishing of inaccurate particulars u/s.271(1)(c) of the Act. The Revenue could further not dispute the clinching fact taken note of both in the assessment order as well as the CIT(A)'s order before us the assessee had already filed his revised return declaring the very income of Rs.1,83,86,690/- which stood duly accepted and processed. Revenue s reliance on hon'ble apex court s decision Mak Data Pvt. Ltd.[ 2013 (11) TMI 14 - SUPREME COURT] we note that the said assessee was found in possession of bogus share application form and other documents as against facts of the instant case wherein this taxpayer had only followed project completion method. We make it clear that Revenue s instant arguments deserve to be rejected only in light of the foregoing factual matrix i.e., non-application of Explanation 5A to sec.271(1)(c) of the Act and filing of revised return at the assessee s behest indicated hereinabove. Decided against revenue.
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2023 (2) TMI 311
Reopening of assessment u/s 147 - deemed income u/s. 69A of the Act and taxed u/s. 115BBE - payment against the sale of 54 flats was received in cheques by the Assessee, on which the Assessee has not given any explanation regarding not mentioning of the transaction in the audit report - HELD THAT:- Since the Assessee did not ever present the cheque to the bank, there is no question of realization of the cheques. In the matter of mentioning of this amount in 3CD report, the cheques of this amount were taken as abundant precaution to secure the interests and not as advance/income and hence, the Assessee was not under obligation to report this alleged income in form 3CB and 3CD, as there is no appropriate column to disclose such cheques which are taken (to secure the interests) in lieu of incomplete and unfulfilled agreement. Vide letter M/s. Shubhkamna Buildtech Pvt. Ltd. has asked for not depositing the issued cheques handed over vide agreement dated 04.03.2012 and to return the same. In this case, the argument of the ld. AR is understandable that if this income is considered as accrued, the claim of the Assessee is that the same became a bad debt and hence, needs to be allowed. Assessee before us claimed that the cheques on the basis of which the addition has been made, were never presented in its bank account and the said company i.e., M/s. Shubhkamna Buildtech Pvt. Ltd. has also asked the Assessee to return unpresented cheques. In our considered view as the parties also consented to, the following facts needs to be examined: (i) Whether the Assessee has returned the cheques to the said company or not; (ii) Whether the Assessee has taken any amount in lieu of returning the said cheques; (iii) Whether the Assessee has taken any part payment on account of commission/brokerage in any other form. We clarify that the primary onus would be on the Assessee , however the Assessing Officer will take appropriate action in accordance with law, to summon the said company, i.e., M/s. Shubhkamna Buildtech Pvt. Ltd. and/or any other person to unearth the real transactions. Appeal filed by the Revenue Department stands allowed for statistical purposes.
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2023 (2) TMI 310
Weighted deduction u/s 35(1)(ii) in respect of donations paid to one NGO - information received from the Directorate of Investigation Wing of the Income Tax Department, Kolkata, whereby, the modus operandi and non-genuineness of the donation was brought to light - HELD THAT:- Despite giving opportunity, the appellant could not prove the genuineness of the alleged bogus donations. The appellant had not discharged the onus lying upon him proving the genuineness of the donations and also failed to rebut the allegation of the AO, which clearly means that he had also participated to the fraudulent activity committed by the said organization i.e. NGO s viz. School of Human Genetics and Population Health. Thus, the doctrine of fraud can be squarely invoked to the facts of the present case. Accordingly, the ratio of the decisions placed by the ld. AR have no application to the facts of the present case, inasmuch as, those cases were decided on the premises that there was no allegation that amount of donation was paid back in cash to the donors and also there was no allegation that the NGO was engaged in the fraudulent activities. Since, we held that the doctrine of fraud is applicable to the facts of the present case, even the principles of natural justice have no application, therefore, we uphold the orders of the lower authorities and dismiss the ground of appeal filed by the assessee. Appeal filed by the assessee stands dismissed.
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2023 (2) TMI 309
Reopening of assessment u/s 147 - reopening of assessment beyond four years - HELD THAT:- In this case, by considering the paper book we of the considered opinion that the assessee has filed all the details in respect of depreciation claim made by the assessee. Therefore, it cannot be said that there is failure on the part of the assessee to disclose fully and truly all the material facts for completing the assessment. The Assessing Officer, in the reasons recorded, simply mentioned that there is a failure on the part of the assessee. The Assessing Officer has not able to establish that there is a failure on the part of the assessee. Thus, in our considered opinion, the notice issued under section 148 of the Act is invalid. We hold that the notice issued under section 148 of the Act in this case is invalid and thus, the ld. CIT(A) has rightly quashed the reassessment proceedings. Accordingly, the ground raised by the Revenue is dismissed.
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2023 (2) TMI 308
Revision u/s 263 - Assessee deposited in old SBN during demonetisation period in excess of the cash on hand at the opening of 09.11.2016 - Assessee was selected for scrutiny under CASS LIMITED SCRUTINY category to examine the Cash deposit during the year - HELD THAT:- The vehicle loan interest, interest on overdraft and other interest payments debited in the profit and loss account nothing to do with the cash deposits made during the year. Therefore, the AO has only examined cash deposited during year for which the case was selected under CASS Limited Scrutiny correctly. As per para 3 of the CBDT circular, referred hereinabove, the Assessing Officer cannot proceed further to examine except what is provided in para 3 of the circular. Therefore, the order passed by the AO cannot be said that it is erroneous and prejudicial to the interest of the Revenue. Following the decision of the Coordinate Benches of the Tribunal in the case of Subbunadar Chandra Sekar [ 2023 (1) TMI 683 - ITAT CHENNAI] the revision order passed by the ld. PCIT under section 263 of the Act cannot be upheld in the eyes of law. The case law relied on by the ld. DR has no application to the facts of the present case. - Decided in favour of assessee.
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2023 (2) TMI 307
Addition u/s 68 - bogus LTCG - Exemption of capital gains u/s 10(38) denied - HELD THAT:- Appellant deliberately withheld the information from the AO as well as the ld. CIT(A) which is within exclusive knowledge of appellant to establish the genuineness of transactions of purchase of shares of that company. It is nothing but a fraud played by the appellant against the AO as well as the ld. CIT(A) who are quasi judicial authorities employed for execution of the provisions of the Income Tax Act. The principle of fraud can be squarely applied to the facts of the present case and principles of natural justice have no application. Applying the said doctrine, we have no hesitation to hold that the transaction of purchase and sale of shares of M/s. Lifeline Drugs Pharma Ltd. under consideration before us is void ab-initio, this is nothing but sham, make believe and colourful device adopted with excellent paper work with intention bringing the undisclosed income into books of account. Accordingly, we confirm the orders of the Assessing Officer as well as the ld. CIT(A) and find no merits in the appeal preferred by the assessee before us. Appeal filed by the assessee stands dismissed.
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2023 (2) TMI 306
Salary income - Deduction of refunded amount of salary - reduction in the salary income disclosed in the revised return filed - Only real income can be taxed - Non-acceptance of Revised return - Non-observation of section 4 of Income-tax Act, 1961 - Assessee has been reduced amount in the revised return filed as disclosed in the original return, which is found to be attributable to reduction in the salary income disclosed originally - HELD THAT:- Admittedly, when the assessee had received the entire compensation package of Rs. 2.01 crores from Vedanta, he had shown that in in his original return of income. Thereafter, due to the dispute, the assessee had paid back Rs. 80.5 lakhs back to the employer out of the said total amount. This has been duly reflected again in the revised return of income. Before us also, the evidence has been placed by which the event of refunding the money of Rs. 80.5 lakhs to Vedanta Ltd. is established. When a particular amount is actually not retained by an assessee, then there does not arise any question of tax for that amount. If the event of transaction is for A.Y. 2017-18 then also, the department should have given effect to the amount which is actually not part of the total income of the assessee. The amount which has already been refunded back cannot be brought within purview of tax since the chargeability to tax of such refunded amount does not arise. The assessee had made a refund of Rs. 80.5 lakhs on account of provisions contained in the confidentiality and noncompete agreement read with MOU between the assessee and Vedanta Ltd. and therefore, such refund cannot be construed as salary for the purpose of charging to tax. Such amount therefore, is not assessable as income. In view thereof, we set aside the order of the ld. CIT(A) and allow the grounds of appeal.
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2023 (2) TMI 305
Income deemed to accrue or arise in India - receipt from Satellite Transmission Services - Royalty receipts as defined in Explanation II to section 9(1)(vi) of the Act and Article 12(3) of India USA Double Taxation Avoidance Agreement (DTAA) - HELD THAT:- As decided in assessee own case [ 2019 (4) TMI 1426 - ITAT DELHI ] receipts from Satellite Transmission Services cannot be treated as royalty, hence, not taxable at the hands of the assessee in India. Accordingly, addition made is deleted. Appeal of assessee allowed.
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2023 (2) TMI 304
Depreciation on non-compete fee capitalized which represents intangible assets being technical know-how, processes etc. - HELD THAT:- Legislature did not intend to provide for depreciation only in respect of specified intangible assets but also to other categories of intangible assets, which were neither feasible nor possible to exhaustively enumerate. Therefore, the nature of business or commercial rights could not be restricted to only the aforesaid six categories of assets, viz., knowhow, patents, trademarks, copyrights, licenses or franchises. The nature of business or commercial rights can be of the same genus in which all the aforesaid six assets fall. All the above fall in the genus of intangible assets that form part of the tool of trade of an assessee facilitating smooth carrying on of the business. We would uphold the claim of the assessee. AO is directed to grant depreciation to the assessee as claimed in computation of income for all the years. The corresponding grounds raised in all the four years stand allowed. Disallowance of depreciation on software - AO held that as per depreciation schedule Rule 5, such depreciation @ 60% is allowed on 'computers including software' - HELD THAT:- We do not concur with the observations of Ld. AO that the software which is in-built into the computer system would alone be eligible for higher rate of depreciation since the expression used is computers including software . The literal interpretation of the same would be that computers or any other software purchased by the assessee would have same rate of depreciation on the logic that software would primarily be used along with computer system. However, there is no requirement that the same should be in-built into the computer system. The same may be independently purchased by the assessee and could be used along with computer system. Nevertheless, the same would remain computer software only which would have same rate of depreciation as applicable to a computer system. The decision of Amway India Enterprises [ 2008 (2) TMI 454 - ITAT DELHI-C] supports our view. It could also be seen that similar rate of 60% has already been allowed by revenue to the assessee in all the other years and this dispute has been raised in this year only. Therefore, we direct Ld. AO to allow depreciation at higher rate of 60%. The corresponding grounds raised by the assessee stand allowed. Disallowance of additional depreciation on newly installed In-house blending plant - HELD THAT:- The said expenditure was directly incurred towards installation of the Machinery and the assessee has capitalized the same by including it in the actual cost of the plant as per Sec. 43(1) of the Act. Accordingly, normal depreciation as well as additional depreciation has been claimed on aggregate amount so capitalized by the assessee. AO has allowed normal depreciation but denied additional depreciation on the ground that the fees so paid by the assessee would not form part of actual cost. The said claim has been termed as a colorable device without any basis. When the actual cost has been accepted for granting normal depreciation then there is no logic to discard the same while granting additional depreciation to the assessee. Pertinently, similar claim denied in AY 2013-14 was deleted by first appellate authority which has not been challenged by revenue any further. In AY 2014-15, no dispute has been raised by the revenue on additional depreciation claimed by the assessee on newly installed Plant machinery. Therefore, considering the fact of the case, denial of additional depreciation on Professional fees as well as additional material issued by the assessee at year-end could not be held to be justified. The Ld. AO is directed to allow the same. The corresponding grounds raised by the assessee stand allowed. Disallowance of Bad debts claimed - CIT(A) held that the burden was on assessee to show that the there was no reasonable expectation of recovering the debts. Since the burden was not discharged, the action of Ld. AO was confirmed - HELD THAT:- Upon perusal of assessee computation of income for AY 2010-11, we find that the assessee has made provision for bad and doubtful debts for Rs.121.11 Lacs which has been added back in the computation of income. In other words, the same has not been claimed in that year rather the same has been claimed in the computation of income for AY 2011-12 as Bad Debts W/off disallowed in earlier years and claimed now which has been denied by Ld. AO. It appears that the assessee has made provisions in AY 2010-11 which has now been claimed. The necessary facts showing the circumstances and the fact whether debtors have actually been written-off in this year is not available on record. The assessee has kept the details of bad-debts written off. Therefore, on the facts and circumstances of the case, we remit this issue back to the file of Ld. AO for de novo adjudication to ascertain the facts whether the debts have actually been written-off in this year which would be evident form perusal of provision for bad and doubtful account. The assessee is directed to furnish requisite details.
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2023 (2) TMI 303
Validity of reopening of assessment u/s 147 - Non Supply of reasons recorded - HELD THAT:- In view of the above legal position as in the case of CIT Vs. Pentafour Software Employees Welfare Foundation [ 2019 (9) TMI 313 - MADRAS HIGH COURT] held that violation of law laid down by Hon ble Supreme Court is not a procedural error because the word bound would be rendered meaningless if it is held to be procedural error and it would lead to abuse of power and such a construction would dilute the decision in the case of GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] . Hence, we hold that the non supply of reasons till the Appellate Tribunal stage vitiate the assessment proceedings and hence, void ab initio and bad in law. Hence, we quash the reassessment order and set aside the order of CIT(A) and the appeal of the assessee is allowed.
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2023 (2) TMI 302
Deduction u/s.54F - Disallowance of claim as assessee has purchased new house property beyond one year from the date of sale of original asset - agreement to sale is not bona fide - Although, the assessee claims to have entered into agreement to sale on 28.09.2012, but in the recitals of Sale Deed, there is no specific reference to agreement to sale - HELD THAT:- We find that the assessee has filed copy of deed of agreement dated 28.09.2012, and agreed to sell in favour of Mrs.S.Lalitha Lakshmi and we find that the parties have set out terms and conditions for purchase of property. Further, the parties have acted upon the sale agreement and executed a Sale Deed dated 07.01.2013 in favour of the purchaser. From the above, what we understood are that the assessee had entered into an agreement to sale with the buyer on 28.09.2012 and had executed final Sale Deed on 07.01.2013. Therefore, we are of the considered view that the AO and the Ld.CIT(A) is erred in not considering the agreement to sale between the parties to allwo the benefit of deduction u/s.54F. Whether the assessee has invested consideration for purchase of property or not? - When the assessee has filed evidences in the form of agreement to sale and if the agreement to sale date is considered, then the period of investment in new house property is less than one year before the date of sale of original asset and thus, in our considered view, the assessee is entitled for deduction u/s.54F of the Act. Multiple deductions in two assessment years - In this case, on the basis of details filed by the assessee, we find that amount paid for purchase of new property at Besant Nagar is much more than the amount of sale consideration received for transfer of original asset, including the asset sold in AY 2012-13 and thus, in our considered view, the assessee can claim deduction u/s.54F of the Act, as long as he or she satisfies other conditions. Since, the assessee has satisfied all conditions prescribed therein, as per provisions of Sec.54F of the Act, he is entitled to claim deduction towards re-investment of sale consideration for purchase of residential house property. Therefore, we direct the AO to allow deduction u/s.54F of the Act, as claimed by the assessee and delete additions made towards disallowance u/s.54F of the Act. Disallowance of interest claimed on second loan u/s.24(b) - AO has disallowed interest claimed u/s.24(b) on the ground that the assessee could not establish nexus between borrowed funds and purchase of house property - HELD THAT:- There is a direct nexus between loan availed from HDFC Bank and purchase of property at OMR, in our considered view, subsequent loan taken from Karvy Finance to re-pay existing loan with HDFC Bank, satisfies the conditions prescribed u/s.24(b) of the Act, and the assessee is entitled for deduction towards interest paid on loan borrowed from financial institution. In fact, the CBDT Circular No.28 dated 20.08.1969 has clarified that if the second borrowing has really been used merely to re-pay the original loan and this fact is proven to the satisfaction of the AO, the interest paid on second loan would also be allowed as deduction u/s.24(1)(vi) of the Act. In this case, the Ld.CIT(A) recorded categorical findings that the assessee has used second loan from Karvy Finance to re-pay existing loan borrowed from HDFC Bank and there is a nexus between loan borrowed from purchase of property and thus, the assessee is entitled for deduction towards interest paid on second loan. The findings of facts recorded by the Ld.CIT(A) is uncontroverted. Hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue. Disallowance of interest paid on loan borrowed for purchase of property at Besant Nagar - AO has disallowed interest claimed u/s.24(b) in respect of house property at Besant Nagar, on the ground that said property has been used by the assessee for self-occupation purpose - HELD THAT:- CIT(A) came to conclusion that when the property has been let out and rental income is offered to tax, under the head income from house property , then interest paid on loan borrowed for acquisition of property should be allowed as deduction u/s.24(b) of the Act. The Ld.CIT(A) further noted that the observation of the AO on the basis of report of Inspector obtained in the course of the assessment proceedings for the AY 2016-17, has no relevance to decide whether the property has in fact let out for the AY 2013-14 or not. In our considered view, the findings and facts recorded by the Ld.CIT(A) is uncontroverted with any evidences except stating that there is a violation of Rule 46A of Income Tax Rules, 1962 - assessee has placed all evidences to prove that rental agreement was filed before the AO and also rental income has been offered for earlier assessment years also. Therefore, we are of the considered view that there is no error in the reasons given by the Ld.CIT(A) to delete the additions made towards disallowance of interest u/s.24(b) of the Act and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue. Short term capital gains OR income from business - commission brokerage income - AO has made addition on the ground that the assessee claimed exemption on sale of his own land and thereby concluded that business profit claimed by the assessee needs to be treated as short term capital gains - HELD THAT:- There is no dispute with regard to the fact that the assessee has admitted commission income apart from real estate deals for the earlier assessment years and the Department has accepted the claim of the assessee. AO has taken a different view for the impugned assessment year without there being any change in facts and circumstances of the case. Therefore, no error in the reasons given by the Ld.CIT(A) to direct the AO to assess commission brokerage income under the head income from business and profession as against income assessed by the AO under the head short term capital gains and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue.
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2023 (2) TMI 301
Deduction u/s 80P(2) - assessee did not file its return of income within due date as prescribed under section 139(1) - HELD THAT:- CIT (A) has examined the issue in details and observed that the assessee did not comply the mandatory requirement of section 80AC which is mandatory requirement for claiming deduction under chapter VI A of the I. T. Act. 1961 as decided in the case of Suolificio Linea Italia (India) (P.) Ltd [ 2018 (5) TMI 638 - CALCUTTA HIGH COURT] DR also relied on the judgment of [ 2023 (1) TMI 606 - ITAT BANGALORE] in which it has been held that the adjustment u/s 143(1) can be made and for getting deduction under Chapter VIA the assessee should have filed return of income within the due date as specified in sec.139(1) of the IT Act. In the above decision the coordinate bench also relied on the judgment of Checkmate Service Pvt. Ltd [ 2022 (10) TMI 617 - SUPREME COURT] Further, the coordinate bench of the Tribunal has also decided the similar issue in favour of the Revenue in the case of M/s. Rushi Sanskruti Vividoddeshagal Souhard SahakariNiyamit [ 2023 (2) TMI 158 - ITAT BANGALORE] the ratio decided in all these judgments are squarely applicable in the present facts of the case. Accordingly the assessee is not eligible to claim of deduction u/s 80P of the Act. Accordingly, the grounds raised by the assessee are dismissed.
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2023 (2) TMI 300
Exemption u/s 11 - Rejection of Application for registration u/s 12AA - CIT-E noted violation of provision of section 13(1)(b) of the Act due to operation only for Christian community - HELD THAT:- The assessee-trust has filed application for registration u/s 12A of the Act. The object clause specifically mentioned that the trust is charitable in nature and the charity would be done without prejudice to any cast creed. Primarily the object is never be barred by section 13(1)(b) of the Act. During registration of the trust the revenue authorities will verify the main object of the trust and the activities in relation to the main object of the trust. In second issues, revenue has not made any adverse comment on activity of the assessee-trust. But in the first issue the revenue authority has expressedthe grievance by rejection the application for registration. The ld. counsel for the assessee had fully relied order of M/S SAIN MIRAN BABA DARVESH GHULAM QUADIR TRUST [ 2022 (12) TMI 737 - ITAT AMRITSAR] wherein as well settled law that where the purpose of a Trust is help to poor, medical relief, and advancement of objects of general public benefit/utility at large, the requirement of definition of 'charitable purpose' would be satisfied even if an activity of profit is carried on in the course of actual carrying out of the primary purpose of the Trust or the Institution. If a Trust's claim for charitable purpose is covered under the head of 'advancement of any other object of general public utility'. The question would arise whether the purpose of Trust or Institution involves the carrying on of any activity of profit. However, it would not be relevant as in the present case of the assessee Trust where the objects of the Trust comprise of relief of the poor, education or medical relief, etc. The observation which was taken in referred case by the bench is same view for the assessee-trust. The main object is indicated properly that there is no violation of section 13(1)(b) - CIT-DR was not able to show any evidence against the submission of assessee during the hearing. Decided in favour of assessee.
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2023 (2) TMI 299
Estimation of income - bogus purchases - CIT-A restricted addition to the extent of 5% of entire purchase - HELD THAT:- We note that issue is squarely covered by the judgment of the Co-ordinate Bench in the case of Pankaj K. Chaudhary [ 2021 (10) TMI 653 - ITAT SURAT ] We note that out of total addition of Rs.3,28,72,462/-, the amount pertaining to M/s Krishna Diamond Pvt Ltd (unsecured loan) to the tune of Rs.43,06,094/- should be excluded, as it does not pertain to bogus purchases, therefore we direct the Assessing Officer that no addition should be made on the amount pertaining to M/s Krishna Diamond Pvt. Ltd. (unsecured loan) to the tune of Rs.43,06,094/- . However in respect of remaining parties viz: M/s Karishma Diamonds Pvt. Ltd. to the tune of Rs.78,65,729/-, M/s Parshwanath Gems Pvt. Ltd. to the tune of Rs.1,87,00,651/-, and M/s. Mihir Diamond to the tune of Rs.19,99,988/-, totalling of these three parties comes to Rs.2,85,66,368/-, therefore we direct the Assessing Officer to sustain the addition at the rate of 6% - Appeal filed by the Revenue is partly allowed.
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2023 (2) TMI 298
Unexplained cash credit u/s 68 - purchase of shares in off-market - Bogus LTCG - Reliance on Kolkata Investigation Wing report - whether an off market purchase of shares could be taken as a ground to declare the entire transaction as sham? - HELD THAT:- The assessee s name or the broker, through whom assessee transacted had not figured in the said list either in the restraint list or in the discharged list. Hence it could be safely concluded that the assessee herein is merely a gullible investor, who had resorted to make investment in the shares of Radford Global Ltd based on market information and had sold the shares in the secondary market in prevailing market prices. Hence the entire addition has been made merely by placing reliance on the Kolkata Investigation Wing report which are more general in nature and does not implicate the assessee herein in any manner whatsoever. We are unable to persuade ourselves to accept to the contentions of the ld. DR that Kolkata Investigation Wing had conducted a detailed enquiry with regard to the scrip dealt by the assessee herein and hence whomsoever had dealt in this scrip, would only result in bogus claim of long term capital gain exemption or bogus claim of short term capital loss. Merely because a particular scrip is identified as a penny stock by the income tax department, it does not mean all the transactions carried out in that scrip would be bogus. So many investors enter the capital market just to make it a chance by investing their surplus monies. They also end up with making investment in certain scrips (read penny stocks) based on market information and try to exit at an appropriate time the moment they make their profits. In this process, they also burn their fingers by incurring huge losses without knowing the fact that the particular scrip invested is operated by certain interested parties with an ulterior motive and once their motives are achieved, the price falls like pack of cards and eventually make the gullible investors incur huge losses. We hold that the entire addition has been made based on mere surmise, suspicion and conjecture and by making baseless allegations against the assessee herein. Whether the ld. AO merely on the basis of Kolkata investigation wing report could come to a conclusion that the transactions carried out by the assessee as bogus? - AO is expected to conduct independent verification of the matter before reaching to the conclusion that the transactions of the assessee are bogus. More importantly, it is bounden duty of the ld. AO to prove that the evidences furnished by the assessee to support the purchase and sale of shares as bogus. This view of ours is further fortified by the decision of PCIT vs Laxman Industrial Resources Ltd [ 2017 (3) TMI 1521 - DELHI HIGH COURT] . It is well settled that the suspicion however strong could not partake the character of legal evidence. Hence the greater onus is casted on the revenue to corroborate the impugned addition by controverting the documentary evidences furnished by the assessee and by bringing on record cogent material to sustain the addition. No evidence has been brought on record to establish any link between the assessee herein and the directors of Radford Global Ltd or any other person named in the assessment order being involved in any price rigging and also the exit provider. This onus is admittedly not discharged by the revenue in the instant case. In the case of CIT vs Shyam S Pawar [ 2014 (12) TMI 977 - BOMBAY HIGH COURT] it was held that where Demat account and contract note showed details of share transaction and the ld.AO had not proved the said transaction as bogus, the long term capital gain earned on said transaction could not be treated as unaccounted income u/s 68 We are not inclined to accept to the stand of the ld. CIT(A) in sustaining the impugned additions on account of denial of exemption for long term capital gains u/s 10(38) of the Act and estimated commission @ 3% against the same. Accordingly, the grounds 2 to 4 raised by the assessee are allowed.
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2023 (2) TMI 297
Estimation of income from the project at the rate of 10% of the work-in-progress - assessee has transferred two existing projects to its sister concern as per the value declared in balance sheet and it is fact on record that assessee has transferred the project at the work-in-progress value to its sister concern without adding any profit to the above said project cost - HELD THAT:- Assessee has partly completed the two projects namely Kapil Malhar Intelligent Homes Phase-II and development rights and transferred the same at the end of the current assessment year to its sister concern M/s Indorigin Electric Ltd. It is fact on record that assessee has transferred the same as per the Books of Accounts at cost without adding any profit of the effort put in by the assessee on these projects. On enquiry assessee has declared profit earned by sister concern i.e. M/s Indorigin Electric Limited at 7.71% after completion of the projects. Therefore, to the extent the assessee has completed the project which was declared in the Books of Accounts as work-in-progress at the end of the year which was subsequently transferred to its sister concern. Therefore, it is proper and just to estimate the profit @7.71% on the value of work-in-progress transferred to its sister concern. AO is directed to add the profit on these projects @7.71% on the value of work-in-progress transferred during the year at the value of ₹.7.2 crores. Accordingly, ground raised by the assessee as well as revenue are partly allowed. Addition made on account of land cost claimed as expenses by the assessee - CIT-A deleted addition on the basis of the fresh evidence, without giving an opportunity to the Assessing Officer as per the provisions of Rule 46A - HELD THAT:- Considered the rival submissions and material placed on record, we observe from the record that the Ld.CIT(A) considered the various submissions of the assessee and while deleting the addition made by the Assessing Officer he heavily relied on the information contained in the assignment deed based on which the project was transferred to its sister concern. Therefore, it clearly shows that it is not an additional evidence submitted before the Ld.CIT(A). Accordingly, the additional ground raised by the revenue is dismissed. Rectification of mistake u/s 154 - CIT(A) allowed the claim of the assessee with regard to interest expenditure and on the issue of transfer of outstanding sundry creditors to the sister concern - HELD THAT:- Assessee has taken loan from Bank of Maharashtra for the project Kapil Malhar and the loan was utilized in the project. During the year the above said project was sold to a third party. The profit from the sale of the remaining part of the project was declared and assessed as 'Business Income . Against this 'Business Income the assessee has claimed the interest expenditure incurred by it for the said project. We are in agreement with the findings of the Ld.CIT(A) that the interest expenditure claimed by the assessee is towards the loan taken from Bank of Maharashtra and the funds were utilized in the said project was subsequently transferred. Therefore, the assessee declared the income earned from this project as the business income. Accordingly, assessee is eligible to claim the above said interest expenditure as business expenditure. Therefore, we do not find any reason to interfere with the findings of the Ld.CIT(A). Accordingly, Ground No. 2 raised by the revenue is dismissed. Outstanding creditors liability in its Books of Accounts - HELD THAT:- As during the year assessee has transferred the development rights and projects to its sister concern and as per the assignment agreement they agreed to transfer the remaining project on as is and where is basis and the liability in respect of the sundry creditors outstanding in the above said projects are automatically transferred to the sister concern. Therefore, there is no liability in the Books of Accounts as per the transfer of the projects to its sister concern. Therefore, the Assessing Officer has merely presumed that the assessee has written off these sundry creditors and he presumed that this falls under deemed income of the assessee. Ld.CIT(A) has verified the development agreement and came to the conclusion that the assessee has transferred the project along with the liability to its sister concern. Therefore, there is no reason to interfere with the findings of the Ld.CIT(A). Accordingly, Ground No. 3 raised by the revenue is dismissed.
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2023 (2) TMI 296
Penalty u/s 271C r.w.s. 274(1) - Assessee has failed to deduct tax at source - HELD THAT:- As decided in assessee own case [ 2015 (7) TMI 1423 - ITAT LUCKNOW] TDS was paid by the assessee or required tax was paid by the deductee, the assessee should not held to be in default. Only interest on delayed payment under section 201(1A) of the Act can be charged. In the light of these decisions where the assessee has made payment of TDS though late, he cannot be held to be in default and there is no question of levy of penalty under section 271C of the Act. We have carefully perused the order of the ld. CIT(A) and we find that the ld. CIT)A) has adjudicated the issue in the light of various judicial pronouncements. Sine no infirmity has been pointed out in the order of the ld. CIT(A), we confirm the same. Accordingly, the appeals of the Revenue are dismissed.
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2023 (2) TMI 295
Income deemed to accrue or arise in India - interest as per Article 12 of Indo-UK DTAA and Section 2(28A) of the Income tax Act - HELD THAT:- We find that under the identical set of facts and circumstances of the case, the matter has been decided by the Coordinate Chandigarh Benches in case of Shri Mohinder Singh Sanghera [ 2018 (9) TMI 2113 - ITAT CHANDIGARH] AND Shri Karnial Singh [ 2022 (12) TMI 1307 - ITAT CHANDIGARH] nothing has been brought on record to the effect that the aforesaid decisions of the Coordinate Benches have either been stayed or reversed by the Higher Courts. Further, no contrary decision of any Higher authority has been brought to our notice. Therefore, we see no reason to deviate from the view already taken by the Coordinate Benches and following the same, the assured return from M/s Omaxe is in the nature of interest taxable @ 15% under Article 12 of India-UK DTAA. In the result, ground no. 4 of the assessee s appeal is allowed in favour of the assessee and against the Revenue. Unexplained cash credits - admission of additional evidence - HELD THAT:- We deem it appropriate that the additional evidence so submitted by the assessee be considered and specific finding be recorded in this regard after examining the additional evidence. In view of the same, the matter is set-aside to the file of the ld CIT(A) who shall examine the additional evidence and shall decide the matter a fresh as per law after providing reasonable opportunity to the assessee. In the results, the grounds no. 5-7 are allowed for statistical purposes.
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2023 (2) TMI 294
Penalty u/s 271AAB - assessee during the search action surrendered income - assessee did not pay the due taxes on the income disclosed rather the disclosed income was set off against the derivative loss - As submitted appellant had made disclosure during the search to buy metal peace and avoid litigation - levy of penalty under the said provision is not mandatory as the wording of the section such as that Assessing Officer may to submit that the word may give discretion, thus word may suggests that the levy of penalty is not mandatory - HELD THAT:- We find that the aforesaid issue raised by the assessee is duly covered by the decision of the Coordinate Bench of the Tribunal in the case of M/s. Vijayshree Autocom Ltd [ 2022 (3) TMI 1492 - ITAT KOLKATA] wherein, the Tribunal on the identical issue has deleted the penalty while relying upon the decision of the Hon'ble Madras High Court in the case PCIT vs. Shri R. Elangovan [ 2021 (4) TMI 1131 - MADRAS HIGH COURT ] penalty order passed by the Assessing Officer is invalid and is accordingly quashed. The appeals of the assessee are allowed on legal issue.
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2023 (2) TMI 293
Correct head of income - receipt from warehousing charges - income from house property or income from business - assessee is a state government company engaged in the business of warehousing - HELD THAT:- As decided in assessee own case [ 2017 (12) TMI 669 - CHHATTISGARH HIGH COURT ] warehousing charges received by the assessee had rightly been offered by it to tax as its income from business. We, thus, in terms of our aforesaid observations set-aside the order of the CIT(Appeals) and direct the A.O to assess the warehousing charges received by the assessee under the head Income From Business . Decided in favour of assessee.
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2023 (2) TMI 292
TP Adjustment - corporate guarantee provided to AEs - HELD THAT:- We are of the considered opinion that since ITAT has decided the issue in assessee s own case AY 2014-15 [ 2022 (5) TMI 685 - ITAT DELHI ] and the same has not been reversed by Hon ble jurisdictional High Court, we follow the same and direct that disallowance be restricted to 0.5% as has been held in the above order of the ITAT. Disallowance in respect of provision made for sales incentive under Shahenshah Scheme - HELD THAT:- As we find that the issue is decided by the ITAT in assessee s own case 2014-15 [ 2022 (5) TMI 685 - ITAT DELHI ] in assessee s favour consistently, hence we follow the same and are of the opinion that the provisions made in this regard are allowable - we direct that the disallowance in this regard is to be deleted. Deduction/rejection allowable u/s 80IC - AO noted that in the preceding year, the assessee was disallowed section 80IC deduction on interest income and held the same was not allowable in this year also - HELD THAT:- Since in assessee s own case AY 2009-10 [ 2021 (1) TMI 741 - ITAT DELHI ] the issue is decided in favour of the assessee, we hold that principally the issue is in favour of the assessee. Revenue authorities have also pointed out that assessee has not given necessary breakup and particular of interests mentioned in CIT s order as above. We remit this issue to the file of the AO to obtain the necessary breakup and follow the ITAT order as above.
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Customs
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2023 (2) TMI 288
Smuggling - seizure of gold weighing 46.3 kgs - Prohibited goods or not - levy of personal penalty under section 112 of the Customs Act, 1962 - Validity of SCN - Jurisdiction of DRI to issue SCN - It is the grievance of the petitioner that he never received a notice to show cause as to why 22.3 kgs of gold be not confiscated under section 111 of the Customs Act and as to why the penalty be not imposed under section 112 of the Customs Act - violation of principles of natural justice - non-availment of opportunity for want of necessary pre-deposit required under section 29E of the Customs Act - HELD THAT:- Reliance is placed on the decision of M/s. Cannon India Limited vs. Commissioner of Customs, [ 2022 (8) TMI 888 - SC ORDER ] whereas the Apex Court has held that DRI has no jurisdiction to issue show cause notice under the Customs Act inasmuch as only such officer of Customs who has been assigned specific function would be a a proper officer under the Central Government in terms of section 2(34) of the Act to issue notice, while exercising the powers under section 6 of the Customs Act - Therefore, the show cause notice issued to the petitioner by the DRI is invalid and this decision would be binding to the Courts within the territory of India under Article 141 of the Constitution of India. Therefore, the show cause notice is urged to be quashed. Considering the fact that essential remedy of appeal is available and it is an efficacious remedy, this Court would prefer not to venture into examining these aspects. According to us, this contention can always be raised before the appellate authority who would also lead to adjudication on factual matrix. Another contention on the part of the petitioner is that he was not in India and was caught at New Delhi Airport and when the show cause notice was issued, it was served upon his wife. When he returned to India in February, 2016, he was caught in connection with another case and because of that he was not in a position to contest the allegations levelled in the show cause notice - HELD THAT:- Much emphasis is placed on the ground of violation of principles of natural justice, as penalty imposed here is based on the statement of co-accused and without any independent corroborative evidence. Application of section 9D of the Central Excise Act and section 138B of the Customs Act is made which makes it mandatory for the Commissioner to conduct the examination-in-chief before admitting the statements and evidence. Section 138B of the Customs Act makes it clear that no statement can be used as evidence unless and until the contents are affirmed by the person before the Commissioner. As the gold is not prohibited for import, therefore, the action of Commissioner in confiscating such gold is illegal, according to the petitioner. It is urged that Commissioner has failed to recognise the settled position that gold is not prohibited for import and it is only restricted. Therefore, the chance ought to have been given to redeem the same with fine. Penalty imposed of Rs. 50 lakhs upon the petitioner under section 12B of the Customs Act - HELD THAT:-The appeal was preferred before the the CESTAT with an application for dispensing with the per-deposit of the amount of fine and penalty imposed upon the petitioner. However, the same was rejected by the CESTAT essentially on the ground that in absence of the amount of the pre-deposit and penalty, the appeal is not maintainable. Absence of any opportunity of cross-examination and gross violation of the principles of natural justice in adjudication of proceedings - HELD THAT:- Denial of right to cross-examine the witnesses whose statements recorded under section 108 of the Customs Act and of those officers who recorded such statements is much emphasized upon - The cross-examination, in a given scenario, is held not to be an absolute right and the facts of every matter shall need to be regarded by the Court at the time of considering the request for cross-examination. This Court also is not oblivious of the fact that without proving the version of the witnesses in examination-in- chief, it is impermissible for the prosecution/department to take into account their evidence given in the form of oral statements. Section 9D of the Customs Excise Act and Section 138B of the Customs Act require fulfillment of these requirements. However, these being legal issues can be raised at any stage before any judicial or quasi judicial authority and they need to be regarded by those authorities. Again, non-availment of opportunity whether would also cause serious prejudice to the parties, also, can be well appreciated by the Appellate authority as and when raised. Thus, what can be gathered is that service of show cause notice appears to be valid and thereafter also, couple of notices were served upon the petitioners for availing an opportunity of hearing at the time of adjudication of the show cause notice and it emerges prima facie that the petitioner has not participated. Whether the reasons put forth for non-participation, even through the authorised representative, could surely be agitated in appeal for the Appellate authority to adjudicate - it is not convincing that there has been any breach of principles of natural justice much less gross violation at the time of service and thereafter of adjudication of the show cause notice. However, the fact remains that the participation on the part of the petitioner was missing when OIO was finalized. Non-availment of opportunity for want of necessary pre-deposit required under section 29E of the Customs Act - HELD THAT:- The appellate authority could not adjudicate on merits. Therefore, the balance needs to be struck by allowing the petitioner to approach the appellate authority by furnishing the amount of predeposits of the requisite amount. Resultantly, without making any interference with the OIO, all the petitioners are permitted to approach the appellate authority. Petition disposed off.
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2023 (2) TMI 287
Time Limitation for issuance of order - Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - order issued beyond the period of ninety days from the receipt of the Offence Report - petitioner also contends that the impugned order was passed on an erroneous premise that the petitioner has acted as a Customs Broker in respect of the exports under certain shipping bills - HELD THAT:- In the present case, the Show Cause Notice dated 24.01.2020 issued to the petitioner is, clearly, erroneous as it proceeds on the basis that the Show Cause Notice dated 22.10.2019 is the Offence Report - Mr. Kumar, the learned counsel for the respondent does not dispute that the Show Cause Notice dated 22.10.2019 is in respect of the same offence as the subject matter of the Offence Report dated 16.02.2015. It is apparent that the proceedings for revocation of the petitioner s license were commenced beyond the period of ninety days from the date of the Offence Report. Since the notice in this case, was issued beyond the period of ninety days from the Offence Report, the impugned order cannot be sustained - It is also not disputed that the petitioner has not acted as a Customs Broker in respect of exports under the offending Shipping Bills. Petition allowed.
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2023 (2) TMI 286
Rejection of petitioner's request for claiming duty drawback - rejection on the ground that the petitioner has not satisfactorily established the reasons for delay in filing the duty drawback claim - Section 74 of the Customs Act, 1962 - non-speaking order - violation of principles of natural justice - HELD THAT:- Learned Standing Counsel for the respondents cannot rely upon the documents filed along with these writ petitions, that too, when the first respondent has not considered the same on merits in the impugned orders, which is a cryptic and a non-speaking order. Any improvement of the impugned order cannot be made by the learned Standing Counsel for the respondents. Therefore, the contentions of the learned Standing Counsel for the respondents before this Court is rejected. It is also not in dispute that the petitioner has satisfied all the statutory requirements for claiming duty drawback as per the provisions under Section 74 of the Customs Act, 1962. When the petitioner has given detailed reasons as to why they were unable to file the duty drawback claim within the prescribed time, the first respondent ought to have considered the said reasons objectively, but as seen from the impugned orders, no reasons have been given for rejecting the petitioner s reasons for non filing of the duty drawback claim on time - Being a cryptic and a non-speaking order, the impugned orders will have to be necessarily quashed and the matter has to be remanded back to the first respondent for fresh consideration on merits and in accordance with law. The matter is remanded back to the first respondent for fresh consideration on merits and in accordance with law. The first respondent shall pass final orders within a period of eight weeks from the date of receipt of a copy of this order after giving due consideration to the contentions of the petitioner in his written submissions dated 03.11.2022 and after affording one personal hearing to the petitioner. Petition disposed off.
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2023 (2) TMI 285
Rejection of refund of Extra Duty Deposit - applicability of principles of natural justice - petitioner contended that EDD was in the nature of a deposit and therefore, the principle of unjust enrichment ere inapplicable to deposit of EDD - request for refund was treated as a fresh application under Section 27 of the Customs Act, 1962 and was rejected by the impugned order on the ground that the same was not filed within limitation - HELD THAT:- Respondent no. 1 has misdirected itself in considering the petitioner s request for refund of the balance amount of ₹13,53,326/- made on 22.07.2022 as a fresh application. The said request was in continuation of the proceedings relating to the application for refund dated 19.02.2019. Thus, the question of the petitioner s claim being barred by limitation does not arise. The authorities are fully aware of the orders passed by the Supreme Court in Suo Motu Writ Petition (Civil) No.3 of 2020 [ 2021 (3) TMI 497 - SC ORDER ] and this Court cannot countenance the approach of the respondents to insist that the orders passed by the Supreme Court be necessarily quoted by applicants for availing their benefit. The respondents are bound to consider the orders passed by the Supreme Court notwithstanding that the same are not referred to by the applicants. The impugned order dated 07.11.2022 is set aside. The respondent is directed to forthwith process the petitioner s request for refund within a period of two weeks from today - Appeal allowed.
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2023 (2) TMI 284
Penalty u/s 112(a) of Customs Act, 1962 on steamer agent - Confiscation of vessel - evasion of duty with acts of omission and commission - HELD THAT:- There is no doubt that, in accordance with section 148 of the Customs Act, 1962, the steamer agent, as the appellant herein is, assumes full responsibility on behalf of person-incharge of conveyance for compliance with chapter VI of Customs Act, 1962. It is on record, however, that the confiscation of the said vessel for alleged violations of chapter VI of Customs Act, 1962 as well as the duty liability arising from misuse of ship stores and bunkers in the findings of the adjudicating authority had been set aside by the Tribunal. In such circumstances, the related act of wrong-doing urged by the Learned Authorised Representative has ceased to be and consequently there is no scope for imposition of penalty under section 112 of Customs Act, 1962 on the representative of person-in-charge of conveyance. Appeal allowed.
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Corporate Laws
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2023 (2) TMI 283
Claim of title in respect of the land - purchase of all rights in respect of the property from Cogent Ventures (India) Ltd., or not - HELD THAT:- Indisputably, title in the property did not vest with Cogent Ventures (India) Ltd. as there was no registered document conveying the said title of any part of the subject land in its favour - Admittedly, Cogent Ventures (India) Ltd. had not challenged the One-Man Committee report rejecting its claim. The appellant claims to derive its interest in the property from Cogent Ventures (India) Ltd. and since the claims of Cogent Ventures (India) Ltd. have been rejected, the appellant cannot claim a better right. Secondly, there is no registered document conveying the property in favour of the appellant. As noted above, the appellant claims right on the basis of the Agreement of Sale-cum-Power of Attorney. The said document does not convey the title of the property to the appellant - Thirdly, the appellant cannot derive any benefit from registration of the Agreement of Sale-cum-Power of Attorney dated 22.06.2006. The said document does not convey any title to the property and as stated hereinbefore, Cogent Ventures (India) Ltd. could not convey title to the property as it did not have any. It is also material to note that although the appellant claims to derive its interest in the property from documents executed in the year 2006, he had taken no steps for execution of the conveyance in his favour. The appellant claims that he was unaware of the orders passed by this Court. The learned Company Court has rightly disbelieved the same. The Official Liquidator has, on repeated occasions, taken steps for protection of the subject land and properties owned by the JVG companies. It is difficult for this Court to accept that the appellant would not have been aware of the same. According to the Official Liquidator, it had taken possession of the subject land, which included the property, on 13.10.2020. The impugned order, rejecting the applications filed by the appellant, cannot be faulted - Appeal dismissed.
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Securities / SEBI
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2023 (2) TMI 282
Decision to write off Additional Tier 1 (AT-1) bonds - Petitioner raised objection to the writing down of AT-1 bonds and even suggested for converting into shares - Petitioner seeks directions against the National Securities Depositories Limited and Central Depository Services to take such steps to reverse the effect of any accounting, entries, noting, write-offs, cancellations, or any such steps that may have been undertaken pursuant to the impugned decision to write off the Additional Tier 1 bonds - HELD THAT:- It appears that upon consideration of the objections the Reserve Bank made modification in the draft scheme, as permissible under section 45(6)(b) of the Act of 1949. It deleted the clause of writing down of AT-1 bonds. After said modification the scheme was placed by RBI before the Central Government as required and mandated under sub section 7 of Section 45 of the Act of 1949. Central Government thereafter sanctioned the scheme sans clause of writing down AT-1 bonds. The final scheme sanctioned by the Central Government did not contain the clause or provision for writing down AT-1 bonds. Section 45(7) further provides that the scheme sanctioned by the Central Government shall come into force on such date as the Central Government may specify. Proviso to sub section 7 of section 45 of Act of 1949 empowers the Central Government to specify different dates for different provisions of the scheme. In the final scheme, March 13, 2020 is the date prescribed of coming into force the scheme, the same would mean that the Bank stood reconstituted on March 13, 2020. Only because the shares were to be allotted to SBI within two working days of the final scheme being notified, would not extend the date from which the scheme came into force nor it would extend the appointed date or the date the Bank is reconstituted. Yes Bank stands reconstituted on March 13, 2020. Under the Scheme, Moratorium period was extended by three days and the Administrator to vacate the office after seven calendar days from the date of cessation of moratorium. Yes Bank stood reconstituted on March 13, 2020 upon the Notification of the final Yes Bank Ltd. Reconstruction Scheme, 2020. After the bank was reconstituted, the Administrator could not have taken such a policy decision of writing off the debentures. Board of Directors were notified in the final scheme. However, actual time period was given for the Board of Directors to take over from the Administrator and for that purpose, tenure of the Administrator was also extended to seven days from the date of reconstitution of the bank. During this period, the Administrator could not have taken such a policy decision of writing down the AT-1 bonds. Nor the RBI had authorized him to do so. The Final Reconstruction Scheme also did not authorize Administrator to write off the AT-1 bonds. It appears that Administrator exceeded his powers and authority in writing off AT-1 bonds after the bank was reconstructed on March 13, 2020. Reading clause 57 of the Information Memorandum along with the Final Reconstruction Scheme, it would be manifest that the administrator could not have exercised his powers after reconstitution of the bank. The clauses in the Information Memorandum which according to the Respondents is a contract between two private parties, is based on the Master Circular. The Master Circular is issued by the Reserve Bank under its statutory powers. The covenant and the terms in the Information Brochure i.e. between the parties is based on statutory Master Circular. Information Memorandum and its clauses refer to Master Circular. The said Information Brochure has a statutory flavour. It is based on the statutory Master Circular. In that event, the agreement would have a statutory base and such an agreement can certainly be enforceable. Reliance can be had to the judgment of India Thermal Power Ltd. [ 2000 (2) TMI 842 - SUPREME COURT] as observed that if entering into a contract containing the prescribed terms and conditions is a must under the statute then the contract becomes a statutory contract. If a contract incorporates certain terms and conditions in it, which are statutory then the said contract to that extent is statutory. Clause 57 of the Information Memorandum binding the parties and relevant for our consideration is extracted from the Master Circular based on Basel III Norms. Clause 57 also suggests that the writing off or conversion to shares would be in accordance with these rules. In view of that, Writ Petition would be tenable before this court. The impugned letter dated March 14, 2020 and decision to write off Additional Tier 1 (AT-1) bonds deserve to be set aside and is hereby quashed and set aside. Necessary consequences shall follow.
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Insolvency & Bankruptcy
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2023 (2) TMI 281
Validity of assessment order - non application of mind to the fact that the NCLAT has passed a moratorium order, which is akin to a moratorium order passed under Section 14 of the Insolvency and Bankruptcy Code 2016 - no personal hearing was granted to the petitioner, despite a specific request having been made in the aforementioned replies by the petitioner - violation of principles of natural justice. HELD THAT:- Admittedly, the contentions of the petitioner, which has been recorded by this Court in the earlier paragraphs were not considered by the respondent in the impugned Assessment Order. It is also not in dispute that the NCLAT had passed an order on 15.10.2018, which the petitioner claims is akin to a moratorium order passed under Section 14 of the Insolvency and Bankruptcy Code, 2016. It is for the respondent to consider the petitioner's contention and decide the issue on merits - this Court is not expressing any view on the merits of the matter. Admittedly, no personal hearing was afforded to the petitioner in the impugned assessment proceedings despite a request having been made by the petitioner for the same in their replies - Having not granted personal hearing to the petitioner in the impugned Assessment proceedings, despite a request having been made by the petitioner in their replies, this Court is of the considered view that principles of natural justice has been violated. The respondent has also not considered the petitioner's contention that Assessment Proceedings cannot be proceeded with in view of the fact that the NCLAT has passed an order on 15.10.2018, which according to the petitioner is akin to a moratorium order passed under Section 14 of the Insolvency and Bankruptcy Code, 2016. This Court is of the considered view that on account of the violation of principles of natural justice due to the fact that no personal hearing was afforded to the petitioner and on account of the fact that the contentions of the petitioner as raised in this writ petition have not been considered by the respondent, despite the same having been raised in their replies sent to the respondent, the impugned order has to be necessarily quashed and the matter has to be remanded back to the respondent for fresh consideration on merits and accordance with law. Petition disposed off.
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2023 (2) TMI 280
Recovery of outstanding dues - Government dues - Validity of attachment orders issued by the Income Tax Department - issuance of attachment notices, after 15 months of the approval of the Resolution Plan - whether this claim of attachment at this stage can be entertained or not. The instant Appeal has been preferred on the grounds that Impugned Order fails to take into account that the Appellants have made the recovery of the outstanding demand for the Assessment Year 2013-14 and Assessment Year 2014-15 vide Form B on 14.11.2017 which is prior in time to the resolution plan being approved on 20.09.2018. HELD THAT:- On 25.10.2018, the Appellants received a draft of Rs. 41,22,407 from the Resolution Professional as a tranche payment. Further, the Appellants received another draft of Rs. 78,90,284 vide letter dated 07.01.2019 as a full and final payment totalling to Rs. 1,20,23,691 which is not even 15% of the outstanding demand. The Respondent was asked to pay the outstanding demand vide letter no. 674 dated 12.03.2019. However, the Respondent wrote to the Appellants for extinguishing all claims against them relating to the period prior to the date of order of the NCLT since as per the approved resolution plan at clause 12.1 no other amount was to be paid to the Operational Creditors. The Appellants filed an application for review of the order passed by the NCLT dated 20.09.2018 with necessary directions to the Resolution Professional for submission of the revised resolution plan incorporating the entire amount alleged to be due to the Appellants. Subsequently, the NCLT vide its order dated 22.10.2019 stated that since the Resolution Professional intimated the Appellants that the demand after finalization of appeal by CIT(A) would be payable by the new promoter, such written intimation of the Resolution Professional is to be read with the new resolution plan and the demand of the Appellants is duly considered and the Appellants have a right to lay its claim before the new promoter of the Respondent Company. The Respondent were examined and rebuttal letter bearing no. ITBA/COM/F/17/2019-20/1024086061(1) dated 21.01.2020 (Annexure A/8) was sent to the Respondent stating that the stay granted by the Appellate Authority had since expired on 13.12.2019 and therefore, the Respondent was requested to pay the outstanding demand for the Assessment Year 2014-15 immediately and intimated within 7 days. Since, there was no compliance of the notice sent by the Appellants a bank attachment in the following banks were carried out; (i) Allahabad Bank, Dibrugarh Branch and (ii) Allahabad Bank, Industrial Finance Bank, Kolkata and further an email dated 28.01.2020 was received from the Allahabad Bank Industrial Finance Bank, Kolkata that accounts have been marked debit freeze. These facts have not been considered by the Adjudicating Authority while passing the impugned order. Admittedly, the judgment passed by the Hon ble Supreme Court in the case of STATE TAX OFFICER (1) VERSUS RAINBOW PAPERS LIMITED [ 2022 (9) TMI 317 - SUPREME COURT ], the dues of the Appellants are Government dues and they are Secured Creditors - Thus, the impugned order dated 10.02.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Guwahati Bench, Guwahati) is hereby set aside and the matter is remitted back to the Adjudicating Authority (National Company Law Tribunal, Guwahati Bench, Guwahati) with a request to hear the parties (Appellants and Respondent herein) considering the aforesaid facts and also judgment in RAINBOW PAPERS. Appeal disposed off.
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2023 (2) TMI 279
Payment of fees to IRP - demand raised on the ground that the claim of the Appellant has not been admitted by the IRP and has been directed to pay entire fee of the IRP despite the fact that the member of the CoC are the Financial Creditors - if the claim of the Appellant (Operational Creditor) is not even taken into consideration by the IRP then on what ground the CoC is burdening the present Appellant with the Cost/Fee to be paid to the IRP? - HELD THAT:- The Adjudicating Authority has passed a cryptic order without taking into consideration the aforesaid facts and circumstances, even if, the Appellant who was the Respondent before it was not present. In such circumstances, it would be just and expedient if the impugned order is set aside and the matter is remanded back to take a decision afresh after giving an opportunity to the Appellant and taking into consideration the aforesaid facts and circumstances which we have been narrated on the basis of the record. The matter is remanded back to the Adjudicating Authority to decide the application, which is hereby restored, by passing speaking order after affording an opportunity of hearing - Appeal allowed by way of remand.
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Service Tax
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2023 (2) TMI 291
Extended Period of Limitation - benefit of section 73 (3) and Section 80 of the Finance Act, 1994 - service received from foreign based service provider - reverse charge mechanism - HELD THAT:- The issue about taxability on reverse charge basis in respect of service received from foreign based service provider was not free from doubt as the issue was finally decided by the Hon ble Supreme court in a landmark judgment in the case of Indian National Shipowners Association [ 2009 (12) TMI 850 - SC ORDER ]. Moreover the appellant have paid the entire service tax even for the period prior to its levy i.e. before 18.04.2006 and the appellant have filed ST-3 returns wherein details of payments have been declared. In this fact the demand for the extended period is not sustainable. The appellant alternatively claimed the benefit of Section 73 (3) of finance Act, 1994 on the ground that the entire service tax along with interest paid prior to show cause notice. Considering this position the demand for extended period is not sustainable hence the same is set aside. Demand for the normal period if any, is sustained along with interest. The penalties are not sustainable hence the same is set aside. Since we have considered appellant s submission on the point of Section 73 (3) we are not going into other issue such as jurisdiction and taxability. Appeal allowed in part.
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2023 (2) TMI 289
Demand of service tax for the service provided to SEZ for the service wholly consumed within their SEZ - Eligibility for exemption under notification no.9/2009-ST as amended by notification no.15/2009-ST dated 20.05.2009 - erection commissioning and installation service - notification no.4/2004-ST was superseded vide notification no.9/2009-ST dated 03.03.2009 whereby, the exemption was granted by way of refund after payment of service tax in relation to specified services - effect of such amendment, retrospective or prospective? - HELD THAT:- The appellant have provided the services to SEZ during the period 03.03.2009 to 20.05.2009, during the said period the exemption to service provided to SEZ was available under notification no. 9/2009-ST which was by way of refund however, subsequently notification no.15/2009-ST dated 20.05.2009 was issued amending the notification no.9/2009-ST wherin, sub-para (c) of para 1 of the notification no.9/2009-ST was substituted. The amendment is explicitly by way of substitution of sub-para (c) in the notification no.9/2009-ST. It is settled law that if any amendment is brought whereby, the earlier terms of the notification is substituted then, such amendment shall be effective from retrospective effect i.e. from the date of original notification accordingly, for the services provided during the period 03.03.2009 to 20.05.2009 substituted sub-para (c) shall apply. As per the sub-para (c) of notification no. 15/2009-ST., if the service provided is for use in authorized operations in the SEZ shall be exempted without opting for the refund by the service provider subject to the condition the services are consumed wholly within the SEZ - In the present case, the service of erection, commissioning and installation is indeed used and wholly consumed in the SEZ therefore, the appellant is eligible for exemption under notification no.9/2009-ST as amended by notification no.15/2009-ST dated 20.05.2009. The demand of service tax in respect of services provided to authorized operation of SEZ is not sustainable accordingly, the impugned order is set aside - Appeal allowed.
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CST, VAT & Sales Tax
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2023 (2) TMI 290
Interest for the period prior to the three years - respondent has refunded the excess tax and also paid interest for the period of three years - HELD THAT:-The said issue was considered by a coordinate bench of this Court in IJM Corporation Berhad v. Commissioner of Trade and Taxes [ [ 2017 (11) TMI 1298 - DELHI HIGH COURT] ]. This Court had held that in terms of Section 42 of the DVAT Act, interest would be payable if the refund is not paid within a period of two months of filing of the return. On a closer examination of the facts of this case, we are unable to accept that the petitioner can be denied interest on the amount of refund which has been unjustifiably withheld, mainly for two reasons. First, that there is no dispute that the petitioner is entitled to the refund and his return was required to be considered as an application for the same. The petitioner was not required to approach or pursue the authorities for its claim for refund of excess tax. Second, that the delay in processing claims for refund is endemic to the DVAT authorities and if the same is considered, the delay on the part of the petitioner approaching this court is not long. Although the petitioner has not approached this Court immediately after the refund of tax became due, we are unable to accept that the same disentitles the petitioner from claiming what is rightfully due - this Court directs the respondents to process the petitioner s claim for interest in accordance with law. Petition disposed off.
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