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TMI Tax Updates - e-Newsletter February 12, 2021 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI SMS Constitution of State Bench of GST Tribunal - Dealers are left remediless inasmuch as Appellate Tribunal is not available - Directions issued - HC Articles CASH PAYMENT IN LIEU OF INPUT TAX CREDIT IN GST Bitcoins - Income Tax, GST & International Taxation Structure News DGGI Gurugram arrests man for fraudulently availing input tax credit of more than ₹ 69 crore Income Tax Department conducts searches in Bengaluru Framework for enabling Ancillary services at International Financial Services Centres notified Goa becomes the 6th State to complete Urban Local Bodies (ULB) reforms Vocal for Local Industrial Corridor Projects Incentives to Foreign Companies Export Targets Agri Export Policy Scheme for Traders SEZ Policy Income Tax Department conducts searches in Kolkata Notifications Customs 17/2021-Customs (N.T./CAA/DRI) - dated 9-2-2021 - Cus (NT) Appointment of CAA by DGRI 16/2021-Customs (N.T./CAA/DRI) - dated 9-2-2021 - Cus (NT) Amendment in Notification No. 66/2020-Customs (N.T./CAA/DRI) dated 14.12.2020 15/2021-Customs (N.T./CAA/DRI) - dated 9-2-2021 - Cus (NT) Amendment in Notification No. 64/2020-Customs (N.T./CAA/DRI) dated 14.12.2020 Circulars / Instructions / Orders FEMA 09 - dated 11-2-2021 Exim Bank's Government of India supported Line of Credit (LoC) of USD 400 million to the Government of the Republic of Maldives Highlights / Catch Notes GST Constitution of State Bench of GST Tribunal - Interpretation of Section 109(6) of the CGST Act/ U.P. GST Act - The proposal of the State Government for creation of State Bench at Allahabad dated 05.03.2019 has neither been quashed by any court nor has been withdrawn by the State Government. - Dealers have been left remediless inasmuch as Appellate Tribunal under the Act is not available - Directions issued - HC Visit to Get Source Carry forward of amount lying in petitioner’s Cenvat account credit when the GST was introduced - The petitioner cannot be deprived of the benefit of claiming the credit lying in its account on the stipulated date only on the basis of procedural or technical wrangles that one form TRAN-1 was not filled by the petitioner particularly when the petitioner has reflected the said credit in its return GSTR-3B - HC Visit to Get Source Initiation of recovery proceedings - time limitation - Section 78 of Gujarat GST Act - Section 75(4), referred to above, makes it abundantly clear that an opportunity of hearing has to be given, more particularly, in those cases where a request is received in writing from the person chargeable with tax or penalty and without any adverse decision is contemplated against such person. - HC Visit to Get Source Validity of ex parte order of cancellation of GST registration of the petitioner - Petitioner could not furnish his reply as no date or time was indicated therein. As such, the cancellation of registration resulting from such an incomplete show-cause notice also cannot be sustained being violative of principles of natural justice. - HC Visit to Get Source Income Tax Allowability of set off of business loss against the interest income - as per section 71(1) of the Act, assessee is entitled to set off business loss with income from other sources. - AT Visit to Get Source Characterization of income - license fee received by the assessee for licensing a fully furnished hotel along with license to run the hotel is a business receipt, which is assessable under the head ‘income from business or profession’ but not a rental income, which is assessable under the head ‘income from house property’. - AT Visit to Get Source Estimation of income - Bogus purchases - Specific information received from the Sales Tax Department to indicate that certain purchases made by the assessee were non-genuine - Considering the nature of business of the assessee and the profit rate generally adopted by the Tribunal in such type of cases no infirmity decision of learned Commissioner (Appeals) in restricting the addition to 12.5% of the alleged non genuine purchases - AT Visit to Get Source Rectification u/s 254 - Maintainability of appeal on low tax effect - both CBDT Circular no. 23 of 2019 and special order dated 16.09.2019 were not in existence and thus not part of the record at the time when the matter was heard on 20.08.2019 or at the time of passing of order by the Tribunal on 22.08.2019 and therefore, non-consideration of subsequent CBDT Circular and the special order so passed by the CBDT is not a mistake apparent from record which can be rectified within the narrow compass of section 254(2) of the Act. - AT Visit to Get Source Customs Refund of the Additional Duty of Customs (SAD) - rejection of refund on the ground that the description of the imported goods and the goods sold in India does not tally - the respondent seems to have applied their own logic and imagination to differentiate the imported goods with the goods sold locally inside India. If at all, the respondent was of the view that the descriptions in the imported goods and locally sold goods are different, the only yardstick that requires to be applied is the conditions prescribed in Notification No. 102/2007 - The respondent shall refund the claim made by the petitioner - HC Visit to Get Source Non-clearance of goods on the ground that verification / enquiry is pending - Origin of Goods - petitioner had been asked to opt or request for provisional assessment for purpose of clearing the goods - The provisional assessment in respect of the goods covered under the Bill of Entry dated 26.09.2020 shall be completed within a period of two days from the date of receipt of a copy of this order. After furnishing of the indemnity bond, those goods be released within next 24 (twenty four) hours. - HC Visit to Get Source Indian Laws Dishonor of Cheque - duties and rights of Director on behalf of the company - It is not being disputed that said cheque was dishonoured due to 'account closed'. The version of applicants, that said cheque was given by Deseased Director as a blank cheque for security but the complainant has made forgery by filling the amount, date and his name in said cheque, cannot be accepted. - HC Visit to Get Source Dishonor of Cheque - insufficient funds - privity of contract - where the person committing an offence under Section 138 of the N.I.Act is a company, every person, who, at the time of commission of offence was incharge of, and was responsible to the company for conduct of business of the company, as well as the company, shall be deemed to be guilty of offence and liable to be proceeded against and punished accordingly. This is evident from the provisions of Section 141 of the N.I.Act. - HC Visit to Get Source Service Tax Works Contract - Classification of services - Scope of Show Cause Notice (SCN) - the Commissioner was not justified in confirming the demand of service tax under the category of “works contract” for the period post June 1, 2007 even if the levy of service tax was not exempted under Notifications, since, the show cause notice that demand it service tax under the three categories namely (i) commercial or industrial construction, (ii) construction of complex and (iii) management, maintenance or repair. - AT Visit to Get Source Rejection of declaration under SVLDRS - when there is a provision for granting personal hearing in a case where the declarant disputes the estimated amount, it would be in complete defiance of logic and contrary to the very object of the scheme to reject a declaration on the ground of being ineligible without giving a chance to the declarant to explain as to why its declaration should be accepted and relief under the scheme be extended to him. - HC Visit to Get Source Case Laws: GST 2021 (2) TMI 436 Constitutional validity of certain provisions of the Central Goods and Services Tax, Act, 2017 - HELD THAT:- This Court in a similar matter in DHRUV KRISHAN MAGGU AND K.P. AND SONS AND ORS. [2021 (1) TMI 330 - DELHI HIGH COURT] has refused to pass any interim order holding that it is not inclined to interfere with the investigation at this stage and that too in writ proceedings. As there are two contrary Division Bench judgments, it cannot be said that the order passed by this Court in Dhruv Krishan Maggu vs. Union of India Ors. [2021 (1) TMI 330 - DELHI HIGH COURT] is per incuriam. The application for interim relief is dismissed in view of the order passed by this Court in Dhruv Krishan Maggu vs. Union of India Ors. - List the matter before the roster Bench on 18th March, 2021 along with the case of Dhruv Krishan Maggu vs. Union of India Ors. 2021 (2) TMI 435 Constitution of State Bench of GST Tribunal - Interpretation of Section 109(6) of the CGST Act/ U.P. GST Act - Seeking to constitute 'Regional Bench' and 'State Bench' for the State of U.P, at the seat of jurisdictional High Court and also such number of Area Benches in the State of U.P - seeking direction that Rule 138 of UPGST Rules under which Notification No.1014 dated 21.7.2017 was issued prescribing e-way bill 01, gets automatically revived on rescinding of Notification No.138 dated 30.1.2018 - Section 109 of the CGST Act and Section 109 of the U.P. GST Act - HELD THAT:- It is evident that the petitioners as well as respondents are in agreement on the following points: (a) The Central Government shall, by notification, specify a State Bench of the Appellate Tribunal in view of Section 109(6) of the CGST Act and Section 109(2) of the U.P. GST Act. (b) The State Government has a role only in creation of Area Benches to the extent that it can request for such number of Area Benches it desires. The Central Government, on receipt of a request of any State Government, shall constitute such number of Area Benches in that State as may be recommended by the Council. Thus, the recommendation of the Council for creation of Area Benches on request of the State Government is required to enable the Central Government to constitute Area Benches. (c) The creation of State Bench of Appellate Tribunal at Prayagraj (Allahabad) and Area Benches at Lucknow, Ghazibad, Varanasi and Agra was approved in the 39th meeting of the GST Council. After approval/ recommendation of the GST Council in its 39th meeting dated 14.03.2020, the matter fell within the powers of the Central Government alone to issue notification in exercise of powers under Section 109(6) of the CGST Act. (d) The State Government has no power under Section 109(6) of the CGST Act or Section 109 of the U.P. GST Act to specify for State Bench of Appellate Tribunal. It is solely within the domain of the Central Government. In the case of Oudh Bar Association High Court, Lucknow [ 2019 (6) TMI 103 - ALLAHABAD HIGH COURT ], Luckow Bench of this Court held vide para-44 that out of two seats of High Court of Judicature at Allahabad, one at Lucknow and other at Allahabad, none of which is permanent. The provisions of Section 109 of the CGST Act/ U.P. GST Act, were not under consideration in the aforesaid case except that in concluding portion of the order, a reference to Section 109 has been made holding that the seat where the Tribunal is to be established is an issue which is in the domain of executive in terms of Section 109. The aforesaid case was filed by an Advocates Association. The present writ petitions have been filed by the dealers of different districts, namely Banda, Kanpur Nagar, Kanpur, Mathura, Lalitpur, Meerut, Aligarh, NOIDA/G.B. Nagar, Bijnor, Agra, Ghaziabad, Bulandshahar, Jhansi and Moradabad, against the order passed by authorities under CGST Act/ U.P. GST Act and their main argument is of interpretation of Section 109 of the CGST Act/ U.P. GST Act and the relief has been sought for establishing the State Bench and Area Benches. Coming back to the proceedings before the GST Council; perusal of Agenda Item No.7 of the 40th Meeting of the Council held on 12.06.2020 as reproduced in Para-19 above, goes to show that the recommendation has been made on the basis of DO Letter No.20/GST dated 29th May, 2020 for creation of State Bench and Area Benches of the Goods and Services Tax Appellate Tribunal, for the State of Uttar Pradesh. The D.O. Letter No.20/GST dated 29.05.020 as reproduced in Para-18 above would show that it is a letter written by the Commissioner Commercial Tax, who is an Officer under the U.P. GST Act and appointed by the State Government by notification, as evident from the definition of the word Commissioner under Section 2(24) read with Sections 3 and 4 of the U.P. GST Act, 2017. The earlier proposals dated 05.03.2019 and 15.03.2019 were of the State Government through its Additional Chief Secretary, who is the competent authority. The proposal of the State Government for creation of State Bench at Allahabad dated 05.03.2019 has neither been quashed by any court nor has been withdrawn by the State Government. It is pertinent to mention that dealers in the State of Uttar Pradesh falling under the CGST Act/ U.P. GST Act and aggrieved with the orders of first appellate authority under Section 107, have been left remediless inasmuch as Appellate Tribunal under the Act is not available in the State of Uttar Pradesh for preferring appeals under Section 112 of the CGST Act/ U.P. GST Act. The Appellate Tribunal being the last fact finding authority and its not availability in the State of Uttar Pradesh, is causing serious prejudice to the rights of aggrieved persons for statutory appeal which is continuing since the enactment of the CGST Act/ U.P. GST Act. In peculiar facts and circumstances of the case and in view of the legislative mandate of Section 109(6) of the CGST Act, we direct as under: (i) The GST Council shall forward its recommendation of Agenda Item No.6 of the 39th Meeting held on 14.03.2020 to the Central Government/ respondent No.1 within two weeks from today. (ii) Thereafter, the respondent No.1/ Central Government shall, within next four weeks, specify by notification in terms of sub-Section (6) of Section 109 of the CGST Act the State Bench at Prayagraj (Allahabad), of the Goods and Services Tax Appellate Tribunal and four Area Benches at Ghaziabad, Lucknow, Varanasi and Agra, in the State of Uttar Pradesh for exercising the powers of the Appellate Tribunal. (iii) The respondent Nos.1, 2, 3 and 6 shall ensure that the State Bench and the Area Benches of the Appellate Tribunal (Goods and Service Tax Appellate Tribunal) in the State of Uttar Pradesh are made functional as far as possible from 01.04.2021. (iv) Since the challenge to the impugned orders relates to questions of fact and the Appellate Tribunal is the last fact finding authority, therefore, we leave it open for all the petitioners to challenge the impugned orders before the Appellate Tribunal under Section 112 of the CGST Act/ U.P. GST Act as and when the State Bench and Area Benches of the Appellate Tribunal are constituted in the State of Uttar Pradesh. However, till expiry of the period of limitation for filing appeals under Section 112 of the CGST Act after establishment of the State Bench and Area Benches or till appeals are filed, whichever is earlier, no coercive action shall be taken against the petitioners herein pursuant to the impugned orders passed by the first authority or the first appellate authority. Liberty is also granted to the petitioners to avail such remedy as available to them under law in respect of other reliefs which have not been considered and decided by this judgment. 2021 (2) TMI 434 Carry forward of amount lying in petitioner s Cenvat account credit when the GST was introduced in the State of Jammu and Kashmir - It appears that the petitioner instead of submitting TRAN-1 form for claiming ITC submitted GSTR-3B - HELD THAT:- It is stated that because of the lack of awareness about the procedure to claim the benefit, the petitioner could not submit TRAN-1 within prescribed time but the respondents are denying the same to the petitioner though the petitioner had mentioned about the credit sought to be claimed, in GSTR-3B return submitted by the petitioner within the prescribed period. The respondents have neither disputed that the petitioner is not entitled to carry forward the said credit nor they have disputed the correctness of the amount. Even they have not disputed that the petitioner has not reflected the said credit in GSTR-3B filed within the stipulated time. Only objection that has been raised by the respondents is that TRAN-1 form was required to be submitted within the prescribed period but was not submitted by the petitioner. Learned counsel for the petitioner at this stage informs that the portal for submitting TRAN-1 is lying closed and it is not possible for the petitioner to submit the claim in TRAN-1. The petitioner cannot be deprived of the benefit of claiming the credit lying in its account on the stipulated date only on the basis of procedural or technical wrangles that one form TRAN-1 was not filled by the petitioner particularly when the petitioner has reflected the said credit in its return GSTR-3B. It is directed that the respondents to permit the petitioner to submit the TRAN-1 either electronically or manually on or before 15.03.2021 and the petitioner shall coordinate with the respondents for the submission of TRAN-1as directed - petition allowed by way of remand. 2021 (2) TMI 433 Initiation of recovery proceedings - time limitation - Section 78 of Gujarat GST Act - HELD THAT:- A perusal of the provisions of Section 78, would indicate that no recovery proceedings can be initiated against the assessee before the expiry of three months from the date of the service of the order - It is not in dispute that in the case on hand, within one month, the proceedings came to be initiated in the form of attachment of the factory premises - Having regard to the materials on record, one thing is for sure that no opportunity of personal hearing was given to the writ applicant by the concerned authority before passing the impugned order. Although a specific request in this regard was made, yet, the impugned order came to be passed without affording any opportunity of hearing. Section 75(4), referred to above, makes it abundantly clear that an opportunity of hearing has to be given, more particularly, in those cases where a request is received in writing from the person chargeable with tax or penalty and without any adverse decision is contemplated against such person. One opportunity to be provided to the writ applicant to appear before the respondent No.2 and make good his case - entire matter is remitted to the respondent No.2 for fresh consideration - application allowed by way of remand. 2021 (2) TMI 432 Principles of Natural Justice - validity of ex parte order of cancellation of GST registration of the petitioner - time limitation - registration cancelled on the ground of failure to file six monthly returns from August, 2019 to January, 2020 by the petitioner within the prescribed time limit - HELD THAT:- Admittedly, no reply to the show-cause was filed by the petitioner. However, a perusal of the impugned order at Annexure- 2 dated 13.03.2020 shows the observation of the Superintendent, CGST, respondent no. 4 that he has examined the reply and submissions made at the time of hearing by the assesse and is of the opinion that his registration is liable to be cancelled for the following reasons. Thereafter, the order records that the assesse has not responded to the show-cause notice dated 26.02.2020 for cancellation of his GST registration on the ground of failure to file six monthly returns from August, 2019 to January, 2020 within prescribed time limit. The merits of the impugned order is not considered as the ingredients of a proper show-cause notice as per the prescribed form GST REG-17 are completely absent. Petitioner could not furnish his reply as no date or time was indicated therein. As such, the cancellation of registration resulting from such an incomplete show-cause notice also cannot be sustained being violative of principles of natural justice. The impugned order of cancellation of registration is quashed - Petition allowed. 2021 (2) TMI 431 Violation of principles of natural justice - petitioner submits that the second respondent without hearing the petitioner and without providing an opportunity has passed the impugned order which is in contravention of principles of natural justice - Assessment period is May-2019 - HELD THAT:- From the perusal of the Annexure-B, the second respondent without providing an opportunity to the petitioner has passed the impugned order. Thus, impugned order passed by the second respondent is in contravention of principles of natural justice. Hence, the impugned orders deserves to be set aside only on the ground of violation of principles of natural justice. The matter is remitted to the second respondent to reconsider the appeal afresh after hearing the parties and pass appropriate order in accordance with law - Petition allowed by way of remand. 2021 (2) TMI 430 Grant of Bail - dummy firms - fake ITC - firms formed by accused persons were never found existing at their registered addresses and the documents uploaded in the GST Portal for obtaining registration by accused persons were also fabricated - HELD THAT:- The grant of bail depends upon complex of facts and factors considered in the light of golden principles laid down from time to time by the higher Courts, In Dipak Subhash Chandra Mehta Vs, CBI [ 2013 (6) TMI 105 - SUPREME COURT ] Hon'ble Apex Court held that the Court granting bail should exercise its discretion in a judicious manner and not as a matter of course. Though at the stage of granting bail, a detailed examination of evidence and elaborate documentation of the merits of the case need not be undertaken, there is need to indicate in such orders reasons for prima facie concluding whey bail was being granted, particularly, where the accused is charged of having committed serious offence. In the given facts, accused persons are languishing in jail since 19.11.2020 and there is substantial change in circumstances as investigation has been completed and the Department has filed complaint. The trial would going to take long time in the given circumstances and in these circumstances, the further incarceration of the accused would serve no useful purpose. Accordingly, considering the fact that investigation has been completed and they are no longer required for custodial interrogation, both the accused persons i.e. Naresh Mittal and Chhedi Lal Mittal are hereby accorded bail subject to furnishing PS/SB of ₹ 5,00,000/- each with following conditions: 1. That the accused persons shall join the investigation as and when directed by the investigating agency. 2. The accused persons shall not tamper with the evidence or influence the witnesses which will be examined by the department during investigation. 3. That accused persons shall not leave the country without the permission of the Court and deposit his passport with the IO within seven days. 4. That accused persons shall not indulge in similar offence in future. 5. That accused persons shall appear before the Court on each and every date of hearing. The application stands disposed off. 2021 (2) TMI 397 Maintainability of amendment application - HELD THAT:- The amendment application is allowed - Put up on 25th January, 2021 in the additional cause list at 2.00 p.m. along with all connected writ petitions. 2021 (2) TMI 396 Maintainability of petition - This bunch of writ petitions have been nominated to this Bench by order of Hon'ble the Chief Justice dated 12.01.2021 which is available in the order sheet of Writ Tax No.716 of 2020 - HELD THAT:- Learned Additional Solicitor General prays for and is granted three days' time to bring on record copies of all the relevant papers referred under agenda item no.7 of the aforesaid extract of the Minute Book of the CGST Council - Learned counsel for the petitioners prays for a day's time to amend the writ petition in view of the aforesaid subsequent developments. The petitioners may file the amendment application by 20.01.2021. Put up in the additional cause list on 20.01.2021 alongwith the connected writ petitions. Income Tax 2021 (2) TMI 429 Settlement Application u/s 245C(1) - assessee disclosed additional income during the course of settlement - fresh and substantial disclosure or not - HELD THAT:- Issue notice, returnable on 12.03.2021 Dasti in addition. In the meanwhile, the effect and operation of the order presently under challenge shall remain stayed. 2021 (2) TMI 428 Addition u/s 41 or 28 - Disallowance of principal amount of loan waived off by the lender - one time settlement of loan with Mafatlal Finance Company Ltd., holding that the loan was acquired for acquisition/investment of capital assets as such its waiver cannot be termed as revenue receipt - HELD THAT:- Special leave petition is dismissed on the ground of delay. 2021 (2) TMI 427 Reopening of assessment u/s 147 - Reopening after four years - Assessee case selected for scrutiny assessment under Section 143(3)Disallowance u/s 14A - HELD THAT:- A specific query was raised by the Assessing Officer with respect to Section 14A and the same was appropriately replied by the writ applicant. The same was accepted at the relevant point of time. Once again the very same issue is sought to be raised for the purpose of reopening which is otherwise not permissible in law on mere change of opinion. It cannot be said that there was any failure on the part of the assessee to fully and truly disclose all the material facts. This writ application, in our opinion, could be said to be squarely covered by the decision of the Supreme Court rendered in the case of CIT vs. Kelvinator India [ 2010 (1) TMI 11 - SUPREME COURT] . We are convinced that the impugned notice under Section 148 of the Act issued to the assessee for the purpose of reopening of the assessment beyond the period of four years and that too in a case of scrutiny assessment under Section 143(3) of the Act is not sustainable in law having regard to the facts of this case - Decided in favour of assessee. 2021 (2) TMI 426 Capital gain by invoking the provisions of section 50C - Year of assessment - HELD THAT:- There was no device adopted by the Assessee to ensure that provisions of Sec.50C of the Act were not applicable to his case. Secondly, the registration was completed in the case before the Hon ble Calcutta High on 27.11.2007 i.e., in AY 2008-09 but the case before the Hon ble Court related to AY 2006-07. The Court was interpreting the term assesseable and countered the contention of the Assessee that prior to the amendment of Sec.50C of the Act w.e.f 1-10-2009, it is only cases where the valuation is completed in the relevant AY that provisions of Sec.50C of the Act can be applied. In the present case, no such devise to evade tax has been pleaded by the revenue nor a plea has been taken by the Assessee that sale having taken place earlier to the execution or registration of sale , provisions of Sec.50C of the Act are not applicable. As rightly contended by the learned Counsel for the assessee, it was a decision rendered on the scope of amendment to section 50C of the Act w.e.f. 01.10.2009. The decision referred to by the learned DR in the case of J.Appa Rao [ 2013 (11) TMI 1775 - ITAT HYDERABAD] is a case where it was held that applicability of the provisions of Sec.50C of the Act is mandatory w.e.f .1-4-2003. This decision does not in any way support the case of the revenue regarding the year in which capital gain is liable to be taxed. Capital gain in question cannot be brought to tax in Assessment Year 2011-12. The Revenue authorities erred in bringing to tax the capital gain in Assessment Year 2011-12. The addition made by the AO is accordingly directed to be deleted - Decided in favour of assessee. 2021 (2) TMI 425 Disallowance of commission expenses - HELD THAT:- We find that the genuineness of claim of similar type of commission expenses was in challenge before this Tribunal in assessee s own case for Assessment Year 2011-12 wherein the Tribunal after considering the relevant facts which are identical to the facts of the instant appeal before us deleted the disallowance of commission holding them to be wholly and exclusively for business purposes. Disallowance of bad debts - AO disallowed this claim observing that the alleged amount was a write off of outstanding balance of loans and advances and since the assessee is not engaged in the business of providing loans and advances such claim cannot be allowed as Bad Debt - HELD THAT:- As decided in TRF. LTD. [ 2010 (2) TMI 211 - SUPREME COURT ] bad debt which the assessee company wants to claim as an expenditure needs to be reduced from sundry debtors. As per the accounting principles when at the end of the financial year unrealised sales are shown under the head sundry debtors. In other words sales effected but consideration not received up to the end of financial year are shown as sundry debtors. From going through the finding of Ld. CIT(A) we find that no efforts have been made by Ld. CIT(A) to examine the fact that whether the alleged amount claimed to be bad debts by the assessee are in the nature of sales made in the preceding years, or loans and advances . If the alleged amount are part of sales effected during the year or in the preceding year and they have become bad and doubtful, such claim may be allowed if the assessee has written off in its books of accounts crediting the customer account but in case it is a loans and advances which have become bad then the assessee will have to claim it under the head of business loss by showing that the same were given in the course of business. Since Ld. CIT(A) has not examined this aspect we restore the issue for reconsideration. Allowability of brought forward losses and unabsorbed depreciation - HELD THAT:- The return of income of preceding years from which the business losses and unabsorbed depreciation loss are being brought forward are also not placed on record. No specific finding is given in this regard by Ld. A.O. Under these given facts and circumstances of the case we are of the considered view that the issue needs to be set aside to the file of Ld. A.O for afresh examination. In case the assessee has legally and rightfully claimed the set off of unabsorbed business loss and unabsorbed depreciation loss and the return of income of the years in which such loss was shown have been filed on the due dates u/s 139(1) of the Act then the assessee deserves to get the benefit of set off. Ground No.1 of the revenue is thus allowed for statistical purposes. Disallowance on account of belated payment of ESIC and EPF contribution - some delay on the part of the assessee in depositing the ESIC and EPF contribution of employee - HELD THAT:- This is not in dispute that the total amount of employees contribution was deposited in Treasury before the due date of filing of return of income i.e. 30.11.2014 and even if employees contribution is deposited before due date of filing of return, same is allowable. Therefore, the addition made by the AO is deleted. Therefore, the appeal on this ground is Allowed.See M/S. ALOM EXTRUSIONS LIMITED [ 2009 (11) TMI 27 - SUPREME COURT] Disallowance u/s 40a(ia) - non deduction of tax at source on the alleged amount of interest - HELD THAT:- As assessee has not shown expenditure in its Profit Loss account. Since no such expenditure has been claimed by the assessee against the revenue for the year and this fact remains undisputed at the end of both the parties, then in such situation the disallowance made u/s 40a(ia) of the Act is uncalled for. We thus find no reason to interfere in the finding of Ld. CIT(A) who has rightly deleted the disallowance based on the facts of the case. 2021 (2) TMI 424 Unexplained investment u/s 69 - HELD THAT:- Considering the fact that the assessee s business is confined to that of finance broker and this business is consistently been followed since many years and further since the Ld. A.O has not brought any corroborative evidence on record by calling for necessary information from the various parties whose names are mentioned in the seized document, the case of the revenue becomes weak. In the paper book assessee has filed ledger account of various parties and the names of most of them are also appearing in the seized document BS-28 and these confirmation accounts clearly reveals that there were regular transactions with these parties through account payee cheques with regard to the loan given by the lenders and received by the borrowers and the repayment there after. No evidence have been brought on record that any of these parties have accepted to have taken loan in cash from the assessee - we find no reason to interfere in the finding of Ld. CIT(A) deleting the addition. - Decided against revenue Unaccounted interest income - addition made by Ld. A.O on the basis of seized document BS-28 observing that the alleged interest income is received by the assessee on monthly basis on cash loan given - as per assessee there was no cash loan given and all the transactions were through account payee cheques which have been duly accounted in the books - CIT(A) deleted the addition - HELD THAT:- AO has picked up transactions which have narration as interest received in cash, however, did not discuss about the interest portion received through cheques. The interest portion received through cheques is also not recorded in books of appellant, if the AO has treated interest received in cash as undisclosed interest income they why the interest received through cheques is not charged to tax. The one and only reason for not making addition on account of interest received through cheque was that the interest has been actually received by the lender and not by the appellant. Thus, the AO was not justified in making additions on assumption and presumption basis - DR failed to rebut the finding of Ld. CIT(A) by placing any material in its favour and thus we find no reason to interfere in the finding of Ld. CIT(A) deleting the addition. - Decided in favour of assessee. 2021 (2) TMI 423 Disallowance of employee benefit expenses - Allowable business expenditure - no business has not been set up - difference between the setting up of business and commencing the business - HELD THAT:- Only because there was no business receipt, it cannot be said that assessee s business has not been set up. Since the assessee s business is already set up and ready to commence its business activities during the previous year relevant to the assessment year under consideration, in our opinion, the assessee is entitled to the loss computed as claimed by the assessee. Accordingly, we hold that the claim of assessee towards business expenditure incurred by the assessee has to be allowed since the assessee has already set up its business and ready to commence. Allowability of set off of business loss against the interest income - contention of the assessee is that interest income has to be assessed business income only - HELD THAT:- We do not find merit in the argument of the ld. AR. The interest income earned by the assessee is from the fixed deposits which is sourced from the share capital. This interest income is to be assessed as income from other sources. However, as per section 71(1) of the Act, assessee is entitled to set off business loss with income from other sources. Being so, we direct the AO to allow the set off of business loss against income from other sources in terms of section 71 (1) of the Act. 2021 (2) TMI 422 Disallowance u/s 14A r.w. Rule 8D(2)(ii) - proportionate interest expenditure disallowance - HELD THAT:- We notice that it had interest free funds of ₹ 13,02,47,08,990/- representing share capital followed by ₹ 7,49,10,320/- of reserves and surplus; respectively. Meaning thereby that assessee s non-interest bearing funds exceed more than its exempt income s investment. We quote CIT Vs. Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT Vs. HDFC Bank Limited [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] that the necessary presumption that flow in such an instance is that of utilisation of non-interest bearing funds only in deriving exempt income. We go by this process reason alone to delete proportionate interest expenditure disallowance. Third limb of administrative expenditure disallowance - CIT-DR fails to dispute that both the lower authorities have gone by the assessee s gross amount of investments than those yielding its exempt income only. We therefore direct the Assessing Officer to restrict the impugned disallowance to the extent of assessee s exempt income yielding investments. The assessee gets part relief to this extent. This first substantive issue is partly decided in assessee s favour. Addition of interest income treated as income from other sources - HELD THAT:- We find no merit in assessee s stand in principle since its interest income is not related to any revenue deriving business activity. The same therefore deserves to be treated as income from other sources only going by the CIT(A) s detailed discussion extracted hereinabove in the light of various judicial precedents. The fact also remains that neither of the lower authorities has proceeded on netting formula going by Hon'ble apex court s decision in ACG Associated Capsules Pvt. Ltd.[ 2012 (2) TMI 101 - SUPREME COURT] . We therefore direct the Assessing Officer to allow netting benefit qua the impugned addition vis- -vis the corresponding expenditure incurred at the taxpayer s behest in above terms. Set-off of its impugned interest income against business losses - CIT(A) appears to have denied the assessee the impugned intra head set-off of the two heads of income, it is not clear as to under which clause of Section 72 was invoked to decline this relief. We thus are of the opinion that this issue of set-off of interest income against business loss deserves to be considered afresh as per law. We restore this issue back to the Assessing Officer therefore. 2021 (2) TMI 421 Characterization of income - License fees received for licensing a hotel to another company for running and maintenance - assessable under the head income from business or profession OR income from house property - HELD THAT:- Case of the assessee is squarely covered by the decision in the case of M/s.Palmshore Hotels (P) Ltd vs. CIT [ 2017 (11) TMI 1086 - KERALA HIGH COURT] has reversed the decision of ITAT, Cochin, which was heavily relied upon by the AO to justify his conclusion to tax license fee under the head income from house property . The Hon ble High Court held that license fee received by an assessee for giving its hotel with furniture and fixture to a company for running a hotel for a specified period was assessable under the head income from business and not under the head income from house property We are of the considered view that, license fee received by the assessee for licensing a fully furnished hotel along with license to run the hotel is a business receipt, which is assessable under the head income from business or profession but not a rental income, which is assessable under the head income from house property . AO as well as the CIT(A) were grossly erred in assessing license fee under the head income from house property and hence, we reverse the findings of the CIT(A) and direct the AO to assess license fee under the head income from business or profession as claimed by the assessee. - Decided in favour of assessee. 2021 (2) TMI 420 Disallowance as amortization expenditure of leasehold land - assessee had incurred an expenditure for gaining control over the property which was necessary to their smooth running of its hotel business, which expenditure was amortized and claimed as revenue expenditure - HELD THAT:- Expenditure was amortized and claimed as revenue expenditure; and which was allowed by AO from A.Ys. 2003-04 to AY 2008-09; and thereafter in AY 2009-10 the AO took a view that the amount was capital in nature and disallowed the same which view was reversed by the Ld. CIT(A) and the revenue's appeal against the action of the Ld. CIT(A) got dismissed and the Tribunal was pleased to uphold the action of the Ld. CIT(A) thereby allowing the claim of the assessee - This view of the Tribunal has been followed in assessee's own case by the coordinate bench for AY 2012-13 also. Even though res judicata is not applicable for income tax proceeding, however, rule of consistency as a principle has been upheld by the Hon'ble Supreme Court in the case of Radhasoami Satsang Vs. CIT ( 1991 (11) TMI 2 - SUPREME COURT ), wherein theas held that if the facts permeating in the earlier years are the same and there is no change in facts and law, then the view taken earlier should not be disturbed by applying the principle of rule of consistency. This view has also been endorsed by the Hon'ble jurisdictional High court in the case of CIT Vs. Hindustan Motors Ltd. [ 1990 (2) TMI 13 - CALCUTTA HIGH COURT ]. - Appeal of the assessee allowed. 2021 (2) TMI 419 Penalty u/s 271(1)(c) - bogus purchases - HELD THAT:- In this case the quantum addition made by the ld. Assessing Officer on which the penalty has been levied has already been deleted by the Tribunal, which has now become final we are of the view that now the cause for the levy of the penalty does not continue. In view of these facts, we reverse the orders of the lower authorities and direct the ld. Assessing Officer to delete the penalty levied under Section 271(1)(c) of the Act. Accordingly, appeal of the assessee is allowed. 2021 (2) TMI 418 Estimation of income - Bogus purchases - Specific information received from the Sales Tax Department to indicate that certain purchases made by the assessee were non-genuine - Commissioner (Appeals) restricted the additions to 12.5% - HELD THAT:- As assessee failed to conclusively prove the fact that the purchases were made from the declared source. However, considering the fact that the assessee has effected corresponding sales, doubt was only with regard to the source of purchases. For this reason alone, the Assessing Officer has estimated the profit element embedded in non-genuine purchases @ 25% and learned Commissioner (Appeals) has restricted to 12.5%. This is solely for the reason that the assessee must have purchased the goods from unverified sources/grey market by not paying VAT and thereby suppressing the true profit. Considering the nature of business of the assessee and the profit rate generally adopted by the Tribunal in such type of cases no infirmity decision of learned Commissioner (Appeals) in restricting the addition to 12.5% of the alleged non genuine purchases. Therefore, the grounds raised in all these appeals are dismissed. 2021 (2) TMI 417 Disallowance u/s 80P(2)(d) - interest earned by the assessee society from cooperative banks - HELD THAT:- As decided in own case [ 2018 (4) TMI 1854 - ITAT MUMBAI] appellant would be entitled for claim of deduction under Sec. 80P(2)(d) of the Act in respect of interest and dividend income earned by it, on the investments held with the co-operative bank i.e. MDC Co-operative Bank Ltd. Accordingly, the AO is directed to allow the deduction u/s 80P(2)(d). Deduction u/s 80P(2)(a)(i) allowed being the income from business activity of providing credit facilities to its members - See SHRI VARDHAMAN URBAN CO-OPERATIVE CREDIT SOCIETY LTD. [ 2015 (9) TMI 1658 - KARNATAKA HIGH COURT] and QUEPEM URBAN CO-OPERATIVE CREDIT SOCIETY LTD. [ 2015 (6) TMI 573 - BOMBAY HIGH COURT] 2021 (2) TMI 416 Interest on NPAs - interest receivable on non- performing advances but not received during the course of assessment - HELD THAT:- No dispute that we are dealing in AY.2015-16 dealing with the case of the assessee/co-operative urban bank. The legislature has included a co-operative bank as covered u/s.43D(a) of the Act vide Finance Act, 2017 w.e.f. 01-04-2018 only. Meaning thereby that the said amendment does not carry retrospective effect. This tribunal s co-ordinate bench s decision The Taliparamba Co-operative Bank Ltd [ 2019 (3) TMI 1853 - ITAT COCHIN] deletes the very nature of additions of interest on NPAs - We direct the Assessing Officer to delete the impugned addition - Decided in favour of assessee. 2021 (2) TMI 415 Income accrued in India - Income from cloud hosting services - India - US tax treaty - HELD THAT:- As decided in own case [ 2020 (10) TMI 708 - ITAT MUMBAI] as per the distributors agreements, it was the responsibility of the distributors to resolve the end user customers queries. - Decided in favour of assessee. 2021 (2) TMI 414 Exemption u/s 11 - dividend income receipts - HELD THAT:- We find that this issue is squarely covered in assessee s favor by the decision of this Tribunal in Jamshedji Tata Trust [ 2014 (5) TMI 890 - ITAT MUMBAI] wherein coordinate bench drawing analogy from the decision in CIT V/s Divine Light Mission [ 2004 (4) TMI 25 - DELHI HIGH COURT] held that dividend income being exempt u/s 10(34) could not be brought to tax by applying the provisions of Sec. 11 to 13 . We also note that amendment to Sec.11 by way of insertion of clause (7) by Finance Act, 2014 to nullify the effect of this decision is applicable only with effect from 01/04/2015 and do not apply to this year. Therefore, respectfully following the same, we would hold that dividend income being exempt u/s 10(34) could not be brought to tax by applying the provisions of Sec.11 to 13 of the Act. The amended provision restricting this exemption is applicable only from AY 2015-16. The assessee succeeds on this issue Accumulate or set apart trust income to the extent of 15% for utilization for charitable purposes in subsequent years - HELD THAT:- We find that the assessee had filed Form No.10 for AY 2010-11 wherein an amount of ₹ 410.84 Lacs has been set-apart for subsequent utilization up-to previous year 2014-15. The same is also evident from assessment order u/s 143(3) dated 27/12/2012. The amount of ₹ 410.84 Lacs has been spread by assessee equally over 5 years in the computation of income. However, if the said amount of ₹ 82.16 Lacs is excluded from Ld. AO s computations, the assessee was required to spend an amount of ₹ 160.48 Lacs (₹ 91.48 Lacs plus ₹ 68 Lacs) during the year. Out of the same, The assessee has already applied the amount of ₹ 103.43 Lacs during the year towards the objects of the trust and the balance amount has been set aside u/s 11(1)(a) as well as under clause (2) of Explanation (renumbered as Explanation-1 by Finance Act, 2017) to Sec. 11(1) to be spent in immediately next year i.e. 2013-14. Hence, there is no underutilization as alleged by Ld.AO. The conclusion stem from erroneous assumption that the amount of ₹ 82.16 Lacs was to be spent in this year as against the correct fact that the amount was set apart for utilization in next 5 years. AO is directed to rework the assessee s computation in the light of our above observations and re-determine the amounts to be set apart u/s 11(1)(a) as well as under Clause (2) of Explanation (renumbered as Explanation-1 by Finance Act, 2017) to Sec. 11(1). This ground stands allowed for statistical purposes. We find that the assessee had filed Form No.10 for AY 2010-11 wherein an amount of ₹ 410.84 Lacs has been set-apart for subsequent utilization up-to previous year 2014-15. The same is also evident from assessment order u/s 143(3) dated 27/12/2012. The amount of ₹ 410.84 Lacs has been spread by assessee equally over 5 years in the computation of income. If the said amount of ₹ 82.16 Lacs is excluded from Ld. AO s computations, the assessee was required to spend an amount of ₹ 160.48 Lacs (₹ 91.48 Lacs plus ₹ 68 Lacs) during the year. Out of the same, The assessee has already applied the amount of ₹ 103.43 Lacs during the year towards the objects of the trust and the balance amount has been set aside u/s 11(1)(a) as well as under clause (2) of Explanation (renumbered as Explanation-1 by Finance Act, 2017) to Sec. 11(1) to be spent in immediately next year i.e. 2013-14. Hence, there is no underutilization as alleged by Ld.AO. The conclusion stem from erroneous assumption that the amount of ₹ 82.16 Lacs was to be spent in this year as against the correct fact that the amount was set apart for utilization in next 5 years. AO is directed to rework the assessee s computation in the light of our above observations and re-determine the amounts to be set apart u/s 11(1)(a) as well as under Clause (2) of Explanation (renumbered as Explanation-1 by Finance Act, 2017) to Sec. 11(1). This ground stands allowed for statistical purposes. 2021 (2) TMI 413 Unexplained deposits in bank account - cash flow submitted by the assessee did not explain the bank deposits of the assessee in Punjab National Bank - HELD THAT:- As per the chart given the deposits remaining unexplained by the assessee are also having cheque deposit entries. Before us, the Ld. AR has not submitted any break-up or details received by the assessee. AR could not co-relate the bank deposits with the cash deposits. CIT (A) has also referred the remand report of the Assessing Officer and has pointed out that the assessee was specifically required to explain the amount of ₹ 14,50,000/- deposited in the bank account but the assessee did not furnish any corroborative evidences regarding these deposits. CIT (A) has also stated that the rejoinder of the assessee was vague and did not throw any light on the issue. The assessee could not explain the source of deposits by co-relating the same to the advances received on various dates. All the same, looking into the facts of the case and in view of the interest of substantial justice, we deem it fit to restore this appeal to the file of the Ld. CIT (A) with a direction to the assessee to substantiate the impugned amount with documentary evidences before the Ld. CIT (A). The Ld. CIT (A) is directed to examine the issue afresh based on the evidences being furnished by the assessee to substantiate his claim. Appeal of the assessee stands allowed for statistical purposes. 2021 (2) TMI 412 Rectification u/s 254 - Maintainability of appeal on low tax effect - non-consideration of subsequent CBDT Circular and the special order so passed by the CBDT - HELD THAT:- CBDT Circular dated 16.09.2019 is by way of a special order and the appeal has been directed to be filed by virtue of such special order has apparently not been considered in other cases relied upon by the Revenue in case of Satish M Patel [ 2020 (2) TMI 1436 - ITAT AHMEDABAD] and Ambrish Chandra Sharma[ 2020 (2) TMI 1435 - ITAT AHMEDABAD] We find that the decision in said cases has also been guided by the concession by the ld A/R on behalf of the assessee to go for the tax settlement scheme and we therefore, find that the said decisions doesn t support the case of the Revenue. Further, we find that both CBDT Circular no. 23 of 2019 and special order dated 16.09.2019 were not in existence and thus not part of the record at the time when the matter was heard on 20.08.2019 or at the time of passing of order by the Tribunal on 22.08.2019 and therefore, non-consideration of subsequent CBDT Circular and the special order so passed by the CBDT is not a mistake apparent from record which can be rectified within the narrow compass of section 254(2) of the Act. 2021 (2) TMI 411 TP Adjustment - adjustment made to international transactions on account of interest receivable from AE s - addition by bench marking the receivables on transactions of sales/ services of the assessee company by adopting the prime lending rate of SBI plus markup of 300 basis points - assessee s contention that assessee has margin of 23.3% on Software Development segment as compared to the margin of 11.42% of the comparable companies and the working capital adjustment margin has already been factored in the account and no separate adjudication is called for - HELD THAT:- The above contention of the assessee has not been controverted by the Revenue. Further the contention of the assessee of not charging interest on overdue debts from the third parties and not paying any interest to the creditors has also not been controverted by the Revenue. We further find that identical issue arose in assessee s own case in A.Y. 2010-11 [ 2019 (7) TMI 85 - ITAT DELHI ] wherein the Co-ordinate Bench of Tribunal has decided the issue in favour of the assessee . No material to show that the decision of the Co-ordinate bench of the Tribunal in assessee s own case for AY 2010-11 has been set aside/ stayed or over ruled by the higher judicial forum. We further find that the case law relied upon by the Learned DR is distinguishable on facts and are not applicable to the present facts of the case of the assessee. - Decided in favour of assessee. 2021 (2) TMI 410 Permission to withdraw the present advance ruling application - HELD THAT:- The provision of Section 245Q(3) of the Act stipulates that An applicant may withdraw an application within 30 days from the date of the application. In the present case, the request to withdraw the application has been made by the Applicant much beyond the eligibility period of 30 days, as stipulated under section 245Q(3) of the Act. In view of this specific provision, the Applicant cannot be allowed to withdraw the application at this stage. In the present case the order for admission of the application was passed on 30th January 2017, which was under section 245R(2) of the Act. Once the application has been admitted under section 245R(2) of the Act, the provision of Section 245R(4) is applicable which reads as under - Where an application is allowed under sub-section (2), the Authority shall, after examining such further material as may be placed before it by the applicant or obtained by the Authority, pronounce its advance ruling on the question specified in the application. Since the Applicant does not wish to pursue the present application for advance ruling filed by it, we do not deem it necessary to examine the matter further and decline to pronounce the advance ruling. The contention of the Revenue that once the application is admitted it cannot be rejected in the proceeding under section 245R(4) of the Act is found to be misplaced. In a case where it is found that the transaction was designed prima-facie for avoidance of income-tax, such application can be rejected even under the proceeding under section 245R(4) of the Act. In the present case we are only declining to pronounce the advance ruling in view of the request of the Applicant not to pursue the matter further and to withdraw the application. Accordingly, the application is dismissed as not pressed or withdrawn by the Applicant. 2021 (2) TMI 395 Penalty u/s 271(1B) - non-compliance of the notice u/s 142(1) - HELD THAT:- We find from the records that a remand report dated 31.05.19 was furnished to the ld. CIT(A) by the ld. A.O wherefrom it appears that where the submission of the reply by the assessee relating to the penalty order u/s 271(1B) was filed wherein the assessee categorically mentioned that the permanent established of the assessee is at Ranchi and the details of the business are maintained in the said city further that there is no established at Kolkata. It appears that the assessee has complied with the notice u/s 142(1) of the Act though late as evident from the records before us. Therefore no penalty in the instant case is called for. As we rely upon the judgment passed by the Hon ble Apex Court in the case of Hindustan Steel Ltd. vs. State of Orissa [ 1969 (8) TMI 31 - SUPREME COURT ] where it was held that penalty should not be imposed unless the assessee acted deliberately - we set aside the order passed by the ld. CIT(A) and direct the Assessing Officer to delete the penalty. The common order. passed by the ld. CIT(A) in all appeals is set aside. - Decided in favour of assessee. Customs 2021 (2) TMI 409 Grant of Bail - Smuggling - Gold Bars - reason to believe present or not - HELD THAT:- As per Section 104(1) of the Customs Act, if a person has committed offence, inter alia, under Section 135 of the said Act, he may be arrested. Coming to Section 135(1)(b)(i) (A) of the Act, if the market price of the goods exceeds ₹ 1 crore, the same is punishable with imprisonment for a term which may extend to 7 (seven) years and with fine and as such, such an offence is non-bailable - Mr. Purkayastha has submitted that the value of the gold so seized is less than ₹ 1 crore as per the value of gold found and collected from the website. However, it has been found from the complaint/bail objection placed before this Court by the DRI that the gold was weighed by the registered goldsmith and the value of the seized gold was Rs. ₹ 1,01,94,450/-. In the absence of any material to show that ascertainment of the value of the seized gold is not legally valid/correct, there is no reason to disbelieve the value ascertained by the registered goldsmith. Accordingly, the offence is covered by Section 135(1)(b)(i)(A) of the Customs Act. In the instant case, so far the materials collected, it was a smuggled gold and no duty was paid for that - Whatever it may be, from the materials on record and on hearing the rival submissions made by the respective learned counsel for the parties, this Court is of the view that this is not a fit case to grant bail to the petitioner, at this stage, as there are materials collected during the investigation of the case that the petitioner had, in his possession four gold bars weighing 1995.00 grams and valued at Rs. ₹ 1,01,94,450/- covering the case by the provision of Section 135(1)(b)(i)(A) of the Customs Act. Bail application dismissed. 2021 (2) TMI 407 Non-clearance of goods on the ground that verification / enquiry is pending - Origin of Goods - Principles of Natural Justice - serious allegation is that without affording any opportunity to the petitioner in respect of meeting any deficiency, the petitioner had been asked to opt or request for provisional assessment for purpose of clearing the goods on furnishing the security [100% bank guarantee] for the difference between the duty provisionally assessed under Section 18 of the Act and the preferential duty claimed - HELD THAT:- It is apparent that when the verification was initiated, no record was available with the respondents nor any communication was made to the petitioner that the verification was being under Rule 6(1)(a) or Rule 6(1)(b) or Rule 6 (4)(c) of the CAROTAR 2020 and hence, there was no reference to the security (BG). However, from the records as produced [which are the posterior records] such as the communication dated 30.10.2020 [Annexure-3 to the reply filed by the respondent No.3] and the communication dated 24.11.2020 [Annexure-D to the reply filed by the respondent No.3] or the communication dated 20.11.2020 [Annexure-E to the reply filed by the respondent No.3], it appears to this court that verification is on mis-declaration‟. The petitioner was not afforded any opportunity to meet the purported deficiency for which the clearance has been refused. No observation on the legality or regularity of the process of verification on merit is called for at this stage, considering that the verification is still inconclusive. But in the emerged circumstances, the assessing officer and the other respondent-authorities are directed to provisionally assess the duty and to release the goods on obtaining an indemnity bond, to be submitted by the petitioner binding himself to deposit the duty or the difference between the duty that would be assessed by the competent authority on verification and the preferential duty within a period of 7(seven) days. In the event of failure to deposit the assessed duty on completion of verification within the said stipulated time, the payable duty shall carry interest at the rate of 15% per annum from 26.09.2020 till the said duty is deposited. The provisional assessment in respect of the goods covered under the Bill of Entry dated 26.09.2020 shall be completed within a period of two days from the date of receipt of a copy of this order. After furnishing of the indemnity bond, those goods be released within next 24 (twenty four) hours. Petition disposed off. 2021 (2) TMI 401 Refund of the Additional Duty of Customs (SAD) - N/N. 102/2007, dated 14-9-2007 - sale of the imported elevator in India - rejection of refund on the ground that the description of the imported goods and the goods sold in India does not tally - HELD THAT:- Notification No. 102/2007, dated 14-9-2007 (as amended), provides for refund of Additional Duty of Customs paid under Section 3(5) of the Customs Tariff Act, 1975 upon sale of imported goods in India, subject to certain conditions. Among the conditions prescribed, the importer was required to pay the appropriate Sales Tax or Value Added Tax and should also produce documents evidencing payment of appropriate Sales Tax or Value Added Tax, as the case may be, on sale of such imported goods - By Circular No. 6/2008, dated 28-4-2008, the Central Board of Excise and Customs had prescribed the procedures to be adopted for refund of the 4% Additional Duty of Customs, in pursuance of Notification No. 102/2007, dated 14-9-2007. As per Clause 5.1 of this Circular, the importer was required to furnish a certificate from the Statutory Auditor, certifying that the imported goods and the local goods are one and the same. The only reason adduced by the respondent in rejecting the petitioner s claim for refund is that, the goods that were locally sold are not the goods that were imported. For such a reasoning, the respondent had relied upon the description in the Bill of Entry of the imported goods, which reads as, Elevator in SKD condition , whereas, the description mentioned in the Sale Invoice dated 31-10-2012 reads as 1 No. Johnson 6 Passenger (408 kgs) Electric Mini Sukranti Lift . Since the respondent was of the view that these two descriptions are distinct, they had concluded that the goods sold are not the same as that imported under the Bill of Entry. The procedure contemplated for seeking exemption/refund of the Additional Duty of Customs is under Notification No. 102/2007, dated 14-9-2007 read with Circular No. 6/2008, dated 28-4-2008. If that be so, the respondent is mandated to strictly adhere to the procedure prescribed under this notification/circular and cannot deviate from the same. However, in the instant case, the respondent seems to have applied their own logic and imagination to differentiate the imported goods with the goods sold locally inside India. If at all, the respondent was of the view that the descriptions in the imported goods and locally sold goods are different, the only yardstick that requires to be applied is the conditions prescribed in Notification No. 102/2007, dated 14-9-2007 and Circular No. 6/2008, dated 28-4-2008. In other words, Circular No. 6/2008, which clarifies the conditions prescribed in Notification No. 102/2007, dated 14-9-2007, requires the importer to produce the certificate of the Statutory Auditor along with the correlation statement and if such certificate and correlation statement are produced, the respondent is bound to accept the description of the goods in the import documents as well as the Sales Invoice to be one and the same, on the strength of the certificate/correlation statement - Though the condition prescribed under the notification does not prescribe a different procedure and even assuming that the respondent was not satisfied with the certificate issued by the Statutory Auditor, such a decision should be based on certain incriminating and reliable documents before him and further, the reasons for disbelieving the certificate requires to be spelt out. Such a proposition has been laid down by a Hon ble Division Bench of this Court in P.P. Products Ltd. [ 2019 (5) TMI 830 - MADRAS HIGH COURT ]. This Court is of the view that though there is an alternate remedy of appeal as against the impugned order in the present case, the same shall not be a bar to maintain this writ petition under Article 226 of the Constitution of India, since there is a violation of the procedure prescribed under the statute and thereby, the order itself is wholly without jurisdiction. The respondent shall refund the claim made by the petitioner, which is the subject matter of the Order-in-Original, together with interest at the rate of 6% p.a. from the date of the refund application - Petition allowed. 2021 (2) TMI 398 Compliance with N/N. 83/90-Cus or not - claim of the appellant is that they have produced end use certificate though late and claimed the benefit of the said notification - revenue neutrality - Difference of opinion - HELD THAT:- Following questions are referred to President for reference to third Member, for resolution in difference of opinion between of us: 1. Whether in facts of the case the benefit of exemption under notification No. 83/1990-Cus dated 20.03.1990 should be allowed to the appellant as has been held by the Member (Judicial) or disallowed as held by the Member (Technical)? 2. Whether the demand should be set aside on the ground of revenue neutrality as held by the Member (Judicial) or the demand should be upheld as held by the Member (Technical). 3. Whether the appeal should be allowed as held by Member (Judicial) or dismissed as held by Member (Technical). Corporate Laws 2021 (2) TMI 402 De-activation of the Director Identification Number - Section 164(2) of the Companies Act, 2013 - HELD THAT:- Similar controversy was raised in other High Courts and after considering the issue at length, the Gujarat High Court decided batch of petitions led by Special Civil Application No. 22435 of 2017 by its order dated 18.12.2018 [ 2019 (1) TMI 27 - GUJARAT HIGH COURT ] where it was held that The writ petition for challenge to the de-activation of the Director Identification Number are allowed. It was de-activated on account of dis-qualification in one company effecting Director Identification Number for the other companies. The opposite parties are directed to activate the Director Identification Number for use for other company. Service Tax 2021 (2) TMI 406 Rejection of declaration of the petitioner filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - SVLDRS - Stand taken is that investigation into the allegation of short payment of service tax by the petitioner was going on and the amount of duty involved had not been quantified on or before 30.06.2019 - period from April 2014 to March 2017 - HELD THAT:- In Thought Blurb Vs. Union of India [2020 (10) TMI 1135 - BOMBAY HIGH COURT] it was held that the petitioner was eligible to file the application (declaration) as per the scheme under the category of enquiry or investigation or audit whose tax dues stood quantified on or before 30th June, 2019. It is evident that all that would be required for being eligible under the above category is a written communication which will mean a written communication of the amount of duty payable including a letter intimating duty demand or duty liability admitted by the person concerned during enquiry, investigation or audit - That apart, in Thought Blurb, It is held that when there is a provision for granting personal hearing in a case where the declarant disputes the estimated amount, it would be in complete defiance of logic and contrary to the very object of the scheme to reject a declaration on the ground of being ineligible without giving a chance to the declarant to explain as to why its declaration should be accepted and relief under the scheme be extended to him. The matter remanded back to respondent Nos.3, 4 and 5 to consider the declaration of the petitioner dated 30.12.2019 in terms of the scheme as a valid declaration under the category of investigation, enquiry and audit and thereafter grant the consequential relief(s) to the petitioner - appeal allowed by way of remand. 2021 (2) TMI 400 Works Contract - Classification of services - Scope of Show Cause Notice (SCN) - whether the projects undertaken by the appellant would fall in the classification alleged in the show cause notices or would be more appropriately classifiable under works contract , if the contracts involved both goods as well as services? - HELD THAT:- The Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] noted that a works contract is different from a contract for service simpliciter and could be subjected to service tax only with effect from June 1, 2007. The Commissioner has recorded a categorical find that each of the works contract undertaken by the appellant are not covered under the three services namely (i) commercial or industrial construction, (ii) construction of complex and (iii) management, maintenance or repair mentioned in the first show cause notice. The Commissioner further recorded a categorical finding that the activities undertaken by the appellant would be classifiable as works contract as they involved goods as well as labour services - The Commissioner therefore, dropped the demand for the period prior June 1, 2007. But for the demands for the period w.e.f. June 1, 2007 the Commissioner proceeded to examine whether the particular work performed under works contract is exempted from levy of service tax under Notifications issued from time to time. A Division Bench of the Tribunal in M/S GURJAR CONSTRUCTION VERSUS COMMISSIONER CENTRAL EXCISE, JAIPUR-II [ 2019 (5) TMI 717 - CESTAT NEW DELHI] also examined such a position and observed that a demand made under a particular category cannot be sustained under a different category - In view of the aforesaid decisions of the Tribunal, it has to be held that the Commissioner was not justified in confirming the demand of service tax under the category of works contract for the period post June 1, 2007 even if the levy of service tax was not exempted under Notifications, since, the show cause notice that demand it service tax under the three categories namely (i) commercial or industrial construction, (ii) construction of complex and (iii) management, maintenance or repair. The order dated January 31, 2018 passed by the Commissioner that has confirmed the demand of service tax, therefore, deserves to be set aside and is set asid - appeal allowed - decided in favor of appellant. 2021 (2) TMI 399 Rebate of Service tax paid - services exported between December, 2008 to March, 2009 and June, 2008 to March, 2009 - privity of contract - argument of Revenue is that although the client is located abroad and services are being paid for in foreign currency, the actual service is being rendered in India, therefore, this does not qualify as export of service and no rebate is available - HELD THAT:- This issue is no longer res integra as this Bench had in respect of the same assessee, in M/S. SAMSUNG INDIA ELECTRONICS P. LTD VERSUS CCE. NOIDA [ 2015 (1) TMI 1098 - CESTAT NEW DELHI] where it was held that such services qualify as export of services. Revenue s argument is that they have filed an SLP against this order of the Tribunal and, therefore, it should not have been followed by the Commissioner (Appeals) in the impugned order. There are nothing on record that the order of this Tribunal has either been stayed or set aside by the Hon ble Supreme Court or any High Court and, therefore, the ratio holds good - Therefore, Commissioner (Appeals) has correctly followed the ratio and held that rebate is admissible on the export of service. Appeal dismissed - decided against Revenue. Central Excise 2021 (2) TMI 408 Entitlement of the appellant to credit of additional duty of customs, education cess, secondary and higher education cess and special duty of customs paid on polyurethane resin for payment of CENVAT duty - Process amounting to manufacture or not - HELD THAT:- Since the related appeal is of the year 2013, it would be just and proper to hear the appeal at an early date. Moreover, though the show cause notices may be post the decision of CESTAT which is being examined in the related appeal, those draw sustenance from the reasons recorded in the order of the CESTAT which is the subject matter of the related appeal. It would be in the interest of justice if the show cause notices are not proceeded further till we decide the related appeal - Application disposed off. CST, VAT & Sales Tax 2021 (2) TMI 405 Maintainability of petition - availability of alternative remedy of appeal - Validity of assessment order - TNVAT Act - assessment year 2014-15 and 2015-16 - HELD THAT:- It is found that not only the stand taken by the appellant was examined by the Assessing Officer but the Assessing Officer has gone one step further to observe that the dealers have not furnished any documentary evidence for proof for movement of goods without which the physical occurrence of the transaction cannot be established. Therefore, we are not inclined to accept the submission made on behalf of the appellant that the Assessing Officer has brushed aside the legal position and concluded the assessment rather the Assessing Officer has rendered a opinion on the available facts and taking note of the reply given by the appellant. Therefore, if according to the appellant this conclusion is factually wrong that needs to be agitated in an appeal and to be adjudicated by the appellate authority and not by a writ court. Therefore, the learned Single Bench was right in relegating the appellant to avail the available remedy of appeal - the writ appeals are dismissed with liberty to the appellant to file an appeal before the first appellant authority and if such appeal is filed within a period of thirty days from the date of receipt of copy of this judgment, the appellate authority shall entertain the appeal without reference to limitation and take a decision on merit Indian Laws 2021 (2) TMI 404 Dishonor of Cheque - duties and rights of Director on behalf of the company - specific averments in the complaint that applicants were responsible for conduct of business of the company, present or not - It has been argued by learned counsel for applicants that the impugned summoning order has been passed without applying judicial mind - Applicability of Section 141 of Negotiable Instrument Act - HELD THAT:- It is apparent that it is necessary to specifically aver in a complaint under section 141 of Negotiable Instrument Act that at the time the offence was committed, the person accused was in-charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 of Negotiable Instrument Act. The requirement of Section 141 of Negotiable Instrument Act is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases - However, in view of law laid down in case of N. Rangachari [ 2007 (4) TMI 621 - Supreme Court ] it is equally clear that if from reading the complaint as a whole, it appears that the allegations in the complaint are that at the time at which the dishonoured cheque was issued by the company, the persons were the Directors of the company and were in-charge of the affairs of the company, it is not proper to split hairs in reading the complaint so as to come to a conclusion that the allegations as a whole are not sufficient to show that at the relevant point of time the appellant and the other are not alleged to be persons in-charge of the affairs of the company. In such facts and circumstances on the other elements of an offence under Section 138 of Negotiable Instrument Act being satisfied, the burden is on the Board of Directors or the Officers in-charge of the affairs of the company to show that they are not liable to be convicted. Thus, it is not the mere terminology but the substance of complaint, which matters for consideration whether the Directors were in charge and responsible for conduct of business of the company or not. In the instant case it may be observed that there are allegations in the impugned complaint that applicant No. 2 and 3 are Directors of the company (applicant No. 1) and they were responsible for duties and rights on behalf of the applicant No. 1-company and that the cheque in question was issued by applicant No. 2 in presence of applicant No. 3 for payment of paddy supplied by the opposite party No. 2 to the said company and that they have assured that the cheque would be honoured. It is not being disputed that said cheque was dishonoured due to 'account closed'. The version of applicants, that said cheque was given by late C.P. Chaudhary as a blank cheque for security but the complainant has made forgery by filling the amount, date and his name in said cheque, cannot be accepted. In the instant case considering the impugned complaint as whole, it cannot be said that there are no averments that applicant Nos.2 and 3 were not in-charge and responsible for conduct of business of company. Further it is not the case of applicants that any other Director or Official of company was responsible for conduct of business of company. There are specific allegations that applicant nos.2 and 3 are Directors of said company and that the paddy was supplied to the company on their assurance. Thus, the contention of learned counsel for applicants that in view of Section 141 of Negotiable Instrument Act, the applicants cannot be held liable for criminal proceedings, has no force - Similarly, the version of applicants that the said cheque was given to opposite party no.2 as a blank cheque for security by deceased Director C.P. Chaudhary but after death of said C.P. Chaudhary, the opposite party no.2 has committed forgery by entering the said amount, date and name in the cheque, is liable to be outrightly rejected. It is apparent from record that after the cheque was dishonoured, the opposite party no.2 has issued a demand notice calling for payment against the said cheque but no payment was made. It is well-settled that the jurisdiction to quash a complaint, FIR or a charge-sheet should be exercised sparingly and only in exceptional cases. Thus, inherent power of High Court has to be exercised in exceptional cases and to prevent the abuse of process or otherwise to secure ends of justice. The jurisdiction under Section 482 Cr.P.C. is discretionary, therefore, the High Court may refuse to exercise the discretion if a party has not approached it with clean hands. The inherent power should not be exercised to stifle a legitimate prosecution. In the instant case considering material on record and from the aforesaid discussion, it cannot be said that a prima facie case is not made out. This Court is of the considered view that matter required adjudication by trial court and that no case for quashing of the impugned proceedings or the impugned summoning order is made out - The instant application under Section 482 Cr.P.C lacks merit and is accordingly dismissed. 2021 (2) TMI 403 Dishonor of Cheque - insufficient funds - privity of contract between the petitioner and respondent - Section 141 of the N.I.Act - HELD THAT:- This is not a fit case for indulgence in the exercise of inherent jurisdiction vested in this Court by Section 561 A Cr. P.C. (now Section 482 Cr. P.C.). Admittedly, the petitioner is an employee of respondent no. 2, this is evident from the certificate placed on record by the petitioner as Annexure-2 with the petition, which is also reproduced by the Revisional Court in the judgement impugned. Simply because the employer of the petitioner i.e., Welcome World Electrical Pvt. Ltd. is executing NFS Project in coordination with respondent no. 1 does not make the petitioner an employee of the later. That apart, cheque for the discharge of liability towards the petitioner has been issued by the respondent no. 2 as is evident from the copy of the cheque placed on record by the petitioner as Annexure-4 and the cheque has been returned with the memo insufficient funds in the account of respondent no. 2. In that view of the matter, it is difficult to comprehend the submission of learned counsel for the petitioner that respondent no. 2 being a partner in business with respondent no. 1 too is guilty of commission of offence under Section 138 of the N.I.Act. It is axiomatic that it is only the person who has issued the cheque for discharge of legally enforceable debt, which is bounced or returned by the Bank due to insufficiency of funds in the account of such person, alone can be arraigned as accused in the complaint under Section 138 of the N.I.Act. It is only where the person committing an offence under Section 138 of the N.I.Act is a company, every person, who, at the time of commission of offence was incharge of, and was responsible to the company for conduct of business of the company, as well as the company, shall be deemed to be guilty of offence and liable to be proceeded against and punished accordingly. This is evident from the provisions of Section 141 of the N.I.Act. In the instant case, going by the allegations contained in the complaint and the supporting evidence placed on record, it is respondent no. 2, a company, which is accused of committing an offence under Section 138 of the N.I. Act. By operation of Section 141 of the N.I. Act, it is not only the company i.e., respondent no. 2, but every person, who, at the time of commission of offence was incharge of, and responsible to the company for conduct of business, shall be deemed to have committed offence and, therefore, liable to be proceeded against and punished accordingly. Section 141 of the N.I. Act cannot be stretched so as to fasten the liability on the other company, who may be executing works in partnership with the accused company. Petition dismissed.
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