Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 15, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Seeking anticipatory bail - Husband of the applicant was arrested but applicant was released on the same day - Admittedly, the export made by the companies of the applicant in crores of rupees. The Investigating Agency has conducted as many as 5 raids including the residence and office premises of the applicant and seized the evidence such as original documents, purchase and sale invoices, ledgers and Bank Statements, hard disks, CPU, export details, etc. - The custodial interrogation of the applicant is not required - HC
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Interest on delayed payment of GST - CBIC has clarified that the Notification No. 63/2020-Central Tax dated 25th August 2020 relating to interest on delayed payment of GST has been issued prospectively due to certain technical limitations. However, it has assured that no recoveries shall be made for the past period as well by the Central and State tax administration in accordance with the decision taken in the 39th Meeting of GST Council. This will ensure full relief to the taxpayers as decided by the GST Council.- HC
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Exclusion of ice cream from the benefits of Composition Scheme under Section 10 of CGST Act - violation of the spirit of Articles 14 and 19 of the Constitution of India or not - The only direction which can be issued in this petition is, to direct the respondent no.2 GST Council to reconsider the exclusion of small scale manufactures of ice cream from the benefit of Section 10(1) of the Act - HC
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Exemption from GST - transmission or distribution of electricity - Through circular it was clarified that certain activities shall be taxable - Vires of para 4(1) of the impugned circular No.34/8/2018-GST dated 1.3.2018 - Attempt of chipping out some of the services, out of the complete package and treating them to be taxable is not only arbitrary and unreasonable but such exercise is also violative of provisions of Section 8 of the CGST Act - A circular cannot seek to clarify provisions of statutory notification - HC
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Grant of anticipatory bail - The offence of fake ITC bill u/s 132 is not dependent upon the adjudication proceedings. Considering the seriousness of offence and the modus operandi in commission of said offence and the fact that it caused grave economic loss to exchequer, the applicants/accused are not entitled to be released on anticipatory bail - DSC
Income Tax
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Prayer for remand - Tribunal upon reconsideration of the factual position, found no justifiable reason to accept the prayer of the assessee to remand the matter to the Assessing Officer and also rightly observed that the assessee cannot fill up the gaps and blanks by seeking for a remand. Further, the Tribunal also agreed with the submission of the Revenue that there is a likelihood of tinkering of the evidence in the meantime and if the same is permitted, it would be prejudicial and detrimental to the interest of the Revenue. - HC
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Depreciation on roads developed and maintained by the assessee - Tribunal were right in holding that the development done by the assessee by forming the road would qualify as a plant so as to be entitled to depreciation under Section 32 - HC
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TDS u/s 194H OR 192 - Addition u/s 40(i)(a) - TDS was not deducted on pigmy deposits commission - the authorities below could not have treated the payment made by assessee to the pigmy deposit collectors as commission for making disallowance under section 40(a)(ia) of the Act for non-deduction of TDS under section 194H- AT
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Nature of expenditure incurred on building taken on lease - expenses of Repairs & Maintenance debited to Profit & Loss Account - it is quite clear that the assessee is not the owner of the building he is only lease-holder, hence, expenses are not liable to be capitalized - claim of the assessee has been accepted in the previous and subsequent year also, therefore, in the said circumstances, the finding of the CIT(A) is not justifiable, hence is liable to be set aside - AT
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Addition u/s 68 as accommodation entries - long term capital gain on sale of shares as sham/bogus transaction - Mere suspicion cannot be a ground for treating the transaction as bogus in the absence of any evidence or material on record -when the assessee has produced all the relevant documentary evidences to establish the genuineness of the transaction and there is no contrary evidence to doubt the correctness of the evidences produced by the assessee then treating the transaction of purchase and sale as sham by the AO is not justified - AT
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Addition u/s 68 - suspicious sale transaction in shares (penny scrip) - bogus LTCG - The assessee merely acted on the basis of such market information and happened to get phenomenal gain. It could have been otherwise as well. The rags to riches story in the stock market are galore. - In the absence of any link between the assessee and the alleged admissions of the directors and brokers, human probability is being used as a vague and convenient medium for the department’s conjectures - AT
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Penalty 271(1)(c) - if the contention of the Revenue is accepted, then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under Section 271(1)(c) and that is clearly not the intendment of the Legislature. - AT
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Exemption u/s 11 - violation of the provision of Section 13(1)(c) on account of payment of remuneration to specified person - In the event of any violation of provision of section 13, the entire exemption u/s 11 cannot be denied and would be restricted only to this extent of income misused by the Trust. Accordingly, we hold that the Assessing Officer was not justified in completing denying exemption u/s 11. - AT
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Income accrued in India - Taxability as Royalty income - the income earned by the assessee from sale of software, either directly to the customers in India or through Distributors or Resellers constitutes its business income and not the Royalty income. As admittedly the assessee did not have any Permanent Establishment in India, such income will not magnetize Indian taxation. - AT
Customs
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Provisional release of the exportable goods - insistence on bank guarantee or revenue deposit equal to the amount declared free on board of the goods plus the probable redemption fine and penalty is not only harsh and oppressive but also amounts to prejudging as to what the adjudicating authority would do upon adjudication. Presupposing that adjudicating authority will impose redemption fine and penalty will amount to taking a view before hand as to what decision the adjudicating authority would render. - HC
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Seeking to demand duty on the lost quantity of the mixed scraps - export of goods in violation of Letter of Permission and In Bond Manufacturing License - The control over the warehouse was with the petitioner. - As the respondent had not taken physical control of the seized quantity and that seized quantity which was ordered to be confiscated continued to be in possession of the petitioner, petitioner was responsible for the loss of such seized/confiscated goods. - HC
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Duty Drawback - conversion of shipping bill - the tribunal has rightly recorded the finding that the claim of the appellant for conversion of shipping bill is based on pre existing documents which were available at the time of re-export and no new material evidence has been claimed and identity of the product can be established on the basis of documentary evidence as physical examination could not be done at the time of shipment. - HC
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Availment of fraudulent Special Focus Market Scheme (SFMS) benefits - Since the matter is at the stage of SCN, which in our prima facie opinion is not time barred, especially looking to Section 28 AAA of the Customs Act, 1962 and the facts of this case. We are not inclined to entertain the petition at this stage. - HC
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Validity of SCN - Non-adjudication of show cause notice within reasonable period - Both members of CESTAT have different opinion on application of ratio of decision in the case of M/s Prabhat Fertilizers & Chemical Works Works [2020 (2) TMI 1443 - PUNJAB AND HARYANA HIGH COURT] - Matter referred to larger bench - AT
Indian Laws
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Condonation of delay in filing appeal - appealable order or not - an appeal under section 37(1)(c) of the Arbitration Act, 1996 would be maintainable against an order refusing to condone delay in filing an application u/s 34 of the Arbitration Act, 1996 to set aside an award - SC
Service Tax
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Rejection of declaration under SVLDRS - The object of the scheme is to encourage persons to go for settlement who had bonafidely declared outstanding tax dues prior to the cut off date of 30.06.2019. The fact that there could be discrepancy in the figure of tax dues admitted by the person concerned prior to 30.06.2019 and subsequently quantified by the departmental authorities would not be material to determine eligibility in terms of the scheme under the category of inquiry, investigation or audit. - HC
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Jurisdiction to impose penalty for late filing of return - Levy of late fee payable under Rule 7C of the Service Tax Rules, 1994 - The petitioner has not made out a case for any interference as the petitioner himself agreed to pay the late fee of ₹ 1,28,000/- before the first respondent Settlement Commission - HC
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Extended period of limitation - It is pertinent to mention here, that in the show cause notice itself no allegations of fraud collusion, misstatement or suppression of facts have been stated against the respondent, therefore, the demand is barred by limitation under Section 73 of the Finance Act, 1994 - HC
VAT
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Raising unpaid tax demands - recovery of short paid tax - According to the AO, the petitioner could not have excluded the discounts passed on to the dealers from his taxable turnover and to that extent the assessee had declared turnover less than the actual turnover. Even if the Assessing Officer is correct in so contending, it is not under Section 25(1)(a) of the Act that he can bring such turnover to tax. Allowing him to do so, would not only be expanding the boundaries of the powers under sub-section (1) of Section 25 of the TNVAT Act but also overriding the limitation provisions contained in the said chapter. - HC
Case Laws:
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GST
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2021 (2) TMI 563
Validity of Section 171 of the Central Goods and Services Tax Act, 2017 (CGST Act) and Chapter XV of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- Issue notice.
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2021 (2) TMI 562
Seeking anticipatory bail - Availment of fraudulent ITC upon the strength of fake invoices providing fabricated information on E-way bill portal - HELD THAT:- It is not in dispute that the suppliers have their valid PAN cards as well as Bank accounts and they have been granted registration by the Respondents itself after doing complete verification from their end, in terms of Chapter VI of CGST Act, 2017. Moreover, the suppliers of the Companies of the applicant have been filing requisite GSTR returns and doing all the compliances under CGST Act, 2017, on the basis of which ITC is credited to the Account of the Companies of the applicant - From the material available on record, it established that the suppliers have supplied goods to the Companies, which have been further exported by the Companies to the buyer. In addition to it, payments received by the Companies from their foreign buyers are further transferred to account of the suppliers via-online. Copy of some of the Ledgers maintained by the Company qua their suppliers are annexed herewith as Annexure A-32. Therefore, it is wholly misconceived that the suppliers are non-existent. Supply of goods by the transporter - e-way bill uploaded by the supplier - HELD THAT:- It goes to many levels of checks and inspection by the Custom Authorities and Export General Manifesto (EGM) are issued at different stages. It leaves no doubt that the goods are not transported by the concerned vehicle as it goes through different level of checks and inspections. However, the facts have not been investigated by the respondents. It is not in dispute that on the day the impugned order has been passed, the said Judge granted regular bail to the husband of the applicant after spending nearly 50 days in custody who is the person involved in dayto-day affairs of the company, however, dismissed the anticipatory bail of the applicant - It is also not in dispute that the applicant and her husband were called for investigation by the Investigating Agency/Department on 10.12.2020 and their statements were duly recorded. Husband of the applicant was arrested but applicant was released on the same day - Admittedly, the export made by the companies of the applicant in crores of rupees. The Investigating Agency has conducted as many as 5 raids including the residence and office premises of the applicant and seized the evidence such as original documents, purchase and sale invoices, ledgers and Bank Statements, hard disks, CPU, export details, etc. The custodial interrogation of the applicant is not required - petitioner shall cooperate with the investigation and make herself available for interrogation by police officer, as and when required - petition allowed.
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2021 (2) TMI 561
Interest on delayed payment of GST - Section 75(12) read with Section 50(2) of the the Bihar Goods and Services Tax Act, 2017 - HELD THAT:- We close the present proceedings taking on record the averments made by the deponent holding that no recovery will be made for interest charged on delayed payment of tax which has been made by the taxpayer debiting the credit ledger, however, in terms of amended section- 50(1), it is prayed before the Hon ble Court that the taxpayer may be directed to pay the interest on delayed payment of tax which has been made by debiting the cash ledger that is interest payable on net liability. Additionally, our attention is invited to the circular issued by the Central Board of Indirect Taxes Customs (CBIC), which reads as Interest on delayed payment of GST:CBIC Posted on 26th August 2020 5:34 PM by PIB Delhi Central Board of Indirect Taxes Customs (CBIC) today clarified that the Notification No. 63/2020-Central Tax dated 25th August 2020 relating to interest on delayed payment of GST has been issued prospectively due to certain technical limitations. However, it has assured that no recoveries shall be made for the past period as well by the Central and State tax administration in accordance with the decision taken in the 39th Meeting of GST Council. This will ensure full relief to the taxpayers as decided by the GST Council. Petition disposed off.
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2021 (2) TMI 560
Search proceedings - Respondent restored to physical violence and torture on the employees of the petitioner - HELD THAT:- Let Notice be issued to the respondents, returnable on 16.02.2021. On the returnable date, the respondents Nos.4 and 5 respectively shall appear before this Court through the Video Conferencing, failing which, this Court may proceed to take appropriate steps in accordance with law.
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2021 (2) TMI 559
Seeking grant of anticipatory bail - legality of the attachment order of bank accounts - allegation is that only bills were received without receiving any goods - HELD THAT:- Issue Notice. The petitioners have already deposited ₹ 2.5 crores with the respondent's department. List on 18.03.2021. Reply be filed by the respondent within 4 weeks with advance copy to the petitioners.
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2021 (2) TMI 558
Exclusion of ice cream from the benefits of Composition Scheme under Section 10 of CGST Act - violation of the spirit of Articles 14 and 19 of the Constitution of India or not - violation of principles of natural justice or not - It is the argument of the counsel for the petitioner that ice cream comprises of a large number of other components which are assessable to GST and thus the reasoning emanating from the minutes of the impugned meeting of the respondent no.2 GST Council for excluding ice cream from the benefit of Section 10(1) of the Act, is fallacious - HELD THAT:- A reading of Section 10(2)(e) of the Act shows that no parameters, whatsoever, on the anvil of which, the respondent no.2 GST Council may recommend for notification, any goods from the benefit of Section 10(1) of the Act, have been prescribed. The legislature has vested the Government with absolute discretion, to exempt whichsoever goods it may deem necessary, from the benefit of Section 10(1) of the Act. The only limitation placed on the Government is, to act on the recommendation of the GST Council, established under Article 279A of the Constitution of India. The said GST Council comprises of Union Finance Minister, Union Minister of State in charge of Revenue or Finance and the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government. It will thus be seen that the GST Council is a high powered constitutional entity. It is well settled that a State does not have to tax everything in order to tax something and it entitled to pick and choose, if it does so reasonably. Mention may also be made of STATE OF JAMMU AND KASHMIR AND ANOTHER VERSUS M/S. TRIKUTA ROLLER FLOUR MILLS PVT. LTD. AND ANOTHER, SANSAR OIL MILLS AND ANOTHER, R.C. FLOUR MILLS AND ANOTHER, SUDERSHAN STEEL (P) LTD., JAMMU STEEL INDUSTRIES AND ANOTHER, BARI BRAHMA INDUSTRIAL ASSOCIATION AND OTHERS AND K.B. ROLLER FLOUR MILLS [ 2017 (8) TMI 678 - SUPREME COURT] holding that grant of refund on CST paid, to boost entrepreneur investment, was primarily an executive economic policy decision, the scope of judicial scrutiny and interference wherewith is limited to on the grounds of mala fide, unreasonableness, arbitrariness or unfairness and that there is no legal or indefeasible right to claim refund of CST paid. To the same effect is UGAR SUGAR WORKS LTD. VERSUS DELHI ADMINISTRATION AND ORS. [ 2001 (3) TMI 1008 - SUPREME COURT] . The only direction which can be issued in this petition is, to direct the respondent no.2 GST Council to reconsider the exclusion of small scale manufactures of ice cream from the benefit of Section 10(1) of the Act, including on the aforesaid two parameters i.e. the components used in the ice cream and the GST payable thereon and other similar goods having similar tax effect continuing to enjoy the benefit - The respondent no.2 GST Council to take up the aforesaid aspect in its next meeting and to take a decision thereon at the earliest, keeping in view that the ice cream season has just begun, and preferably within three months of today. The petition is disposed of.
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2021 (2) TMI 557
Exemption from GST - transmission or distribution of electricity - Through circular it was clarified that certain activities shall be taxable - Vires of para 4(1) of the impugned circular No.34/8/2018-GST dated 1.3.2018 contrary to the Notification No.12/2017-CT (R) - Section 8 of the CGST Act - HELD THAT:- A simple reading of Sl.No.25 of exemption Notification dated 28.06.2017 and the corresponding notification leaves no room for ambiguity that entire package of services namely transmission or distribution of electricity has been exempted - Whereas a perusal of impugned Circular dated 01.03.2018, particularly para No.4(1) reveals that the CGST Council has sought to bring in tax-net five services enumerated therein, regardless of the fact that complete bundle or package of services namely transmission and distribution of electricity by an electricity transmission or distribution utility have been exempted. Attempt of chipping out some of the services, out of the complete package and treating them to be taxable is not only arbitrary and unreasonable but such exercise is also violative of provisions of Section 8 of the CGST Act - A circular cannot seek to clarify provisions of statutory notification dated 28.06.2017, which is otherwise unequivocal. There is no room for ambiguity or doubt, for which the GST Counsil was required to issue the circular. Respondents have as a matter of fact, levied tax on some of the services by carving them out that too by way of a circular under the cloak of a clarification. The writ petition succeeds - para 4(1) of the impugned Circular dated 01.03.2018 is hereby quashed - Application disposed off.
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2021 (2) TMI 556
Cancellation of its GST registration - petitioner has argued that the impugned order has been passed without serving a show cause notice on the petitioner - Principles of natural justice - HELD THAT:- Shri Ashish Anand Barnad, learned Deputy Advocate General though sought time to file reply to the writ petition, but considering the fact that this Court had already granted time to the respondents to file reply vide order dated 21.12.2020 and that the show cause notice (Annexure P/1) itself indicates that the petitioner was required to file reply to the show cause notice within seven days whereas he was required to appear before the competent authority within three days and the assertion made by the petitioner that no such show cause notice was ever served upon the petitioner, it is deemed appropriate to remit the matter to the competent authority for considering the same afresh in accordance with law. Appeal allowed by way of remand.
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2021 (2) TMI 555
Grant of anticipatory bail - origin of fake invoices and layer by layer of firms was revealed - issuance of only paper invoices and no goods were actually received - HELD THAT:- Though it is submitted in bail application that accused Sushil Goel do not play any day to day role in purchase of the company however this fact cannot be appreciated at this stage when there is a active involvement of the company is found to have alleged for using fake invoices through ITC. Ld. Counsel relied upon the judgment of Apex Court in case titled C. PRADEEP VERSUS THE COMMISSIONER OF GST AND CENTRAL EXCISE SELAM ANR. [ 2019 (11) TMI 659 - SUPREME COURT] that the accused was released on bail upon depositing 10% of total liability and in present case more than 10% has been deposited therefore, the present accused persons be released on anticipatory bail however accused appears to be knowingly used fake ITC in commission of offences. The offences caused grave economic loss to exchequer and this practice appears writ large in business community. The offence of fake ITC bill u/s 132 is not dependent upon the adjudication proceedings. Considering the seriousness of offence and the modus operandi in commission of said offence and the fact that it caused grave economic loss to exchequer, the applicants/accused Pawan Goel and Sushil Goel are not entitled to be released on anticipatory bail hence the present application qua accused Pawan Goel and Sushil Goel stands dismissed.
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2021 (2) TMI 554
Detention of goods alongwith vehicle - E-way Bill was found to be defective - the driver of the said vehicle revealed that it was his second trip against the same E-way Bill and Invoice - crux of allegation is that the respondent failed to deposit the amount of tax and penalties as proposed in FORM GST MOV-07 within the stipulated time of seven days as prescribed under Section 129(6) of the CGST Act, 2017 - sub-section (1) of Section 129 of Central Goods and Services Tax Act, 2017 read with Section 20 of the Integrated Goods and Services Tax Act, 2017 - HELD THAT:- Section 129(6) of the CGST Act, 2017 stipulates that where the amount of tax and penalties proposed and determined by the adjudicating authority should be automatically deposited within seven days, failing which proceedings shall be initiated in accordance with the provisions of Section 130. Section 130 provides for confiscation of goods or conveyance and penalty under Section 122 and also provide option to pay fine in lieu of confiscation - In the present case, the respondent failed to deposit the duty and penalty within seven days accordingly, the adjudicating authority was required to take the action under Section 130 of the Act. The adjudicating authority has erred in passing the impugned order by not confiscating the goods and conveyance or not imposing fine in lieu of confiscation under Section 130 of the Act - Appeal of Revenue allowed.
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2021 (2) TMI 553
Grant of Bail - input tax credit in respect of the Service Tax paid by the appellant under RCM - ITC on in respect of the services they booked in their books of accounts - Section 140(1) of the CGST Act, 2017 and Section 140(5) of the CGST Act, 2017 - penalty - HELD THAT:- The existing Registrants under Central Excise, Service Tax and VAT on migration to GST can carry forward the balance of Cenvat credit on inputs, capital goods and input services lying in the last return filed. In the instant case, the appellant has made the payment of Service Tax on 6-7-2017 but the credit has been taken on 30-6-2017 which is not in accordance with the existing law i.e. Cenvat Credit Rules, 2004. Since, the appellant was not entitled to avail the credit in the month of June, 2017 they were not having any Cenvat credit balance legally in their return before the appointed day, therefore, were not entitled to transfer the said credit in Table 5(a) of TRAN-1 as ITC and was not in accordance with the transitional provision of Section 141(1) of CGST Act, 2017 and rightly disallowed by the adjudicating authority. Further, it is found that the appellant has taken the Cenvat credit of ₹ 61,518/- as ITC in Table 7(b) of GST TRAN-1 related to appellant itself. In the cases where the credit taken on or before 30-6-2017 should have been transferred in Table 5(a) of TRAN-1 instead of Table 7(b) and in some cases credit was taken in books of account after thirty days from the appointed day which is not in accordance with Section 140(5) of CGST Act, 2017 and was rightly disallowed by the adjudicating authority. Imposition of penalty - HELD THAT:- The appellant has already reversed the credit amounting to ₹ 2,32,334/- along with interest amounting to ₹ 20,719/- vide Challan No. 42433, dated 6-7-2017 prior to issue of show cause notice. The appellant has stated that issues are primarily relating to procedural violation and was unintentional due to provisions being new, lack of knowledge and such lapses are ought to occur during the initial phase of new law - it is also found that GST being a new law such lapses are ought to occur during the initial phase but it should not be with intent to evade tax. The penalty imposed under the provisions of Section 122(2) of the CGST Act, 2017 is set aside. The order to the extent of disallowance of ITC is upheld and the penalty imposed under Section 122(2) of the CGST Act, 2017 is set aside - appeal allowed in part.
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2021 (2) TMI 552
Confiscation of goods alongwith the vehicle - Valid E-way bill was not available with the conveyance at the time of interception - Vehicle number not updated in the E-way Bill - HELD THAT:- M/s. Prerna Export, Shivaji Nagar, Madanganj, Kishangarh, Rajasthan has imported the goods ABRASIVES from China. During the course of verification of vehicle No. RJ14-GE-4146 by the officers of CGST Division, B, Jaipur the E-way Bill Number 721075239264, dated 4-6-2019 of Part-A of E-way Bill was having the shipping address Shivaji Nagar, Madanganj, Kishangarh, Rajasthan-305801 whereas, in Part-B of E-Way Bill the vehicle Number was shown different as RJ-19-GF-0560. Thus it is clear that the E-way Bill found during verification was not valid/proper for movement of vehicle. The appellant has contended that when the goods reached to Jaipur, the goods were being carried in another Vehicle Number RJ 14 GE 4146 to their office at Bani Park, Jaipur from the location of the local transporter, which is the distance upto 50 kilometers. But it is found that in the E-way Bill the address, has been shown as Shivaji Nagar, Madanganj Kishangarh, Rajasthan. The distance of Kishangarh is more than 50 Kilometer from Jaipur. As per Rule 138(5) of CGST Rules, 2017 - Where the goods are transferred from one conveyance to another, the consignor or the recipient, who has provided information in Part-A of the FORM GST EWB-01, or the transporter shall, before such transfer and further movement of goods, update the details of conveyance in the E-way Bill on the common portal in Part-B of FORM GST EWB-01. Further, as per Notification 12/2018-C.T., dated 7-3-2018 while transporting the goods from the place of transporter to the place of the consignee for more than 50 kilometer the part-B of E-way Bill has to be updated with the actual vehicle number. But the appellant has failed to do so. It is also found that in fact, the goods were found loaded in vehicle No. RJ 14 GE 4146 whereas, in Part-B of GST EWB-01 the vehicle number was mentioned as RJ 19 GF 0560. Therefore the driver of the vehicle was not carrying a valid E-way Bill at the time of interception of the vehicle. Thus, the appellant s contention is not acceptable. The E-way Bill shall not be valid for movement of goods by road unless the information in Part-A and Part-B of FORM GST EWB-01 has been furnished correctly. Appeal dismissed - decided against appellant.
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2021 (2) TMI 551
100% EOU - Refund of ITC accumulated - export of goods services without payment of Integrated Tax against filing the Letter of Undertaking - rejection on the grounds that the appellant has not followed the procedure for procurement of goods from DTA units - HELD THAT:- The question of deemed export arises as the appellant is 100% EOU and supply received by them is deemed export, therefore, the appellant had to comply with provisions of Circular No. 14/14/2017-GST, dated 6-11-2017 and other provisions for the time being in force. The deemed export refer to supplies of goods manufactured in India (and not Services) which are notified as deemed export under Section 147 of the CGST Act, 2017 and recipient EOU shall have to follow the procedure as per Circular No. 14/14/2017-GST - Rule 89 of the CGST Rules, 2017 as amended vide Notification No. 47/2017-Central Tax, dated 18-10-2017 allow either the recipient or supplier of deemed export supplies to claim refund of tax paid thereon. The appellant has also contested that the condition of furnishing undertaking has been specified only in case when the supplier of the deemed export intends to file refund claim. As per Para 4 of C.B.E. C. Circular No. 24/24/2017-GST, dated 21-12-2017 - Whereas, the Government has issued notification No. 48/2017-Central Tax, dated 18-10-2017 under Section 147 of the CGST Act wherein certain supplies of goods have been notified as deemed export. Further, the third proviso to Rule 89(1) of the CGST Rules allows the recipient or the supplier to apply for refund of tax paid on such deemed export supplies. In case such refund is sought by the supplier of deemed export supplies, the documentary evidences as specified in Notification No. 49/2017-Central Tax, dated 18-10-2017 are also required to be furnished which includes an undertaking by the recipient of deemed export supplies that he shall not claim the refund in respect of such supplies and that no input tax credit on such supplies has been availed of by him. The undertaking should be submitted manually along with the refund claim. Similarly, in case the refund is filed by the recipient of deemed export supplies, an undertaking by the supplier of deemed export supplies that he shall not claim the refund in respect of such supplies is also required to be furnished manually. Thus, the undertaking in both the case is to be furnished mandatorily, therefore the contention of the appellant is not acceptable. Further, vide Para 41 of Circular No. 125/44/2019-GST, dated 18-11-2019 it is also clarified that the procedure regarding procurement of supplies of goods from DTA by Export Oriented Unit (EOU)/Electronic Hardware Technology Park (EHTP) Unit/Software Technology Park (STP) Unit/Bio-Technology Parks (BTP) Unit under deemed export as laid down in Circular No. 14/14/2017-GST, dated 6-11-2017 needs to be complied with. Thus, the appellant was required to follow the procedure as prescribed but they failed to do so. Appeal dismissed - decided against appellant.
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Income Tax
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2021 (2) TMI 550
Disallowance of expenses being 10% of the expenses paid to port workers as incentives - books of account have been accepted are not rejected by pointing to any defects therein - as per assessee entire expenditure is supported by documentary evidence on the facts and circumstances of the case - HELD THAT:- In the absence of any challenge to the entries made in the books of accounts by the authorities, in our opinion, the finding recorded by the Assessing Officer as well as the Tribunal that it denied the claim of the assessee for expenditure to the extent of 10% on account of payment of speed money, is perverse as the same is duly supported by the documentary evidence. Insofar as the submission made by revenue that Commissioner the assessee himself had restricted the payment of speed money to 10% is concerned, it is pertinent to note that the restriction was made by the assessee in respect of Assessment Year 2004 05 and from the grounds of memorandum of appeal before the Tribunal, we find that the assessee had challenged the aforesaid finding which is evident from paragraphs 1 and 2, therefore, the aforesaid submission is of no assistance to the revenue. Substantial question of law involved in this appeal is answered against the revenue and in favour of the assessee.
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2021 (2) TMI 549
Prayer for remand - Whether Tribunal was right in refusing to either go through the evidence themselves, or to remand the matter for appreciation of evidence, on the suspicion and surmise that the Appellant would fabricate evidence in the event of remand? - allowability of expenditure was for the purpose of inviting membership of health farm - HELD THAT:- Before the CIT(A), for the first time, the assessee set up a case as if portion of the expenses was not relatable to public issue. The CIT(A) would have been well justified to pin down the assessee to their original claim in the return of income filed and reject their case. However, in order to ensure that the assessee gets a fare deal and the correct income needs to be taxed, the stand taken by the assessee was examined for its correctness. After elaborately considering the matter, the CIT(A) found that the assessee miserably failed to establish the tenability and truthfulness of its claim that the expenditure was revenue in nature. Once again before the Tribunal, the assessee made further attempt on the same grounds, which were considered by the Tribunal in great length and it was rejected. Tribunal rightly noted the decisions on the point that an order of remand is not for the asking and superior courts should be slow in remanding a case to the authority, unless it is shown that the case warrants reconsideration on the already available material or when important legal issue was not considered and that cannot be considered by the Court because disputed facts have to be gone into otherwise, prayer for remand should be rejected. Tribunal upon reconsideration of the factual position, found no justifiable reason to accept the prayer of the assessee to remand the matter to the Assessing Officer and also rightly observed that the assessee cannot fill up the gaps and blanks by seeking for a remand. Further, the Tribunal also agreed with the submission of the Revenue that there is a likelihood of tinkering of the evidence in the meantime and if the same is permitted, it would be prejudicial and detrimental to the interest of the Revenue. Hence. we are not persuaded by the submissions made on behalf of the assessee both on merits as well as with regard to the prayer for remand and above all, we find no question of law, much less substantial question of law arising for consideration in this appeal.
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2021 (2) TMI 548
Depreciation on roads developed and maintained by the assessee by agreement with the Government on the State/National Highway - whether roads so developed eligible for depreciation as 'building'? - HELD THAT:- While considering the issue as to whether the national highway was a road or not, one had to go by the common parlance of road where public at large had an access. As in the case on hand, the assessee therein was granted licence for construction, against which, they had a right to use and collect licence fee to use the land, that in that view of the matter, they had a right to restrict the people without non payment of toll tax and that if the definition, which was given under the Act was looked into, even a development made while occupying the premises and development of a road was the main agreement between the parties and that therefore, the argument of the Revenue that it would not qualify for depreciation was not sustainable. Accordingly, the view taken by the Tribunal was confirmed.Tribunal were right in holding that the development done by the assessee by forming the road would qualify as a plant so as to be entitled to depreciation under Section 32 - Substantial question of law No.1 is also answered against the Revenue and in favour of the assessee and it is held that the assessee is entitled for depreciation at the rate of 10%. Disallowance u/s 14A - Revenue has contended that the Tribunal committed an error in holding that the provisions of Section 14A of the Act read with 8D Would have no applicability if there was no exempt income received though the disallowance was linked to expenditure incurred on investment fetching exempt income - HELD THAT:- As decided in own case [ 2021 (2) TMI 340 - MADRAS HIGH COURT] to apply the provisions of Section 14A AO should have recorded a finding as to how Sub-Section (1) of Section 14A would stand attracted. In the absence of any such finding, the disallowance made was not justifiable. AO straightaway proceeded to the second limb of Section 14(2) which is impermissible - provisions of Section 14A r.w.r 8D cannot be made applicable in vacuum i.e in the absence of exempt income. Decided in favour of assessee. Eligibility for depreciation u/s 32(1)(ii) on the lease hold rights obtained by the assessee for a period of 99 years pursuant to an agreement entered into between themselves and the SIPCOT - HELD THAT:- Tribunal need not have taken the matter thus far to render a verdict in favour of the assessee especially when the Lower Authorities did not know the factual position. Thus, we are of the firm opinion that the matter has to be re-adjudicated by the Assessing Officer, for which purpose, the Assessing Officer has to threadbare analyse the agreement dated 21.9.2005 entered into between the assessee and the SIPCOT and not go merely by the nomenclature or the title of the document. But, the Assessing Officer should examine the contents. It would also be well open to the assessee to raise the alternate plea, which they raised before the Assessing Officer stating that the expenditure incurred for operational purposes ought to have been allowed as a revenue expenditure. The finding rendered by the Tribunal, the CIT(A) and the Assessing Officer with regard to the disallowance of depreciation on lease hold rights for the assessment years 2007-08 and 2008-09 is set aside and the matter is remanded to the Tribunal to take a fresh decision on merits and in accordance with law, after due opportunity to the assessee.
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2021 (2) TMI 547
Addition u/s 40(a)(ia) - payment of Cross Charge by the assessee - whether CIT(A) was justified in holding that the payment of Cross Charge by the assessee to Pfizer Ltd. was in the nature of reimbursement of expenses, whereas as per the cost sharing agreement, the payment was on estimate basis which cannot be regarded as reimbursement of quantifiable expenses? - CIT-A held that the second proviso to section 40a(ia) inserted by Finance Act, 2012, shall be operative retrospectively and therefore the assessee shall not be treated as an assessee in default? - HELD THAT:- We find that the assessee paid cross charges to Pfizer Ltd. in terms of the cost sharing agreement dated 21.11.2003 ( original agreement ) for sharing personnel cost and supplemental cost sharing agreement dated 13.12.2004 ( supplemental agreement ) for sharing the common costs and expenses pertaining to marketing, promotion, sales distribution and administration and other charges. Admittedly, Pfizer Ltd. has deducted appropriate taxes before making payment to the shared employees in accordance with the provisions of section 192 of the Act and as stipulated in para 2.4 of the original agreement. The expenses under dispute represent reimbursement of amount incurred by shared employees while they are on business tours. Shared employees can claim the said amount only after providing documentary evidence. Hence, such expenses are not liable for TDS. The disallowance u/s 40(a)(ia) of the Act is not warranted in view of the second proviso to section 40(a)(ia) of the Act r.w. first proviso to section 201(1) inserted vide Finance Act, 2012, provided the payee has (a) furnished return of income u/s 139, (b) taken into account the stated sum for computing the income in the return of income and (c) has paid the tax due on the income returned and there is a certificate of a Chartered Accountant to that effect. In the instant case, since all the conditions/requirements were complied with by the payee Pfizer Ltd. , the assessee cannot be considered as an assessee-in-default and therefore, disallowance u/s 40(a)(ia) is not warranted. - Decided in favour of assessee.
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2021 (2) TMI 546
TDS u/s 194H OR 192 - Addition u/s 40(i)(a) - TDS was not deducted on pigmy deposits commission - AR has been clarified vide letter dated 12/12/2007 by CBDT treating the remuneration (commission) earned by the pigmy deposit collectors as salary and subject to TDS under section 192 - HELD THAT:- The CBDT circular relied by the Ld.AR has been clarified vide letter dated 12/12/2007 by CBDT treating the remuneration (commission) earned by the pigmy deposit collectors as salary and subject to TDS under section 192 of the Act. The same has been placed Vide letter dated 03/03/2008 the position has been reiterated and confirmed by CBDT followed by 01/12/2011 and 14/12/2011. The subsequent clarifications by CBDT States applicability of provisions of section 192 of the Act on the remuneration earned by pigmy deposit collectors, and that, the same will be treated as salary. In the light of the Circulars and subsequent clarifications issued by CBDT, in our view the authorities below could not have treated the payment made by assessee to the pigmy deposit collectors as commission for making disallowance under section 40(a)(ia) of the Act for non-deduction of TDS under section 194H of the Act - We are therefore of the opinion that the disallowance deserves to be deleted. Denial of deduction u/s 36(1)(viia) - provision for NPA of 10% of the aggregate average advances made by the rural branches - CIT(A) while concluding on this issue, held that assessee is eligible only for deduction equal to an amount not exceeding 7 % of the total income computed before making any deduction under section 36 (1) (viia) of the Act, read with Rule 6 ABA of Income tax Rules - HELD THAT:- Section 36 of the Act deals with various deductions that could be allowed in computing income under section 28 of the Act. As per Section 36(1)(a)(viia), deduction could be claimed by banks referred to in clause (viia) in respect of bad and doubtful debts. It provides certain terms and conditions under which such deductions could be claimed by a particular bank. As benefit of 7.5% of the total income, there is no condition that it should be in respect of any rural branch. In the paper book computation of deduction under section 36(1)(viia) of the Act and 10% of aggregate advances of rule rural branches have been placed. We note in computation of income placed in paper book that the income from business of banking claiming any deduction under section 36(1)(viia) is ₹ 64,49,179/- and that the Ld.AO disallowed the said sum under section 36(1)(viia) of the Act, thereby treating the deduction to be nil . The Ld.CIT(A) directed the Ld.AO to verify the reversal of the opening balance of provision relating to that asset, which in our view cannot be found fault with. If the assessee created a new provision on a particular asset by fully reversing the opening balance of provision relating to that asset then the net recreation should be treated as a new provision which needs verification at the end of the Ld.AO. Accordingly this issue is remanded to the Ld.AO for verification on the lights of various judicial proceedings passed by this Tribunal and in accordance with law. - Ground allowed for statistical purposes.
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2021 (2) TMI 545
Assessment of trust - Anonymous donations u/s. 115BBC - failure on the part of the donors to file confirmation; in response to the notice issued u/s.133(6) - HELD THAT:- To come out of the definition of anonymous donation, the only requisite condition is that names and addresses from whom the donation has been received has to be maintained. The section is silent thereafter unlike Section 68 which casts an obligation on the assessee to explain the amount credited in the books along with the explanation to the satisfaction of AO. The moment the person receiving the donations provides the record containing the names and addresses of the persons from whom the donation has been received such donation comes out of the definition of anonymous donations. In the present case, it is undisputed fact that assessee had maintained complete record regarding identity of donors along with their addresses. Such information has been filed before us also in the form of paper book. This list of donors other then students contains PAN numbers also. Therefore, these donations cannot be termed as anonymous donations and hence cannot taxed u/s. 115BBC of the Act. - Decided in favour of assessee.
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2021 (2) TMI 544
Penalty u/s 271(1)(c) - Estimation of income - quantum additions made on account of bogus purchases - HELD THAT:- We find that the CIT(Appeals) has deleted the penalty on the basis of this fact when the profit was estimated then no penalty was leviable. CIT(A) has relied upon the Hon ble Allahabad High Court in the case of Naresh Chand Agrwal [ 2013 (6) TMI 68 - ALLAHABAD HIGH COURT ] and the decision in the case of DCIT Cir 4(2)(2) Vs. M/s. Manoharmanak Alloys Pvt. Ltd [ 2017 (1) TMI 1698 - ITAT MUMBAI ], and the decision of Hon ble ITAT Delhi Bench in the case of Shruti Fastners Ltd. Vs. DCIT [ 2017 (4) TMI 1059 - ITAT DELHI ], and ITAT Mumbai in the case of Rakeshkumar M. Gupta Vs. ITO [ 2017 (2) TMI 1472 - ITAT MUMBAI ], Moreover, the Hon ble Gujarat High Court in the case of National Textiles Vs. CIT [ 2000 (10) TMI 19 - GUJARAT HIGH COURT ], has held that the penalty is not leviable when the profit has been estimated on estimation basis. - Decided in favour of assessee.
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2021 (2) TMI 543
Nature of expenditure incurred on building taken on lease - expenses of Repairs Maintenance debited to Profit Loss Account - revenue or capital expenditure - HELD THAT:- The issue is duly covered by the assessee s own case titled as CIT Vs. Shree Nirmal Commercial Ltd. [ 1994 (4) TMI 19 - BOMBAY HIGH COURT] which speaks that the income of the assessee should be treated as business income. No doubt in the said circumstances, the expenses are liable to be allowed as revenue expense. In the previous and subsequent year, the claim of the assessee has been accepted by the revenue as revenue expenses. The claim of the assessee is liable to be accepted on the basis of consistency also. Moreover, there is no plausible reason given by the AO as well as CIT(A) in which it can be assumed that the nature of the expenses has been changed. Anyhow, in view of the above said facts and circumstances, it is quite clear that the assessee is not the owner of the building he is only lease-holder, hence, expenses are not liable to be capitalized - claim of the assessee has been accepted in the previous and subsequent year also, therefore, in the said circumstances, the finding of the CIT(A) is not justifiable, hence is liable to be set aside. We ordered accordingly and the claim of the assessee is hereby allowed.
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2021 (2) TMI 542
Rejection of books of accounts - estimation of Profit - assessee s premises was subjected to survey action wherein combined physical stock was taken and to cover up the discrepancies, the assessee offered additional income which has, in fact, credited to its financial statements for the year under consideration - Allegations of Ld. AO that the assessee tried to nullify the declaration so made by valuing the closing stock at lower rates and also by resorting to sell the frames at abysmally lower rates. Consequently, the books were rejected u/s 145 and the Gross profit rate of 42.36% has been applied to determine the income of the assessee. HELD THAT:- We find that the books were subjected to Tax Audit and the quantitative details were duly furnished by the assessee during the course of assessment proceedings. It could also be observed that discrepancies were found only in the physical stock of frames. To cover up the same, the assessee has already offered additional income of ₹ 20 Lacs. No discrepancies were found in the stock of lenses. During original assessment proceedings, Ld. AO chose to make addition of ₹ 12 Lacs since the closing stock of lenses was valued at ₹ 5/- per pair as against cost of ₹ 17/- per pair. However, the aforesaid action has already been turned down by the Tribunal in assessee s appeal wherein the addition was deleted. In other words, the matter of valuation of closing stock of Lenses has already attained finality. Assessee was maintaining proper books and furnished the requisite details, vouchers, bills, purchase and sales register as called for by Ld. AO during the course of assessment proceeding - no specific defects have been pointed out by Ld. AO in the documents furnished by the assessee before rejecting the books of accounts. Rather the assessee was successful in explaining that fall in Gross profit was mainly on account of old stock of lenses for which there was no fresh purchases during the year. There was only disposal of the old stock and the balance closing stock was valued at lower of cost or market price, which action the Tribunal has already accepted. Therefore, the lower authorities, in our considered opinion, were not justified in rejecting the books of accounts in the second round of assessment proceedings. Loss in the case of the present assessee is arising only due to lower valuation of closing stock of lenses which has been accepted by the Tribunal in assessee s own case and we see no reason to deviate from the same. We are inclined to hold that the rejection of books u/s 145 was not justified and the estimation of Profit as done by lower authorities could not be sustained. The Ld. AO is directed to accept the income declared by the assessee as per its computation of income.
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2021 (2) TMI 541
Correct head of income - treatment of entire lease rentals - under the head 'Income from Business' to be 'Income from Property' or 'Income from Other Sources' - HELD THAT:- By accepting the trading results, Ld. AO has accepted the fact that assessee s business was continuing despite the observation that no manufacturing activity was being carried out by the assessee during the year which is also evident from the fact that except for depreciation allowance, retrenchment compensation along with minor disallowances, all other business expenditure as claimed by the assessee has been allowed by Ld. AO. We find that various lease agreements of buildings and Plant Machinery, entered into by the assessee, were continuing since past many years and the assessee earned rental / lease income in similar manner since AY 1999-2000 and offered the same as Business income . The assessee s stand has always been accepted by the department in most of other years. Rental / lease income so earned by the assessee has been accepted by the revenue as Business income all along since AY 1999-2000 except for this assessment year and AYs 2007-08 2008-09. Though undisputedly, the principle of res - judicata is not applicable to income tax proceedings but the rule of consistency would demand that accepted position is not disturbed on identical facts as per the decision in the case of PCIT v/s. Quest Investment Advisors Pvt. Ltd. [ 2018 (7) TMI 479 - BOMBAY HIGH COURT ] wherein it has been held that when a principle has been accepted by the Revenue in earlier years as well as in subsequent years then the Revenue is bound by it unless there is a change in law or change in facts therein, which change has to be pointed out in the assessment Order. Therefore, action of Ld. AO in disturbing the rental / lease income as Business Income could not be held to be justified. Once the assessee s position has been accepted in so many past as well as succeeding years, there is no reason to disturb the same only in few years, the facts being remaining the same. Therefore, we are inclined to hold that the rental / lease income from building as well as from plant machinery was assessable as Business Income only. Consequently, the assessee would be entitled for depreciation on these assets. In such a scenario, the question of determining the notional rental income would not, at all, arise. Retrenchment compensation disallowance - as argued compensation is paid under section 25F of Industrial Disputes Act and is a deductible expenditure - HELD THAT:- AR correctly pointed out that the payment was covered by the provisions of Sec.35DDA and accordingly, the same should be allowable in 5 equal installments. Concurring with the same, we direct Ld. AO to allow 1/5th of retrenchment compensation paid during the year. Ground No.2 stand partly allowed. Deduction of business expenditure as well as set-off of carry forward losses - As Rental / lease income was to be assessed as Business Income only. Consequently, the assessee would be entitled for deduction of business expenditure as well as set-off of carry forward losses. The Ld. AO is directed to recompute the income in terms of our above order. The appeal stand allowed in terms of our above order. Deduction of Salary expenditure, repairs to building and professional fees as well as set-off of carry forward losses - As rental / lease income was to be assessed as Business Income only. Consequently, the assessee would be entitled for deduction of Salary expenditure, repairs to building and professional fees as well as set-off of carry forward losses. The Ld. AO is directed to re-compute the income in terms of our above order.
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2021 (2) TMI 540
Addition u/s 68 as accommodation entries - long term capital gain on sale of shares as sham/bogus transaction - HELD THAT:- AO has treated the transaction of sale of 66,500 shares as bogus being accommodation entry but has not doubted the holding of the shares by the assessee to the tune of 4,13,500 shares in the Demat account of the assessee. Once the assessee has produced all the supporting evidences which include purchase bill, bank statement showing the payment of purchase consideration, Demat account, holding of shares in the Demat account, sale of the shares through Stock Exchange which are also reflected in the Demat account of the assessee and receipt of the sale consideration in the bank account of the assessee as it is evident from the bank account, statement of the assessee, then in the absence of any contrary material or evidence brought on record by the AO, the transaction of purchase and sale of the shares in question cannot be held as bogus merely on the basis of the investigation carried out by the Department in some other cases where some persons were found indulged in providing accommodation entry. AO in the entire assessment order has not made reference to single documentary evidence which can be said to be an incriminating material against the assessee to show that the assessee has availed accommodation entry of bogus Long Term Capital Gain. Mere suspicion cannot be a ground for treating the transaction as bogus in the absence of any evidence or material on record -when the assessee has produced all the relevant documentary evidences to establish the genuineness of the transaction and there is no contrary evidence to doubt the correctness of the evidences produced by the assessee then treating the transaction of purchase and sale as sham by the AO is not justified - Decided in favour of assessee.
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2021 (2) TMI 539
Correct head of income - Income from sale of shares - income from capital gains or business income - HELD THAT:- Transaction of purchase and sale of share is in respect of one script only. Purchases are made in instalments and thereafter they have been sold in instalments. Hence, it is not a case of repetitive purchase and sales. Shares purchased in earlier years have been held as `investment . Own funds are used for purchase of shares and not borrowed funds. The main object of the assessee is `investment and the objective of trading is only with reference of commodity.Assessee has declared short term capital gains and paid taxes accordingly, even though it has brought forward business loss. In light of the aforesaid reasoning we hold that profits on sale of shares in given facts and circumstances of the case, ought to be taxed under the head 'capital gains . Appeal filed by the assessee is allowed.
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2021 (2) TMI 538
TP Adjustment - Comparable selection - action of AO/TPO for selecting companies as comparables without considering their functions undertaken and picking the high margin companies by applying arbitrary filters - main contention of Ld. AR is that Eclerx Services Ltd. is functionally not comparable to the functions of assessee - HELD THAT:- There is no dispute regarding exclusion of Eclerx Services Ltd. by this Tribunal in assessee's own case in A.Y. 2011-12 [ 2020 (8) TMI 441 - ITAT PUNE ] There is no dispute regarding exclusion of Eclerx Services Ltd. by this Tribunal in assessee's own case in A.Y. 2011-12 Eclerx Services Ltd. shall be excluded from the set of comparables and the AO/TPO is directed to determine the arm's length price for the purpose of benchmarking of international transactions in design engineering services segment. Thus, the final assessment order in this regard is set aside and the ground raised by the assessee are allowed.
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2021 (2) TMI 537
Income accrue or arise, or deemed to accrue or arise in India - Treating the consideration received for sale of software products as Royalty and taxable in the hands of assessee in India - DTAA between India and the USA - resellers have been given a license by the assessee for consideration to commercially exploit such license at their end - HELD THAT:- On an examination of distributors agreement held the distributors, except for passing over the assessee products as acquired by them from the assessee, do not acquire any right or title in the intellectual property used in the software which always remains with the assessee and at no stage the right to use the copyright in the software is licensed either to the distributor or the reseller. Thereby this Tribunal held the income earned by the assessee from sale of software, either directly to the customers in India or through distributors or resellers constitutes its business income and not the Royalty income and as such business income is not taxable in India as the assessee did not have any Permanent Establishment in India as decided in [ 2021 (2) TMI 508 - ITAT PUNE] Thus we hold the sale consideration received for sale of software products from the end users, distributors or resellers is business income and not Royalty income and as such it is not taxable in India. Thus, the final assessment order passed by the AO is set aside and ground raised by the assessee is allowed.
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2021 (2) TMI 536
Exemption u/s 11 - permissible accumulation of 15% of the total income of the appellant contemplated in section 11(1)(b) - method of computation - whether capital expenditure incurred by the appellant in the purchase of the printing machinery at the cost financed out of Bank loan does not qualify for the claim of application in computing the income of the Appellant Trust? - HELD THAT:- CIT (Appeals) computed the application amount wherein he has mentioned the value of the asset purchased at ₹ 7,15,540. However he has not mentioned how he has arrived the figure. Further we make it clear that purchase of capital asset by availing loan cannot be construed as application of income. There is a difference between application of income and utilization of loan as a source for acquisition of capital asset. Only the repayment of loan out of income will be construed as application of income.
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2021 (2) TMI 535
Long term capital gain addition after invoking Section 50C - stamp rate of the capital asset transferred by the assessees' at much lower value after invoking Section 50C thereby making the impugned addition - HELD THAT:- Revenue at this stage raised the vehement contention that no such reference prayer came in the course of assessment at these assessees' behest. We find no merit in the Revenue's instant technical arguments. Hon'ble Calcutta high court decision Sunil Kumar Agarwal Vs. CIT [ 2014 (6) TMI 13 - CALCUTTA HIGH COURT] holds that Section 50(C)(2) a reference to the DVO is mandatory in Sec. 50C proceedings even if the assessee concerned fails to agitate the same at the appropriate stage. At this stage stated during the course of hearing that the capital asset sold at the assessees' behest in the relevant previous year also involved some title dispute and other distressing factors. We therefore restore this sole issue of long term capital gain addition raised at the assessees' behest back to the AO for his appropriate adjudication after making necessary reference to the DVO as per law. It is made clear that the assessees shall be at liberty to raise all factual/legal pleas in consequential proceedings - Assessees' appeals are treated as allowed for statistical purposes.
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2021 (2) TMI 534
Correct head of income - surplus on sale of land as short term capital gain or business income treated by the assessee - Setting off business loss against the profit of the firm which included profit on sale of plot which was trading asset of the assessee only - As per assessee inadvertently/on account of typographical error that the said asset was shown as fixed asset in the balance sheet of earlier years ignoring the documentary evidences produced to the effect that it was trading asset only - HELD THAT:- The impugned land was purchased on 16/7/2013. This date is clearly after the amendment in the partnership deed bringing into the deed that the assessee was also dealing in the business of real estate developer. In these circumstances when the said land was sold the revenue authorities have tried to thrust upon the assessee that the said sale of land resulted in short-term capital gain. This has been done solely on the ground that assessee has classified the said land as fixed asset. It is settled law that description in the books of account is not the determinative of the true nature of the transaction. The fact that the partnership deed has been duly amended bringing into account the fact that assessee was dealing in the business of real estate developer prior to the purchase of land and that the tax audit report also showed the assessee to be in the said business cannot be ignored. The assessee's plea that it was an inadvertent mistake to classify the same as fixed asset has to be accepted. No cogent reason has been brought on record by the authorities below to dispute the facts as recorded above. Except for mentioning about the assessee's classification in earlier year authorities will have not at all commented upon the assessee's explanation that the said purchase of land happened after the assessee started the business of dealing in land and real estate and the fact that auditor in the auditor's report did mention the same as the assessee's business. In this view of the matter authorities below action has no legs to stand. The gain is directed to be treated as business income with the necessary consequences. Accordingly set aside the orders of authorities below and decide the issue in favour of the assessee.
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2021 (2) TMI 533
Bogus purchases - No opportunity to the assessee to cross examine those parties - HELD THAT:- Assessee is indulged in submitting bogus purchases in order to reduce the profit margin against the sales made by them. It is fact on record that AO has not doubted the sales transactions and AO has disallowed the purchase from the above said 2 parties. Considering the facts that they have not made any sales to the assessee, however assessee has filed copy of the purchases, which are placed on record, AO should have given opportunity to the assessee to cross examine those parties. Since assessee has made a plea before Ld. CIT(A) and Ld. CIT(A) should have given an opportunity or adjudicate on this issue. Therefore, for the sake of natural justice, we are inclined to sustain the addition @ 6% similar to the other alleged purchases. Addition of labour charges - HELD THAT:- We notice that AO has made a general comment on this expenditure that these were not verifiable independently and made disallowance on adhoc basic with observation that assessee has self made vouchers and incurred expenditure in cash. It is the duty of the AO to verify the vouchers and check that whether this expenditure was actually incurred for the purpose of business or not. If it is not, he cannot proceed to disallow on adhoc basis without there being any reason. Therefore, we are inclined to treat the whole expenditure as incurred for the purpose of business. Accordingly, ground no. 2 raised by the assessee is allowed. Addition of 10% of the motor car expenses since there is no record on utilization of the vehicle - HELD THAT:- Ld. CIT(A) has already given substantial relief and reasonable. Therefore, we see no reason to grant any further relief to the assessee. Accordingly, ground no. 3 raised by assessee is dismissed.
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2021 (2) TMI 532
Income from house property - determination of ALV on the basis of Municipal Rateable Value - HELD THAT:- As decided in own case [ 2018 (12) TMI 1681 - ITAT MUMBAI] wherein upheld the determination of ALV on the basis of Municipal Rateable Value. Tribunal in all the earlier years is that municipal rateable value was to be taken as Annual Rental Value. Nothing is on record to demonstrate that the any of the aforesaid adjudication has subsequently been reversed in any manner. Therefore, the distinction of facts as made by Ld. CIT(A) was not to be accepted. Respectfully following the consistent view of Tribunal in earlier years in assessee s own case, we direct Ld. AO to adopt the MRV as Annual Letting Value. The ground, thus raised, stand allowed.
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2021 (2) TMI 531
Reopening of assessment u/s 147 - Addition u/s 68 - suspicious sale transaction in shares (penny scrip) - bogus LTCG - disallowing the exemption Claimed by assessee u/s.10(38) on account of Long-Term Capital Gain - HELD THAT:- there is no dispute regarding date of purchase of shares. Price of the shares ₹ 2/- instead of ₹ 0.55/- per share, confirmed from the party. The shares which the assessee had acquired were later on demated and then the assessee sold the shares at stock exchange through registered stock broker after making payment of STT. Neither the Stock Exchange or SEBI has disputed the assessee s transaction nor was any action against the assessee s broker taken by BSE or SEBI. The assessee s dealings in shares are supported by the contract notes issued by broker as well as demat account. Genuineness of contract notes or demat accounts have not been disputed even in the show cause notice by the assessing officer. The payments were received through account payee cheque and transaction was done through recognized stock exchange. The inflow of shares is reflected by way of physical share certificate and demat account. The shares were transferred through demat account. There is no evidence that the cash was recycled back to the assessee. The assessee merely acted on the basis of such market information and happened to get phenomenal gain. It could have been otherwise as well. The rags to riches story in the stock market are galore. It has been submitted that the alleged, circumstantial evidence and material has led the Assessing Officer to believe that the real is not the apparent. In the absence of any link between the assessee and the alleged admissions of the directors and brokers, human probability is being used as a vague and convenient medium for the department s conjectures - Decided in favour of assessee.
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2021 (2) TMI 530
Penalty 271(1)(c) - case of difference of opinion between the assessee and the learned Assessing Officer in respect of the treatment to be given to a particular expenditure - HELD THAT:- We are satisfied that it s not the case of concealment of income nor of furnishing of any inaccurate particulars but it is only a case of difference of opinion between the assessee and the learned Assessing Officer in respect of the treatment to be given to a particular expenditure. Further the assessee does not stand to much gain by this differential treatment also. The essential ingredients to attract the provisions under section 271(1)(c) of the Act do not seem to have been existing in this case. In CIT vs Reliance Petroproducts Pvt Ltd [ 2010 (3) TMI 80 - SUPREME COURT ] held that when the assessee preferred a claim, it was up to the authorities to accept its claim in the Return or not, but merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty under Section 271(1 )(c) of the Act. It was further held that if the contention of the Revenue is accepted, then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under Section 271(1)(c) and that is clearly not the intendment of the Legislature. There is no basis for the authorities below to levy are sustained the penalty and the same has to be deleted. - Decided in favour of assessee.
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2021 (2) TMI 529
Addition u/ 68 - case of the assessee was selected for scrutiny under CASS - cash deposits and saving bank account is more than the turnover cash - assessee is coming from Pakistan - main claim of the assessee is that the issue is squarely covered in favour of the assessee by the notification number 73/16/68/IT/A II dated 3/2/1969 issued by the Ministry of Finance (Department of revenue and insurance), New Delhi which are duly met by the assessee as assessee is coming from Pakistan, the source of the fund is not required to be explained - HELD THAT:- Assessee brought 50 lakhs of Indian rupees in India through unofficial channel as claimed by the assessee. However, it is a matter of common knowledge as per information available in public domain; generally the exchange rate for one Indian rupee is ₹ 1.75 Pakistani rupees. Therefore it is highly improbable that a person gets ₹ 50 lakhs of Pakistani rupees and deposited in Indian bank ₹ 50 lakhs INR in Indian banks. In view of this assessee is also required to explain that where from he got the money and how much, what is the conversion rate at that prevail in time i.e. how many Pakistani rupees he paid for getting 50 lakhs Indian rupees for depositing in the bank account. The assessee is required to show the source of that some. As before the assessing officer assessee could not submit all the requisite details, the assessee submitted details according to his understanding before the CIT A, but without any enquiry, the evidence produced by the assessee were rejected. The assessee is not an Indian resident but has come from Pakistan as persecuted hindu community therefore naturally the assessee will not have the sufficient or foolproof evidences. This fact has also been considered in this notification number 5 dated 29/05 /1969 wherein it is provided that any claim by such migrants that the funds or the jewellery have been brought from the abovementioned countries, will be accepted only if the persons concerned produce adequate evidence to show that they had sufficient funds/wealth in those countries and that the transfer of the cash/jewellery to India can directly be linked with the said funds or wealth. These migrants will have to lead proper evidence like any other assessees, about the source of the cash/jewellery alleged to have been brought by them from these countries. In support of the claim that they had sufficient funds in those countries, they might produce before the income-tax authorities in India their bank accounts in those countries as also copies of the assessment orders passed in their cases by the income-tax authorities of those countries. The migrants would also then be required to prove that the amounts brought into India can directly be linked with the funds which they had possessed in those countries. Even it is also the request of the assessee that the learned assessing officer has not considered the evidence placed before him in view of the above circular therefore the matter should go back to the assessing officer. The revenue did not contest the above claim of the assessee. Even otherwise for the reasons stated above, we set-aside the whole issue back to the file of the learned assessing officer with a direction to examine the evidence produced by the assessee and test them in accordance with notification number 5 - Appeal of the assessee is allowed for statistical purposes
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2021 (2) TMI 528
Exemption u/s 11 - violation of the provision of Section 13(1)(c) on account of payment of remuneration to specified person -opportunity of being heard to the appellant on various issues - Incurring expenses versus generation of surplus - institution for elite class of the society - HELD THAT:- Assessing Officer has to bring something on record or carry out any comparative analysis to show that services rendered by her are not in commensurate with the payments made. We agree with the contention of the learned counsel which is well supported by the various judgments that while making such allegations, the onus is on the Revenue to prove that payment made to the person specified in section 13(3) is excessive or unreasonable by placing material on record and the services rendered or not in commensurate with the payments made. In so far as the payment of remuneration made to Mrs. Malvika Rai is not excessive and does not violate the provision of section 13(1)(c) and accordingly the entire payment made to her is treated as application of income. Payment of scholarship and salary to Mrs. Aarti Rai - In so far as payment of salary is concern, there is no reason for making any part disallowance for the reason that, firstly; because she has been actively involved in set up of Banyan Tree School and has been rendering services; and secondly no adverse material has been brought on record that her services and other contribution is not in commensurate with the payment of salary. Payment of scholarship - For rendering of services for any institution or school affiliated to the appellant Trust a person is compensated by the salary/remuneration and not by incurring any expenditure for sponsorship of higher education from foreign University. Thus, to the extent of ₹ 13.36 lakhs towards the scholarship payment for Ms. Aarti Rai, the same cannot be treated as application of income, and therefore, Assessing Officer and Ld. CIT (A) are justified in disallowing the payment as non application of income. We agree with the other contention of the learned counsel that, only to the extent of expenditure incurred on scholarship of ₹ 13.36 lakhs for which there is a violation under section 13, same should alone be disallowed and entire exemption under section 11 cannot be denied. In the event of any violation of provision of section 13, the entire exemption under section 11 cannot be denied and would be restricted only to this extent of income misused by the Trust. Accordingly, we hold that the Assessing Officer was not justified in completing denying exemption under section 11.Thus, in view of our finding given above the exemption of section 11 in the case of the appellant Trust shall be denied to the extent of ₹ 13.36 lakhs only. Computation of income and taxing of surplus by the Assessing Officer assuming that net profit of 44.4% of the gross income is wholly erroneous and incorrect , because both Assessing Officer and Ld. CIT (A) has failed to consider acquisition of fixed assets and other capital expenditure shown in the utilisation of income as application of income for charitable purposes. During the year, as per the income expenditure account, the total amount actually spent comes to 92.83% which is far less than a statutory limit of 85%. It is no longer res integra that capital expenditure is tantamount to application of income for charitable purposes as held by the Hon ble Supreme Court and various other High Courts as relied upon by the Ld. Counsel above. Thus, the taxing of the surplus by the Assessing Officer is not justified on facts and in law. Only the education per se has been treated as charitable in section 2(15); and if Appellant trust is imparting education for which it has been granted registration under section 12A, then Assessing Officer cannot deny benefit of section 11 and treat the Appellant trust as a business entity on this ground alone. Accordingly, such an observation and finding of the Assessing Officer and CIT (A) is reversed. Addition on account of security deposit refundable to the students - As on 31st March 2007 the refundable deposit was ₹ 1,17,62,966/- whereas, the Assessing officer has erroneously taken ₹ 22,75,226. As pointed out by the learned counsel and is also evident from the record that ₹ 22,75,226/- represented repayment/ adjustment out of student security amount on various years and the same could not have been treated as income since the entire amount is refundable by the appellant as per its mandate and very nature of security. It cannot be treated as income because there was an obligation of the part of the trust to refund as and when necessary claim is made by the student. Thus, such an addition is unwarranted. Disallowance of 50% of maintenance and fuel expenses - As clearly stated that the cars have been utilised purely for the use of the Appellant Trust and for various high positioned faculty members, then adhoc disallowance cannot be made for personal use or it can be inferred or presumed to be not utilised for the activities of the Trust. Once the car is used for officials, like, Dean, Professors and other faculty members, then usage of car for such officials of the Trust cannot be held to be for personal benefit or for non-official purposes. Accordingly, such an adhoc disallowances is directed to be deleted. Donation - we find that no details have been provided and the purpose for making such donation. Therefore, no interference is called for in the finding of the Assessing Officer and CIT(A) as nowhere it has been explained about the nature of donation and its purpose. Exemption under section 11 to the assessee on the ground that assessee runs an institution for elite class of the society her sole purpose is to make profit and no charitable intention which could be seen its operation and application of fund - HELD THAT:- CIT (A) held that once the assessee is carrying out educational activities which is charitable in nature and also granted restriction under section 12A, therefore, the assessee cannot be treated as involved in any trading, commerce or business. 50% of donation relying upon the judgement of Hon ble Supreme Court in Queen Educational Society vs. CIT [ 2007 (9) TMI 347 - UTTARAKHAND HIGH COURT] he held that there is no violation of section 11 or 12. Since already the issue of Smt. Malvika Rai and ad hoc disallowance fuel expenses have been dealt by us in the earlier appeals, therefore, these grounds raised by the revenue are dismissed. Disallowance of 50% of donation is concern, we agree with the finding of the CIT (A) that there is no violation of section 11 or 12. Accordingly, we hold the CIT ( A) has rightly allowed the exemption under section 11 of the Act. - Decided against revenue.
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2021 (2) TMI 527
Employees contribution disallowed applying the provisions of section 36(i)(va) and section 43B - AO rejected the contention of the assessee and stated that due date means the date for deposit of the above contribution is the dates mentioned in the respective PF and State Insurance Act - HELD THAT:- In this case is that whether the amount of employee s contribution deposited beyond the due date prescribed in the respective provident fund laws is allowable to the assessee as a reduction or not. In case of CIT Vs. Aimil Ltd 2009 (12) TMI 38 - DELHI HIGH COURT wherein, it has been held that the payment of even employees contribution before the due date of filing of return of income is allowable as deduction to the assessee despite all the facts that such contribution has not been deposited within the due date prescribed under the respective Provident Fund Laws. In view of this, we find that disallowance made by the lower authorities is not sustainable in law. Assessee is allowed and the ld AO is directed to delete the disallowances - Decided in favour of assessee.
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2021 (2) TMI 526
Calculation of interest u/s.244A - entitled for interest on self-assessment tax - assessee has raised ground before us stating that refund granted to the assessee is to be first adjusted against the correct amount of interest due on that date and thereafter, the left over portion should be adjusted with the balance tax - HELD THAT:- We find that in the instant case refund was granted to the assessee vide refund order in October 2013 and it was pleaded by the assessee that the said refund is to be adjusted against the correct amount of interest payable thereof to be computed as per the directions of the ld. CIT(A) and only the balance amount is to be adjusted against tax paid. Accordingly, unpaid amount is the tax component and therefore, the assessee would be entitled for claiming interest on the tax component remaining unpaid. In our considered opinion, the same would not tantamount to interest on interest as alleged by the ld. CIT(A). Similarly, the refund granted to the assessee in July 2016 is to be adjusted against the correct interest payable on the tax amount remaining unpaid and balance towards tax component. Accordingly, we direct the ld. AO to compute the correct amount of interest allowable to the assessee as directed by the ld. CIT(A) as on the date of giving effect to the Tribunal s order i.e.06/09/2013. We further hold that the refund granted on 06/09/2013 be first appropriated or adjusted against such correct amount of interest and consequently, the short fall of refund is to be regarded as shortfall of tax and that shortfall should then be considered for the purpose of computing further interest payable to the assessee u/s.244A of the Act till the date of grant of such refund. Accordingly, the grounds raised by the assessee in this regard are allowed for both the years. It cannot be said that assessee never made such a claim of interest in the return of income for the respective years. Accordingly, no delay could be attributable on the part of the assessee in this regard. Hence, the grounds and the arguments advanced by the ld. AR in this regard deserves to be rejected. We also find that the issue of assessee being entitled for interest on self-assessment tax from the date of payment of self-assessment tax till the date of actual payment of refund has been the subject matter of adjudication by the Hon ble Jurisdictional High Court in the case of Stock Holding Corporation of India Ltd., vs. CIT [ 2014 (11) TMI 899 - BOMBAY HIGH COURT ] wherein held interest is payable from date of payment of tax on self assessment to date of refund of amount under section 244A - Decided in favour of assessee.
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2021 (2) TMI 508
Income accrued in India - Taxability as Royalty income - sale to Resellers - assessee earned revenue from sale of software licenses in India including certification and software for authentication business which was claimed as not chargeable to tax in the absence of it having any Permanent Establishment (PE) in India - AO show caused the assessee as to why the receipts from sale of software licenses should not be taxed as Royalty - India and USA DTAA - HELD THAT:- assessee has entered into agreements with Resellers for establishing contact with the end customers and make sales. Resellers are obliged to purchase the Symantec Products from the assessee for resale. A Reseller simply gets a user name and password for accessing to the Reseller Console of the assessee just for the purpose of purchasing Symantec Products and then for further sale to the customers. Price per product is already settled at which the Symantec products will be available to the Resellers. Price to be charged by the Reseller from customers is to be decided by him without the assessee s involvement. Right in the intellectual property of the computer software remains with the assessee at all times. Thus it is abundantly clear that it is not a case as projected on behalf of the Revenue that the Resellers have been given a license by the assessee for consideration to commercially exploit such license at their end. Resellers have not been conferred with any right to copy the software for further sale by them. They just purchase the Symantec Products as such for resale to the end customers in India. Each item of Symantec product is to be separately purchased by them for resale. The position would have been otherwise, if the assessee, instead of selling Symantec Products to the Resellers, would have licensed them the right to copy it for their commercial exploitation, which would have merited consideration of the matter from a different perspective. In our considered opinion, the position qua the sale to Resellers is no different from the direct sales made by the assessee to its end customers in India. Thus the essential ingredient of the Royalty, being, granting of use or right to use the copyright is lacking insofar as sale to Resellers is concerned. It is not as if the Distributors or the Resellers acquire any right from the assessee to copy the software and then exploit it commercially. Their transactions are confined to purchasing specific Symantec Products from the assessee and then eventually selling the same to the end customers in India. There is no qualitative difference between the direct sales made by the assessee to its customers in India, which have already passed the scrutiny by the Tribunal in assessee s own case for earlier year and the sales made by the assessee through the Distributors or the Resellers. In both the sets of circumstances, it is only one-to-one sale of the Symantec Products by the assessee and at no stage the right to use the copyright in the software is licensed either to the Distributor or the Reseller. Thus, the decision taken by the Tribunal in the context of direct sales made by the assessee to end customers in India applies with full force insofar as the sales through Distributors and Resellers are concerned. That being the position, we hold that the income earned by the assessee from sale of software, either directly to the customers in India or through Distributors or Resellers constitutes its business income and not the Royalty income. As admittedly the assessee did not have any Permanent Establishment in India, such income will not magnetize Indian taxation. - Decided in favour of assessee.
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Customs
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2021 (2) TMI 525
Validity of conditions imposed for provisional release of the exportable goods - Scope of the term Exporter - beneficial owner - section 110A of the Customs Act, 1962 - Export of cut and polished diamonds of the petitioners - HELD THAT:- In all the writ petitions challenge have been made to the orders of seizure which will be gone into in due course. However, in the proceedings held on 21st January, 2021 this court took the view that at this stage it would meet the ends of justice if provisional release of the exportable goods of the petitioners are considered. Accordingly, without entering into the merit of the challenge vis-a-vis the impugned orders of seizure and observing that there was no impediment to exercise of power under section 110A of the Customs Act, direction was issued to the Commissioner of Customs to pass orders for provisional release of the exportable goods of the petitioners within seven days. When this court had directed the Commissioner of Customs to pass orders for provisional release and in compliance to such direction the Principal Commissioner of Customs has now passed orders for provisional release of the exportable goods of the petitioners with certain conditions, it would not at all be just and proper to relegate the petitioners to the appellate forum to ventilate their grievance as to the conditions imposed. The goods under consideration are cut and polished diamonds which are freely importable/ exportable. Petitioners are having Importer Exporter Code (IEC) on the basis of which they are carrying on the business of import and export. In the instant case it is a matter of export. The Importer and Exporter Codes of the petitioners have neither been cancelled nor suspended by the competent authority. The basic allegation is that the exporter is not operating its business from the notified address and is existing only on paper. Therefore, under the reasonable belief that the exporter is indulging in some fraudulent practices the seizure has been made - Since we are not dealing with the challenge to the seizure memos at this stage, we refrain from making any comment thereon. Reverting back to the conditions imposed in the provisional orders of release dated 2nd February, 2021, we may refer to some of the definitions given in section 2 of the Customs Act. As per section 2(3A) beneficial owner has been defined to mean any person on whose behalf the goods are being imported or exported or who exercises effective control over the goods being imported or exported. Exporter is defined under section 2(20). As per this definition, exporter in relation to any goods at any time between their entry for export and the time when they are exported includes any owner, beneficial owner or any person holding himself out to be the exporter - it is evident that the definition of exporter under the Customs Act is both elastic as well as wide. Exporter would include the owner or a beneficial owner or any person holding himself out to be the exporter. Any person whether the owner, beneficial owner or an agent (including a customs house agent) can seek release of the goods on production of the relevant papers and on payment of the duty - insistence on bank guarantee or revenue deposit equal to the amount declared free on board of the goods plus the probable redemption fine and penalty is not only harsh and oppressive but also amounts to prejudging as to what the adjudicating authority would do upon adjudication. Presupposing that adjudicating authority will impose redemption fine and penalty will amount to taking a view before hand as to what decision the adjudicating authority would render. It goes without saying that an adjudicating authority while adjudicating post seizure of goods exercises quasi-judicial powers. Therefore, there can be no interference, either implicit or explicit, in the exercise of such power by the adjudicating authority. The conditions imposed by the Principal Commissioner of Customs in the orders dated 2nd February, 2021 while ordering provisional release of the exportable goods of the petitioners is modified as follows:- (a) Petitioners shall furnish a bond equal to the free on board value of the goods. (b) Further, petitioners shall furnish bank guarantee to the extent of 20% of the free on board value of the goods. (c) Petitioners shall also furnish an undertaking to the adjudicating authority that they would co-operate in the investigation and in the event of any amount that may be found due relatable to the exports, they would discharge their liability. (d) Petitioners shall not claim any duty drawback or other benefits relatable to the exports till disposal of the writ petitions. Stand over to 22nd March, 2021.
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2021 (2) TMI 524
Seeking to demand duty on the lost quantity of the mixed scraps - loss of seized goods kept in warehouse of the petitiooner - re-export of goods in violation of Letter of Permission and In Bond Manufacturing License - benefit of Customs N/N. 53/97-Cus dated 3.6.1997 denied - HELD THAT:- The petitioner, a 100% Export Oriented Unit had imported 1914.256 metric tons of scrap under 77 Bills of Entry and had allegedly cleared the same in violation of Letter of Permission and In Bond Manufacturing License and that the imported goods did confirm to the description of the items allowed to be imported by the petitioner as per the aforesaid Letter of Permission/In Bond Manufacturing License issued to the petitioner. Therefore, benefit of Customs Notification No.53/97-Cus dated 3.6.1997 extended at the time of import of 1609.326 metric ton of scrap cleared under various bills of entry were sought to be denied to the petitioner. The petitioner was therefore called upon to pay an amount of ₹ 1,64,80,526/-of 1156.326 Metric ton of scrap cleared under various Bills of Entry by the petitioner. It was incumbent on the part of the petitioner to have brought to the Notice of the CESTAT that apart from 53 metric tons of imported scrap which missing, 297.06 metric ton out of 453 metric tons of the seized and confiscated had gone missing during the pendency of the appeal before the Tribunal. Instead, the petitioner suppressed these facts and has later filed an application for compensation before the respondent - It must be also recalled that, on the date of the Mahazer (24.1.2003), the Managing Partner of the petitioner was informed to not to deal with the seized goods except with the prior written permission of the Special Investigation and Intelligence Branch of the Customs Department. The market value of the seized goods was estimated to be approximately 3 crores on the date of the seizure. The seized quantity of the scrap was allegedly in the custody of the petitioner at the petitioner s premises between 3.12.2002 and 28.12.2002 when the petitioner s premises was inspected on a suspicion that about 59 metric tons of bonded goods had been allegedly diverted into the local market without payment of Customs duty by the petitioner and therefore a seizure was effected on 24.1.2003. It is not clear when the seized goods went missing - the finding arrived the CESTAT as far as the quantity are concerned are not conclusive especially when a party who seeks compensation on the ground that out of the seized quantity of 453 metric tons of imported scrap, 297.06 metric ton of scrap was missing before the said order was passed. The petitioner has not made out of the case for interference with the impugned Order in Original No.12417 of 2010 dated 15.7.2010 passed by the respondent. The control over the warehouse was with the petitioner. It should be also recalled that earlier, the bonded warehouses of 100% Export Oriented Units were a physical control of the Department. However, after 1998 the physical control was removed and therefore the responsibility of safe keeping of imported goods was with the petitioner - As the respondent had not taken physical control of the seized quantity and that seized quantity which was ordered to be confiscated continued to be in possession of the petitioner, petitioner was responsible for the loss of such seized/confiscated goods. In any event, as mentioned above the jurisdiction of this court under Article 226 of the Constitution of India cannot be abused by converting it into a Civil Court to order compensation for the alleged loss with recording of evidence. A Writ Court cannot be converted into a Civil Court to determine disputed question of facts and the extent of compensation to be paid to the petitioner. To claim compensation for the alleged loss suffered by the petitioner, a proper trial and recording of evidence is a sine-qua non and it is only thereafter a Court can order compensation to the plaintiff. A writ Court under article 226 of the Constitution of India is not competent to decide such disputed questions of facts. The petitioner should have therefore filed a civil suit in the first instance instead of inviting an order from the respondent in the impugned Order - Even otherwise, seized/confiscated goods were allegedly lost during 2005. Therefore, it was incumbent on the part of the petitioner to have filed a suit within the period of limitation prescribed in the Limitation Act. Instead, the petitioner merely proceeded to lodge a private complaint which culminated in an FIR No.732 of 2005 dated 11.7.2005 of the Judicial Magistrate Court No.1 which was eventually closed by the Judicial Magistrate based on the report of the police on 24.11.2006. Petition dismissed.
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2021 (2) TMI 523
Duty Drawback - conversion of shipping bill - claim of drawback on import of microscopes despite exporting the goods vide a free shipping bill and without physical examination of the goods by the customs authorities at the time of export - Section 74 of the Customs Act - time limitation - respondent claimed drawback of duty on the said goods more than 3 months after the export of the goods - HELD THAT:- It is evident that Proviso to Rule 4(a) of Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 provides for exemption or waiver of the requirement physical verification and cannot form the sole basis for rejection of the claim for drawback of duty under Section 74 of the Act. Similarly, clauses 3 and 4 Circular dated 23.09.2010, which deals with conversion of free shipping bills to export promotion scheme shipping bills and conversion of shipping boils from one scheme to another also provides that on case to case basis on merits, provided the commissioner of customs is satisfied, on the basis of documentary evidence which was in existence at the time the goods were available for export promotion scheme to which conversion has been requested, the same may be allowed subject to the conditions mentioned therein. Thus, the tribunal has rightly recorded the finding that the claim of the appellant for conversion of shipping bill is based on pre existing documents which were available at the time of re-export and no new material evidence has been claimed and identity of the product can be established on the basis of documentary evidence as physical examination could not be done at the time of shipment. It is also pertinent to note that goods were exported on 13.09.2006 and on 30.11.2006, the demand was made to convert the duty drawback under Section 74 of the Act. Thereafter, a reminder was submitted on 20.02.2007. Thus, the original demand has been made within the prescribed period of limitation. The substantial questions of law framed by this court are answered against the appellant and in favour of the respondent - Appeal dismissed.
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2021 (2) TMI 522
Availment of fraudulent Special Focus Market Scheme (SFMS) benefits - production of forged house BLs and Landing Certificate, wherein consignee country was deliberately mis-declared by them for availing undue benefits under the Scheme - export goods did not correspond with the material particulars with regard to the port of discharge and country of destination - Section 28AAA of the Customs Act, 1962 - Time limitation - HELD THAT:- Since the matter is at the stage of SCN, which in our prima facie opinion is not time barred, especially looking to Section 28 AAA of the Customs Act, 1962 and the facts of this case. We are not inclined to entertain the petition at this stage. It is open to the petitioner to file a reply in response to the SCN and a decision shall be taken thereafter by the respondents, in accordance with law and taking into account the stand of the petitioner. It is also open to the petitioner to raise the grounds taken in the present petition in reply to the SCN including the objection to the jurisdiction, power and authority of the concerned respondent to issue the SCN which is one of the grounds urged in the petition. Respondents are hereby directed to take a decision pursuant to the SCN dated 24.01.2020 in accordance with law, Rules, Regulations and Government Policies applicable to the facts of the case and also keeping in mind the evidence on record, as early as possible and practicable. The issues raised herein with respect to the SCN being time barred, applicability of Section 28 (1) or Section 28AAA as well as the jurisdiction of the concerned authority are also left open to be decided by the concerned respondent - petition disposed off.
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Corporate Laws
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2021 (2) TMI 521
Violation of principles of natural justice - main grievance of the Appellant is that the Devas Company was grossly deprived of Principles of Natural Justice and in fact, more than 2400 pages were filed on the side of the First Respondent/Petitioner before the Tribunal in petition on the earlier date and on the next date, the Petition was numbered and listed before the Tribunal - HELD THAT:- As per Section 273(1c) of the Companies Act, the Tribunal has the requisite powers to pass interim orders, even against a stranger to the proceedings, with a view to preserve the property of the company Furthermore, the Tribunal has necessary powers to appoint Provisional Liquidator which will also necessarily affects the rights and interests of numerous parties which may not be parties to the winding up proceedings - In this connection it is pertinent to make a mention that the Tribunal has an inherent power to pass an interim order(s) , which is just and necessary to prevent an abuse of process of the Tribunal or to advance the cause of Justice or to pass orders, which are vital to meet the ends of justice. In fact, the words, occurring in Section 273(1)(e) of the Companies Act, 2013, any other order as it thinks fit means that the Tribunal in winding up petition has wide powers to pass necessary orders. In so far as the Principles of Natural Justice are concerned, it cannot be imprisoned in a strait-jacket form. It cannot be lost sight of that a necessary party is an individual who should have been arrayed as a party and in whose absence, no effective order can be passed by a Court of Law / Tribunal , as the case may be - It is to be remembered that a proper party is a party who although not a necessary party, is a Person whose presence will enable the Tribunal to completely, effectively, efficaciously and adequately to determine all the issues/questions encircling around a particular case. Although the Appellant claims that it is Shareholder of Third Respondent/Devas Multi Media Pvt.Ltd.(Company) presently holding 3.48% of Issued Equity Share Capital therein and in as much as the impugned order dated 19.1.2021 passed by the National Company Law Tribunal according to the Appellant, affects its right to participate in the Affairs and Management of Third Respondent, this Tribunal taking note of the entire facts and Circumstances of the instant case, in a Conspectus Fashion at this stage, simpliciter without traversing / and not delving deep into the controversies centering around the pending main C.P.No.06/BB/2021 pending on the file of National Company Law Tribunal, Bengaluru Bench, deems it fit and proper in Directing the Appellant to file necessary Interlocutory Application before the Tribunal seeking permission to implead itself in the main pending Company Petition setting out necessary facts/reasons for the same and if such an Application is filed by the Appellant for redressal of its grievances before the Tribunal , then the Tribunal can take it on file (if it is otherwise in order) and after numbering of the same it shall provide reasonable opportunity of being heard to the respective sides by adhering to the Principles of Justice , and to pass an order ascribing reasons on merits, of course, in the manner known to Law and in accordance with Law . The instant Company Appeal shall stand disposed of, but without costs.
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2021 (2) TMI 520
Seeking an order of injunction directing the Respondents to restore the board of the Directors of SIIL to its composition as it stood as on 7 November 2019 and more particularly in respect of Applicant No. 1 as a Director on the Board of Directors of SIIL - temporary order of injunction restraining the respondents from any further alteration to the composition of the Board of Directors of SIIL - seeking an order of injunction directing SIIL to send to Applicant No. 1, all notices and communications with respect to affairs of SIIL and its board of directors including but not limited to notices and agenda for all Board Meetings of SIIL - seeking an order of injunction directing the respondents to restore the board of directors of EEL to its composition as it stood as on 30 July 2020 and more particularly in respect of Applicant No. 3 being reinstated as a Director on the board of directors at EEL - seeking temporary order of injunction restraining the respondents from any further alteration to the composition of the board of directors of EEL - seeking an order of injunction directing EEL by to send to Applicant No. 3, all notices and communications with respect of affairs of EEL and its board of directors, including but not limited to notices and agenda for all Board meetings of EEL - seeking restraint on Respondents from interfering the in the day to day management of the trade division of SIIL and EEL and to maintain status quo in relation to the functions, operations and present location of the trade division headed by the applicants - seeking Injunct on Respondent No. 3 to Respondent No. 6 from commencing any venture / partnership / management / agreement directly or indirectly competing with the business of SIIL and/or EEL; and/or using the brand name, trade-name, mark or any other intellectual property right relating to SOLAR - seeking Injunct on Respondents from acting through and/or constituting any committee (in any manner especially comprising of directors on the board) from investigating into the allegations as raised by Applicants with respect to SIIL and EEL. HELD THAT:- Following observations are made: i. In the case on hand R1 was founded jointly by father of A1 R3, wherein the family of the father, family of R3 and family of A1 were made as members who were subscriber to the Memorandum of Association and were allotted 400 shares each at the time of incorporation of the Company. ii. We have noticed that there is family settlement entered into between the Applicants and R3 to R6. The family settlement envisages not only the way and manner in which the assets of the family had to be partitioned but there also is an agreement that even in future businesses to be started there shall be a discussion among the family members and the shareholding will be devised in a particular manner. Further, the Family Settlement Agreement was signed by Mr. Nandlal Nuwal Mrs. Sohandevi Nandlalji Nuwal (as Party No. 1); R3 R6 (as Party No. 2); A1, A2 A3 (as Party No. 3); and R4 R5 (as Party No. 4). iii. We are of the view that it would not be proper at the interim application stage to decide anything on merit to find out whether R1 is a quasi partnership or not. This can only be considered while deciding the Company Petition. iv. Even though A1 has become Director of the Company after few years of incorporation it is to be noted that he was the Director in the Company for the past 15 years and also functioning as the Vice Chairman of R1. It cannot be said that he is the Director of the company because of some professional qualifications. He has been a Director of this Company only by virtue of shareholding like R3 and R4. So, denying a directorship to K C Nuwal Group will definitely prejudice the interest of the Group and would amount to change in management of R1. v. It is to be noted that the Applicants Group hold 29% of R1 and the Respondents Group cannot muster support for a Special Resolution even if it is assumed that all the public shareholders may support the Respondents Group. vi. It is not the case of the Respondents that A1 has not disclosed his interest in AGT. The interest in AGT was informed to the Company Secretary in writing, though A1 has not filed the required Form MBP 1 at the initial point of reporting. vii. It is not the case of the Respondents that A1 has participated in the Board Meeting wherein the agreement to be entered with AGT was discussed. Further the pleadings of the Respondents themselves are clear that there were informal discussions between A1 R3 with regard to the shifting of the Administrative Office of R1 in Mumbai. viii. The argument of the counsel for the Applicants that Section 184(1) of the Act requires disclosure of the Director s interest inter alia in a company or companies including shareholding in a prescribed format but it does not speak about any contract or arrangement in which a Director is directly or indirectly interested, which is the subject matter of Section 167(1) (c) (d) and therefore Section 184(1) has no link at all to Section 167(1) (c) (d), cannot prima facie be brushed aside lightly. The matter would require deeper consideration during the hearing of the Company petition. ix. As far as Section 184(2) is concerned it requires a director to disclose the nature of his concern or interests, at the Board Meeting in which the contract or arrangement is discussed and such director has to refrain from participating in such discussion. In this case, A1 has not attended the Board Meeting where the contract with AGT was discussed and approved. Since A1 has not participated in the Board Meeting there is no question of A1 refraining from participation in such meeting. x. Section 167(1)(c) provides that the office of the Director shall become vacant in case, he acts in contravention of provision of Section 184 relating to entering into contract or arrangement in which he is directly or indirectly interested. xi. Section 167(1)(d) provides that the office of the Director shall become vacant in case, he fails to disclose his interest in any contract or arrangement in which he is directly or indirectly interested in contravention of provisions of Section 184. xii. Whether there is contravention of provision of Section 184 can be decided only after the final hearing of the Petition. xiii. Even though the Respondents submitted that A1 is not in the active management of R1 and he was not attending the Board Meetings for the past one year, their own statement reveals that even for change of the administrative office of the Company there was an informal discussion between A1 R3 which means that A1 is participating in the management decision making process of R1. Not only this, this stand of the Respondents leads to an irrefutable conclusion that the company s decision was essentially taken not only in the Board Meeting but also in the informal discussion between A1 R3. xiv. R14, the Company Secretary of R1 has received the information as to the shareholding of the Applicants in AGT and in view of this as a professional, R14, was expected to guide and advise the Director in filing proper form in consonance with the Rules and Regulations. xv. In the above said circumstances we are of the view that there is prima facie case made out by the Applicants and the balance of convenience is also in their favour and if the interim prayers are not granted, they would suffer irreparable loss. xvi. Accordingly, the amended prayers at para 2 (a) (b) above are allowed on contest. The remaining prayers are rejected as not pressed. Their rejection however, shall not come in the way of agitating them afresh, in accordance with law. There would however be no order as to costs.
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Insolvency & Bankruptcy
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2021 (2) TMI 519
Seeking extension of the mandate of the learned Arbitral Tribunal to conclude the arbitral proceedings and render award - Section 29A (5) of the Arbitration and Conciliation Act, 1996 - HELD THAT:- A reading of the counter affidavit filed by the BSNL, indicates that the learned Arbitral Tribunal is also conscious of the pendency of the CIRP proceedings pending before the NCLT, and the question of whether the mandate of the Arbitral Tribunal still continues in view of the said proceedings. It appears that, on 3rd October, 2020, the learned Arbitral Tribunal had directed the parties to intimate the learned Arbitral Tribunal whether, in view of the provision of the IBC and the 1996 Act, the learned Arbitral Tribunal was authorised to proceed with the matter. The parties were also requested to place, on record, the orders passed by the NCLT, in that regard, as well as the decision taken by RP for reviving the arbitration case. The fact that the petitioner was approaching this Court under Section 29A(5) of the 1996 Act also stands noticed by the learned Arbitral Tribunal in its order dated 27th October, 2020. Section 29A(5) of the 1996 Act merely authorizes the Court to extend the mandate of the Arbitral Tribunal, on its expiry without completion of the arbitral proceedings. It is, no doubt, open to the respondent to question the maintainability of the petition preferred under Section 29A(5). Mr Tripathi has done so and, as opined hereinabove, the challenge fails to impress. All other issues, regarding the competence of the RP to represent the petitioner in the arbitral proceedings, or the impact, on the arbitral proceedings, of the proceedings pending before the learned NCLT or NCLAT, and the orders passed therein, would appropriately have to be addressed before the learned Arbitral Tribunal, and not before this Court, exercising jurisdiction under Section 29A(5). The submission merely requires to be stated, to be rejected. Para 4 of the resolution clearly approves the appointment of Mr. Anish Niranjan Nanavaty as the Resolution Professional. Mr. Tripathi has not been able to show me any provision in the IBC, which limits the authority of the Resolution Professional and does not authorize the Resolution Professional, overseeing the affairs of the Company, to apply for extension of the mandate of the Arbitral Tribunal or file the present petition - This Court, therefore, deems it appropriate to extend the mandate of the learned Arbitral Tribunal, as prayed in the petition, by a period of 12 months, with effect from 8th September, 2020. While doing so, this Court makes it clear that this Court has not expressed any final opinion on the proceedings before the IBC, the authority of Mr. Anish Niranjan Nanavaty as RP of the Company, or the effect on the arbitral proceedings, of the proceedings pending before the NCLT. All these aspects are left open and the learned Arbitral Tribunal would be at liberty to take a decision, as it deems appropriate after hearing the parties in that regard. The present petition stands allowed.
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2021 (2) TMI 518
Validity of illegal circular resolutions by which the employment agreement of Respondent Nos. 2 to 4 were extended - Seeking directions to nullify any actions taken by Respondent Nos. 2 to 4 pursuant to these illegal appointment/extension of employment agreements - seeking appointment of professional management for Respondent No. 1 - HELD THAT:- There is no procedure prescribed in the Act and Rules that separate interim applications can be filed only after the question of admission of main case is over. Ld. Counsel for the Respondents frankly admitted that there is no provision in the Act or Rules that for interim reliefs separate applications are not maintainable or such applications can be filed only after admission of the main Petition. Section 242 (4) of Companies Act provides that it cannot be said that application for interim reliefs are not maintainable or such applications can be filed only after admission of the main Petition or if the interim reliefs claimed in the interlocutory applications are entirely covered by the reliefs sought in the main Petition then the applications are not maintainable. Appeal allowed.
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2021 (2) TMI 517
Dissolution of the Corporate Person through voluntary liquidation - Section 59 of the Insolvency and Bankruptcy Code, 2016 read with the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process ) Regulations, 2017 - HELD THAT:- It is clear that the affairs of the company have been completely wound up and its assets have been completely liquidated. The Liquidator has also made necessary application to this Adjudicating Authority for dissolution. Application is allowed with the following directions: i. The Corporate Person, India Steamship Limited, stands dissolved from the date of this Order, i.e. 09.02.2021. ii. The Liquidator is directed to file this order with the concerned Registrar of Companies, Income Tax Department and IBBI within 14 days from the date of receipt of an authentic copy this order, for information and necessary action. iii. The Liquidator is also directed to file this order with all other Statutory Authorities connected with the affairs of the Company. iv. The Liquidator shall preserve a physical or an electronic copy of the reports, registers and books of account referred to in Regulations 8 and 10 of IBBI Regulations for at least eight years after the dissolution of the Corporate Person, either with himself or with an information utility.
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2021 (2) TMI 516
Seeking direction to R1 to immediately refund/deposit the sum of ₹ 1,23,93,968/- back to the account maintained by the Corporate Debtor with R2 - seeking direction to R2 to strictly adhere to the provisions of section 17(1)(d) and henceforth only consider instructions of the Applicant RP for any debits to the account of the Corporate Debtor maintained with R2 - seeking directions to necessary directions requiring R1 to file an Affidavit confirming that it would refrain from taking any further adverse actions either against the Corporate Debtor or its assets during the Moratorium period. HELD THAT:- A conjoint reading of section 14(1)(a) and section 238 of IBC Code, clearly shows that the Code overrides section 44 of the GVAT Act, as the same is inconsistent with the provisions of the Code. Thus the action of R1 is clearly barred by provisions of section 14(1)(a) - Even though the CIRP period was over and the liquidation order passed by this Bench was stayed by the Hon'ble Appellate Tribunal and the direction was given that the RP will manage the company and ensures that the company will remain as a going concern, we are of the considered opinion that CIRP is still continuing. Thus the Moratorium provided u/s 14 is in operation and the action of R1 is hit by section 14(1)(a) of the Code. R1 is directed to refund the sum of ₹ 1,23,93,968/- to the account of the Corporate Debtor maintained with R2 - application allowed in part.
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Service Tax
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2021 (2) TMI 515
Rejection of declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - eligibility of the petitioner or maintainability of his declaration to avail the benefits of the scheme under the category of investigation, enquiry or audit - quantification of the service tax dues of the petitioner for the related period was not quantified on or before 30th June, 2019 - HELD THAT:- The issue decided in the case of THOUGHT BLURB VERSUS UNION OF INDIA AND ORS. [ 2020 (10) TMI 1135 - BOMBAY HIGH COURT] where it was held that On the one hand there is a letter of respondent No.3 to the petitioner quantifying the service tax liability for the period 1st April, 2016 to 31st March, 2017 at ₹ 47,44,937.00 which quantification is before the cut off date of 30 th June, 2019 and on the other hand for the second period i.e. from 1st April, 2017 to 30th June, 2017 there is a letter dated 18th June, 2019 of the petitioner addressed to respondent No.3 admitting service tax liability for an amount of ₹ 10,74,011.00 which again is before the cut off date of 30th June, 2019. Thus, petitioner s tax dues were quantified on or before 30th June, 2019, there are no hesitation to hold that 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. The object of the scheme is to encourage persons to go for settlement who had bonafidely declared outstanding tax dues prior to the cut off date of 30.06.2019. The fact that there could be discrepancy in the figure of tax dues admitted by the person concerned prior to 30.06.2019 and subsequently quantified by the departmental authorities would not be material to determine eligibility in terms of the scheme under the category of inquiry, investigation or audit. What is relevant is admission of tax dues or duty liability by the declarant before the cut off date. Of course the figure or quantum admitted must have some resemblance to the actual dues. In our view, petitioner had fulfilled the said requirement and therefore he was eligible to make the declaration in terms of the scheme under the aforesaid category. Rejection of his declaration therefore on the ground of ineligibility is not justified. Matter remanded back to respondent No.1 to consider the declaration of the petitioner dated 24.12.2019 afresh as a valid declaration in terms of the scheme under the category of investigation, inquiry and audit and thereafter grant the consequential relief(s) to the petitioner - appeal allowed by way of remand.
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2021 (2) TMI 514
Jurisdiction to impose penalty - Levy of late fee payable under Rule 7C of the Service Tax Rules, 1994 - submission of petitioner is that late fee was imposed beyond the scope of the Show Cause Notice cannot be countenanced in as much as the returns were filed belatedly by the petitioner after the issuance of Show Cause Notice - HELD THAT:- If the Petitioner had filed its periodical returns under Section 70 of the Finance Act, 1994 read with Rule 7C of the Service Tax Rules, 1994 belatedly prior to the issue show cause notice and if there was a deficit in the payment of late fee and if no proposal was made in the show cause notice to recover such late fee, the arguments of the learned counsel for the petitioner can be considered. Therefore, it would be incorrect to state that the first respondent Settlement Commission was not justified and asking the petitioner to pay a late fee of ₹ 1,46,000/- for delayed filing of returns while passing the impugned order. Further, before the Settlement Commission, the petitioner had prayed for waiver of late fee as the petitioner was facing the extreme financial constraints. In the alternative, the petitioner prayed for time to pay the late fee. Since the petitioner himself offered to pay the late fee of ₹ 1,28,000/- instead of ₹ 1,66,000/- as was demanded by the respondents, there is no justification in this Writ Petition - Further, under the Scheme of Section 32F of the Central Excise Act, 1944 as made applicable for settling of cases under the Finance Act, 1994, it is to be observed that every order passed by the Settlement Commission is final and conclusive and therefore such orders of the Settlement Commission cannot be interfered. Unless the order passed by the Settlement Commission is contrary to the provisions of the Act, it cannot challenged. The Court while exercising its jurisdiction under Article 226 of the Constitution of India is also not concerned with the correctness or otherwise of the decision arrived by the Settlement Commission or Tribunal whose orders are challenged before it unless there is perversity in the order impugned before it or there was a material irregularity in the procedure followed by such Tribunal while passing the order impugned before it which had caused prejudice to the petitioner or there was a violation of Principles of Natural Justice. The petitioner has not made out a case for any interference as the petitioner himself agreed to pay the late fee of ₹ 1,28,000/- before the first respondent Settlement Commission - petition dismissed.
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2021 (2) TMI 513
Extended period of limitation - demand under the head maintenance and repair of computer software - validity of circular dated 17.12.2003 - Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the demand is raised beyond the normal period of limitation, resulting in undue gains to the Respondent? - HELD THAT:- Admittedly as per the stand taken by the respondent themselves before the High Court of Madras, it is evident that activity of maintenance of computer software was exempt from the provisions of the Act prior to 2006. We are in agreement with the view taken by the High court of Madras in KASTURI SONS LTD, CHENNAI VERSUS UNION OF INDIA OTHERS [ 2011 (2) TMI 76 - HIGH COURT OF MADRAS] , where it was held that There was no occasion to consider the implications of the Finance Act 2003 to 2006 in respect of the terms 'information technology' and 'maintenance of software' and the decision rendered in Tata Consultancy Service v. State of Andhra Pradesh [2004 -TMI - 4143 - Supreme Court] in the context of the said Act under Entry 54, List-II of VII Schedule to the Constitution cannot be cited for a clarification in respect of the Finance Act, 1994 which is a Parliamentary enactment. It is pertinent to mention here, that in the show cause notice itself no allegations of fraud collusion, misstatement or suppression of facts have been stated against the respondent, therefore, the demand is barred by limitation under Section 73 of the Finance Act, 1994 as well. The substantial questions of law are answered in against the appellant and favour of the respondent - Appeal dismissed.
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2021 (2) TMI 512
Refund claim of excess paid - Denial on the ground of time limitation - Section 11B of Central Excise Act, 1944 - unjust enrichment - HELD THAT:- The facts in the present case is not under dispute that the appellant have paid the excess service tax during the quarter April to June, 2017, however, the appellant under bona fide belief transferred the said excess paid service tax into their TRANS-1 as balance in personal ledger account. Subsequently, on objection raised by the GST department the appellant have reversed the said amount and also paid an interest of ₹ 52,256/- on 27.02.2019. In these peculiar circumstances, it is found that since the appellant has transferred the amount of excess paid service tax in the TRANS-1 and same was reversed on 27.02.2019, therefore till the date up to 27.02.2019 there is no cause for claiming refund of this amount. The refund is arising only after the appellant reversed the amount on 27.02.2019. The refund was admittedly filed on 05.04.2019 i.e well within the prescribed time limit of 1 year in terms of section 11B. Therefore, the refund was filed well within the time. Principles of Natural Justice - HELD THAT:- As submitted by the Learned Authorized Representative the issue of unjust enrichment need to be verified at the time when the refund is to be granted to the assessee. Therefore in the present case also though the refund is not hit by limitation but the fact that whether the incidence of the refund amount has been passed on or otherwise needs to be examined by the sanctioning authority. The matter is remanded to the adjudicating authority to only verify the unjust enrichment and accordingly, to dispose of the refund claim of the appellant - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2021 (2) TMI 511
Raising unpaid tax demands - recovery of short paid tax - levy of penalty in terms of Section 75A of the TVAT Act - assessment period 2010-11, 2011-12 and 2012-13 - HELD THAT:- There is a clear misconception on part of the Assessing Officer as to his powers under sub-section (1) of Section 25 of the TVAT Act. Clause (a) of sub-section (1) of Section 25 can be activated when a dealer has not paid the tax at prescribed rate without sufficient cause which tax liability emerges from the return filed by him. If there is any legal dispute about the declaration of the taxable turnover or any other element of any of the claims made by the assessee in the return, the same cannot be a subject matter of a demand by the Assessing Officer under Clause (a) of sub-section (1) of Section 25 of the TVAT Act. Any dispute as to correct taxable turnover, any claim of exemption or deduction or any other disputed item under the return filed by a registered dealer, has to be first adjudicated by the Assessing Officer in the assessment proceedings. Clause (a) of sub-section (1) of Section 25 cannot be termed into an assessment which in the present case the Assessing Officer has done. According to him, the petitioner could not have excluded the discounts passed on to the dealers from his taxable turnover and to that extent the assessee had declared turnover less than the actual turnover. Even if the Assessing Officer is correct in so contending, it is not under Section 25(1)(a) of the Act that he can bring such turnover to tax. Allowing him to do so, would not only be expanding the boundaries of the powers under sub-section (1) of Section 25 of the TNVAT Act but also overriding the limitation provisions contained in the said chapter. The impugned orders of tax demands raised by the Assessing Officer under Section 25 of the TVAT Act are set aside - attachment or attachments on the petitioner s bank accounts are lifted - Petition allowed.
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Indian Laws
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2021 (2) TMI 510
Condonation of delay in filing an application u/s 34 of the Arbitration Act, 1996 - appealable order or not - whether a learned single Judge s order refusing to condone the Appellant s delay in filing an application under section 34 of the Arbitration and Conciliation Act, 1996 is an appealable order under section 37(1)(c) of the said Act? HELD THAT:- The effect doctrine referred to in ESSAR CONSTRUCTIONS VERSUS NP. RAMA KRISHNA REDDY [ 2000 (5) TMI 1062 - SUPREME COURT] is statutorily inbuilt in section 37 of the Arbitration Act, 1996 itself. For this purpose, it is necessary to refer to sections 37(1)(a) and 37(2)(a). So far as section 37(1)(a) is concerned, where a party is referred to arbitration under section 8, no appeal lies. This is for the reason that the effect of such order is that the parties must go to arbitration, it being left to the learned Arbitrator to decide preliminary points under section 16 of the Act, which then become the subject matter of appeal under section 37(2)(a) or the subject matter of grounds to set aside under section 34 an arbitral award ultimately made, depending upon whether the preliminary points are accepted or rejected by the arbitrator. It is also important to note that an order refusing to refer parties to arbitration under section 8 may be made on a prima facie finding that no valid arbitration agreement exists, or on the ground that the original arbitration agreement, or a duly certified copy thereof is not annexed to the application under section 8. In either case, i.e. whether the preliminary ground for moving the court under section 8 is not made out either by not annexing the original arbitration agreement, or a duly certified copy, or on merits the court finding that prima facie no valid agreement exists an appeal lies under section 37(1)(a). Likewise, under section 37(2)(a), where a preliminary ground of the arbitrator not having the jurisdiction to continue with the proceedings is made out, an appeal lies under the said provision, as such determination is final in nature as it brings the arbitral proceedings to an end. However, if the converse is held by the learned arbitrator, then as the proceedings before the arbitrator are then to carry on, and the aforesaid decision on the preliminary ground is amenable to challenge under section 34 after the award is made, no appeal is provided. The question of law is answered by stating that an appeal under section 37(1)(c) of the Arbitration Act, 1996 would be maintainable against an order refusing to condone delay in filing an application under section 34 of the Arbitration Act, 1996 to set aside an award - impugned judgment of the Division Bench under appeal is set aside, and the matter is remitted to a Division Bench of the High Court of Delhi to decide whether the Single Judge s refusal to condone delay is or is not correct. Appeal allowed.
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2021 (2) TMI 509
Summon of complainant to produce the documents - relevancy of the documents sought by accused No.2 - HELD THAT:- When the documents are already marked and are part of the Trial Court records and witness has been cross-examined by the defence counsel, filing of the application for summoning of the documents does not arise and while marking the documents also not disputed the same. When such being the facts and circumstances of the case, there are no merit in this petition. The Trial Judge has pointed out that the resolution is already marked as Ex.P.18 and though it is observed that those documents are relevant but relevancy of the documents has not been explained and when the documents are already on record, the question of summoning the complainant to produce those documents does not arise. Petition dismissed.
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