TMI Tax Updates - e-Newsletter
February 19, 2021

Case Laws in this Newsletter:

GST Income Tax Service Tax Central Excise

Articles

1. RTI APPLICATION SEEKING INFORMATION AGAINST PRIVATE PARTIES

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Shri Piyush Goyal delivers keynote address at India-Singapore CEO Forum;

2. Shri Piyush Goyal emphasizes on fair dealing in engagement with the US;

Notifications

Customs

1. 18/2021 - dated 17-2-2021 - Cus

Amendment in Notification No. 11/2021-Customs, dated the 1st February, 2021

2. 17/2021 - dated 17-2-2021 - Cus

Seeks to amend Notification No. 57/2000-Customs, dated the 8th May, 2000

3. 24/2021 - dated 18-2-2021 - Cus (NT)

Amendment in Notification No. 61/94-CUSTOMS (N.T.) dated the 21st November, 1994

4. 18/2021 - dated 18-2-2021 - Cus (NT)

Exchange rate Notification No.18/2021-Cus (NT) dated 18.2.2021.

5. 17/2021 - dated 17-2-2021 - Cus (NT)

the Levy of Fees (Customs Documents) Amendment Regulations, 2021

Income Tax

6. 07/2021 - dated 17-2-2021 - IT

Amendment in Notification No. 62/2019 dated 12th September 2019

7. 06/2021 - dated 17-2-2021 - IT

Faceless Assessment (1st Amendment) Scheme, 2021

Law of Competition

8. 1 of 2021 - R-40007/Reg-Recovery/Noti/2021-CCI - dated 16-2-2021 - Competition Law

Competition Commission of India (Manner of Recovery of Monetary Penalty) Amendment Regulations, 2021

Circulars / Instructions / Orders

Customs

1. 05/2021 - dated 17-2-2021

IGST refunds on exports-extension in SB005 alternate mechanism

2. PUBLIC NOTICE NO. 17/2021 - dated 12-2-2021

Applicability of GST on the clearance of UCC Cargo

3. PUBLIC NOTICE No: 12/2021 - dated 5-2-2021

Mandatory uploading of documents in e-Sanchit – Further Clarifications

4. PUBLIC NOTICE No. 11/2021 - dated 3-2-2021

ICES Advisory on Budget 2021 related changes in EDI system

5. PUBLIC NOTICE NO. 11/2021 - dated 3-2-2021

BUDGET 2021 RELATED Changes in EDI System ICES Advisory 07/2021

6. PUBLIC NOTICE NO. 09/2021 - dated 1-2-2021

Mandatory uploading of documents in e-Sanchit — Further Clarifications

7. PUBLIC NOTICE NO: 06/2021 - dated 31-1-2021

Customs: ICES Advisory 09/2021 - Mandatory uploading of documents in e-Sanchit –Further Clarification

8. PUBLIC NOTICE No.09/2021 - dated 30-1-2021

Budget Updation 2021-22

9. PUBLIC NOTICE No. 08/2021 - dated 28-1-2021

Mandatory uploading of documents in e-Sanchit — Certain Clarifications

10. PUBLIC NOTICE NO.08 /2021 - dated 28-1-2021

Implementation of PGA e-SANCHIT — Paperless Processing under SWIFT — Uploading of Licences/Permits/Certificates/ Other Authorizations (LPCOs) by PGAs

11. PUBLIC NOTICE NO. 08 /2021 - dated 28-1-2021

Mandatory uploading of documents in e-Sanchit — Certain Clarifications

12. Public Notice: 01/2021 - dated 27-1-2021

Mandatory uploading of documents in e-Sanchit

13. PUBLIC NOTICE NO. - 10/2021 - dated 27-1-2021

Mandatory uploading of documents in e-Sanchit — Certain Clarifications

14. PUBLIC NOTICE NO. - 07/2021 - dated 19-1-2021

Mandatory uploading of documents in e-Sanchit

15. PUBLIC NOTICE NO: 04/2021 - dated 18-1-2021

Customs: ICES Subject : Mandatory uploading of documents in e-Sanchit

16. PUBLIC NOTICE NO: 05/2021 - dated 18-1-2021

Mandatory uploading of the documents in e-Sanchit

17. PUBLIC NOTICE NO. 01/2021-CUSTOMS-AEO. - dated 12-1-2021

Special measures to facilitate MSME for AEO T1 & T2 accreditation

18. PUBLIC NOTICE No. 01/2021 - dated 1-1-2021

Implementation of RoDTEP Scheme in System

Highlights / Catch Notes

GST

• Court Rules GST Registration Suspension Unlawful Due to Lack of Required Personal Hearing; Sets Aside Suspension.

  Case-Laws - HC : Cancellation of the Goods and Service Tax (GST) registration of the petitioner - This Court, therefor, does not wish to enter the domain of the authority and leaves all points in respect thereof open. So far as the personal hearing part before suspension is concerned the same is a statutory requirement which having not been complied with, the suspension part as indicated in the show cause notice for cancellation dated 2nd December, 2020 is bad in law and is set aside. - HC
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• Court Upholds Validity of Investigation u/s 6(2)(b) of CGST Act, 2017; No Grounds for Interference Found.

  Case-Laws - HC : Validity of summon order - Competent officer / authority u/s 6(2)(b) of CGST Act 2017 - Jurisdiction - The investigations being conducted by competent Officers against the petitioner are not hit by provisions of Section 6(2)(b) of CGST Act, 2017 - there are no reason to interfere with the aforesaid investigations undertaken by the competent authorities against the petitioner under CGST Act, 201 - HC
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• Court Orders Banks to Let Petitioners Access Accounts After Year-Long Attachment Under GST Act Section 83(2.

  Case-Laws - HC : Attachment of bank account - One year passed - Section 83(2) - The respondents-Banks are directed to allow the petitioners to operate their bank accounts forthwith - HC
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• Petitioners Allege Harassment by CGST During Pandemic; High Court Directs Streamlining of Inquiry u/s 70.

  Case-Laws - HC : Summon Order - seeking to take instruction as to the basic documents required by the Inquiry Officer, who is holding an inquiry u/s 70 - petitioners allege that they are co-operating with the CGST Authorities in the inquiry yet, they are being harassed being summoned to New Delhi and kept waiting for hours amidst the pandemic - Directions issued - HC
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• Petitioner's Credit Ledger Blocked Without Reasons; Rule 86A Issues on "Reasons to Believe" and Automatic Cease Date Raised.

  Case-Laws - HC : Blocking of petitioner’s credit ledger - no reasons assigned for such blockage - reasons to believe - Rule 86A - for the purposes of Rule 86A(3) which stipulates that the blockage shall cease to have effect after the expiry of a period of one year from the date of blocking, the effective date shall continue to be 21.01.2020. - HC
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• GST Officer Denied Bail for Alleged Bribery and Collusion in Tax Evasion Scheme, Court Cites Serious Revenue Loss Risk.

  Case-Laws - HC : Grant of Anticipatory Bail - GST officer - taking bribe - connivance in evasion of GST - If the dealer is sure that the goods sent in transit and the documents accompanying will not be checked or verified, he has leverage of playing havoc with the collection of tax. The goods can be sent by preparing the documents which are not accounted for and on reaching the destination, the documents are done away with leaving no trail of the transaction. - The allegation in the present case are very serious. - it appears that the officials were being paid bribe on a monthly basis. - no case is made out for grant of pre-arrest bail. - HC
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Income Tax

• Charitable Trust Retains Exemption u/s 11: 14% Loan Interest Rate Deemed Normal by Tax Authorities.

  Case-Laws - AT : Exemption u/s 11 - assessee is a charitable Trust and it was granted registration u/s 12A - Denial of exemption as assessee is charging exorbitant interest rates on the loan given to the women - the rate of interest of 14% is the normal rate charged by the banks for its lending and hence the said rate cannot be considered to be at exorbitant rate, as observed by the tax authorities. - AT
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• No Penalty for Taxpayer: Tribunal Rules Belief of Non-Taxable Income Valid u/s 271(1)(c) Explanation 3.

  Case-Laws - AT : Levy of penalty u/s 271(1)(c) - Capital gain on sale of property - Allegation of the AO that, return of income has not been filed voluntarily - There was a reasonable cause with the assessee for not filing the return originally within prescribed time as he holds a belief that his taxable income was below the taxable limit and no tax liability arises - Therefore, given the reasonable cause for non-filing the return of income, one of the essential conditions for invocation of explanation 3 to section 271(1)(c) is not satisfied - No penalty - AT
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• Penalty u/s 271AAB Invalid Due to Lack of Business Income and No Disclosure Requirement for Undisclosed Jewellery Income.

  Case-Laws - AT : Penalty levied u/s 271AAB - assessee in the return of income has disclosed income on account of undisclosed jewellery - The assessee has neither earned any business income nor earned any income exceeding ₹ 50 lakhs so as to require mandatory filing of personal assets and liabilities or to maintain books of accounts; even the assessee is not required to otherwise disclose any such income before the date of search - Levy of penalty 271AAB is not valid - AT
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• CIT(A) Overrules AO: Deletions of Bogus Sundry Creditors u/s 41(1) Upheld Due to Consistent Balances.

  Case-Laws - AT : Addition u/s 41(1) - additions towards sundry creditors as bogus - AO made the disallowance in question holding that the assessee had made payments in cash to 24 parties. However, the Ld. CIT (A) noted that the opening and closing balance of most of the parties remained unchanged - Order of CIT(A) deleting the additions sustained - AT
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• Court Allows Hindu Undivided Family to Pursue Remedy; Limitation Will Not Affect Case if Act Invoked in 4 Weeks.

  Case-Laws - AT : Assessment of HUF - protective addition in the hands of the assessee - additional evidence - The petition disposed off with the directions that the petitioners have been pursuing the remedy before this Court, hence if petitioners take recourse to remedy provided under the Act, within a period of four weeks, the issue of limitation shall not be allowed to come in the way of it's adjudication on merits - AT
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Central Excise

• Court Rules on Petition Maintainability; Allows Pursuit of Statutory Remedy in Central Excise Case Without Limitation Hindrance.

  Case-Laws - HC : Maintainability of petition - availability of an equally alternative remedy stipulated under the Statute - The petition disposed off with the directions that the petitioners have been pursuing the remedy before this Court, hence if petitioners take recourse to remedy provided under the Act, within a period of four weeks, the issue of limitation shall not be allowed to come in the way of it's adjudication on merits - HC
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Case Laws:

• GST

• 2021 (2) TMI 703
  Validity of action of the State Tax Officer in directing the 2nd respondent-Bank to invoke bank guarantee and to forward the demand draft of the value of the said bank guarantee to the 1st respondent - petitioner submitted that the direction contained in the order at Ext.P3 to the 2 nd respondent directing the said respondent to encash the bank guarantee and forward the demand draft of the value of the bank guarantee to the 1st respondent is per se illegal - HELD THAT:- Keeping in mind the provisions of Sections 78 and 107 of the GST Act, this writ petition deserves to be allowed with the following directions: The 2nd respondent shall not comply with the directions of the 1st respondent to encash bank guarantee and to forward the amount under the bank guarantee by demand draft to the 1st respondent and the said direction is quashed and set aside. However, the petitioner shall continue the bank guarantee till filing of the appeal. The parties to act on authenticated copy of this judgment.

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• 2021 (2) TMI 702
  Cancellation of the Goods and Service Tax (GST) registration of the petitioner - Applicability of provisions of Section 29(2) and rule 21A of the Central Goods and Service Tax Act, 2017 - correctness of suspension of registration under the second proviso to Section 29(2) of the CGST Act - HELD THAT:- It appears from the record that the petitioner has already challenged show cause notice for cancellation of registration dated 2nd December, 2020 by filing reply thereto. This part has to be adjudicated by the concerned authority empowered under the statute in accordance with law. This Court, therefor, does not wish to enter the domain of the authority and leaves all points in respect thereof open. So far as the personal hearing part before suspension is concerned the same is a statutory requirement which having not been complied with, the suspension part as indicated in the show cause notice for cancellation dated 2nd December, 2020 is bad in law and is set aside. The authority concerned is directed to give a personal hearing to the petitioner in terms of Section 29(2) of the CGST Act for the purpose of adjudicating the cancellation issue in terms of show cause notice for cancellation dated 2nd December, 2020. The entire exercise shall be completed within a period of three weeks from date. The authority concerned shall issue a specific notice informing the petitioner about the date and time of hearing well in advance and the petitioner co-operate in the hearing. The concerned officer upon hearing the petitioner shall pass a reasoned order and will be free to pass appropriate orders, if the petitioner does not participate at the hearing. Petition disposed off.

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• 2021 (2) TMI 701
  Recovery of input tax credit at the time of search/inspection proceedings under Section 67 of the Central/Gujarat Goods and Services Tax Act, 2017 - HELD THAT:- Interim order passed as: No recovery in any mode by cheque, cash, e-payment or adjustment of input tax credit should be made at the time of search/inspection proceedings under Section 67 of the Central/Gujarat Goods and Services Tax Act, 2017 under any circumstances. - Even if the assessee comes forward to make voluntary payment by filing Form DRC-03, the assessee should be asked/ advised to file such Form DRC-03 on the next day after the end of search proceedings and after the officers of the visiting team have left the premises of the assessee. Mr. Devang Vyas, the learned Additional Solicitor General of India has taken the pains to address this Court from the hospital room. Mr. Vyas is not well and has been hospitalized. Mr. Vyas may respond day after tomorrow to the aforesaid directions, which we propose to issue. Post all the matters on 18/02/2021 on top of the board.

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• 2021 (2) TMI 700
  Threats, pressure, coercion, etc. - It is pointed out by the learned counsel appearing for the writ applicants that the harassment was to such an extent that the writ applicant No.2 attempted to commit suicide - HELD THAT:- Let urgent Notice be issued to the respondents, returnable on 16 th February 2021. The respondents shall be served directly through Email today itself. Direct service today is permitted.

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• 2021 (2) TMI 699
  Validity of summon order - Competent officer / authority u/s 6(2)(b) of CGST Act 2017 - Jurisdiction - seeking restraint on Respondent from carrying out further investigation against him - HELD THAT:- The investigation conducted by respondent No.2 is limited to information provided by DGGI, Lucknow, CGST Agra and DGGI Ghaziabad about fake availment of ITC by M/s R.K.M. Steels Industries from bogus firms namely M/s Shri Radhe Traders, Kanpur; M/s M.G. Enterprises, Agra; M/s T.C. Company, Agra and M/s Dharam Enterprises, Agra. The matter under investigation before DGGI Bhopal is limited to purchases and availment of ITC by M/s R.K.M. Steel Industries from M/s Diamond Enterprises. Accordingly, the petitioner has been summoned under Section 70 of CGST Act, 2017 by DGGI, Bhopal. The aforesaid position, makes it quite clear that different Officers appointed under Sections 3 6 of CGST Act, 2017 are independently investigating altogether different matters, in accordance with law, without any overlapping. Moreover, the alleged contraventions are prima facie cognizable and punitive in nature under CGST Act, 2017. The investigations being conducted by competent Officers against the petitioner are not hit by provisions of Section 6(2)(b) of CGST Act, 2017 - there are no reason to interfere with the aforesaid investigations undertaken by the competent authorities against the petitioner under CGST Act, 2017 - petition dismissed.

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• 2021 (2) TMI 698
  Profiteering - Franchisor services - vires of Section 171 of the Central Goods and Services Tax Act, 2017 (CGST Act) and Rules 126, 128 and 133 of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- The counsel for the petitioner to, before the next date of hearing, place before this Court the agreement / arrangement of the petitioner, if any, with the foreign company, which is entitled to the trade mark SUBWAY and / or showing the authority under which the petitioner is issuing franchises in India. The petitioner to also place before this Court, before the next date, a sample agreement entered into by the petitioner with the franchises / sub-franchises in India, if they are all the same and / or be prepared to make a statement to the said effect before this Court. List on 15th February, 2021.

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• 2021 (2) TMI 697
  Seeking directions holding the proceedings initiated by Respondent No.1 of provisional attachment of bank account as bad and without authority of law - immediate sanction of refund of IGST paid - Zero Rated Supplies - seeking direction to conclude the proceedings within a specified time and submission of report to respondent - attachment of his bank account in exercise of powers under Section-83 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- We take notice of the fact that on 25/02/2021 the statutory time period for keeping the bank account attached would come to an end. In such circumstances, the bank account attached as on date would get defreezed by efflux of time. Withholding of the refund of IGST paid in regard to the goods exported i.e. Zero Rated Supplies made vide shipping bills - HELD THAT:- According to Mr. Raval, a preliminary inquiry as regard the dealings of the writ-applicant has revealed that he is one of the risky exporters . Mr. Raval submits that the inquiry is still in progress. At the end of the inquiry, the concerned department shall take an appropriate call as regards the claim of the writ-applicant with respect to the refund. This writ-application is disposed off by observing that the inquiry may continue but the at the same time, it should not continue for an indefinite period of time. We expect the concerned department to complete the inquiry within a period of eight weeks from today and take an appropriate decision in accordance with law.

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• 2021 (2) TMI 696
  Refund of the IGST paid - some doubt as regards the E-way bill - Jurisdiction of respondent to inquire with the writ applicant - export of the goods under the provisions of the Customs Act - HELD THAT:- Prima facie, Mr. Uchit Sheth, the learned counsel appearing for the writ applicant is right in his submission that once the E-way bill is generated, the export cannot be disputed. If there is any doubt as regards the export of the goods, it is for the customs authority to take up the issue. Why should the respondent No.2 meddle into the affairs and jurisdiction of the Customs Authority. It has also been brought to our notice that the goods to be exported were detained by the Customs Authority at the instance of the respondent No.2, but later, such goods were permitted to be cleared and those were actually exported. We would like to hear the Customs Authority also in this regard. We ask Mr. Sheth, the learned counsel appearing for the writ applicant to implead The Deputy Commissioner of Customs, Air Cargo Complex, Old Airport, Ahmedabad as the respondent No.3. The cause title be amended accordingly. Notice to the newly added party respondent No.3, returnable on 23.02.2021. The matter shall be heard finally on 23.02.2021. Notify the matter on top of the Board on the next date of hearing.

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• 2021 (2) TMI 695
  Attachment of bank account - One year passed - Seeking direction to respondent to permit operation of bank accounts of petitioners as attachment order cease to operate in terms of Section 83(2) of the Punjab Goods and Services Tax Act, 2017 (PGST Act) - seeking direction to respondent(s) to defreeze the bank accounts of the petitioners - HELD THAT:- Similar, question has been answered in the case of M/S. A.P. STEELS AND SRI. SANJAY KUMAR MISHRA, VERSUS ADDITIONAL DIRECTOR GENERAL DGCI, BANGALORE ZONAL UNIT, BENGALURU [ 2020 (8) TMI 329 - KARNATAKA HIGH COURT] where it was held that Respondent Nos.1 and 2 are hereby directed to defreeze the petitioners bank account within a period of two weeks from the date of receipt of this order. The respondents Banks are directed to allow the petitioners to operate their bank accounts forthwith - petition allowed.

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• 2021 (2) TMI 694
  Levy of GST - Time of supply of services - submission of the learned senior counsel for the petitioner is that the charging section under the Central Goods and Services Taxes Act is Section 13 and that liability to pay taxes on the above work contract arises either at the time of supply of services or on the date of the receipt of the payment, whichever is earlier - HELD THAT:- This is a disputed factual aspect which can only be resolved after a counter affidavit is filed on behalf of the respondents clearly stating the rate on which the tax was included while submitting the tender by the petitioner. The petitioner may also clarify its stand in this regard by filing an affidavit. List this petition for admission/final disposal on the exchange of affidavits on 9th March 2021.

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• 2021 (2) TMI 693
  Vires of provisions of Rule 5A of the Service Tax Rules 1994 - respondents concedes that the provisions of Rule 5A of the Service Tax Rules 1994 have been decided in favour of the Assesses by a Division Bench of Delhi High Court, however, the said judgment has been stayed by the Hon ble Supreme Court - HELD THAT:- Adjourned sine-die. Parties are free to get the matter listed after the final adjudication by the Hon ble Supreme Court.

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• 2021 (2) TMI 692
  Non-filing of Returns - sudden change in the status of the petitioner from a composite taxpayer to a regular taxpayer . - all on a sudden petitioner s nomenclature as an assessee was changed without even calling the petitioner for any hearing - HELD THAT:- The fact remains that to change the status of a taxpayer and in the instant case, that of the petitioner, a procedure is laid down. The authority concerned without adopting such procedure cannot change the status of the petitioner. The respondents at the present, have not been able to show any proceedings, the outcome of which was the change in status of the petitioner. The matter is adjourned to enable the respondents to take the following instructions: 1). Whether any proceeding was initiated by the respondents consequent upon which the status of the petitioner in the portal was changed from a composite taxpayer to a regular taxpayer. 2). Will the system allow the filing of the pending returns by the petitioner from the quarter commencing from 1st April, 2019 as a composite taxpayer without imposition of any late fee charges or other applicable charges if the portal is directed to be unlocked to allow the petitioner to file the returns up to 31st December, 2020. If not, what can be an alternative mode to allow the petitioner to file the pending returns without any late fee payment or other charges applicable for the delay. Let this matter be adjourned till 12th February, 2021 to enable the respondents to take instructions, which is necessary for effective adjudication of the matter.

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• 2021 (2) TMI 691
  Vires of sub- rule (10) of Rule 96 of the Central Goods and Services Tax Rules, 2017 - exemption from payment of Integrated Goods and Services Tax (IGST) on the goods imported under advance authorization - refund of IGST paid on goods imported under advance authorization - HELD THAT:- It is hereby directed as an interim measure that no recovery of IGST already paid by the petitioner on the goods imported under advance authorization shall be made till the next date. Stand over to 16.03.2021.

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• 2021 (2) TMI 690
  Refund claim - Seeking directions to respondent to pay the balance GST (Goods and Service Tax) @ 7% on the R.A. bills already issued and to be issued in future by the petitioner on and from 01.07.2017 - seeking restraint on particularly respondent N. 5 from making any demand of the balance 7% GST in question or from taking any action against the petitioner - HELD THAT:- There is nothing on record to suggest any inaction on the part of the authorities in processing the application for refund. The present writ petition is disposed off, inter alia with the following directions- (a) The petitioner shall initiate proceeding before the concerned authority under the Act, seeking refund of the amount, as per the agreement dated 23rd June, 2016 within two weeks from today. (b) Such application filed by the petitioner shall positively be processed and decided within a period of four weeks thereafter or the statutory period prescribed under the Act. (c) In the event of failure, the officials found negligent in taking appropriate action, shall be held personally responsible. (d) Liberty is reserved to the petitioner to file a petition on the same and substantial inaction of the concerned authorities in processing/deciding the refund application. (e) Additionally, if any amount is deposited by the petitioner, the same shall also be processed along with the refund application.

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• 2021 (2) TMI 689
  Summon Order - seeking to take instruction as to the basic documents required by the Inquiry Officer, who is holding an inquiry u/s 70 - petitioners allege that they are co-operating with the CGST Authorities in the inquiry yet, they are being harassed being summoned to New Delhi and kept waiting for hours amidst the pandemic - HELD THAT:- Considering this nature of dispute an enquiry proceedings is conducted by the CGST Authorities by issuing summons under Section 70 of the 2017 Act. It appears that in the enquiry the classification of the transaction has to be first ascertained. In order to ascertain this the documents and records of the petitioner no.1 is required initially. The corroborating evidence or statement from the officers of the petitioner no.1 is then required. After ascertaining the rate of the tax applicable in terms of the classification, the quantum has to be ascertained on the basis of the value of the transaction undertaken. For this, the books of the petitioner no.1 are required initially and after scrutiny if any discrepancies are found the corroborative statements and evidence is required. CGST Authorities have already issued two summons, one dated 7th December, 2020 and the other dated 7th January, 2021. In Annexure A to the summons dated 7th December, 2020 a list of documents required to be produced by the petitioners on 16th December, 2020 is mentioned - The petitioners are, therefor, directed to produce the documents mentioned in Annexure A to the summons dated 7th January, 2021 on 29th January, 2021 at 11.00 a.m. at the place notified in the summons through a proper officer. The officer holding the enquiry shall receive the documents after preliminary scrutiny thereof and should release the person producing such documents immediately thereafter without detaining him for recording any evidence. The officer shall make a full study of the documents so produced on 29th January, 2021 and shall communicate to the petitioner as to whether any further documents are required to be produced - Petitioners shall be bound to produce such documents which may further be asked for, provided the same are in their possession on the date and time that may be specified by the Inquiry Officer. Let the writ petition be adjourned till March 15, 2021 with liberty to the parties to mention in case of any difficulty.

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• 2021 (2) TMI 688
  Summon Order - Initiation of inquiry under section 70 of the CGST Act, 2017 - petitioners allege that they are co-operating with the CGST Authorities in the inquiry yet, they are being harassed being summoned to New Delhi and kept waiting for hours amidst the pandemic - HELD THAT:- It appears from the writ petition that a summons was issued under section 70 of the CGST Act to the petitioners on 7th December, 2020. A list of twelve documents have been provided to be produced by the petitioners. The said summons directed the petitioners to be present before the concerned officer on 16th December, 2020. The petitioners say that the petitioners had appeared before the concerned officer and produced the documents as enumerated in Annexure-A to the said summons. A further summons has been issued under section 70 of the CGST Act on 7th January, 2021. After going through the two lists, it appears that the documents are not in common and as such, a presumption is there that the documents which were asked to be produced by the summons dated 7th December, 2020 has been produced by the petitioner and only after considering the same further documents as mentioned in the summons dated 7th January, 2021 have been directed to be produced. It cannot be, therefore, at this stage, said that the petitioners are not co-operating in the inquiry - the learned advocate for the respondent nos. 3, 7 and 10 is, therefore directed to take instruction as to the basic documents apart from those already produced and asked to be produced which the officer concerned holding the inquiry under section 70 of CGST Act requires for the present to be produced by the petitioners for the inquiry. The Court requires this information for passing an appropriate order in the writ petition. Let this matter appear on 18th January, 2021, when the learned advocate for the respondent nos. 3, 7 and 10 shall apprise the Court about the list of the documents as stated herein.

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• 2021 (2) TMI 687
  Levy of interest u/s 50 on payment of GST through Credit ledger - Seeking direction upon the order direction upon or in respondents to accept assessed amount of demand in amount of demand installments - section 80 of The Bihar Goods And Services Tax Act, 2017 - immediate revocation/withdrawal of order of attachment of bank account of the petitioner upon receipt of the first installment - HELD THAT:- Post issuance of Notification-no-63/2020 dated 25th August 2020 by the central government a press release was issued by Ministry of Finance, Govt of India on 26.08.2020 wherein it was clarified that amendment in section 50(1) has been made effective prospectively wef 01-09-2020 due to certain technical limitations, however for present no recoveries for interest charged on gross liability will be recovered for the past period as well by the central and state tax administration - no recovery will be made for interest charged on delayed payment of tax which has been made by the taxpayer debiting the credit ledger. 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.

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• 2021 (2) TMI 686
  Levy of interest u/s 50 on payment of GST through Credit ledger - Seeking direction upon the respondents to accept assessed amount of demand in installments in terms of section 80 of The Bihar Goods and Services Tax Act, 2017 - seeking direction upon the respondents to immediately revoke/withdraw the order of attachment of bank account of the petitioner - HELD THAT:- Post issuance of Notification No.- 63/2020 dated 25th August, 2020 by the central government a press release was issued by Ministry of Finance, Govt of India on 26-08-2020 wherein it was clarified that amendment in section 50(1) has been made effective prospectively wef 01-09-2020 due to certain technical limitations, however for present no recoveries for interest charged on gross liability will be recovered for the past period as well by the central and state tax administration - Further, it is stated that no recovery will be made for interest charged on delayed payment of tax which has been made by the taxpayer debiting the credit ledge. 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 - petition disposed off.

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• 2021 (2) TMI 685
  Blocking of petitioner s credit ledger - no reasons assigned for such blockage - reasons to believe - Rule 86A of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- It would be just and reasonable to dispose of the writ petition calling upon the Assistant Commissioner to pass a detailed reasoned order as required under Rule 86A of the Rules while observing that for the purposes of Rule 86A(3) which stipulates that the blockage shall cease to have effect after the expiry of a period of one year from the date of blocking, the effective date shall continue to be 21.01.2020. Petition disposed off.

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• 2021 (2) TMI 684
  Grant of Anticipatory Bail - GST officer - taking bribe - connivance in evasion of GST - Sections 420, 465, 467, 468, 471 and 120B of the Indian Penal Code, 1860 and Sections 7, 7(a) and 8 of the Prevention of Corruption Act, 1988 - HELD THAT:- There are far reaching ramifications which may vary from allowing of input credit/MODVAT of tax not paid to the Government to an eventuality that the credit of tax paid on some other product is used for something else. Not only this, someone later in chain in spite of being bona fide purchaser not aware of the earlier misdeed in the chain yet will have to suffer the conse-quences - The term passer has been repeatedly used. He is a person who acts as a Mediator between the dealers, transporters and the officers. He ensures the ground level implementation that the goods in transport reach the destination without checking. It is for this facility that the amount is charged and the said bounty is shared and distributed. If the dealer is sure that the goods sent in transit and the documents accompanying will not be checked or verified, he has leverage of playing havoc with the collection of tax. The goods can be sent by preparing the documents which are not accounted for and on reaching the destination, the documents are done away with leaving no trail of the transaction. This enables usage of the credit of the tax paid or suffered on the said goods in the manner which is suitable to the commercial interest of the dealer - The allegation in the present case are very serious. There is alleged connivance of the transporters, passers and the officials to facilitate the evasion of tax. The investigation is going on, it appears that the officials were being paid bribe on a monthly basis. There is no quibble that the liberty of a person is of utmost importance but when pitted against a sovereign function i.e. collection of tax which is life blood of the economy, the latter would prevail. Present is a case where arrest is imperative for fair and full investigation. The official position of petitioner can be used to influence witness or temper with evidence - Considering the complexity of the issue, the tax impact on the chain of sellers and purchasers, the material as on date with the investigating agency, the multi-dimensional aspects involved needing a deeper probe, no case is made out for grant of pre-arrest bail. Petition dismissed.

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• 2021 (2) TMI 683
  Jurisdiction - power of Commissioner to arrest - reasons to believe that such a person has committed the offence specified under Section 132(a) to (d) of the Customs Act, is present - HELD THAT:- The petitioner shall be released on interim bail in case the Commissioner passes an order authorizing the arrest of the petitioner under the provisions of Section 69 of the Act and proposes to detain him. It is made clear that the said order is purely interim in nature and subject to petitioner joining the investigation and putting in appearance before the concerned authorities on 2-9-2020 at 10 AM. Reply be filed by the respondent, in the meantime.

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• Income Tax

• 2021 (2) TMI 682
  Penalty u/s 271 (1)(c) - addition under Section 50C - HELD THAT:- We are of the view that as the issue with regard to Section 50C of the Act is to be decided afresh by the Principal Commissioner, the issue with regard to penalty also should be decided afresh by the Principal Commissioner. Writ application succeeds in part. The impugned order is hereby quashed and set aside and the matter is remitted to the Principal Commissioner of Income Tax, Ahmedabad. The Principal Commissioner shall decide both the issues with respect to Section 50C of the Act as well as the issue with regard to the penalty.

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• 2021 (2) TMI 681
  Assessment of trust - Depreciation on the asset purchased through application of income - HELD THAT:- First substantial question of law involved in this appeal has already been answered against the revenue by a decision of the Supreme Court in CIT Vs. RAJASTHAN GUJARAT CHARITABLE FOUNDATION POONA [ 2017 (12) TMI 1067 - SUPREME COURT] as well as the decision of this Court in DIT Vs. AL-AMEEN CHARITABLE FUND TRUST [ 2016 (3) TMI 462 - KARNATAKA HIGH COURT] Eligibility to carry forward the deficit to the subsequent years, so that to set off with future year income - HELD THAT:- second substantial question of law has already been answered against the revenue by the decisions of this Court in CIT Vs. OHIO UNIVERSITY CHRIST COLLEGE [ 2018 (11) TMI 1055 - KARNATAKA HIGH COURT] as well as PCIT Vs. MANIPAL ACADEMY OF HIGHER EDUCATION ( [ 2018 (8) TMI 1865 - KARNATAKA HIGH COURT] .

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• 2021 (2) TMI 680
  Revision u/s 263 - order passed by the Assessing Officer u/s 143(3) rws 147 was erroneous in so far as it is prejudicial to the interest of the Revenue - Disallowance of expenditure on account of the accumulation under Section 11(1)(a) in respect of the car purchased in the name of the trustee - appellate tribunal directed the Assessing Officer to restrict the disallowance to the extent of Rs. 9,56,175=00 and not disallow the entire accumulation as held by the CIT(E) - HELD THAT:- As decided by tribunal we consider that in the case of the assessee on violation of Section 13(1) (c)(ii)/13(2) r.w.s. 13(3), the disallowance u/s. 11 is limited only to the amount which the assessee trust has diverted for purchase of a car in the name of trust, i.e. Rs. 9,56,175/-. Considering the above, we direct the Assessing Officer to restrict the disallowance to the extent of Rs. 9,56,175/- and not to disallow the entire accumulation as held by the Ld. CIT(A). We are of the view that no error, not to speak of any error of law, could be said to have been committed by the Tribunal in passing the impugned order.

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• 2021 (2) TMI 679
  Validity of reopening of the assessment for want of sanction/satisfaction of Pr. CCIT/CCIT/PCIT/CIT - Reopening after four years - mandatory condition as provided u/s. 151(1) - HELD THAT:- In the new substituted provision of Section 151(1) it is mandatory requirement for issuing notice u/s 148 after expiry of four years from the end of the relevant assessment year that unless the Pr. CCIT/CCIT/PCIT/CIT is satisfied on the reasons recorded by the AO that it is fit case for issue such notice. Therefore, there is no difference in the higher authority whose satisfaction is required prior to issuing notice u/s. 148 in all the cases where the notice u/s. 148 is issued after the expiry of four years from the end of the relevant assessment year. Hence,reopening in the case in hand is not valid as the Assessing Officer has not satisfied the mandatory condition as provided u/s. 151(1) read with proviso being the satisfaction of Pr. CCIT/CCIT/PCIT/CIT. Accordingly, the reopening of the assessment is quashed being void and consequently the reassessment order is also liable to be quashed as void ab initio. Appeal filed by the assessee is allowed.

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• 2021 (2) TMI 678
  Addition u/s 68 - accommodation entries receipt - Addition on the basis of statements of Shri Mukesh Kumar and Shri Deepak Agarwal found that they have controlled the Investor Company PIPL who have provided accommodation entry to the assessee company - HELD THAT:- Assessee has produced the documentary evidences noted above which clearly shows that the Investor company has made investment in assessee company which is confirmed by the Investor in their confirmation and affidavit of the Director. The balance-sheet of the Investor shows that they have made investment in assessee company and they have sufficient balance to make the investment in assessee company which was made through banking channel. No cash was found to have been deposited in the account of the Investor before making investment in assessee company and actual shares were also allotted to the Investor by the assessee company. Thus, documentary evidences on record have not been rebutted by the A.O. through any evidence or material on record. No independent enquiry has been made against these documentary evidences. Therefore, such documentary evidences clearly supports the explanation of assessee that genuine investment have been made in the assessee company. There is no adverse material available on record against the assessee so as to make the impugned addition and that no investigation have been made by the A.O. on the documentary evidences submitted by assessee, we are of the view that addition is wholly unjustified. We, accordingly, set aside the Orders of the authorities below and delete the addition - Decided in favour of assessee.

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• 2021 (2) TMI 677
  Disallowance u/s.40A(3) - assessee was engaged in the land plotting business and had purchased the plots as stock-in-trade paying in cash - cash purchases, ex-facie, violated the provisions of section 40A(3) - diversified decisions - HELD THAT:- As found as an admitted position that the assessee as well as the seller of the plots had bank accounts at the material time and still the transaction was carried out in violation of section 40A(3) without bringing the case in any of the specific clauses of Rule 6DD. On an overview of the view canvassed by various Hon ble High Courts on the point - some deleting the disallowance on the basis of the genuineness of the transactions while others sustaining the disallowance - what matters for the Tribunal is to follow the binding precedent, being, the judgment of Hon ble jurisdictional High Court. That being the position, the Pune Tribunal is bound by the judgment of the Hon ble jurisdictional High Court in Madhav Govind Dulshete [ 2018 (10) TMI 869 - BOMBAY HIGH COURT] sustaining the disallowance in case of cash payments exceeding the stipulated limit notwithstanding the fact that the transactions were genuine and the parties were identifiable. Respectfully following the judgment, we uphold the disallowance sustained in the first appeal. This ground fails. Addition u/s 14A read with Rule 8D - Interest disallowance - HELD THAT:- Authorities below did not accept the contention, in principle, by opining that interest free funds available with the assessee could not be deemed to have been utilised for making investments in sources yielding exempt income. In this regard, it is noticed that the Hon ble Supreme Court in CIT (LTU) Vs. Reliance Industries Limited [ 2019 (1) TMI 757 - SUPREME COURT] has approved the view that where interest free funds available with the assessee were sufficient to meet its investment and at the same time loan was raised, it can be presumed that the investments were made from interest free funds and hence, no disallowance of interest should be made to that extent. It is appropriate to send the matter back to the file of AO for examining the assessee s contention about the availability of interest free funds available with him and then decide the amount of interest disallowable u/s.14A. Appeal is partly allowed for statistical purposes.

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• 2021 (2) TMI 676
  Exemption u/s 11 - assessee is a charitable Trust and it was granted registration u/s 12A - Denial of exemption as assessee is charging exorbitant interest rates on the loan given to the women - HELD THAT:- It is merely a surmise entertained by the AO. The question is whether the rate of interest of 14% charged by the assessee is an exorbitant rate?. The Ld A.R submitted that the assessee is constrained to charge interest at a higher rate than the cost of borrowing, so that it can absorb administrative and allied expenses and also possible defaults by the borrowers, which is an inherent risk in the financing activities. The Ld A.R submitted that the assessee has charged interest @ 14%, which is normal interest charged by commercial banks for lending during the period under consideration. Accordingly the ld A.R has contended that the rate of interest charged by the assessee cannot be considered to be exorbitant. We find merit in the said contentions. As submitted by Ld A.R, the rate of interest of 14% is the normal rate charged by the banks for its lending and hence the said rate cannot be considered to be at exorbitant rate, as observed by the tax authorities. Assessee is running a women s hostel charging rent of Rs. 5,300/- per month for twin sharing room and Rs. 4000/- per month for four sharing room - We notice that the AO does not appear to have confronted the inspector s report with the assessee. No comparable cases to prove the above said submission has also been brought on record. In any case, the Ld A.R submitted that the above said rate includes three times meals, electricity charges, water charges etc. Under these set of facts, in the absence of any other comparable case, we are of the view that there is merit in the submissions made by Ld A.R on this issue. Assessee is generating surplus year after year - The important point to be noted here is that, so long as the assessee has been utilizing its income derived from the property held under the trust for its charitable objectives, the provisions of sec.11 do not deny exemption to a charitable trust. Hence, mere generation of surplus cannot be a reason to deny exemption u/s 11 of the Act. The AO might have highlighted this aspect to drive the point that the activities of the assessee are carried on commercial lines and hence the proviso to sec.2 (15) would be hit - As decided in AHMEDABAD URBAN DEVELOPMENT AUTHORITY [ 2017 (5) TMI 1468 - GUJARAT HIGH COURT] when the profit making was neither the aim nor object of the trust, then the incidental surplus generated while carrying on its activities would not render any activity in the nature of trade, commerce or business. Hence, this reasoning of the AO would also fail. Assessee has not got approval from DIT (E) for the amendment made to the trust deed - In any case, there is no dispute with regard to the fact that the assessee was having registration u/s 12A of the Act during the year under consideration. In that case, the proposal of the AO, if accepted, would apply to the future years only. Hence the exemption u/s 11 should not have been denied by the AO for the year under consideration on this reasoning. We are of the view that none of the reasons given by the AO would enable him to reject the exemption u/s 11 of the Act. Accordingly, we are of the view that the Ld CIT(A) was not justified in confirming the assessment order passed by the AO for the year under consideration. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to grant exemption u/s 11 of the Act to the assessee for the year under consideration. - Decided in favour of assessee.

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• 2021 (2) TMI 675
  TP adjustment on entity level rather than the transactions with the Associated enterprises (AEs) - TNMM - whether on segregate or aggregate approach of international transactions? - HELD THAT:- The case of the assessee, with which we concur, is that the transfer pricing adjustment ought to have been restricted to the international transactions rather than the entity level transactions. Section 92 is the first section of the Chapter-X containing special provisions relating to avoidance of tax. Subsection (1) of section 92 provides that: `Any income arising from an international transaction shall be computed having regard to the arm s length price . Thus it is graphically clear that the ALP and the consequential transfer pricing adjustment are contemplated only in respect of the international transactions and not the entity level transactions. The TPO, in the instant case computed transfer pricing adjustment in respect of entity level transactions and then forgot to restrict it to the international transactions. In a case of combined TNMM, when there are international transactions of the income as well as expenses nature, the transfer pricing adjustment can be made only by considering either the expenses or the incomes. Out of the balance four international transactions under the `Manufacturing activity taken by the TPO, three transactions are of expense nature and one is of income nature. As the TPO took the PLI of OP/OR, naturally, the transfer pricing adjustment as per his version could have been in respect of the international transactions of expenses items and he has also proceeded with the costs base rather than the revenue - after finding out the amount of entity level transfer pricing adjustment accordingly, the TPO should have gone further by restricting it to the transactions with the AEs by ascertaining value-wise percentage of such transactions to the total operating costs of the assessee and then applied such percentage to the amount of the entity level transfer pricing adjustment. AR has placed on record a computation of value of the international transactions in the `Manufacturing activity , warranting adjustment towards expenses, at Rs. 14.15 crore and also the percentage of such costs to total operating costs of the assessee at 4.26%, thereby working out the proportionate transfer pricing adjustment at Rs. 55,87,148/-. This calculation has not passed through the eyes of the AO/TPO. Under these circumstances, we set aside the impugned order and restore the matter to the file of the AO/TPO for verifying the correctness of the above figures given by the ld. AR and then deciding the issue afresh. Assessee appeal is partly allowed for statistical purposes.

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• 2021 (2) TMI 674
  Revision u/s 263 - Entitlement of deduction u/s 54 - assessee has made payments in instalments and some of the instalments were paid prior to one year window before the date of sale of the original assets - HELD THAT:- Benefit under section 54 is available to an individual who has transferred a long term capital asset being a Residential House Property and the assessee has either purchased one residential house in India within a period of one year before or two years after the date of transfer of the original asset or constructed one residential house in India within a period of three years from the date of transfer of the original asset. In the instant case, the purchase of the new flat is evidenced by the purchase deed dated 10.03.2014 which is within a window of one year before the date of transfer of the house property on 24.11.2014 and it thus satisfies the requirement and mandate for claiming exemption under section 54. What is relevant to determine is the date of purchase and such date of purchase is evidenced by the purchase deed reflecting the final payment and taking over the possession of the flat. Merely because the assessee has made payments in instalments and some of the instalments were paid prior to one year window before the date of sale of the original assets would not debar the assessee from claim of deduction u/s 54. We are therefore of the considered view that all the relevant facts were on record, duly examined by the AO and the claim of deduction has been rightly allowed by the AO as per mandate of provisions of section 54 of the Act. The order so passed by the AO cannot therefore be held as erroneous in so far as prejudicial to the interest of the Revenue. Thus, the order of the Pr CIT is hereby set-aside - Decided in favour of assessee.

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• 2021 (2) TMI 673
  Reopening of assessment u/s 147 - eligibility of reasons to believe - mandatory requirements for re-opening the assessment have not been complied with by the AO - assessment had been reopened on account of the survey findings that the assessee had entered into the two JDAs and the income accruing to the assessee out of these JDAs had not been offered to tax and the assessee had not provided any documentary evidence that the transfer of the property to the developer had happened at a later date - HELD THAT:- Assessing Officer has power to reopen the assessment, provided there is tangible material to come to the conclusion that there is escapement of income from assessment and the reasons must have a live link with the formation of belief. In the present case, there is no tangible material. The issuance of the impugned notice u/s.148 is nothing but mere change of opinion. In absence of any new tangible material available with the A.O., it is not open to the A.O. to change his opinion by issuing the notice of re-assessment. Being so, in our opinion the reopening of assessment which is already concluded under Section 143(3) of the Act on 26.03.2010 cannot be reopened without any allegation by the Assessing Officer that there was non-disclosure of true and correct facts by the assessee while framing the original assessment. In order to assume jurisdiction under Section 147 where assessment has been made under sub-section (3) of section 143, two conditions are required to be satisfied. Assessing Officer must have reason to believe that the income chargeable to tax has escaped assessment; Such escapement occurred by reason of failure on the part of the assessee either to make a return of income under section 139 or in response to the notice issued under sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all the material facts necessary for his assessment for that purpose. The power to assess or reassess income under section 147 of the I.T. Act cannot invoked routinely . During the course of original assessment proceedings, the issue for which the assessment is sought to be reopened was subject matter of examination by the A.O. Thus, it is clear that the assessee had disclosed all the material facts during the regular assessment proceedings. Therefore, it cannot be alleged that there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment - we hold that the reassessment proceedings is bad in law and we quash the same.- Decided in favour of assessee.

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• 2021 (2) TMI 672
  Levy of penalty u/s 271(1)(c) - difference between actual sale consideration and DLC value of immovable property sold by the assessee - addition tax liability has arisen on account of applying the deeming provisions of section 50C - HELD THAT:- No evidence has been brought on record by the Assessing officer that any money over and above the sale consideration as per the sale deed was received by the assessee. Assessee has suo-moto adopted the value of the immoveable property as determined and adopted by the stamp duty authorities which to our mind, put the case of the assessee on a better footing and in any case, cannot be worse off as compared to aforesaid cited cases where the additions have been made by the AO by invoking the provisions of section 50C and which later on, have been accepted by the respective assessees by not going in further appeal. A case of self declaration and self adoption of value as adopted by stamp duty authorities while filing the return of income by the assessee and which has been accepted in entirety by the AO. Where the value so declared in the return of income has been accepted by the Assessing officer, there cannot be any basis for levy of penalty for concealment of income. Revenue s only contention is that such return of income has not been filed voluntarily and has been filed only in response to notice u/s 148 and thus, in a way, it is a case of deemed concealment - There was a reasonable cause with the assessee for not filing the return originally within prescribed time as he holds a belief that his taxable income was below the taxable limit and no tax liability arises thereon considering the actual sale consideration received by the assessee on sale of shop amounting to Rs. 3,50,000/-. The bonafide of such belief has not been challenged by the Revenue, as we have noted above that there is no finding or adverse material that the assessee has received any consideration over and above the sale consideration. We therefore find that there was a reasonable cause for the assessee for not filing the return of income originally within prescribed time and thus, the second condition is not satisfied in the instant case. The third condition of non-issuance of any notice either u/s 142(1) or section 148 within prescribed time under section 153(1) is satisfied as the notice u/s 148 has only been issued on 29.03.2017. Therefore, given the reasonable cause for non-filing the return of income, one of the essential conditions for invocation of explanation 3 to section 271(1)(c) is not satisfied and thus, the case of the assessee doesn t fall within the meaning of deemed concealment as so defined in the said explanation and the contentions so advanced by the Revenue cannot be accepted. Where the value so declared in the return of income has been accepted by the Assessing officer and infact, the returned income has been accepted, there cannot be any basis for levy of penalty - Decided in favour of assessee.

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• 2021 (2) TMI 671
  TP Adjustment - comparable selection - upper turnover filter - HELD THAT:- companies having turnover of more than Rs. 200 crores could not be taken as comparable companies for an assessee having turnover of less than Rs. 200 crores. Tata Elxsi, Sasken Communication, Mindtree Ltd, Larson Tubro Infotech, Infosys Technologies Ltd and Zylog Systems Ltd.excluded accordingly. Assessee provided software research and development services and call centre services thus companies functionally dissimilar with that of assessee need to be deselected. Bodhtree Consulting Ltd. excluded accordingly. Disallowance being research and development expenses u/s 37- said expenses confer an enduring benefit and is not revenue in nature - HELD THAT:- As decided in own case [ 2013 (1) TMI 672 - ITAT BANGALORE] The submissions made before us that the above expenses were incurred for website development is contrary to the stand of the Assessee before DRP/AO that these expenses were for exploring the possibility of domestic market through pilot projects. Unless the nature of the expenses is examined it is not possible to decide as to whether the same were revenue in nature and that it relates to existing business of an Assessee. The alternative contention of the Assessee that the claim should be examined u/s.35 of the Act also cannot be decided unless the correct description of the expense is considered. We therefore set aside the order of the AO on this issue and remand the issue for consideration afresh by the AO after affording opportunity of being heard to the Assessee.

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• 2021 (2) TMI 670
  Revision u/s 263 - deduction u/s 80P(2)(d) as granted by Ld. AO on account of interest received by assessee from cooperative bank was required to be denied - HELD THAT:- a specific query was raised by Ld. AO during original assessment proceedings regarding deduction claimed u/s 80P(2)(d) which was duly responded to by the assessee. The decision of this Tribunal rendered in Lands End Co-operative Housing Society Ltd. [ 2016 (2) TMI 620 - ITAT MUMBAI ] was brought to the notice of Ld. AO in support of the deduction. The Ld. AO was clinched with the issue of deduction u/s 80P(2)(d) and assessee s claim was allowed after due application of mind and a view was already taken in the matter. Therefore, the allegation of Ld. Pr. CIT that the deduction was allowed without verification and necessary inquires is bereft of any merits. We find that it not a case of no inquiry but it is a case wherein a plausible / possible view has been taken by Ld. AO after due consideration of issue of deduction u/s 80P(2)(d). Whether the view taken by Ld. AO was in accordance with law or not ? - As it could be observed that there were two possible views on the issue at the time of framing of assessment. Dealing with similar conflicting position, Mumbai Tribunal in the case of Kaliandas Udyog Bhavan Premises Co-op Society Ltd. V/s ITO [ 2018 (4) TMI 1678 - ITAT MUMBAI ] relying upon the order of Hon ble High Court of Bombay in the case of K. Subramanian V/s Siemens India Ltd. [ 1983 (4) TMI 3 - BOMBAY HIGH COURT ] held that where there are conflicting decisions of non-jurisdictional High Courts then a view which is in favor of the assessee is to be preferred as against that taken against him. Hence, the coordinate bench chose to took a view that interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. Similar favorable view has been taken in various subsequent decisions of this Tribunal which has already been tabulated by Ld. AR in the legal paper-book. In view of the fact that no decision of the jurisdictional High court holding the field is available, it could safely be concluded that the issue was a debatable one and the view taken by Ld.AO was one of the possible view which could not be said to be contrary to law. Therefore, the assessment order could not be held to be erroneous and prejudicial to the interest of revenue which would require revision u/s 263. Thus the revisional jurisdiction as invoked by Ld. Pr. CIT could not be held to be valid under law. By quashing the order we allow assessee s appeal.

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• 2021 (2) TMI 669
  Reopening of assessment u/s 147 - Addition of unexplained cash deposits in the bank account - HELD THAT:- On a conjoint reading of the reasons along with the order u/s. 147 it is palpable no addition arising from the reasons for the reassessment was made. An altogether separate addition was made, which admittedly did not have any connection with the initiation of re-assessment. Hon ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd.[ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY ] has held that the AO cannot proceed with re-assessment if the grounds mentioned in re-assessment are non-existent i.e if no addition is made on that score. When I examine the factual scenario obtaining in the instant case on the touchstone of the ratio laid down by the Hon ble jurisdictional High Court in the above decision, the inescapable conclusion which can be drawn is that the only addition made in the reassessment on a ground different from the one for which notice u/s. 148 of the Act was issued, lacks legality. The same is, therefore, deleted.

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• 2021 (2) TMI 668
  Penalty levied u/s 271AAB - assessee in the return of income has disclosed income on account of undisclosed jewellery - HELD THAT:- AO has not mentioned about unearthing of any undisclosed income as defined u/s 271AAB during search action carried out at the premises of the assessee - income declared by the assessee in the return of income or found or assessed by the Assessing officer in the assessment proceedings may be relevant for assessment of the income under section 68 /69 and other related provisions of the Act and also for the levy of penalty under section 271(1)(c) of the Act in view of the relevant provisions of section 68/69 and 271(1)(c). Assessee in this case is an individual and has earned income from partnership firm and interest income. The assessee has neither earned any business income nor earned any income exceeding Rs. 50 lakhs so as to require mandatory filing of personal assets and liabilities or to maintain books of accounts; even the assessee is not required to otherwise disclose any such income to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the date of search; the alleged income is not any income represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course. Assessee has neither made any surrender of any undisclosed income during the search action nor the penalty has been initiated on the basis of undisclosed income found during such search action. In view of the above factual position, the impugned order of the AO imposing the penalty on the assessee under section 271AAB of the Act does not pass the mandate of the provisions of section 271AAB - Decided in favour of assessee.

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• 2021 (2) TMI 667
  Assessment u/s 153A - Addition u/s 68 - third parties on whose statements the addition was made and sustained by the authorities - HELD THAT:- We find that a search seizure operation was carried out on the group of assessees on 23/08/2016 and in the earlier appeals which were decided by the Tribunal [ 2020 (12) TMI 1064 - ITAT LUCKNOW ] the Tribunal had made a finding of fact that in assessment year 2013-14, the additions could not have been made as additions were not made on the basis of material found during the course of search and the assessments in those years had already stood completed. As already held in our order dated 16/12/2020 in the case of the present assessees itself in other assessment years that additions were not made on the basis of any incriminating material as the Assessing Officer, while making the additions, had not relied on any seized material and had relied on the document marked as BK-2 which was seized by the search party from some other group and there the search took place almost one year before the date of search on the present assessee- Decided in favour of assessee.

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• 2021 (2) TMI 666
  Disallowance u/s 14A read with Rule 8D(2)(ii) - disallowance of interest - suo motto disallowance offered by the assessee in its return of income - HELD THAT:- Exhaustive contentions that were raised by the assessee to buttress its aforesaid claim for reduction of the disallowance under Sec. 14A were required to be verified and could not have been accepted by the CIT(A) on the very face of it. Accordingly, finding no infirmity in the restoring of the issue pertaining to the assessee s claim for reducing the disallowance under Sec. 14A r.w. Rule 8D by the CIT(A), we uphold his order to the said extent. However, before parting, we may herein observe that the claim of the assessee that the disallowance under Sec. 14A is liable to be restricted to the extent of the exempt income received or receivable by the assessee during the year in question, the same, merits acceptance. Our aforesaid view is fortified by the judgement of the Joint Investments Pvt. Ltd. Vs. CIT [ 2015 (3) TMI 155 - DELHI HIGH COURT] We, thus, in terms of our aforesaid observations uphold the restoration of the aforesaid issue by the CIT(A) to the file of the A.O, with a rider that the disallowance be restricted to the extent of the exempt income received or receivable by the assessee during the year under consideration. Claim of the revenue that the CIT(A) was in error in directing the A.O to consider only those investments made in non-subsidiary company which had yielded dividend income for the purpose of disallowance under Sec. 14A r.w. Rule 8D(2)(iii), as the same was contrary to the CBDT Circular No. 5 of 2014, dated 11.02.2014, we are unable to persuade ourselves to accept the same. Similar reliance placed by the revenue on the aforesaid CBDT Circular No. 5 of 2014, dated 11.02.2014 was rejected by the Hon ble High Court of Madras in Redington India Ltd. Vs. Addl. CIT [ 2017 (1) TMI 318 - MADRAS HIGH COURT] and in PCIT Vs. IL FS Development Company Ltd. [ 2017 (8) TMI 732 - DELHI HIGH COURT] - At the same time, we in light of the judgment of the Hon ble Supreme Court in Maxopp Investment Ltd. Vs. CIT [ 2018 (3) TMI 805 - SUPREME COURT] are unable to subscribe to the observation of the CIT(A), wherein he had inter alia directed the A.O to consider only those investments made in non-subsidiary companies which had yielded dividend income for the purpose of disallowance under Sec. 14A r.w Rule 8D(2)(ii). Accordingly, the aforesaid observation/direction of the CIT(A) is expunged and the latters order is modified to the said extent. TP Adjustment - guarantee/counter guarantee given by the assessee to various banks and other corporate bodies for and on behalf of its AE - HELD THAT:- It is the claim of the ld. A.R that the aforesaid bank guarantee charges that were recovered by the assessee from its AE, viz. Elsamex SA were not considered by the TPO while benchmarking the transaction of providing of guarantee/counter guarantee by the assessee to the various foreign banks and other corporate bodies for and on behalf of its aforesaid AE. It is further stated by the ld. A.R that if over and above the corporate guarantee charges of 1% charged by the assessee to its AE, the aforesaid bank guarantee charges of Rs. 5.67 crores recovered from the AE (which are in the range of 1.25% to 2.6%) are taken into consideration, then, no transfer pricing adjustment would be called for in the hands of the assessee. On being confronted with the aforesaid facts, the ld. D.R fairly submitted that the matter may be restored to the file of the TPO for considering the aforesaid claim of the assessee. In the backdrop of the aforesaid facts, we are of the considered view that as the aforesaid claim was not raised by the assessee before the lower authorities, therefore, in all fairness the matter requires to be restored to the file of the TPO for fresh adjudication after considering the same. Accordingly, we set aside the issue to the file of the TPO, with a direction to consider the aforesaid claim of the assessee in the course of the set aside proceedings. D isallowance of club expenses - allowable as a business expenditure or not? - HELD THAT:- The issue pertaining to allowability of club expense as a revenue expenditure is squarely covered by the Judgment of the Hon ble High Court of Bombay in the case of Otis Elevator Company India Ltd. Vs. CIT [ 1991 (4) TMI 53 - BOMBAY HIGH COURT] wherein as approved the view taken by the Tribunal that the payment of club membership is allowable as a revenue expenditure - also see M/S GROZ BECKERT ASIA LIMITED [ 2013 (2) TMI 375 - PUNJAB HARYANA HIGH COURT] - thus we are of the considered view that the CIT(A) had rightly allowed the assessee s claim for deduction of the club membership fees of Rs. 4,79,225/- as a revenue expenditure. Also, we concur with the observation of the CIT(A) that the rejection of the assessee s claim for deduction of club membership expenses by the A.O, de hors any verification on his part that as to whether or not the said expenditure was incurred by the assessee wholly and exclusively in the course of its business, also, cannot be sustained. Whether CIT(A) had exceeded his powers under Sec.251(1)(a) by setting aside the matter to the file of the A.O/TPO for carrying out a fresh benchmarking and determining the arm s length price of the guarantee fees ? - We are unable to concur with the same. On a perusal of the order of the CIT(A), we find that as observed by him, instead of quashing the addition on a mere technical ground i.e a wrong basis of comparison adopted by the TPO, the CIT(A) had in all fairness restored the issue to the file of the A.P/TPO, with a limited direction and a defined line of action for carrying out a fresh benchmarking and determining the arm s length price of the aforesaid international transaction. In light of the aforesaid limited purpose for which the matter had been restored with specific directions to the file of the AO/TPO, we are unable to persuade ourselves to agree with the department that the CIT(A) by so doing had exceeded the jurisdiction vested with him under Sec. 251(1)(a) of the Act.

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• 2021 (2) TMI 665
  MAT Computation u/s 115JB - denying the adjustment in book profit by not giving deduction towards unabsorbed depreciation on the ground that the same has already been adjusted in the preceding years - HELD THAT:- We find that provisions of Sections 32(2) and 72 of the Act explicitly provide that the amount would be carried forward for set off in the succeeding years and it should be arrived at after deducting the amounts to which effect has already been given. We find that such provisions are apparently not present in computing the book profits u/s.115JB. We also find that most crucial expression used in the said Clause (iii) of Explanation 1 to Section 115JB of the Act would be as per books of accounts . Hence, unless the entire loss as per books of accounts gets wiped out by profits earned in subsequent years, the said loss would continue to remain in the balance sheet of the assessee i.e. books of accounts and would be eligible for reduction in accordance with Clause (iii) of Explanation 1 to Section 115JB of the Act, while computing book profits u/s.115JB of the Act. We find that this issue is no longer res-integra in view of the decision of DCIT vs. Binani Industries [ 2016 (3) TMI 873 - ITAT KOLKATA ] Thus we direct the ld. AO to grant reduction of unabsorbed depreciation and re-compute the book profits u/s.115JB of the Act thereon. Grant of short credit of TDS - HELD THAT:- We direct the ld. AO to verify the TDS certificates or any other supporting evidences thereon and accordingly, grant the TDS credit eligible to the assessee in accordance with law.

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• 2021 (2) TMI 664
  Addition u/s 41(1) - additions towards sundry creditors as bogus - CIT-A deleted the addition - HELD THAT:- CIT (A) has considered the plea of the assessee that since it had furnished the details of payments made to the sundry creditors appearing in the books as on 31st March, 2013, the AO should have issued notices u/s 133 (6) and called the details of the outstanding balances. Further, the Ld. CIT (A) has pointed out that seven creditors have filed suits for recovery against the assessee. Further, the Ld. CIT (A) has relied on the judgment of the Hon ble Supreme Court in the case of CIT vs. Sugauli Sugar Works Pvt. Ltd. [ 1999 (2) TMI 5 - SUPREME COURT] - Hence, in our considered view, the findings of the Ld. CIT (A) are based on the evidence on record and in accordance with the settled principles of law. We therefore do not find any infirmity in said order to interfere with. - Decided against revenue. Bogus purchases - assessee failed to furnish full details to prove genuineness of the transaction despite several opportunities given by the AO - CIT (A) has deleted the addition holding that the opening and closing balance of the sundry creditors remain intact through of the years - HELD THAT:- We notice that the AO made the disallowance in question holding that the assessee had made payments in cash to 24 parties. However, the Ld. CIT (A) noted that the opening balance of most of the parties remained unchanged as on 01.04.2012 and 31.03.2013, which shows that no payments were made by the assessee. Hence, we do not find any infirmity in the order of the Ld. CIT(A). We accordingly uphold the findings of the Ld. CIT (A) and dismiss this ground of appeal of the revenue.

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• 2021 (2) TMI 663
  Assessment of HUF - protective addition in the hands of the assessee - additional evidence - whether any notice u/s 142(1) was issued in respect of S.J. Bahadur HUF? - HELD THAT:- There is no reason as to why the learned Assessing Officer had not taken the things to their logical conclusion by making necessary enquiries as to the nature of the receipt vis a vis the HUF and also why the request of the assessee to permit him to produce the additional evidence on this aspect was resisted. When it has come to the notice of the Ld. CIT(A) that it is only the protective assessment that is made in the hands of the assessee in view of the proposed proceedings against the HUF by issuance of notice under section 142 (1) of the Act to make substantive addition in the hands of the HUF, and no such notice under section 142 (1) of the Act was issued by the learned Assessing Officer, as admitted by the assessing officer in his remand report, the endeavour of the Ld. CIT(A) should be to allow the assessee to prove his contention with reference to the document, instead of proceeding with the matter and to hold that the receipt is taxable in the hands of the assessee basing on certain circumstances. When the assessee offered the direct evidence, findings of the authorities below basing on the circumstances does not appear to be proper, inasmuch as the endeavour of the authorities under the Income Tax Act shall be to assess the correct tax liability by affording an opportunity to the assessee. We are of the considered opinion that the additional evidence to be produced by the assessee shall be admitted and a view has to be taken by the learned Assessing Officer by proper appraisal of such material with reference to the submissions made by the assessee. We, therefore, admit the additional evidence, set aside the findings of the Ld. CIT(A) in respect of the addition which the assessee contends to pertain to the HUF, and remand the issue to the file of learned Assessing Officer to take a view after appreciating the material on record and affording an opportunity to the assessee to put forth his case on this aspect. Grounds of appeal of the assessee are accordingly allowed for statistical purpose. - Appeal of the assessee is allowed for statistical purpose

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• Service Tax

• 2021 (2) TMI 704
  Nature of activity - service or manufacturing? - Design Services or not - allegation is that appellant failed to pay service tax on gross amount received by them by way of suppressing the value of services willfully with intent to evade payment of Service Tax - contravention of provisions of Section 68,69 70 of the Finance Act 1994, as amended read with Rules 4,6 7 of the Service Tax Rules 1994 - HELD THAT:- It is on records that the designs/ drawings of the die/moulds etc. (tooling for manufacturing final Products) are being provided by the overseas buyers of the appellants and upon manufacturing of said tooling kits the appellants have realized charges from their overseas buyers. From the foregoing, it transpires that, the appellants have, in fact not designed the tooling kits or made drawings for the same. They have only manufactured the tooling kits as per the drawings provided by their overseas buyers and the same tolling kit is thereafter used for the manufacture of dutiable forgings which are to be sold to the same overseas buyers. The prime activity of the appellants is manufacturing and as per the agreement/contract/ purchase order, they have to manufacture goods only as per the specification of their buyers and the design of the said goods is also very specific. To meet out the requirements of their buyer they first manufacture the tooling kit for the production of goods and they charge the manufacturing cost of the tooling kit in the head of Die design preparation charges . From the records it appears that, the appellants themselves not design the said tooling kit but they only manufacture the same on the basis of drawings provided by their customers. Further, it is found that the period of demand starts from 2014-15 onwards, whereas, prior to 01.07.2012 the classification was being done as per the provisions of Section 65A read with Section 65(105} of the Finance Act, 1994. However, the earlier method of classification was done away w.e.f, 01.07.2012 and negative list regime has came in to existence wherein service has been defined as any activity for consideration (Section 65B of the Act) and there remains no categorization of service. All the activities for consideration were held to be service except those which specifically mentioned in the negative list in terms of Section 66D of the Finance Act - classification of the impugned activities had been done under earlier Section 65(105)(zzzzd) of the Finance Act, 1994 read with Section 65A of the Act. Whereas, the said statute has lost its existence w.e.f, 01.07.2012 and in absence of proper legal backing, the classification done in the instant cases for the period from 2014-15 onwards and demand of service tax thereof cannot be held as legal and proper. The impugned activities cannot be termed as service rather manufacturing. Hence, the demand of service tax in the instant cases does not sustain - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (2) TMI 662
  CENVAT Credit - Deposit Insurance and Credit Guarantee Corporation for insuring the deposits of the customers - HELD THAT:- The issue is decided in the case of BANK OF MAHARASHTRA, BANK OF BARODA (FORMERLY KNOWN AS DENA BANK) , BANK OF BARODA, UNION BANK OF INDIA, STATE BANK OF INDIA VERSUS COMMISSIONER, CGST CX, PUNE-II, COMMISSIONER OF SERVICE TAX-I AND IV, MUMBAI, COMMISSIONER OF CENTRAL EXCISE [ 2020 (10) TMI 300 - BOMBAY HIGH COURT] where it was held that the credit is allowed. Appeal is remanded back to the CESTAT for fresh decision in conformity with the decision rendered by the Larger Bench - appeal allowed by way of remand.

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• 2021 (2) TMI 661
  Maintainability of petition - availability of an equally alternative remedy stipulated under the Statute - violation of principles of natural justice or not - HELD THAT:- The petitioners have failed to establish how the order passed is in total violation of the principles of natural justice. What prejudice, much less serious in nature, stands caused on account of non-examination of the witnesses, is also not born out from the material on record or demonstrated. The assessing authority has found the petitioners and concerns associated with them, dealing in the product i.e. production/trade of cigarettes, which are excisable under the Act. On 13th December 2013, a raid was conducted, inter alia, at the petitioner s premises, and got recovered huge stocks of more than two crores of cigarette sticks. The petitioners were arrested, and their statement recorded while in judicial custody. During the search and seizure operations, statements of other witnesses were also recorded and the material, inculpatory in nature, recovered from the conscious possession of the petitioners/associated persons and premises. The search was conducted at different places in the States of Chhatisgarh, Jharkhand and Bihar - With the completion of search and seizure operations, petitioners and associated persons were issued notices for carrying out the adjudicatory proceedings under the Central Excise Act s provisions, 1944 read with Central Excise Rules, 2002. While declining the petitioner s request for cross-examining the witnesses, the adjudicatory authority ultimately passed the impugned order dated 05.10.2018 and corrigendum order dated 22.11.2018. The petition disposed off with the directions that the petitioners have been pursuing the remedy before this Court, hence if petitioners take recourse to remedy provided under the Act, within a period of four weeks, the issue of limitation shall not be allowed to come in the way of it s adjudication on merits and that such proceedings shall expeditiously be decided on merits, per law, preferably within a period of six months from the date of initiation.

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