TMI Tax Updates - e-Newsletter
February 25, 2022

Case Laws in this Newsletter:

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

Articles

1. Blocking of Credit Ledger cannot result in creating negative Balance in Credit Ledger and authority is not at Dead End as recovery measures u/s 73/74 is available

   By: Rachit Agarwal

2. Rule 96(10) - Where is the horizon!

   By: Navjot Singh

News

1. Delhi South CGST unearths fake invoicing racket of ₹ 611 crore involving tax evasion of 38.5 crore

2. 2 held by Faridabad CGST Commissionerate for issuing fake invoices of over ₹ 200 crore and availing involving fraudulent ITC of ₹ 31.85 crore

Notifications

DGFT

1. 55/2015-2020 - dated 24-2-2022 - FTP

Amendment in import policy of items under ITC(HS) 8524 and 8525 of Chapter 85 of ITC(HS) 2022, Schedule - I (Import Policy)

GST - States

2. G.O.MS.No.77 - dated 21-2-2022 - Andhra Pradesh SGST

Seeks to bring in force provisions of section 2, 3 and 7 to 15 of the Andhra Pradesh Goods and Services Tax (Amendment) Act, 2021

3. G.O.MS.No.76 - dated 21-2-2022 - Andhra Pradesh SGST

Seeks to bring in force provisions of section 4 and 5 of the Andhra Pradesh Goods and Services Tax (Amendment) Act, 2021

4. G.O.MS.No.75 - dated 21-2-2022 - Andhra Pradesh SGST

Seeks to bring in force provisions of section 6 of the Andhra Pradesh Goods and Services Tax (Amendment) Act, 2021

5. G.O.MS.No.71 - dated 10-2-2022 - Andhra Pradesh SGST

Supersession of the Go.Ms.No.378, Revenue (CT-II) Department, dated 30-12-2021 and Amendment to Go.MS.No.259, Revenue (CT-II) Department, dated 29.06.2017

6. 09 /GST-2 - dated 23-2-2022 - Haryana SGST

Amendment in Notification No. 112/ST-2, dated the 18th October, 2017

SEBI

7. SEBI/LAD-NRO/GN/2022/74 - dated 23-2-2022 - SEBI

Securities and Exchange Board of India (Depositories and Participations) (Amendment) Regulations, 2022

8. SEBI/LAD-NRO/GN/2022/73 - dated 23-2-2022 - SEBI

Securities and Exchange Board of India (Stock Brokers) (Amendment) Regulations, 2022

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD2/DCAP/P/CIR/2022/0022 - dated 24-2-2022

Segregation and Monitoring of Collateral at Client Level – Extension of timeline

2. SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2022/23 - dated 24-2-2022

Nomination for Eligible Trading and Demat Accounts – Extension of timelines and relaxations for existing account holders

GST - States

3. D.C.(A&R)-2/GST/PWR/Sections/2017-18/ADM-8 - dated 11-2-2022

Amendment in Order No. D.C.(A&R)-2/GST/PWR/Sections/2017-18/ADM-8, dated the 10th October 2017

DGFT

4. Trade Notice No. 35/2021-2022 - dated 24-2-2022

Mandatory filing/issuance of Registration Cum Membership Certificate (RCMC)/ Registration Certificate (RC) through the DGFT common digital platform from 01.04.2022

Highlights / Catch Notes

GST

• IGST Refund Rejection Overturned Due to Time Exclusion Order; Petitioner's May 2021 Application Deemed Timely.

  Case-Laws - HC : Refund of IGST - rejection on the ground of time limitation - any computing of period of limitation for any such appeal, application of proceeding the period from 15.03.2020 till 02.10.2021 shall stand excluded and in the present case admittedly the application for refund having been filed on 12.05.2021, the petitioner is entitled to the benefit of such order. - HC
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• Solar Power Plant on Rooftop Qualifies as 'Plant and Machinery' under GST, Eligible for Input Tax Credits.

  Case-Laws - AAR : Input tax credit - inputs / capital goods / input services - Solar Power Generating Plant of the applicant qualify as 'plant and machinery' as it falls under machinery - Although, construction of “Solar Power Generating Plant at rooftop of the building of applicant is an immovable property, however the said “Solar Power Generating Plant qualify as 'plant and machinery', hence it not covered under blocked credit as mentioned in 17(5)(d) of the CGST Act, 2017. Thus, the applicant is eligible for Input credit of Inputs, Capital goods and Services related to setting of Solar Power generator plant for captive consumption. - AAR
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• Employer Cannot Claim ITC on GST for Employee Health Insurance per Section 17(5)(b) Requirements Not Met.

  Case-Laws - AAR : Input tax credit - GST charged by the Medical/ Health Insurance Company in respect of insurance done for employees - requirement prescribed under Section 17(5)(b) stands satisfied or not - the applicant cannot claim ITC of GST charged by the Medical/Health insurance company in respect of insurance done for employees - AAR
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• Court Quashes Demand for Interest on Delayed GSTR-3B; Revenue Must Follow Adjudication Process Under CGST Act Sections 73/74.

  Case-Laws - HC : Interest liability - delay in furnishing GSTR-3B return - Liability imposed without any adjudication proceeding u/s 73 or 74 - despite disputing the liability towards interest, the revenue has raised a demand for payment of interest on the ground of delay in furnishing of GSTR-3B return for the period July 2017 to December 2019 without initiating any adjudication proceedings under Section 73 or 74 of the CGST Act, 2017. Earlier by an order dated 8th May 2020 a Coordinate Bench of this Court had been pleased to grant interim protection from any coercive steps against the petitioner pursuant to the impugned demand at Annexure-4. - Demand quashed with liberty - HC
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• Blasting with explosives subcontracted for airport land is a composite supply under GST, classified as a works contract.

  Case-Laws - AAR : Classification of supply - supply of goods or supply of services - The applicant's submissions as well as the submissions of the jurisdictional officer that, the work of blasting with explosives which is subcontracted to the applicant, is a composite supply as defined under the GST Laws, is agreed upon - also since the Applicant is rendering a composite supply and since the said supply is in respect of immovable property i.e. Airport Land, it is found that the applicant is providing Composite supply of works contract - AAR
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• Network Setup Classified as Service, Taxed at 18% Under Works Contract Per Notification No. 11/2017-CTR, Entry No. 3 (xii.

  Case-Laws - AAR : Classification of supply - supply of goods or supply of services - works contract or not - setting up of network - the subject activity of the applicant will be covered under Since Entry No 3 (xii) of Notification No. 11/2017-CTR- dated 28.06.2017 as amended till date. - taxable at the rate of 18% - AAR
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• EPC contract activities like design and installation are classified as services with an 18% GST rate, says AAR.

  Case-Laws - AAR : Classification of services - The activities of supply designing & engineering, installation, Commission of Project under EPC contract by the applicant shall attract GST @18% (9% CGST and 9% SGST) - AAR
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• Rajasthan Consultancy Services for RUDSICO Not Exempt from GST, Says AAR; Not Considered Pure Services.

  Case-Laws - AAR : Project Management Consultancy services provided to Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation (RUDSICO) under Rajasthan Secondary Towns Development Sector Project - Invoice is raised by the Applicant to the Leading Member, who further raise invoice to RUDSICO of complete amount - Cannot be held as pure service - not eligible for exemption - AAR
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Income Tax

• Court Reviews Penalty for Incorrect Tax Loss Reporting; No Evidence of Income Concealment Found u/ss 276(c)(1) & 277.

  Case-Laws - HC : Offence u/s 276(c)(1) and 277 - petitioner filed incorrect Income Tax Returns declining loss of business - The petitioner paid the penalty as early as on 23.04.2014. Three years thereafter, show cause notices were issued to the petitioner. In these cases, the entire payments paid by the petitioner and there is no intention to evade payment. The Assessment Orders shows that only penalty was levied for wrong calculation of loss and no concealment of income, penalty paid in the year 2014. In this case, there is no material to show that there was any deliberate and conscious evasion of tax on the part of the petitioner. - HC
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• Petitioner Seeks High Court Approval for Partial Compliance with Pradhan Mantri Garib Kalyan Deposit Scheme Requirements.

  Case-Laws - HC : PMGKY scheme - t the petitioner has made all efforts to try and comply with the requirement of the Pradhan Mantri Garib Kalyan Deposit Scheme. In such a situation, 66 per cent. of the compliance having been done, the petitioner ought not to be denied the benefit of the scheme more so that the learned counsel for the petitioner has made a submission that he is still willing to deposit the amount for a period of four years from today and would not claim any interest on the same. - HC
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• High Court Rules Section 234E Late Fees for TDS Returns Unenforceable Before June 1, 2015 Due to Lack of Authority.

  Case-Laws - HC : Penalty u/s 234E - late fee for delayed filing of TDS returns - when the statute confers no express power under section 200A before 01.06.2015 on the authority either to compute and collect any fee under section 234E, the demand for the period before 01.06.2015 could not be sustained.- HC
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• Penalty Imposed u/s 271G for Non-Compliance with Rule 10D; Assessee Cites Reasonable Cause u/s 273B.

  Case-Laws - AT : Penalty levied u/s 271G - Assessee has failed to maintain the information as per Rule 10D (1) (d), (g), (h) and (m) of Income Tax Rules - ‘reaso-nable cause’ under section 273B - assessee has a belief that such information is not required as well as not available, therefore , the assessee has ‘reasonable cause’ under section 273B of the Act for not maintaining the same. For failure as envisaged subject to penalty u/s 271G, if such failure is because of reasonable cause, no penalty can be levied. - AT
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• Undisclosed Income u/s 69B: Assessee Must Reconcile Discrepancy in Stock Reported to Bank and in Books.

  Case-Laws - HC : Undisclosed income u/s 69B - stock submitted to the bank - Such a tendency tantamount to commercial immorality for obtaining unjustified gains in the form of higher credit facility or loans etc. by showing incorrect statement of stock position to the Bank. In any case, the burden lies upon the assessee to reconcile the difference of stock position presented to the bank with the stock position mentioned in the books of accounts/audit report. Thus excess stock represented the income of the assessee from undisclosed sources. - HC
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• Challenge to Assessment Reopening: Section 147 Cited for Change of Opinion and True Disclosure of Facts in Tax Case.

  Case-Laws - HC : Reopening of assessment u/s 147 - True and full disclosure of all material facts - It is true that in the assessment order self-disallowances have not been discussed but at the same time it has been a subject of consideration during the assessment proceedings since the Assessing Officer has started from the business income as returned by petitioner, which included self-disallowances debited to the P&L Account. - it is a clear case of change of opinion to take a different view relying on the same set of documents. Change in opinion cannot construe “reason to believe”. - HC
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• Appellant's Derivatives Loss Deduction Denied; No Provision to Amend Income Return via Letter Without Revision.

  Case-Laws - AT : Rectification of mistake u/s 154 - Disallowing Derivatives F & O loss and Speculation profit - The appellant sought to claim a deduction by way of a letter before the Assessing Officer. The deduction was disallowed by the Assessing Officer on the ground that there was no provision under the Income-tax Act to make amendment in the return of income by filing an application at the assessment stage without revising the return. - Action of AO confirmed - AT
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• Section 68 Addition Invalid: Cash Deposits in Savings Account Not Considered 'Books' for Tax Purposes.

  Case-Laws - AT : Addition u/s 68 - addition of the cash deposits in the assessee’s savings bank account - as the bank account of an assessee cannot be held to be the 'books' of an assessee maintained for any previous year, thus, no addition under Sec. 68 of the Act could have validly been made in respect of a simpliciter deposit made by the assessee before us in her bank account. - Thus addition made by the A.O under Sec.68 cannot be sustained, and is liable to be vacated - AT
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• Court Rules in Favor of Revenue: Non-Payment Doesn't Affect Capital Gains Recognition u/s 2(47.

  Case-Laws - AT : Chargeability of capital gains - Year of assessment - Transfer of capital asset u/s 2(47) - The assessee never cancelled the said former development agreement even unilaterally as it has entered into the latter supplementary agreement on 25.09.2014 in continuity with the earlier one only. The question as to whether mere non-payment of the corresponding consideration; if any, would keep the impugned long term capital gains in abeyance has already been decided in Revenue's favour - AT
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• Assessee Fails to Prove Share Applicant Credibility; Section 68 Additions Confirmed Due to Unjustified Share Premiums.

  Case-Laws - AT : Addition u/s 68 - In the instant case, despite numerous opportunities granted by the A.O, the assessee failed to substantiate with evidence to his satisfaction regarding the identity and creditworthiness of the share applicants and the genuineness of the transaction. It is also not understood as to how the assessee company was able to get share premium of ₹ 49,990/- per share for a ₹ 10/- per share when it is not doing any worthwhile business. - Additions confirmed - AT
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Customs

• Penalties under Customs Act Sections 112(a) and 114AA challenged; Act applied only within India before March 29, 2018.

  Case-Laws - AT : Levy of penalty u/s 112(a) of the Customs Act, 1962 and u/s 114AA of the Customs Act - the Customs Act prior to 29.03.2018 was applicable only to the whole of India and not beyond the territorial jurisdiction of India. Penalty, therefore, could not have been imposed upon the appellant under section 112(a) of the Customs Act - AT
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Corporate Law

• Court Rules 2013 Companies Act Supersedes 2014 Rules; Directors' Disqualification u/s 164(2) Invalidated.

  Case-Laws - HC : Disqualification of Directors - cessation of office as directors - non-filing balance sheets and annual returns for a continuous period of three years from the year 2014-15 - Section 164 (2) of Companies Act - This Court is also of the view that the provisions of the 2013 Act have an overriding effect on the Companies (Appointment and Qualifications of Director) rules of 2014. The said rules can, therefore, not have any manner of application or confer in right on the petitioners, insofar as their disqualification as directors - On the power of the ROC to deactivate the DIN of the petitioners it would be necessary to go into whether the provisos to the two Section 164(2) and 167(1), introduced subsequently by amendment. - HC
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Indian Laws

• Appellant acquitted as prosecution fails to prove bribery demand essential u/s 7 for conviction.

  Case-Laws - SC : Bribery - demand of illegal gratification - demand of ₹ 3,000/- by way of illegal gratification was made by the appellant for passing the assessment order - this is a case where the demand of illegal gratification by the appellant was not proved by the prosecution. Thus, the demand which is sine quo non for establishing the offence under Section 7 was not established. - SC
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IBC

• Tribunal Rules Appellant Failed to Prove Loan Disbursement for Time Value of Money Under IBC Section 5(8.

  Case-Laws - AT : Recovery of dues - It cannot be forgotten that in the case on hand the Allottees had approached the Appellant/Applicant for the financial assistance which was disbursed by the Appellant as Loan amounts to the respective Allottees which was then disbursed by the Allottees to the ‘Corporate Debtor’. The Appellant has not subjectively satisfied this Tribunal that the money which it is claiming was disbursed to the ‘Corporate Debtor’ for time value of money as per Section 5(8) of the I&B Code. Undoubtedly, the Appellant in ‘Law’ has a valuable right to proceed against the Allottees in the light of numerous documents executed between them. - AT
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Service Tax

• Service Tax Not Applicable u/s 66E(e) for Bank Guarantee Penalty in Berth Reservation Scheme at Ports.

  Case-Laws - AT : Levy of service tax - declared services - Berth Reservation Scheme, to accord priority berthing of specified users in the Port - penalty by way of encashment of Bank Guarantee for the equivalent wharfage in respect of the shortfall quantity of the MGT - It cannot be said towards tolerating any act or a situation on the part of the appellant and thus, there is no rendition of Declared Service under Section 66E(e) by the appellant. - AT
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• Service Tax Demand Overturned: Improper Use of Extended Limitation Period Due to Appellant's Transparency with Department.

  Case-Laws - AT : Demand of service tax - Extended period of limitation - In place of invoking extended period in cases of suppression of fact with an intent to evade payment of duty or tax, it is found that the department chose to invoke extended period in a case where the appellant has proactively informed the department about their activities and sought clarification. The Revenue had no case to invoke the extended period to issue show-cause notice - the impugned order does not survive on limitation either. - AT
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Central Excise

• Court Rules Insufficient Evidence to Deny CENVAT Credit Claim; Department Fails to Prove Fake Invoice Allegations.

  Case-Laws - AT : CENVAT Credit - fake invoices - credit availed based on invoices without actually receiving the goods - It is evident that except for the evidence in the form of records, statements of transporter’s employee and check post records, the department has not been able to bring any acceptable evidence to prove non- receipt of the duty paid copper inputs . The department also not been able to disprove by any logical means the receipt and use of duty paid copper inputs in the manner prescribed in and due compliance with the provision of Cenvat Credit Rules, 2004. - Credit cannot be denied - AT
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VAT

• U.P. Motor Vehicles Taxation Act: Tax Must Be Paid in Advance Per Section 9, Not at Time of Use.

  Case-Laws - SC : Liability to pay tax under the U.P. Motor Vehicles Taxation Act, 1997 - the requirement under law is to first pay the tax in advance as provided under Section 9 and thereafter to use the vehicle. In other words, it is ‘pay the tax and use’ and not ‘use and pay the tax’. Therefore, the submission on behalf of the appellant-financier that tax has to be paid at the time of use or thereafter cannot be accepted. - SC
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• Court Rules Interest Waiver on Tax Differential Not Allowed for Default Period; Payment Post-Assessment Revision Doesn't Benefit Revenue.

  Case-Laws - HC : Demand of interest on the differential amount of tax - There can be no waiver of interest for default period as such tax ought to have paid at the time of filing of return. By paying tax pursuant to revision of assessment, the petitioner is not doing a favour to the revenue. The petitioner is merely paying the tax which ought to have been earlier. Thus, there is no merit. - HC
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Case Laws:

• GST

• 2022 (2) TMI 1052
  Detention of goods alongwith the vehicle - demand of penalty at 200% of the tax as per Section 129 of the CGST Act, 2017 - respondent submits that the respondent s husband was a registered dealer under the GST Act and he had an untimely death and the respondent is taking steps to register herself as a dealer in the place of her husband and as on date she has stepped into the shoes of her husband - HELD THAT:- The technical objection raised by the appellant has to be agitated before the learned Single Judge as the appellant has been given an opportunity to file an affidavit-in-opposition. All that is required to be seen is whether the interest of revenue has been reasonably safeguarded. In our considered view, the respondent having paid the 100% of the admitted tax and further 10% of the disputed tax, the interest of revenue has been safeguarded, for the present. This order should not be treated as a precedent as this court has not interpreted the provisions of Section 129 of the Act and rendered this decision. The decision is based on facts after noting that the respondent is the wife of the deceased dealer and also that she is yet to be formally recognized as a dealer by substituting her name in the Registration Certificate for which specified procedure has to be followed. Therefore, this order shall not be treated as laying down a legal principle or treated as a precedent. Appeal dismissed.

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• 2022 (2) TMI 1051
  Interest liability - delay in furnishing GSTR-3B return - Liability to be imposed without any adjudication proceeding under Section 73 or 74 of the CGST Act which has been done admittedly or not - applicability of Section 112 inserting proviso to Section 50 of the CGST Act, or not - HELD THAT:- The issue at hand is whether interest liability under Section 50 of the CGST Act can be determined without initiating any adjudication proceeding either under Section 73 or 74 of the CGST Act in the event the assesse disputes its liability towards interest. It is not in dispute that no such proceeding has been initiated in the case of the petitioner, though the liability has been disputed by the petitioner by way of a reply to the notice of recovery under Section 79 of the CGST Act, 2017 - the case of the present petitioner stands covered by the ratio rendered by this Court in the case of MAHADEO CONSTRUCTION CO. VERSUS THE UNION OF INDIA, ASSISTANT COMMISSIONER, CENTRAL GOODS SERVICES TAX AND CENTRAL EXCISE, SUPERINTENDENT, CENTRAL GOODS SERVICES TAX AND CENTRAL EXCISE [ 2020 (4) TMI 666 - JHARKHAND HIGH COURT ] as despite disputing the liability towards interest, the revenue has raised a demand for payment of interest on the ground of delay in furnishing of GSTR-3B return for the period July 2017 to December 2019 without initiating any adjudication proceedings under Section 73 or 74 of the CGST Act, 2017. The impugned demand contained in letters dated 28th February 2020 / 2nd March 2020 (Annexure-4) is quashed - the writ petition is allowed.

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• 2022 (2) TMI 1050
  Seeking grant of bail - drawing fictitious statements of accounts - drawing of forged invoices - Section 16 of Central Goods and Service Tax Act, 2017 - HELD THAT:- Admittedly, the bail applicant was working, as a chartered accountant with proprietorship concerns. If he had purportedly not prepared above fictitious invoices, and, statements of accounts, the above offence would not have occurred. It is a matter of evidence whether the bail applicant has scribed either the invoices concerned, or the statements of accounts concerned, or has loaded them on, to the electronic devices concerned. Obviously, hence prima-facie, at this stage the above role, as ascribed by the prosecution to the bail petitioner cannot be tested, and, only after collection of evidence with respect to the afore, it can be concluded by the Inspector concerned, rather in his final report qua whether the inculpatory role as ascribed to the bail petitioner, becoming supported by the apposite thereto credible evidence, as becomes collected by him. This Court cannot at this stage, determine the validity of the incriminatory role as scribed to the bail petitioner by the prosecution. Moreover, since the bail petitioner did prima-facie ably facilitate the above entities in the commission of the offences. However, when at this stage though, there is no tangible evidence suggestive of his being a beneficiary of the illegal drawings, from the government treasury concerned, of monetary sums concerned, through the above purported illegal recoursing of passings off. Moreover, when even with respect of the above, the evidence is not completely collected, and, is in the stage of becoming investigated, and, also collected. Subject to the conditions being complied with by the petitioner, before the learned trial Judge concerned, the instant petition is allowed.

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• 2022 (2) TMI 1049
  Seeking grant of Regular Bail - preparation of fake invoices and availment Input Tax Credit (ITC) and its monetization through refunds - HELD THAT:- It may be debatable as to whether the role of the petitioner is confined to preparing forged documents at the instance of the co-accused or as to whether he was part and parcel of the larger conspiracy pursuant to which a loss of Rs. 21.60 crores was caused to the government on account of availing Input Tax Credit on the basis of forged documents. Without commenting any further on the merits of the case and while noticing that the petitioner has been behind bars since the last about 8 months and otherwise has a clean record, the petition is accepted and the petitioner is ordered to be released on regular bail on his furnishing bail bonds/surety bonds to the satisfaction of learned trial Court/Chief Judicial Magistrate/Duty Magistrate concerned. Petition allowed.

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• 2022 (2) TMI 1048
  Refund of IGST - rejection on the ground of time limitation - whether rejection of the claim of the petitioner for refund for the period April, 2018 to February, 2019 on the ground that the same was filed beyond the statutory period and not extended or covered as per the Government notifications, is proper? - HELD THAT:- The Court finds that the order impugned needs interference. The rejection of the claim has been solely on the ground that as per the Notification of the Central Government No.91/20 dated 14.12.2020, the time was extended only till 31.03.2021 for the activities which fell within the dates 20.03.2020 to 30.03.2021. The Court would note that such Notification is dated 14.12.2020 that is much prior to the order of the Hon ble Supreme Court dated 29.03.2021. Moreover, it need not be overemphasized that the direction of the Hon ble Supreme Court would finally hold the field and in the present case, when the Hon ble Supreme Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2022 (1) TMI 385 - SC ORDER] has clearly indicated that any computing of period of limitation for any such appeal, application of proceeding the period from 15.03.2020 till 02.10.2021 shall stand excluded and in the present case admittedly the application for refund having been filed on 12.05.2021, the petitioner is entitled to the benefit of such order. The matter is remanded to the respondent no.1 to pass fresh orders on the claim of the petitioner in terms of his application dated 12.04.2021 - appeal allowed by way of remand.

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• 2022 (2) TMI 1047
  Classification of supply - supply of goods or supply of services - composite supply or not - works contract - applicability of Entry 3(x) of Notification No. 11/2017-CT (R) dated 28.06.2017 i.e. provided by a sub-contractor to the main contractor providing services specified in item (vii) above to the Central/State Government, Union territory, a local authority, a Governmental Authority or a Government Entity taxable at the rate of 5% - HELD THAT:- The applicant is to provide only drilling and blasting operation with the usage of explosives for extraction of boulders at the said QUARRY to M/s Balajee. The applicant s submissions as well as the submissions of the jurisdictional officer that, the work of blasting with explosives which is subcontracted to the applicant, is a composite supply as defined under the GST Laws, is agreed upon - also since the Applicant is rendering a composite supply and since the said supply is in respect of immovable property i.e. Airport Land, it is found that the applicant is providing Composite supply of works contract as to M/s Balajee. Whether the work of drilling and blasting with explosives, which has been sub contracted to the applicant, falls under Sr. No. 3 (x) of Notification No 11/2017-CT (Rate) dated 28.06.2017? - HELD THAT:- Sr. No. 3 (x) of Notification No 11/2017-CT (Rate) elated 28.06.2017 states that Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item (vii) above to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity - the impugned service supplied by the applicant will be covered under Sr. No. 3 (x) of Notification No. 11/2017 - CTR dated 28.06.2017 only if the services provided by M/s Balajee to M/s CIDCO, a Government entity, falls under Sr. No. 3 (vii) of Notification No.11/2017-CT (Rate) dated 28/6/2017. Notification No.11/2017-CT (Rate) dated 28/6/2017 was amended vide Notification No. 15/2021 - CT(R) dated 18.11.2021 (with effect from 01.01.2022) and in Sr. No 3 (vii) of the amended Notification No. 15/2021-CTR dated 18.11.2021, the words Governmental Authority and Government Entity have been deleted. Therefore, with effect from 01.01.2022, the impugned services supplied by the applicant will not be covered under Sr. No. 3 (x) of Notification No. 11/2017-CT (Rate) dated 28/6/2017, as amended.

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• 2022 (2) TMI 1046
  Classification of supply - supply of goods or supply of services - works contract or not - setting up of network - Section 2(119) of the CGST Act - supplies contemplated as per the contract with BSNL are not treated as works contract, can these continue to qualify as composite supply or not? - rate of tax applicable to the supplies made under the contract - HELD THAT:- It is seen from the amendments from N/N. 11/2017-CTR dated 28.06.2017, the activities which were earlier covered by the Entry 3 (ii), after deletion of said sub-clause (ii), would get covered (said activities) under respective residual entry i.e Sr. No. 3 (xii) of the Notification No. 11/2017-CTR dated 28.06.2017 as amended by Notification No 03/2019 CGST (Rate) dated 29th March, 2019. The Authority, vide its earlier order (referred by the applicant) had classified the subject activities under the Entry 3(ii) of Notification No. 11/2017 - CTR- dated 28.06.2017, after considering all the headings of the said notification including Sr. No. 3 (vi) (a). The remaining headings are still in existence today and no new headings have been incorporated in the said notification after Notification No 3/2019 Dated 29th March, 2019, which can be considered to be relevant to the applicant s subject activities. Further, at this stage it is crucial to mention that the applicant had accepted the earlier ruling of this Authority - the subject activity of the applicant will be covered under Since Entry No 3 (xii) of Notification No. 11/2017-CTR- dated 28.06.2017 as amended till date. The activities of the applicant were covered under entry 3 (ii) of the Notification No. 11/2017 CGST (Rate) dated June 28, 2017 and thereafter with effect from 01.04.2019, the said activities are covered under Sr. No. 3 (xii) as amended by Notification No 03/2019 CGST (Rate) dated 29th March, 2019, taxable at the rate of 18% - the supplies of the Applicant are covered by sub-clause (xii) of Entry No. 3 of Notification No. 11/2017-CTR dated 28.06.2017 as amended and taxable @ 18% GST.

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• 2022 (2) TMI 1045
  Classification of services - whether the services supplied by the Applicant to Vedanta qualify as Support Services to Mining (Sr. No. 24) or Professional, Technical or Business Services to Mining (Sr. No. 21) under the Rate Notification? - services rendered by M/s. ION Exchange India to M/s. Vedanta appears to be classifiable under Heading 9983 or not - N/N. 20/2019-Central Tax(Rate) dated 30.09.2019 - HELD THAT:- Since services are in the nature of operational or administrative assistance provided by the applicant to Vedanta, it aptly merit classification as Support-services to mining as per heading 9986 of the Sr. No. 24 (ii) Rate notification No. 11/2017 central tax (Rate) dated 28/06/2017 (as amended). The applicant further contended that alternatively the supply of services by them should be classified as other professional, Technical and Business services relating to exploration, mining or drilling of petroleum crude or natural gas or Both under Heading 9983 of Sr. No. 21 (ia) of the Rate notification No. 11/2017 Central tax (Rate) dated 28/06/2017 (as amended). Whether the supply to be made by the applicant under the EPC contract awarded to them would be classified as Support services to mining or other Professional, Technical Business services relating to exploration, mining or drilling of Petroleum Crude or Natural Gas or Both or otherwise in any other service? - HELD THAT:- Support Services shall include the services to be provided for exploration, once the infrastructure/facility for exploration is built complete in all respect and ready to start exploration. But it does not include the services to be provided before creating the infrastructure/facility. Under the EPC contract the applicant has to undertake activities from Designing, Engineering, Procurement, construction of customised facility, commissioning of permanent facility, Test run and hand over of complete facility so designed, constructed, tested commissioned. Thus it cannot be treated as support services to oil gas extraction. The applicant has to undertake the Designing, Engineering, Procurement, construction of customised facility, commissioning of permanent facility, Test run and hand over of complete facility so designed, constructed, tested commissioned. Thus it cannot be classified as other professional. Technical and Business services relating to exploration, mining or drilling of petroleum crude or natural gas or Both - the services provided by the applicant neither fall under Support services to exploration, mining or drilling of Petroleum crude or natural gas or other professional, technical and business services relating to exploration, mining or drilling of Petroleum crude or natural gas or Both. The services provided under EPC contract awarded to the applicant by M/S Vedanta for setting up of a Sulphate Removal Plant broadly ranging from designing, engineering, Surveys, procurement, fabrication, manufacturing, erection installation, facilities construction, Pre commissioning Commissioning, training etc. and satisfactory hand over of complete Sulphate Removal Plant as per contract, it is a work contract of composite supply. The composite supply is a mixed of goods services and would be taxed accordingly under S. No. 3 Heading 9954 (ii) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 and GST @ 18 % is payable.

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• 2022 (2) TMI 1044
  Input tax credit - inputs/capital goods - input services - Section 16 and 17 of the CGST/ RGST/ IGST Act - capital goods and inputs constitute plant and machinery of the Applicant which are used in the business of Manufacturing PP/HDPE Woven Sacks or not - blocked input tax credit under section 17(5) of the CGST/ RGST/ IGST Act or not? - HELD THAT:- Section 16 (1) of the CGST Act specifically provides that every registered person shall be entitled to take credit of the input tax charged on any supply of goods or services or both made to him, which are used or intended to be used in the course or furtherance of his business. Such entitlement is subject to fulfillment of certain conditions such as possession of invoice, receipt of goods/service, payment of tax to Government etc. as provided under Section 16(2) of the GST Act, 2017. However, the availability of credit is subject to the restrictions as stipulated under Section 17(5)(d) of the GST Act, 2017 - the restriction imposed herein is absolute in nature as it seeks to override Section 16(1) which entitles a registered taxpayer to avail credit on goods or services used or intended to be used in the course or furtherance of business. Irrespective of the fact that the goods or services are used for construction of immovable property which in turn will be used for conducting business, credit is not available; if the ownership of the property remains with the said person. In order to install/embed the said power plant at the roof top of its own building, there would be construction/erection of pillers on which the said plant is to be installed and certainly there would be lot of other civil work which support to construct the said plant. Such work can not be done without fasten and embed the part of said plant at roof top of the building - the roof top of the building is attached to earth and simultaneously plant to be fastened/embedded is attached to roof top. This results in permanently fastened to anything attached to the earth as per Section 3(26) of the General Clauses Act, 1897. Further, for the purposes of clauses (c) and (d) of sub-section 5 of Section 17 of CGST Act, 2017, the expression construction includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property. Hence, the erection, commissioning and installation of the said power plant covers in expression of construction . Whether the capital goods and inputs constitute plant and machinery of the Applicant? - HELD THAT:- The explanation to Section 17(5) provides plant and machinery means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes,- (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. Solar Power Generating Plant of the applicant qualify as plant and machinery as it falls under machinery - Although, construction of Solar Power Generating Plant at rooftop of the building of applicant is an immovable property, however the said Solar Power Generating Plant qualify as plant and machinery , hence it not covered under blocked credit as mentioned in 17(5)(d) of the CGST Act, 2017. Thus, the applicant is eligible for Input credit of Inputs, Capital goods and Services related to setting of Solar Power generator plant for captive consumption.

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• 2022 (2) TMI 1043
  Input tax credit - GST charged by the Medical/ Health Insurance Company in respect of insurance done for employees - requirement prescribed under Section 17(5)(b) stands satisfied or not - HELD THAT:- On perusal of section , it is observed that the following two condition is required to avail ITC to medical/health insurance.- (i) outward taxable supply should be same category. (ii) Inward supply should be an element of a taxable composite or mixed supply. It is a fact that the applicant is a manufacturer of textile item and supply is also taxable items. We find that, neither applicant is a supplier related to health insurance service nor this service has an element of supply of textile - In view of the above the applicant cannot claim ITC of GST charged by the Medical/Health insurance company in respect of insurance done for employees, as provided under section 17(5)(b)(i) of the CGST Act, 2017.

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• 2022 (2) TMI 1042
  Project Management Consultancy services provided to Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation (RUDSICO) under Rajasthan Secondary Towns Development Sector Project - Invoice is raised by the Applicant to the Leading Member, who further raise invoice to RUDSICO of complete amount - pure services or not - exemption under SI. No. 3, (Chapter 99) of Table mentioned in Notification No. 12/2017 - Central Tax (Rate) Dated 28/06/2017 - Governmental Authority or not - HELD THAT:- The services provided by the Applicant to RUDSICO is Project Management Consultancy Services is in relation to Rajasthan Sector Towns Development Sector Project (RSTDSP) for rehabilitation and expansion of water supply network, rehabilitation and expansion of sewerage network, modernization and construction of new water supply and wastewater treatment plants which is listed in Twelfth Schedule to Article 243 W of the Constitution - the PMC services provided by the Applicant to RUDSICO is a Pure Service eligible for exemption under Notification no. 12/2017-Central Tax (rate) dated 28.06.2017. irrespective of the way of raising Invoice as stated in the Joint Venture Agreement. Whether the applicant is eligible for exemption under notification 12/2017central tax rate dated 28.06.2017 or otherwise? - HELD THAT:- It is seen that the following three conditions are to be fulfilled to be eligible for taking the benefit of the exemption from GST under the above notification:- (i) Pure services are to be provided. (ii) Such services provided should be by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution of India or in relation to any function entrusted to a Municipality under Article 243W of the Constitution of India; and (iii) Service recipient should either be Central Government or State Government or Union territory or Local authority or Governmental authority. In the present case, as regard the first condition to be discussed is as to what is meant by pure service? Since pure service has not been defined under GST. the same can be construed in general terms as any supply, which is either deemed as services under Schedule II of CGST Act or which are not covered under the definition of goods shall be categorized as pure services. It is seen that the services provided are of only consultancy services. The applicant has also declared that PMC services provided by them has no component of supply of goods. Since there is no involvement of supply of goods in the services, the services would be termed as pure services . Hence, the first condition is fulfilled. As regard the second condition, the project will include O M embedded construction contracts combining design, construction and O M for water supply and waste water contracts for a period of 10 years. This will support the municipalities O M responsibility and improve the quality of service delivery by providing continuity in system operation as well as O M. In view of the above, we conclude that the supply of Consultancy services by the applicant are in relation to function of town planning and water supply. As regard the third condition, as per the master data submitted by the applicant, we find that the total authorized capital is Rs. 50 crores and the paid up capital is Rs. 48.67 crore.It is further found that total paid up capital, wherein, only Rs. 41 crore holding with Government of Rajasthan through H.E. governor of Rajasthan, which is less than 90%, as per the definition given under Notification no. 11/2017-Central tax (rate) and Notification no. 12/2017- Central tax (rate) dated 28th June 2017 as stated above, the recipient of the service viz. Rajasthan Urban Drinking Water Sewerage Infrastructure Corporation Limited (RUDSICO) is not a Governmental authority. Therefore, they are not eligible for exemption under notification no. 12/2017 central tax (Rate) dated 28.06.2017.

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• 2022 (2) TMI 1041
  Classification of goods - rate of GST - Solar Pump - Controller - Structure - Solar Water Pumping System (comprising of Solar panel + Controller + Solar Pump + Structure) - Solar panel + Solar Controller + Solar Pump - Solar Pump + Solar Panel - Solar Pump + Controller - Solar Panel + Controller - Supply of Solar water pumping system as a whole comprising of goods (Solar Panel + Solar Controller + Solar Pump 4 Structure) along with the installation of Solar water pumping system for drinking water application. Solar Panels - HELD THAT:- Solar Panels (also known as Photovoltaic/PV Panels ) are made of solar cells (also known as PV cells ) which are connected to each other in series and parallel connection. Solar cells are made up of silicon semi-conductor material which converts the energy generated from sunlight into electrical energy. The electrical energy generated by conversion of sunlight is known as Solar power. Solar PV modules/panels are to be positioned at proper inclination to collect maximum energy from the sunlight - Under the GST tariff, SI. No. 234 of Schedule-I of GST Tariff has a specific entry for Solar PV cells which is taxable at the rate of 5%. Solar pump - HELD THAT:- The solar pumps whether AC or DC have a low voltage capacity and hence in solar water pumping systems, solar pump sets are fitted with solar charge controllers to maintain the frequency of current supplied to them - Entry 234 of Scheduled, specifically covers the parts for manufacture of Solar Power Generating System or Solar Power based devices - Hence, solar pump is solar power based devise and is classifiable under SI. No. 234 of Notification No. 0172017 - CT(Rate) dated 28.06.2017 and taxable at the rate of 5% GST. Solar Controller - HELD THAT:- Solar Controller is technically known as a Charge controller. It determines how much power should be injected into the batteries for optimum performance. It measures the efficiency of the entire system as well as the operating life of the batteries. It also protects the battery bank from overcharging. Whenever a battery is used, a charge controller is also used to ensure longer battery life - controller is neither solar power based devise nor part of solar power based devices and fall under chapter heading 85 of GST Tariff which has a specific entry for Electrical transformers, static converters and inductors as 8504 - controller attracts 18% rate of GST. Structure - HELD THAT:- STRUCTURES attracts 18% rale of GST. Solar Water Pumping System - HELD THAT:- Since, Solar Water Pumping System is not the whole device it is made of Solar panel. Controller, Solar Pump, Structure etc, includes procurement, development, testing, commissioning etc hence, it is a mixed supply for goods and services. The Solar Water Pumping System (comprising of Solar panel + Controller + Solar Pump + Structure) is a Mixed Supply and highest rate of GST will be applicable amongst goods supplied by the applicant. What should be the classification and GST rate on Supply of Solar water pumping system as a whole comprising of goods (Solar Panel + Solar Controller + Solar Pump + Structure) along with the installation of Solar water pumping system for drinking water application? - HELD THAT:- In the present case, the applicant is proposed to supply the functional solar water pumping system as a whole, which include supply, installation, commissioning maintenance. The proposed supply including installation. commissioning maintenance would fail under the ambit of works contract service as per Section 2(119) of CGST Act.2017 and attracts 18% GST - the proposed supply comprising of Solar Panel, Solar Controller. Solar Pump, Structure along with the installation shall attract GST @18% under S. No. 3 of Heading 9954 (ii) of Notification No. 11/2017. dated 28.06.2017.

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• Income Tax

• 2022 (2) TMI 1064
  Offence u/s 276(c)(1) and 277 - petitioner filed incorrect Income Tax Returns declining loss of business - Seizure of documents in search proceedings - HELD THAT:- During search, some documents were seized by the respondent. On verification, it was found that the loss accounted was not corroborated with the books of account and also found that the books of account of his business were not properly maintained by the petitioner. On assessment of notice, the petitioner filed revised Income Tax Returns and also paid the penalty - deletions made in the assessment was purely on the basis of difference of opinion as to the estimates and not a case of concealment of income or even furnishing of inaccurate particulars of income. To attract the provisions of Section 276C prosecution has to establish that the accused willfully attempted in any manner to evade any tax, penalty or interest chargeable or imposable under the Act. To attract the provisions of Section 277 of the Act, the prosecution is required to establish that the accused made a statement in any verification under the Act, which he either knows or believes to be false, or does not believe to be true. Presumption under Section 132(4)(a) of the Act is with regard to the books of account or the other documents found in possession of a person from whom it is seized. The same presumption shall not apply for offence, under Section 276(c) and 277 of the Act. There is no act of concealment on the part of the assessee. The gravamen of indictment relates to filing of incorrect return and making wrong verification of the statements filed in support of the return, resulting in initiation of penalty proceedings. Admittedly, in this case, it is only wrong calculation of the loss sustained in his business, which is not supported by the books of account or other documents. The petitioner paid the penalty as early as on 23.04.2014. Three years thereafter, show cause notices were issued to the petitioner. In these cases, the entire payments paid by the petitioner and there is no intention to evade payment. The Assessment Orders shows that only penalty was levied for wrong calculation of loss and no concealment of income, penalty paid in the year 2014. In this case, there is no material to show that there was any deliberate and conscious evasion of tax on the part of the petitioner. In this case, there is no concealment of income. - Decided in favour of assessee.

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• 2022 (2) TMI 1063
  TP Adjustment - ALP determination - whether the Associated Enterprises (AE) of the respondent/assessee could have been accepted as a tested party for the purpose of determining the Arms Length Price (ALP) and whether there is a bar from doing so under the Indian Transfer Pricing Regulations? - HELD THAT:- After noting several decisions, it was held that the Indian Transfer Pricing guidelines issued by the Institute of Chartered Accountants of India vide guidance note on report under Section 92E by ICAI and transfer pricing guidelines issued by OECD does not prohibit AE to be a tested party. The Tribunal accepted the stand taken by the assessee that the AE can be selected as a tested party. In the light of the decision in the case of Virtusa Consulting Services (P.) Ltd. [ 2021 (2) TMI 378 - MADRAS HIGH COURT] as well as on the factual aspect which has been noted by the Tribunal with regard to the FAR profile of both the assessee company and the AE, we are of the considered view that the finding rendered by the Tribunal is just, proper and legally valid. Whether the Tribunal was right in directing the assessing officer to accept the segmental analysis for the transaction of purchase of finished goods, receipt of commission and sale of finished goods by the assessee from the AE? - DRP, on noting that such issue was raised by the assessee before it for the first time, forwarded the contention to the TPO for his consideration and submit a remand report. The TPO in his remand report held that the segmentation of profitability provided by the assessee has no basis and is far fetched and not audited. Upon consideration of the remand report submitted by the TPO, the DRP accepted the same and denied relief to the assessee for the assessment year 2012-13. However, for the assessment year 2013-14 and the subsequent assessment year 2014-15 the DRP has accepted the stand of the assessee with regard to the segmentation of the profitability. These factors were taken into consideration by the Tribunal and on facts it was noted that the adjustment can be made only on the basis of the transaction and not on aggregation and, accordingly, accepted the segmentation analysis of the assessee. Noting that the facts are same for the assessment year 2013-14 as well as 2014-15, hence, we find that the conclusion arrived at by the Tribunal cannot be faulted. Whether the administrative support services and IT support services received by the assessee from the AE could have been treated as stewardship functions? - When the matter was dealt with by the Tribunal, it noted the decision of the Tribunal in the assessee s own case for the assessment year 2011-12 and accepted the case of the assessee. In paragraph 39 of the impugned order the order passed by the Tribunal [ 2019 (4) TMI 1304 - ITAT KOLKATA] for the assessment year 2011-12 has been quoted from which we find that a thorough factual analysis was done by the Tribunal for the said year held that the assessee has established the nature of services including the quantum of services received from the AE and such services were provided in order to meet specific need of the assessee for such services, economic and commercial benefit derived by the assessee. Thus, we find that the third issue raised by the revenue is entirely factual and no substantial question of law arises for consideration.

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• 2022 (2) TMI 1062
  Pradhan Mantri Gareeb Kalyan Yojana (PMGKY) scheme - whether petitioner qualifies for the benefits enumerated in section 199-I of Act No. 48 of 2016 granting immunity from the provisions of the Income-tax Act? - amount could not be deposited solely on account of the fact that the first bank that the petitioner went to was not authorised to collect the money and the second bank that the petitioner went to could not accept the money since the banking hours had closed - Can an assessee be denied the benefit of the scheme when there is partial fulfilment of the requirement of the scheme ? - HELD THAT:- In the present case, the petitioner-assessee has tried to deposit the amount and in support thereof has produced annexures C and D to the writ petition. Annexure D is the application form in form 2 as required under the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016. If at all the amount had been accepted by the bank, this application and declaration could have been subsequently submitted by the petitioner to the respondent-Department. It is only on account of the bank not accepting the deposit that form 2 could not be got counter signed with an acknowledgment from the bank and not be submitted by the petitioner to the respondent-Department. In the peculiar nature of the facts of the present case, we are of the considered opinion that the petitioner has made all efforts to try and comply with the requirement of the Pradhan Mantri Garib Kalyan Deposit Scheme. In such a situation, 66 per cent. of the compliance having been done, the petitioner ought not to be denied the benefit of the scheme more so that the learned counsel for the petitioner has made a submission that he is still willing to deposit the amount for a period of four years from today and would not claim any interest on the same. Petition stands allowed.

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• 2022 (2) TMI 1061
  Penalty u/s 234E - amounts covered by respective intimations towards late fee for delayed filing of TDS returns - intimation received under Section 200A - scope of amemdment - HELD THAT:- As relying on SRI. FATHERAJ SINGHVI AND OTHERS VERSUS UNION OF INDIA AND OTHERS [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] when the statute confers no express power under section 200A before 01.06.2015 on the authority either to compute and collect any fee under section 234E, the demand for the period before 01.06.2015 could not be sustained. WP Allowed.

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• 2022 (2) TMI 1060
  Penalty levied u/s 271G - A ssessee has failed to maintain the information as per Rule 10D (1) (d), (g), (h) and (m) of Income Tax Rules - reaso-nable cause under section 273B - assessee had made substantial compliance, failing to note that under TNMM adopted by the assessee, the profit of the international transaction has to be furnished, whereas the assessee has only furnished the entity level margins which consists of overall profits on AE and significant non-AE transactions - CIT (A) deleted the above penalty. He held that the Transfer Pricing Officer was not prevented and was not forced to accept the ALP methodology adopted by the assessee. He has not made use of the details submitted by the assessee, which were lot wise details of exported cut and polished diamonds - HELD THAT:- As requisite detail asked during the Assessment Year 2011-12 were not required for earlier years and no adjustment was made. Therefore, the details asked for by the learned Transfer Pricing Officer may be relevant for determination of Arm s Length price. But was asked for the first time, not question by ld TPO in past TP Assessments, therefore, assessee has a belief that such information is not required as well as not available, therefore , the assessee has reasonable cause under section 273B of the Act for not maintaining the same. For failure as envisaged subject to penalty u/s 271G, if such failure is because of reasonable cause, no penalty can be levied. Thus, we find no infirmity in the order of the learned CIT (A) in deleting the penalty. The various judicial precedents stated before us are also to the same effect. There is a reasonable cause for failure on the part of the assessee, which saves assessee from levy of penalty under, section 271G of the Act. In the Result, we dismiss the appeal of the learned Assessing Officer. - Decided in favour of assessee.

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• 2022 (2) TMI 1059
  Unexplained investment u/s.69 - Addition based on seized document - HELD THAT:- As seized document i.e. ledger account of Shri Manish Pinjani appearing in the books of account of M/s. R.S. Automobiles, Raipur, proprietary concern of the assessee evidencing receipt/repayment of loan of Rs. 1 lacs by Shri Manish Pinjani to the assessee was also seized in the course of the aforesaid search proceedings and form part of the seized document. Viz. LPS-13 . The said fact on a standalone basis can in no way establish to the hilt a nexus of the assessee with the contents of the incriminating document evidencing payment of Rs. 8,86,000/- towards purchase of the aforesaid property in question i.e. Plot No.47. We are of a strong conviction that as no nexus between the contents of the aforesaid incriminating document evidencing payment of Rs. 8,86,000/- has been established with the assessee before us, therefore, we are of the considered view that the addition of the same could not have been made in the hands of the assessee. We thus, in terms of our aforesaid observations vacate the addition made by the AO during the year under consideration. - Decided in favour of assessee.

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• 2022 (2) TMI 1058
  Income accrued in India - Business Connection and Permanent Establishment = presence of BC/ PE of the assessee in India - HELD THAT:- The Hon ble Delhi ITAT vide its order in assessee s own case [ 2021 (10) TMI 1023 - ITAT DELHI] held that the assessee has a BC/ PE in India. In arriving at this conclusion, the coordinate bench followed the decisions of Hon ble Delhi High Court and Hon ble Delhi ITAT in case of assessee s predecessor entities i.e. TGDSBV and Galileo International Inc. ( GII ). - Decided against assessee. Attribution of 75% of the India related gross profit instead of 15% of revenue to the alleged PE of the assessee in India - HELD THAT:- As decided in assessee s own case [ 2021 (10) TMI 1023 - ITAT DELHI] the correct attribution to PE of the assessee in India is 15% of the gross booking fees. Also see [ 2021 (10) TMI 1004 - ITAT DELHI] Allowability of 100% of distribution expenses - HELD THAT:- This ground is covered in favour of the assessee in the case of assessee s predecessor entity i.e. TGDSBV for AY 2007-08 to 2012-13 and AY 2014-15, wherein the coordinate bench of ITAT [ 2021 (10) TMI 1004 - ITAT DELHI] Allowed 100% deduction of distribution fees in the hands of the assessee. Allowability of other expenses like apportionment of technology service fees, vendor cost, amortization expenses and finance cost - HELD THAT:- The coordinate bench of ITAT vide its order [ 2021 (10) TMI 1004 - ITAT DELHI] in the case of assessee s predecessor entity, TGDSBV for AY 2007-08 to 2012-13 and AY 2014-15 has allowed 70% deduction of all other expenses in the hands of TGDSBV relying on non-discrimination clause. Allowability of head office expenses under section 44C - assessee submitted that as per section 44C of the Act, a non resident assessee shall be allowed claim of head office expenditure incurred, notwithstanding the provisions of section 28 to section 44C of the Act - Also submitted that the Ld. AO and the Hon ble DRP have suo moto allowed the deduction of head office expenditure in AY 2016-17, however the amount of such expenditure is computed incorrectly - HELD THAT:- In view of the above submissions of the assessee, we remit this issue to the file of the Ld. AO for allowing the correct claim of the head office expenditure to the assessee in the light of the details/information/ documents already on record and which he may require the assessee to furnish before him.

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• 2022 (2) TMI 1057
  Disallowance u/s 14A r.w.r. 8D - Mandation of recording satisfaction - as per assessee in absence of recording of proper satisfaction, the disallowance made by the AO and sustained by the CIT(A) is not correct - HELD THAT:- Assessee has received dividend income only in respect of one scrip and the average investment - We find, the Special Bench of the Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI ] has held that only the investments that has yielded exempt income during the year has to be considered for computing the average value of investment u/s. 14A r.w.r. 8D of the Income-tax Rules, 1962. Hon ble Delhi High Court in the case of ACB India Ltd. vs. ACIT [ 2015 (4) TMI 224 - DELHI HIGH COURT ] has held that for the purpose of provisions of section 14A, instead of taking into account the total investment, the investment attributable to dividend was required to be adopted and, thereafter, the disallowance was to be arrived at. We, therefore, deem it proper to restore the issue to the file of the AO with a direction to recompute the disallowance u/s. 14A r.w.r. 8D by considering the investments which has actually yielded dividend income and decide the issue as per fact and law, after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

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• 2022 (2) TMI 1056
  Disallowance u/s 54F - assessee did not purchase or construct any new residential house, but claimed to have acquired residential house by way of a gift deed, that too, 3/4th share of the property owned by the assessee s spouse - As contented assessee had re-invested his capital gain both in residential property by way of obtaining gift from his wife and repairs and maintenance incurred thereupon so as to be eligible for Section 54F deduction - HELD THAT:- We find no merit in the assessee s arguments as it has come on record that the impugned gift had been executed in the year 2012-13 without any actual consideration having re-invested in favour of the spouse concerned. Coupled with this, CIT(A) has made it clear that the assessee had failed to prove repairs and maintenance expenditure alleged to have been paid to his relative contractor Shri Kota Ramakrishna, who could neither prove any repair activity to this effect nor genuineness of the claim as it was found that even this recipient s return had been filed belatedly to cover up the impugned issue. All these clinching findings on facts have gone un-rebutted from the assessee s side. - Decided against assessee.

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• 2022 (2) TMI 1055
  Non admission of additional evidences by CIT-A as filed under rule 46A of the Income Tax Rules - CIT(A) refused to accept additional evidences under Rule 46A - HELD THAT:- Referring to order of the ld. CIT(A) and the provisions of Rules 46A, we hereby direct the assessee to demonstrate the pre-requirements as per the Rule 46A(1)(a) to 46A(1)(d) before the revenue authorities. The revenue authorities shall examine the issue afresh with regard to admission of additional evidence and further adjudication on merits. Since, the entire issue has been remanded back to the file of the ld. CIT(A), adjudication on the other grounds taken up by the assessee is not resorted to. Appeal of the assessee is allowed for statistical purpose.

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• 2022 (2) TMI 1054
  Income from house property - Annual value determination - addition of Deemed Rent of house properties lying vacant for whole of the year - deemed annual value @ 5% of value of investment in house property was calculated by ld. CIT(A) - Rejection of assessee contention that properties were not let in past years and letting in future years does not entitle the assessee to relief granted in section 23(1)(c) - HELD THAT:- We find that the AO has computed 10% of the value of investments in house property whereas the ld. CIT(A) reduced the amount to 5% of the value of investments. Both decisions are on ad-hoc basis. The rent realized by the assessee in the subsequent years is on record with all the evidences. Hence, we deem it proper to refer the matter back to the file of the AO to compute the income from house property as per the municipal value in accordance with the provisions of Section 23(1) of the Income Tax Act, 1961. Appeal of the assessee is allowed for statistical purpose.

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• 2022 (2) TMI 1053
  Income from house property - computation of standard rent - ALV of the property is the value for which the property might reasonably be expected the let during the year or actual rent receipt whichever is higher - HELD THAT:- We find that the AO was under the wrong impression that equal rate of rent should be charged from all the tenants disregarding the time, location and the facilities enjoyed by each tenants. Once, the revenue comes to a conclusion that the rent received by the assessee is less than the ALV, it is for the revenue to obtain the details of the ALV from the competent authorities to prove that the rent receivable by the assessee is less than the ALV. In this case, the revenue failed to do so instead they have embarked upon a flat rate of determination of rent. CIT(A) also failed to utilize the opportunity of obtaining the details of ALV from the district authorities while denying the standard rent received by the assessee. The entire action of the revenue simmers down to determination of a notional rent without any support of the Uttar Pradesh Urban Building (Regulation of Letting, Rent and Eviction) Act, 1972. Hence, the action of the revenue authorities cannot be sustained. Assessee appeal allowed.

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• 2022 (2) TMI 1040
  Undisclosed income u/s 69B - difference of stock between the stock submitted to the bank as on 28/3/2005 and the stock indicated in the audit report for the period ending 31/03/2005 relating to raw material, stock-in-process and finished goods - HELD THAT:- No evidence has been produced by the assessee of sale and purchase of raw material and finished goods during the period 28.03.2005 to 31.03.2005 as found by the Assessing Officer in the previous assessment order, as well as, set aside assessment order, as affirmed by the Tribunal. Hence, the entire gamut of matter is in the realm of facts and does not give rise to substantial question of law. Even otherwise, as has been held in catena of decisions by different High Courts, the practice followed by Industrialists declaring larger than actual quantity of stock to the Bank for the purpose of getting higher loans or over-draft facility, in fact, is not recognized as conforming to the fiscal discipline by Courts, Authorities and Tribunals. Such a tendency tantamount to commercial immorality for obtaining unjustified gains in the form of higher credit facility or loans etc. by showing incorrect statement of stock position to the Bank. In any case, the burden lies upon the assessee to reconcile the difference of stock position presented to the bank with the stock position mentioned in the books of accounts/audit report. Thus excess stock represented the income of the assessee from undisclosed sources. Once the Assessing Officer finds that there was excess stock, in absence of explanation by the assessee, the conclusion is inescapable that the excess stock, if any, was from undisclosed sources. Further, once the assessee s explanation, if any, has not been accepted, the resultant position is that there was excess stock un-disclosed in the books of accounts and non disclosure was only with a view to suppress the income. - Decided against assessee.

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• 2022 (2) TMI 1039
  Reopening of assessment u/s 147 - True and full disclosure of all material facts - HELD THAT:- There has been a full and true disclosure of the material facts by petitioner. It may be noted at the cost of repetition that in the recorded reasons, it has not been alleged that there has been any failure on the part of the assessee to make a full and true disclosure of the material facts. AO has also asked petitioner to specifically explain the facts relating to the sum debited to the P L Account towards provisions for customs duty and why a disallowance should not be made under Section 143(3) - Petitioner has explained the full facts vide its letter dated 14th November 2007. Amount has been offered to tax by petitioner in the succeeding Assessment Year 2006 2007 and assessed. It is only thereafter the Assessing Officer has passed the assessment order dated 30th November 2007 in which he has thoroughly discussed the explanation of the assessee on the issue of provision for customs duty in para 5 of the assessment order and held that the sum was disallowable under Section 143(b) of the Act on the ground that there was no actual payment. In computing the total income under the normal provisions of the Act, the Assessing Officer started from the business income as returned by petitioner, which included self-disallowance debited to the P L Account towards advance doubtful of recovery and provision for non-moving inventory, respectively. Therefore there has been a true and full disclosure of all material facts by petitioner. It is true that in the assessment order self-disallowances have not been discussed but at the same time it has been a subject of consideration during the assessment proceedings since the Assessing Officer has started from the business income as returned by petitioner, which included self-disallowances debited to the P L Account. Therefore, there can never be escapement of income. Respondent no.1 Assessing Officer also applied his mind to the computation of book profits under Section 115JB of the Act. In the assessment order, respondent no.1 has held that petitioner s deferred tax liability of Rs. 512,47,42,000/- had to be added to the book profits. He computed the book profit at Rs. 140,362,63,678/- and computed total tax payable by petitioner at Rs. 110,06,18,525/-. Therefore, in our view, there has been a full and true disclosure of the material facts by petitioner and it is a clear case of change of opinion to take a different view relying on the same set of documents. Change in opinion cannot construe reason to believe . - Decided in favour of assessee.

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• 2022 (2) TMI 1038
  Validity of Reopening of assessment u/s 147 - notice beyond period of four years - eligibility of reasons to believe - Addition of expenses towards leased assets repurchase - HELD THAT:- The reasons recorded by the Assessing Officer,singularly lack the element of satisfaction recorded by the Assessing Officer that the escapement of income was on account of the failure on the part of the petitioner to make a true and full disclosure. Nay, there is no assertion that there was a failure to disclose on the part of the petitioner. the causal connection between alleged escapement and failure to disclose is simply non-existent. The petitioner had made a full and true disclosure of the material, which forms the basis of the alleged reasons to believe escapement of income, and there was also a conscious consideration of the said material by the Assessing Officer during the course of scrutiny assessment under Section 143(3) of the Act, 1961, also appears to be borne out by the material on record. Expenses towards leased assets repurchase - The situation which is obvious is that during the course of the scrutiny assessment under Section 143(3) of the Act, 1961, the Assessing Officer had made specific query as regards leased assets repurchase expenses and solicited explanation and documents. In compliance thereto, the petitioner furnished the requisite information and documents. It is true that in the assessment order dated 18th December, 2008, the Assessing Officer did not specifically advert to the said aspect of the matter and in terms record that the explanation so furnished was accepted and allowance upheld. However, this factor is not of decisive significance. It is trite law that once a query is raised and the assessee furnishes explanation thereto, the Assessing Officer is presumed to have applied his mind to the question so raised and the fact that the Assessing Officer had not specifically dealt with the said aspect in the assessment order does not justify an inference that the Assessing Officer did not consider the same. On the contrary, it would be justifiable to assume that the Assessing Officer was satisfied with the explanation so furnished by the assessee. Once it becomes evident that the Assessing Officer had raised the query and reply thereto was furnished by the assessee, the endeavour on the part of the revenue to reopen the assessment is fraught with two infirmities. One, it cannot be said that the income escaped assessment on account of failure to make a true and full disclosure of the material facts (in cases where the proviso operates). Two, the exercise would then fall in the realm of mere change of opinion on the basis of the very same material, which is legally impermissible. Further, it cannot be said that there is a tangible material which would justify recourse to the provisions contained in Section 147 Non-application of mind - The second leg of the alleged escapement of income to the tune of Rs. 1,78,05,149/- towards assets written off (irregular spares) , is not at all borne out by the material on record. The claim of the petitioner that in the return submitted by the petitioner, the said amount of Rs. 1,78,05,149/- came to be added back, finds support in the computation of income submitted along with the tax audit report. Evidently, the Assessing Officer had not at all adverted to the fact that the petitioner had not claimed the said amount of Rs. 1,78,05,149/- as deduction towards the revenue expenses. Failure to take cognizance of the fact that the said amount of Rs. 1,78,05,149/- came to be added back as income erodes not only the sanctity of the reasons recorded by the Assessing Officer but also the sanction accorded by the Principal Commissioner, under Section 151 of the Act, 1961. As contextually relevant to note that the rejection of the objections to the reopening also suffers from a familiar error, which the notices for reopening usually manifest. The Assessing Officer in the impugned order recorded that though the details of the expenses were called for and brought on record, no further inquiry regarding the expenses was conducted and, thus, the Assessing Officer (during the course of the scrutiny assessment) cannot be said to have applied his mind and recorded a finding as to the allowability or otherwise of the said expenses. These reasons betray a clear change of opinion on the same material. Thus the impugned notice under Section 148 and the consequent action are required to be quashed - Decided in favour of assessee.

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• 2022 (2) TMI 1037
  Addition of investment in unexplained stock - burden of proving excess stock - Whether Tribunal is right in holding that the burden of proving excess stock is on the revenue when the assessee himself has admitted the availability of excess stock and thereby deleting the addition ? - HELD THAT:- It is the case of the Assessee that the closing stock declared by the Assessee and accepted by the Commercial Tax Department has been rightly accepted by the Income Tax Department (the Assessing Officer) and therefore, the confirmation of the same by the Income Tax Appellate Tribunal has to be upheld. Assessee has brought to the notice of this Court the decision rendered by this Court in SK. USMAN ALI [ 2015 (3) TMI 891 - MADRAS HIGH COURT] relating to the same assessee (for the Assessment year 2001-2002), whereunder, relying upon the decision reported in Sakuntala Devi, Khetan [ 2013 (3) TMI 270 - MADRAS HIGH COURT] it has been held that the Assessing Officer has to adopt the figures and turn over finally assessed by the Sales Tax Authorities. This decision is binding upon the Revenue. Therefore, the contention of the Revenue that it has powers to tinker with the stock estimated by the Sales Tax Authorities cannot be accepted. Therefore, the appeal filed by the Revenue fails

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• 2022 (2) TMI 1036
  Deduction of liability on account of the provision of leave encashment which has not fallen due within the financial year 1995-1996 corresponding to AY 1996-1997 - deduction of Voluntary Retirement Scheme (VRS) payments which is payable in future years and not crystallized expenditure of this year is in the nature of provision to meet the future liability - HELD THAT:- Tribunal rightly took note of the decision of the Hon ble Supreme Court in Metal Box Company of India Ltd. Vs. Workmen [ 1968 (8) TMI 53 - SUPREME COURT] which was followed by the Hon ble Supreme Court in Bharat Earth Movers [ 2000 (8) TMI 4 - SUPREME COURT] . Therefore, we find there is no error in the order passed by the Tribunal. Hence, question Nos. 1 and 2 are decided against the Revenue. Short term or long term capital gain - whether Consideration received on sale proceeds of assessee s chemical undertaking is not liable to tax as short term capital gain under Section 50 of the Income Tax Act or as long term capital gain? - HELD THAT:- As in assessee s own case in [ 2021 (12) TMI 143 - CALCUTTA HIGH COURT] we have dismissed the Revenue s appeal and decided the question in favour of the respondent/assessee. Thus, following the said decision, the substantial question No. 3 is also answered against the Revenue.

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• 2022 (2) TMI 1035
  Reopening of assessment u/s 147 - Assessment time barred - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia in Section 149 - Constitutionality of certain provisions of CBDT Notification No.20/2021 dated 31.03.2021 and Notification No.38/2021 dated 27.04.2021 - HELD THAT:- Similar challenge to Constitutionality of these provisions is made before the various High Courts. The High Court of Delhi in Mudra Finance Limited [ 2021 (8) TMI 197 - DELHI HIGH COURT] in Mon Mohan Kholi vs. Assistant Commissioner of Income Tax Anr.[ 2021 (12) TMI 664 - DELHI HIGH COURT] , and in Tata Communications Transformation Services Limited vs. Assistant Commissioner of Income Tax 14(1)(2), Mumbai Others [ 2021 (8) TMI 195 - BOMBAY HIGH COURT] and High Court of Calcutta in Babaria Properties and Investments Private Limited Anr. [ 2022 (1) TMI 742 - CALCUTTA HIGH COURT] have entertained the similar petitions and granted interim protection to the petitioners therein. Learned counsel for the respondents prayed for time to file reply but did not dispute the aforesaid contentions of learned counsel for the petitioner that similar petitions have been entertained by other High Courts and interim protection has been granted. Considering the aforesaid, the respondents are permitted to file reply in the matter.

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• 2022 (2) TMI 1034
  Validity of Assessment u/s 144-B - Denial of opportunity of personal hearing - Scope of the word may - HELD THAT:- In terms of Section 144-B 7(vii) seeking an opportunity of personal hearing which has been denied. Learned counsel submits that fair opportunity has not been provided to put up their submissions and defence and the order goes beyond the contents of the show cause notice. Learned counsel also relied upon the judgment delivered by Delhi High Court in the case of Sanjay Aggarwal Vs. National Faceless Assessment Centre, Delhi [ 2021 (6) TMI 336 - DELHI HIGH COURT ] to submit that the provision contained under Section 144-B 7 (viii) where the Chief Commissioner was required to approve the request for personal hearing is mandatory form, as the word may as to mean shall for the said purpose. Issue notice of the writ petition as well as stay application, returnable by 18.10.2021.

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• 2022 (2) TMI 1033
  Deduction u/s 80HHC - Income earned from hiring plant and machinery - Whether the income earned by the Appellant from leasing its plant and machinery in course of its business activity of leasing is in the nature of rent as contemplated under Explanation (baa) to Section 80 HHC of the Act? - Whether income earned by leasing plant and machinery is synonymous to the words rent or charges as contemplated in Explanation (baa) to Section 80 HHC? - HELD THAT:- In Sesa Goa Ltd [ 2015 (5) TMI 621 - BOMBAY HIGH COURT ] this Court had considered that receipts from hiring barges would be in the nature of rent or similar to rent and, therefore, would fall in items specified in clause (baa) of Explanation to section 80HHC. It has been observed, the assessee has not been able to show that such an activity had any nexus to the export activity and, thus, the decision in Ravindranathan Nair s case [ 2007 (11) TMI 10 - SUPREME COURT ] had been followed. In the present matter as well, the assessee is not at loggerheads with the revenue that the amount sought to be deducted from the profits of business, under section 80HHC is not an income earned from export. It is the income earned by hiring plant and machinery. The situation thus as has been observed by the authorities hitherto is squarely covered by the decisions in Ravindranathan Nair s case and Sesa Goa (supra). There is no point in remitting the matter to the authorities. The income earned from hiring out plant and machinery would have to be deducted pursuant to Explanation (baa) to Section 80 HHC. Having regard to emerging position, what has been disallowed pursuant to Explanation (baa) to Section 80HHC is the income from hiring out plant and machinery which is independent of exports. The substantial questions of law as answered in the affirmative.

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• 2022 (2) TMI 1032
  Rectification of mistake u/s 154 - Disallowing Derivatives F O loss and Speculation profit - assessee did not claim loss in the original return filed - whether the omission to claim in the original returns for the assessment year under consideration will enable the assessee to file application under section 154 of the Income-tax Act to rectify the said omission? - HELD THAT:- It is an admitted fact that the assessee did not claim loss in the original return filed by it. It is also an admitted fact that the assessment was completed based on the computation of income submitted by the assessee along with its return of income. The assessee has also not filed revised return of income under section 139(5) of the Income-tax Act to rectify the alleged omission to claim loss in his return of income. Under section 139(5) of the Income-tax Act, an assessee can file a revised return before the completion of assessment or within one year from the end of the respective assessment year whichever is earlier. In the case on hand, admittedly, assessment has been completed based on the original return of income filed by the assessee. Therefore, the omission to claim loss in the original return cannot be termed as a mistake apparent on record. The question raised in this appeal relates to whether the appellant-assessee could make a claim for deduction other than by filing a revised return. The appellant sought to claim a deduction by way of a letter before the Assessing Officer. The deduction was disallowed by the Assessing Officer on the ground that there was no provision under the Income-tax Act to make amendment in the return of income by filing an application at the assessment stage without revising the return. The concurrent finding of the authorities below does not suffer from any perversity or illegality and the substantial questions of law raised by the assessee in this appeal does not carry any merit. - Decided against the assessee.

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• 2022 (2) TMI 1031
  Penalty u/s 271(1)(c) - Taxability of ALV - HELD THAT:- Taxability of ALV was highly debatable and, in fact, right from Assessment Year 1998-99 and till such time, while the Assessing Officer was making similar additions, the ld. CIT(A) and the Tribunal were consistently deleting the same year after year. It is not in dispute that it is only by order dated 31.10.2012 [ 2012 (11) TMI 323 - DELHI HIGH COURT ] the Hon ble High Court of Delhi decided the issue against the assessee. It is equally true that SLP of the assessee is pending before the Hon ble Supreme Court. Past history of the assessee clearly shows that taxability of ALV in respect of vacant commercial/self-occupied assets was a highly debatable issue and two views were possible. Since the assessee has taken a plausible view, the same cannot be considered as filing of inaccurate particulars of income or concealment of particulars of income. Therefore, we do not find any error or infirmity in the findings of the ld. CIT(A). Ground No. 1 is accordingly dismissed. Defective notice - Notice issued by the Assessing Officer u/s 274 r.w.s 271(1)(c) of the Act to be bad in law as it did not specify which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The issue was decided in favour of the assessee - See SSA Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT ]

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• 2022 (2) TMI 1030
  Addition u/s 68 - addition of the cash deposits in the assessee s savings bank account with Axis Bank - HELD THAT:- We are persuaded to subscribe to the contention advanced by the ld. A.R that as the bank account or bank passbook of an assessee cannot be held as his books of account , therefore, no addition in respect of a simpliciter cash deposit made in the said bank account could be validly made under Sec.68 to the I.T. Act. Our aforesaid observations is duly fortified by the judgment of the Hon ble High Court of Bombay in the case of CIT Vs. Bhaichand N. Gandhi [ 1982 (2) TMI 28 - BOMBAY HIGH COURT] We are of the considered view that as the bank account of an assessee cannot be held to be the books of an assessee maintained for any previous year, thus, no addition under Sec. 68 of the Act could have validly been made in respect of a simpliciter deposit made by the assessee before us in her bank account. Thus addition made by the A.O under Sec.68 cannot be sustained, and is liable to be vacated - Decided in favour of assessee.

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• 2022 (2) TMI 1029
  Addition u/s 68 - credit balance appearing in the books of account of the assessee - HELD THAT:- As the outstanding liability of the assessee towards M/s. DPSIPL would have crystallized in corresponding unaccounted sales that would have been made by the assessee to the said party, in our considered view, is an observation which is absolutely in the thin air and is clearly devoid and bereft of any supporting material. In our considered view, even if for the sake of argument the aforesaid observation of the AO is accepted, we find no justification as to on what basis the addition of unaccounted purchases corresponding to the alleged unaccounted sales made by the assessee to the aforementioned party could be related to the year under consideration and not to the preceding year. Be that as it may, we are of the considered view that as there is no material on record to support the aforesaid view of the AO, therefore, the same does not merits acceptance. Adverting to the observation of the CIT (Appeals) that it was beyond comprehension and business prudence that the aforementioned party i.e. M/s. DPSIPL would have advanced the amount in two installments, i.e, more than two months before receiving the first bag of cement from the assessee, we are of the considered view, that by so observing the CIT(A) had tried to convey that the liability in question in itself was bogus. If that be so, then, we are of the considered view that no addition qua the outstanding liability in question could have been made in the hands of the assessee during the year under consideration - See USHA STUD AGRICULTURAL FARM LTD. [ 2008 (3) TMI 91 - DELHI HIGH COURT] There was no justification on the part of the A.O in making the impugned addition u/s.68 of the Act during the year. Backed by our aforesaid observation, we find no justifiable reason to uphold the view taken by the CIT (Appeals) as regards the impugned addition. - Decided in favour of assessee.

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• 2022 (2) TMI 1028
  Addition of Guest fees/Income from hire of rooms/Hire charges in respect of club properties / Housie participation fees - temporary members are not eligible to share surplus on any dissolution of club and principal of mutuality is not acceptable for such members - HELD THAT:- Issue covered in favour of assessee and against the Revenue by the orders of the Tribunal passed in assessee s own case for the several earlier years, wherein a consistent stand was taken by the Tribunal right from the beginning that the addition made by the Assessing Officer on account of Guests fees from member, Hire charges, Income from rooms and Housie participation fees cannot be sustained as the principle of mutuality is applicable in the assessee s case. Since the Ld.CIT(A) has followed the consistent view taken by the Tribunal in assessee s own case for the earlier years and the Ld.DR has not been able to point out anything to the contrary, we find no infirmity in the impugned order of the Ld.CIT(A) giving relief to the assessee on this issue and upholding the same, ground No.1 of Revenue s appeal is dismissed. Disallowance of expenses u/s.57(iii) - HELD THAT:- This issue is also covered in favour of assessee by the consistent view taken by the Tribunal in assessee s own case for the several earlier years and since the Ld.CIT(A) has followed the view of the Tribunal, we find no justifiable reason to interfere with the order of the ld.CIT(A), wherein he has given relief to the assessee on this issue. The same is upheld and ground No.2 of Revenue s appeal is dismissed.

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• 2022 (2) TMI 1027
  Rectification u/s 154 - Exemption u/s 11 - HELD THAT:- It is clear that the issue for consideration before us has its roots in order passed under Section 154 rectifying the AO - The aforesaid assessment order has already been set aside by the Tribunal vide common order [ 2021 (11) TMI 1024 - ITAT MUMBAI] . Therefore, we are of the view that it would be in the interest of justice that the issue before us pertaining to the utilization of accumulated also remanded to the file of AO who would be at liberty to examine the same in terms of Section 11(3)(c) of the Act and the grant relief to the Assessee, if any, as per the applicable law. Accordingly, the issue is remitted to the file of Assessing Officer and the present appeal is disposed off in terms of the aforesaid directions.

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• 2022 (2) TMI 1026
  Late payments towards ESI and EPF u/s 36(1)(va) - Payment before furnishing the return of income under section 139(1) - HELD THAT:- In the present case, it is not in dispute that the assessee deposited the contribution of PF ESI belatedly in terms of section 36(1)(va) of the Act. However, the said deposits were made prior to filing of return of income u/s. 139(1) of the Act. It is noticed that an identical issue having similar facts has already been adjudicated in RAJA RAM [ 2021 (11) TMI 370 - ITAT CHANDIGARH] wherein addition on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s. 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee.

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• 2022 (2) TMI 1025
  Chargeability of capital gains - Year of assessment - Transfer of capital asset u/s 2(47) - CIT-A deleting the impugned long term capital gain addition made on protective basis - HELD THAT:- The assessee had entered into a development agreement cum GPA dt. 04.03.2009 (duly registered document) wherein the possession was irrevocably handedover to the developer party M/s. AMSRI Builders. There is further no dispute that this followed the latter supplementary agreement dt. 25.09.2014 between assessee, M/s. AMSRI Builders and M/s. Rajaram Constructions which is in continuity with the first main development agreement only. That being the case, we express our due agreement with the Revenue s arguments that the assessee had indeed transferred the relevant capital asset by way of a registered development agreement cum GPA on 04.03.2009 relevant to A.Y. 2009-10. We further make it clear that such a part performance has indeed been treated as transfer u/s. 2(47)(v) as per the hon ble jurisdiction high court in case of Potla Nageswara Rao[ 2014 (8) TMI 636 - ANDHRA PRADESH HIGH COURT] . We further find no merit in assessee s vehement contentions that once the developer had not performed the agreement hereinabove, the same stands annulled by the efflux of time. This is for the reason that the assessee has failed to pinpoint any of the specified conditions in the original agreement that time was essence of the contract in light of section 55 of the Indian Contract Act, 1872 The assessee never cancelled the said former development agreement even unilaterally as it has entered into the latter supplementary agreement on 25.09.2014 in continuity with the earlier one only. The question as to whether mere non-payment of the corresponding consideration; if any, would keep the impugned long term capital gains in abeyance has already been decided in Revenue s favour in the case of CIT Vs. Balbir Singh Maini [ 2017 (10) TMI 323 - SUPREME COURT] . Their lordships make it clear that mere accrual of income; when it becomes due, in such an instance gives rise to a corresponding liability of the other party. No merit in assessee s arguments placing reliance on Seshasayee Steels Pvt. Ltd.[ 2019 (12) TMI 70 2 - SUPREME COURT] at the same time since the assessee had executed an irrevocable transfer of possession as against a mere licence therein. The same stands distinguished therefore. AO herein had made a protective addition of long term capital gains in light of the clinching fact that it had been substantively assessed in the latter A.Y. 2015-16.Case law Banyan and Berry Vs. CIT [ 1995 (12) TMI 12 - GUJARAT HIGH COURT] holds that a protective assessment is very much at par with the substantive one. We thus are of the opinion that the mere fact of the impugned addition having been made on protective basis would hardly provide any relief to the assessee in light of the overwhelming factual possession supporting the Revenue s case in preceding paras. - Decided in favor of revenue.

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• 2022 (2) TMI 1024
  Addition u/s 68 - assessee could not substantiate the identity and creditworthiness of the Investor Companies and the genuineness of the transaction and the reason for charging huge premium - HELD THAT:- It is the settled proposition of law that for allowing a cash credit, the onus is always on the assessee to substantiate with evidence to the satisfaction of the A.O. regarding the identity and creditworthiness of the Investor/Share applicants and the genuineness of the transaction. In the instant case, despite numerous opportunities granted by the A.O, the assessee failed to substantiate with evidence to his satisfaction regarding the identity and creditworthiness of the share applicants and the genuineness of the transaction. It is also not understood as to how the assessee company was able to get share premium of Rs. 49,990/- per share for a Rs. 10/- per share when it is not doing any worthwhile business. Even before the Ld. CIT(A), despite number of opportunities granted, the assessee never bothered to appear before her and was seeking adjournment under one pretext or the other just to derail the appeal process Assessee failed to substantiate the identity and creditworthiness of the share applicants/ investors and the genuineness of the transaction and the reason for charging huge premium of Rs. 49,990/- per share of Rs. 10/-, we do not find any infirmity in the order of the Ld. CIT(A) in upholding the addition made by the A.O. - Decided against assessee.

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• Customs

• 2022 (2) TMI 1023
  Classification of goods - subsequent to the assessment of the Bill of Entry, the petitioner has uploaded it representation reaffirming the classification of the imported goods - requirement of speaking order in terms of Section 17(5) of the Customs Act, 1962 - principles of natural justice - HELD THAT:- Admittedly, in this case, after the assessment was finalised, the petitioner has filed an application for registering its protest on 27.08.2021. Though Section 17(5) of the Act contemplates passing of a speaking order within a period of 15 days of reassessment of Bill of Entry or shipping Bill, the issue as to whether the petitioner had to file a declaration under 4016 99 90 or under 8512 90 00 is a matter to be decided by the authority based on the facts that are available before the respondent and the petitioner. The Writ Petition is disposed off by directing the petitioner to participate in the aforesaid proceedings. Though in the counter, the respondent has stated that a notice of personal hearing has been issued to the petitioner, the date of personal hearing has not been disclosed - the respondent are directed to pass a speaking order on merits and in accordance with law, within a period of 30 days from the date of receipt of a copy of this order - petition allowed by way of remand.

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• 2022 (2) TMI 1022
  Smuggling from Myamar - Gold Biscuits - the goods mentioned in the invoices did not match with the actual quantity of the detected goods - Appellant has produced sufficient evidence to support his contention that the seized goods are not liable for confiscation or not - levy of penalty under Section 112(b)(i) of the Customs Act, 1962 upon the Appellant - discharge of onus to prove - HELD THAT:- The Adjudicating authority after having considered the documents produced by the Appellant has summarily held that the said documents were fabricated. However, there are no evidence available on record to support the finding in the adjudication order that the documents produced by the Appellant were fabricated. Had the Adjudicating authority suspected of such foul play, they could have easily examined the jewellers who had issued the invoices to the Appellant to establish the correct factual position. Therefore, the Appellant has produced sufficient evidence in support of its claim for ownership of 2158 gms of seized goods. The Revenue has failed to establish beyond reasonable doubt that the seized goods had indeed been smuggled from Myanmar. In order to hold that the seized goods are smuggled goods, the Revenue has sought to rely upon Order-in-Original No.CCP/NER/15/2019 dated 24.09.2019 to state that certain goods, being gold biscuits with KTS marking had been seized by the Customs authorities in another matter and the seized goods in the instant case having KTS marking ought to be from the same batch. However, we find it difficult to accept the contention of the Revenue in the absence of any expert report and/or pictorial evidence establishing any similarity between the goods seized and adjudicated vide Order-in- Original dated 24.09.2019 and the goods seized from the Appellant. Further, it may not be out of place to note that merely because two separate goods have similar markings, it is not sufficient to conclude that both such goods originated from the same place. In the instant case, the Appellant has produced receipts from Kanaram Tarachand Sons, jewelers in respect of 13 biscuits melted and converted by the Appellant. In view of the fact that the Adjudicating authority had the details of the jewelers in both cases, adjudicated vide Order-in-Original dated 24.09.2019 and the instant case, they could have easily examined the jewelers to establish whether the goods belonged to the same batch. However, unfortunately this exercise has not been carried out by the Adjudicating authority - the Appellant cannot be made to suffer for lapses on the part of the Adjudicating authority. Although there have been certain inconsistencies in the submissions made on behalf of the Appellant, the Adjudicating authority has failed to satisfy that the seized goods were goods brought from a place outside India, and therefore, the provisions under Section 111 of the Customs Act cannot be invoked - the Appellant has duly discharged the burden of proof under Section 123 of the Customs Act, 1962 - 2158 gms. of gold, being 13 gold biscuits of KTS marking, be released in favour of the Appellant after verifying the originals of the receipts and Vasihatnama produced by the Appellant before this Tribunal - Matter is remanded to the Adjudicating authority to issue a fresh Show Cause Notice to Mr. Vishal in respect of the remaining 1328 gms. of seized goods of which he has claimed ownership. Appeal allowed by way of remand.

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• 2022 (2) TMI 1021
  Levy of penalty u/s 112(a) of the Customs Act, 1962 and under section 114AA of the Customs Act - importers of Melamine - evasion of anti-dumping duty by over valuating the goods imported from China - HELD THAT:- A Division Bench of the Tribunal in SHAFEEK P.K., KERALA VERSUS CC, COCHIN [ 2015 (9) TMI 1257 - CESTAT BANGALORE] , after placing reliance upon a decision of a learned Member of the Tribunal in CK. KUNHAMMED VERSUS COLLECTOR OF CENTRAL EXCISE CUSTOMS [ 1992 (3) TMI 199 - CEGAT, MADRAS] observed that the provisions of the Customs Act would extend only to the whole of India and could not be made applicable to a resident of Dubai - Division Bench of the Tribunal in GURU ELECTRONICS SINGAPORE PTE LTD. VERSUS COMMR. OF CUS., BANGALORE [ 2008 (9) TMI 808 - CESTAT, BANGALORE] also observed that since the provisions of the Customs Act extend only to the whole of India, proceedings against a company which is incorporated abroad cannot be sustained. The learned Member also noted that the appellant had subjected to the jurisdiction of the Customs Act upon notice having been sent under section 108 of the Customs Act and concluded that penalty was rightly imposed - though the Division Bench decision of the Tribunal in Shafeek P.K. and the decision of a learned Member of the Tribunal in C.K. Kunhammed had been placed, which decisions clearly held that at the relevant time the Customs Act extended only to the whole of India and not beyond the territorial jurisdiction of India, but a contrary view was taken. It appears that the amendment made in section 1(2) of the Customs Act with effect from 29.03.2018 was not brought to the notice of the learned Member. The binding decision of the Division Bench of the Tribunal in Shafeek P.K. could not have ignored. In view of the Division Bench decision of the Tribunal, it has to be held that the Customs Act prior to 29.03.2018 was applicable only to the whole of India and not beyond the territorial jurisdiction of India. Penalty, therefore, could not have been imposed upon the appellant under section 112(a) of the Customs Act - Appeal allowed.

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• Corporate Laws

• 2022 (2) TMI 1020
  Disqualification of Directors - cessation of office as directors - non-filing balance sheets and annual returns for a continuous period of three years from the year 2014-15 - Section 164 (2) of Companies Act - HELD THAT:- To leave the responsibility of filing balance sheet and annual returns on an accountant of company is not only irresponsible but amounts to wilful negligence. It is difficult to accept that, the petitioners are diligent enough in filing Income Tax and GST returns but not Balance Sheets and Annual Returns. The illness of the petitioner No.2 cannot be a reason for not filing return for a continuous period of three years. No proof of evidence of such illness has been disclosed in the petition. It is essentially to deter conduct of this nature that Section 164 (2) and 167 (1)(a) have been introduced and applied under the Companies Act, 2013. Hence even on facts the petitioners have not made out any case for relief. Whether the petitioners were entitled to any prior notice before disqualification under Section 164 (2)? - HELD THAT:- It has been held in the case of NARESH KUMAR PODDAR VERSUS UNION OF INDIA, THROUGH SECRETARY, MINISTRY OF CORPORATE AFFAIRS AND ANOTHER [ 2021 (1) TMI 258 - CALCUTTA HIGH COURT] by a Co-ordinate Bench at Paragraph 25 thereof that since the disqualification under Section 164 (2) and 167 (1)(a) is automatic, by operation of law and leaving no discretion on the authorities, the question of application of principle of natural justice particularly prior hearing does not and cannot arise. In GAUTAM MEHRA VERSUS UNION OF INDIA [ 2021 (1) TMI 350 - CALCUTTA HIGH COURT] , Co-ordinate Bench has also held at Paragraph 92 and 93 that Section 164 (2) and 167 (1) (a), do not call for any prior notice or hearing. The object and purpose of Section 164(2) and 167(1) is indeed laudable. It is aimed at ensuring good governance and maintenance of high standards of probity and protection of the interest of Shareholders. Transparency in the activities of Companies is very vital for ensuring an enduring business atmosphere in an economy - This Court is of the view that the object and purposes of Section 164 and 167, as amended is to ensure probity and the highest standard of governance in Companies both public and private. A failure to file balance sheet and the annual returns for three consecutive years amounts to deliberate and wilful negligence. The public at large dealing with such companies cannot be put to the uncertainty, whim and fancy of recalcitrant directors. After all the requirements and compliances mandated under the Companies Act, are not only for the benefit of the shareholders of a particular company but also for the public at large, which rely upon such compliances, in assessing the conduct of and in deciding their relations with such companies. This Court is also of the view that the provisions of the 2013 Act have an overriding effect on the Companies (Appointment and Qualifications of Director) rules of 2014. The said rules can, therefore, not have any manner of application or confer in right on the petitioners, insofar as their disqualification as directors - On the power of the ROC to deactivate the DIN of the petitioners it would be necessary to go into whether the provisos to the two Section 164(2) and 167(1), introduced subsequently by amendment. It is, therefore, held that deactivation of the DIN of the petitioners is not automatic - the DIN of the petitioners shall be revived subject to the company having filed DR-9 within prescribed or extended time. The said DIN shall not be applied to entitle the petitioners to act as directors in any other company. Petition allowed.

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• 2022 (2) TMI 1019
  Maintainability of application - application seeking stay for holding of EGM are pending in the main company petitions before the Tribunal - HELD THAT:- Ongoing through the impugned order of the Tribunal, this Appellate Tribunal based on the facts and circumstances of the case is of the considered opinion that the same, does not require any interference, because of the fact that this Tribunal is of the considered view, despite the maintainability application being filed in regard to the issue of validity of the Company Petition, being filed by the concerned party, yet the Tribunal under the Companies Act, 2013 has an inbuilt inherent power, especially, in the teeth of Section 242 (m) of the act, to pass an order of admission and further, passing of an order of admission of Main Company Petition will not preclude the Tribunal to take up the maintainability of the application at a subsequent stage or to take up the same together with the main Company Petition as it deems fit and proper. This Tribunal comes to an irresistible and inevitable conclusion that the instant Appeal sans merits and it fails - Appeal dismissed.

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• 2022 (2) TMI 1018
  Sanction of Scheme of Amalgamation - Section 230(1) read with Section 232(1) of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed.

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• 2022 (2) TMI 1017
  Winding up of Company - Section 272(1)(a) and Section 271(a) of the Companies Act, 2013, read with Rule 2 of The Companies (Winding-UP) Rules, 2020 - HELD THAT:- No objections are received from the ROC and the report of the Income Tax department shows total outstanding demand for assessment year 2014-15 is Rs. 68,55,179/-. In the present case, it is an accepted position that the petitioner company is not engaged in any business from the year 2014. And the current liabilities of the company exceed its current assets and the net worth of the business has eroded as a result. These facts are not controverted by anyone. In consideration of all the facts and circumstances of the case, this is a fit case to wind-up the company under section 271(a) 272(1)(a) of the Companies Act, 2013 read with the Companies (Winding-up) Rules, 2020 - petition admitted.

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• 2022 (2) TMI 1016
  Seeking grant of Anticipatory bail - Hawala transaction - accusations against applicants are that they have not filed return - HELD THAT:- On carefully perusing the police papers, it appears that this complaint had been filed by the Assistant Registrar of the Company. As per the complaint, it reveals that the complainant had received confidential information that Income Tax Department had unearthed hawala-kand with one Chinese company and other cases are filed. The complaint also reveals that pursuant to the news, it came to the light of the Ministry Of Corporate Affairs, Delhi that Savariya International Pvt. Ltd. located at Surat is being running by some Directors and Chartered Accountant and the company was established on 23/07/2012 and after 2015-16 no financial statement had been filed. As per the complaint itself shows that the applicant of bail application no.643/2022 namely Nilamben Bodra had appointed as a director from 23/01/2017 - in absence of production of the books of accounts as well as other documents, C.A. cannot carried-out the function of audit. It is important to note that the Ld. adv. for bail application no.642/2022 and 643/2022 has contended that there is a Savaria International Pvt. Ltd. company situated at Delhi and the present complainant and other department had joined the company of Delhi based with this Savaria International Pvt. Ltd of Surat, but Savaria company located at Surat and Savaria company located at Delhi has no nexus is not tenable and it is to be investigate by the department concerned. On perusing papers, it appears that Ministry of Corporate Affairs Delhi had written a letter of dated 07/01/2022 to Naranpura police station to register the FIR on the ground mentioned therein. Therefore, the complaint itself shows and suggests that in-spite of huge income, less expenses have been shown by the company as alleged by the complainant. Considering facts and circumstance of the present case, there is a difference in balance-sheet is to be investigated and as per the facts of the complaint itself shows that there may be a breach of FERA and rules of RBI by the directors of the company. Therefore, contention of the Ld. adv. for the bail application no.642/2022 that there is no any kind of ingredients of cheating and breach of trust is not tenable looking to the papers - Bail cannot be allowed. Application rejected.

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• Insolvency & Bankruptcy

• 2022 (2) TMI 1015
  Recovery of dues - Appellant prays for considering the claim filed by the Appellant with a Liquidator as a distribution out of the assets of the Corporate Debtor is yet to be made - allotees/home buyers - Financial Creditors or not - HELD THAT:- It is to be pointed out that I B Code, 2016 envisages a time frame for completion of the Insolvency Resolution Process in a time bound manner. The CIRP and the Liquidation Process are to be completed within the specified time period. Further, in the instant case, the Appellant when it questions the determination of the Liquidator dated 05.09.2020 to the effect that the Appellant/Applicant is not a Financial Creditor , then, as per Section 42, in respect of the accepting or rejecting the claim, an Appeal is to be preferred against the decision of the Liquidator to the Adjudicating Authority within 14 days of the receipt of such decision. However, the Appellant has not availed the remedy of preferring an Appeal against the decision of Liquidator in terms of Section 42 of the I B Code. Power of Tribunal - HELD THAT:- A Tribunal can interfere where the Liquidator has not exercised his discretion in a bona fide manner or he was proposing to do an act which no reasonable or prudent person will do. A Liquidator as an Officer of the Tribunal is to act justly and fairly while dealing with an individual who has an adverse claim to his own and does not stand on his right either in equity or in Law, as opined by this Tribunal. Jurisdiction of Adjudicating Authority - HELD THAT:- In the present case, the rejection of the claim was duly communicated to the Appellant through Email dated 02.09.2020. The Appellant had not questioned the rejection of the Resolution Professional in rejecting the claim of the Appellant . It cannot be forgotten that in the case on hand the Allottees had approached the Appellant/Applicant for the financial assistance which was disbursed by the Appellant as Loan amounts to the respective Allottees which was then disbursed by the Allottees to the Corporate Debtor . The Appellant has not subjectively satisfied this Tribunal that the money which it is claiming was disbursed to the Corporate Debtor for time value of money as per Section 5(8) of the I B Code. Undoubtedly, the Appellant in Law has a valuable right to proceed against the Allottees in the light of numerous documents executed between them. The view taken by the Adjudicating Authority in dismissing the aforesaid IA is free from any legal error - Appeal dismissed.

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• 2022 (2) TMI 1014
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - scope of Corporate Person/Corporate Debtor - HELD THAT:- The fact that the Operational Creditor sent the Demand Notice under section 8 of IBC, 2016 dated 24.09.2019 in prescribed Form-3 demanding the payment of unpaid operational debt amounting to Rs. 20,76,923/- however, the Operational Creditor while filing the present application in prescribed Form-5 wherein, the part-IV containing Particulars of Operational Debt states that the Total amount of debt is 16,44,231/- which is a contrary amount to what was stated in section 8 Demand notice, however the Ld. Counsel for the Operational Creditor submitted that reason for change in amount is because the operational creditor accepted the assertion of the Corporate Debtor regarding being in employment since, 2007 and accordingly the Operational Creditor reduced the Gratuity amount. From the perusal of provision of section 3(7) of IBC, it is clear that a financial service provider is excluded from the definition of Corporate Person - Whereas, section 3(17) of the code defines Financial Service Provider means a person engaged in the business of providing financial services in terms of authorization issued or registration granted by a financial sector regulator. In the present case in hand the corporate debtor is a person engaged in the business of providing financial services in terms of the registration granted to it by the Reserve Bank of India, therefore it is clear that the Respondent do not come within the meaning of the Corporate Person/Corporate Debtor - this Tribunal hold that the present application under section 9 of IBC, 2016 is not maintainable. Application dismissed.

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• 2022 (2) TMI 1013
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors or not - function as principal or as an agent - existence of debt and dispute or not - HELD THAT:- It is clear that the Petitioners have rendered the services and there is no dispute with respect to the defect of the services. The only dispute is whether the Respondent/corporate debtor has merely acted as an intermediary or was acting as the principal/co-principal with C K. In order to arrive at any conclusion, the transactions and invoices, which shows that the invoice was raised in favour of Respondent and not C K are properly perused. Furthermore, part payment is made by the Respondent and not by C K. The respondent has deducted TDS and same is evident from Form 26AS and the Operational Creditor has deposited GST amount of Rs. 37,08,000/- on the entire amount of invoice in favour of the respondent - the respondent was not merely acting as an agent rather it was acting as the principal and hence is liable to pay the amount to the petitioners which it defaulted in part. As a result, this authority is inclined to initiate the CIR Process of Corporate Debtor. Therefore, the present petition is admitted. Application admitted - moratorium declared.

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• 2022 (2) TMI 1012
  Seeking exclusion of certain period in the CIRP period of the corporate debtor so that the CIRP period can be extended till 02.03.2022 - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 47A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- Considering the guidelines given by Hon ble Supreme Court in para 127 of its judgment in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT ], where it was held ordinarily the time taken in relation to the corporate resolution process of the corporate debtor must be completed within the outer limit of 330 days from the insolvency commencement date, including extensions and the time taken in legal proceedings. However, on the facts of a given case, if it can be shown to the Adjudicating Authority and/or Appellate Tribunal under the Code that only a short period is left for completion of the insolvency resolution process beyond 330 days, and that it would be in the interest of all stakeholders that the corporate debtor be put back on its feet instead of being sent into liquidation and that the time taken in legal proceedings is largely due to factors owing to which the fault cannot be ascribed to the litigants before the Adjudicating Authority and/or Appellate Tribunal, the delay or a large part thereof being attributable to the tardy process of the Adjudicating Authority and/or the Appellate Tribunal itself, it may be open in such cases for the Adjudicating Authority and/or Appellate 132 Tribunal to extend time beyond 330 days. Likewise, even under the newly added proviso to Section 12, if by reason of all the aforesaid factors the grace period of 90 days from the date of commencement of the Amending Act of 2019 is exceeded, there again a discretion can be exercised by the Adjudicating Authority and/or Appellate Tribunal to further extend time keeping the aforesaid parameters in mind. It is only in such exceptional cases that time can be extended, the general rule being that 330 days is the outer limit within which resolution of the stressed assets of the corporate debtor must take place beyond which the corporate debtor is to be driven into liquidation. The corporate debtor can be put on its feet. Hence, being an exceptional case, it justifies exclusion and extension of the period of CIRP - the period as prayed for is hereby excluded from the CIRP and thus the CIRP period is hereby extended till 02.03.2022 - Application allowed.

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• PMLA

• 2022 (2) TMI 1011
  Seeking grant of anticipatory bail - Money Laundering - proceeds of crime - scheduled offences - fraudulently inducing the banks to release loans using false documents - misappropriation in allocation of purchase orders for procurement of medicines and other medical equipment intended to be used in various ESI dispensaries in Telangana - requirement of compliance with Section 41-A of the Cr.P.C. - return of remand application, permissible or not. Whether the authorized authorities have to comply with Section 41-A of the Cr.P.C. before arresting a person under Section 19 of the PMLA? - HELD THAT:- The provisions of the Cr.P.C. will be applicable to PMLA proceedings as long as there is no inconsistency between both the statues. In case of any inconsistency or where separate provisions exist in both the statutes governing the same subject matter, the PMLA will override Cr.P.C. - What is sought to be provided under Section 41-A of the Cr.P.C. is provided under Section 19 of the PMLA. Further, as stated above, under Section 65 r/w Section 71 of the PMLA, Cr.P.C. will only apply where there is no inconsistency between both the statutes. In the present case, there is an inconsistency between the procedure of arrest as provided under Section 19 of the PMLA and Section 41 41-A of the Cr.P.C. Therefore, PMLA being a special statute will prevail over the Cr.P.C. The provisions relating to arrest and the protections under Cr.P.C were made applicable to the D C Act as no express provision of arrest is provided under the said Act. The power of arrest was impliedly read into the he D C Act by broadly interpreting Section 22(1)(d) which provides that the Inspector has such other powers as may be necessary to carry out the purposes of the D C Act. To check the wide power of the Inspector, the Court held that the arrests should be made in accordance with the Cr.P.C. implying the applicability of Section 41-A. However PMLA provides a specific procedure for arrests and enough safeguards to check illegal arrests. Thus, this Court holds that Sections 41 and 41A of the Cr.P.C. is not applicable to arrests made under Section 19 of the PMLA. Whether the Designated Court can return a remand application? - non-compliance of Section 41-A of the Cr.P.C. - HELD THAT:- The remand applications were returned. According to this Court, the Designated Court cannot return a remand application filed under Section 167(2) of Cr.P.C. It is relevant to note that a Court performs a judicial function while deciding an application for remand under Section 167(2) of the Cr.P.C. The Court while exercising the judicial function under Section 167(2) of the Cr.P.C. is bound to pass a judicial order by applying its mind. The Court under Section 167 of the Cr.P.C. by passing a judicial order has to, where there are adequate grounds for proceeding with the investigation, remand the accused to judicial custody or where no such further investigation is required release him on bail on satisfying conditions as prescribed - It is also relevant to note that neither the Cr.P.C. nor the Criminal Rules of Practice have any provisions conferring the power on the Court to return an application seeking remand under Section 167(2) of the Cr.P.C. While the Code of Civil Procedure under Order VII Rules 10 10A provides for return of plaint, no such provision/procedure is provided under the Cr.P.C. In the present case, the Designated Court had no power to return the remand applications filed by the DOE. Even if the Designated Court had come to a conclusion that Section 41-A of the Cr.P.C. was not complied with, it was incumbent on it to pass a reasoned judicial order rejecting the remand application. The Designated Court could not have let off the accused, against whom serious allegations of money laundering exist, by simply returning the remand application and not passing a reasoned judicial order. Thus, the Designated Court had committed grave error by returning the applications filed by the DOE under Section 167(2) of Cr.P.C. Therefore, the contentions advanced on behalf of the accused that a remand application can be returned is unsustainable - both the orders dated 18.12.2021 returning the remand application are erroneous, illegal and are liable to be quashed. Whether the petitioner is entitled for anticipatory bail? - HELD THAT:- On the score of anticipatory bail, it is trite knowledge that Section 438 CrPC is made applicable only in the event of there being an apprehension of arrest. The petitioners in the writ petitions herein are all inside the prison bars upon arrest against all cognizable offences, and in the wake of the aforesaid question relieving the petitioners from unnecessary disgrace and harassment would not arise - it can be said that an ordinary bail is sought by an accused to be released from the custody of the police, whereas anticipatory bail application is filed in anticipation of arrest and to prevent the police from taking custody of the accused. If the person is not in custody of the police, an application under Section 438 of the Cr.P.C. is maintainable. The Court has to see whether a person is apprehending arrest and subsequent custody of the police. Though the accused was arrested under Section 19 of the PMLA, he was released following the impugned order dated 18.12.2021. He was not in DOE S custody when the Crl.P.No. 10021 of 2021 was filed, therefore, he had filed an anticipatory bail application apprehending that DOE might take him into custody again. Therefore, the anticipatory bail application filed by the accused in maintainable. Section 45 of the PMLA prescribes twin conditions to be satisfied for granting bail. Bail can only be granted if the Public Prosecutor has been given an opportunity to oppose the release of accused and the Court should satisfy itself, based on reasonable grounds, that the accused is not guilty of the alleged offence and he is not likely to commit any such offence. In addition to the said conditions, under Section 45(2), the Court should also consider the other limitations on granting bail as prescribed under the Cr.P.C. - only when reasonable grounds exist regarding the innocence of the accused bail should be granted. In the present case, the allegations against the accused are that he is the main conspirator and has derived proceeds of crime in the form of movable and immovable assets. The accused along with other IMS officials and private persons is alleged to have conspired and misappropriated the allocation of purchase orders meant for procuring medicines and medical equipment - It is relevant to note that the DOE had enclosed the grounds of arrest along with the arrest order in Form No.III issued under Rule 6 of the Rules, 2005. In the grounds of arrest, details about the registration of crime, issuance of summons, recording of statements, etc. are specifically mentioned. It was also stated that the respondents are not cooperating in the investigation. Therefore, according to the DOE, considering the seriousness and graveness of the allegations, the respondent was arrested and produced him before the Designated Court along with application under Section 167 of Cr.P.C. Thus, according to the DOE, the authorized officer has sufficient material in his possession to believe that the respondent is guilty of the offences under the PMLA. This Court could not, prima facie, satisfy itself that the accused is not guilty. Therefore, the anticipatory bail application is dismissed.

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• Service Tax

• 2022 (2) TMI 1010
  Levy of service tax - declared services - Berth Reservation Scheme, to accord priority berthing of specified users in the Port - penalty by way of encashment of Bank Guarantee for the equivalent wharfage in respect of the shortfall quantity of the MGT - HELD THAT:- Tribunal in the case of M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI] has examined in detail the provisions of Declared Service under Section 66E(e) of the Finance Act, 1994, which was introduced in the Negative List based regime effective from 01.07.2012 - In the said case, the issue for consideration before the Tribunal was whether the assessee company was liable to pay service tax on the liquidated damages and penalty / forfeiture of earnest money deposit for recovery of amount due to non fulfilment of contractual agreement by one of the parties to the agreement. The Tribunal came to a conclusion that by collecting the penal amount as aforesaid, it is not the intention of the assessee to tolerate the non performance of the obligation which was cast upon him as per the commercial contract entered by the assessee with the other party. The decision of the Tribunal is squarely applicable in the instant case also wherein the amount collected by the appellant by encashment of Bank Guarantee for the shortfall of the quantity as against the Minimum Guarantee Tonnage (MGT) as per the scheme cannot be said towards tolerating any act or a situation on the part of the appellant and thus, there is no rendition of Declared Service under Section 66E(e) by the appellant. The impugned demand cannot be sustained and is thus set aside. Penalty imposed on the appellant is also set aside - Appeal allowed - decided in favor of appellant.

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• 2022 (2) TMI 1009
  Demand of service tax - Extended period of limitation - charges received by the appellant from its members - principle of mutuality of interest - HELD THAT:- The appellants are a body constituted by the Karnataka Government to supervise, coordinate the functions of various cooperative milk unions operating at various districts of the State. The appellants are registered under Karnataka Cooperative Societies Act. On going through the objectives of the Federation, we find that KMF is a cooperative apex body in the state of Karnataka representing organisations of milk producers and implementing all round diary development activities and the organisation is three tyred and structured on cooperative principles i.e., dairy cooperative societies at grassroot levels, cooperative milk unions at the district level and federation at the state level, thus it is very clear from the statement of objectives that the appellants are part of the federation. Any activity undertaken by the appellants is to be seen to be in the direction of benefit of its members i.e., themselves. The appellants are registered cooperative society and any such activity rendered by them to their member societies is a service to themselves and there is no service provider service receiver relationship between the members of the same organisation. The issue before us is squarely covered in favour of the appellants in view of decision in the case of M/S CHIPLUN NAGARI SAHAKARI PATSANSTHA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND VICE-VERSA [ 2015 (10) TMI 1857 - CESTAT MUMBAI ] where it was held that Section 65(25a), Section 65(105)(zzze) and Section 66 of the Finance (No. 2) Act, 1994 as incorporated/amended by the Finance Act, 2005 to the extent that the said provisions purport to levy Service Tax in respect of services purportedly provided by the petitioner club to its members, to be ultra vires. Learned AR places reliance on Kaira District [ 2002 (11) TMI 97 - SUPREME COURT ] the issue discussed therein was whether the apex body and the cooperative societies are related persons within the meaning of Section 4(4)(c) of Central Excise Act, 1944. Therefore, it is very clear that the ratio is clearly distinguishable on facts itself. Therefore, the demand of service tax does not survive on merits. Time Limitation - HELD THAT:- The department instead of giving clarification have decided to investigate the matter after two years and issued show-cause notice after further two years. In place of invoking extended period in cases of suppression of fact with an intent to evade payment of duty or tax, it is found that the department chose to invoke extended period in a case where the appellant has proactively informed the department about their activities and sought clarification. The Revenue had no case to invoke the extended period to issue show-cause notice - the impugned order does not survive on limitation either. Refund of Service Tax - tax paid under a mistake of law - applicability of time limit under Section 11B of CEA - HELD THAT:- the learned Commissioner (A) has not rejected the refund claim on this count. The only ground of rejection appears to be the contention that the refund application is premature as the main issue is pending before the Commissioner for a decision. In view of the same, we find that the Revenue objection is not relevant. Appeal allowed - decided in favor of appellant.

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• 2022 (2) TMI 1008
  Refund of service tax - rejection of refund being barred by limitation as well as being hit by unjust enrichment - HELD THAT:- The appellant made an application for refund after passing of the Final Order of CESTAT, Chennai, which is dated 13.06.2018 and the application for refund is dated 28.02.2019. Therefore, there are no reason as to how the said refund claim is hit by limitation. Section 11B of the Central Excise Act, 1944 prescribes one year within which an application for refund needs to be made and again, which is also qualified under Explanation (B)(ec) to Section 11B ibid. Going, therefore, by the dates, it is found that the appellant s claim is well within the prescribed period of limitation. Unjust enrichment - HELD THAT:- It is the case of the appellant that the Duty element was not passed on to its customers, in support of which they had placed reliance on documents like the certificate of Chartered Accountant, Income Tax returns, P L Account, etc. This fact, though has been considered by the Adjudicating Authority, yet the same is ignored and no contrary finding is given as to the veracity or otherwise of the same, by any of the authorities below - there are also sufficient force in the contentions of the Learned Advocate for the appellant that even the invoices did not reflect the element of Service Tax which is charged from its customers, which were also available with the Department. The Revenue has not pointed out any defects in the above documents and there is also no discussion as to the genuineness or otherwise of the same. The allegation of unjust enrichment has not been proved by the Revenue. On the other hand, in the absence of any contrary findings on the documents, the appellant has been able to successfully prove that the tax incidence has not been passed on to its customers - the rejection of refund is held to be vague and unjustifiable - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2022 (2) TMI 1007
  CENVAT Credit - fake invoices - credit availed based on invoices without actually receiving the goods - copper ingots/ copper rod purchased from the Jammu based unit which was not received by them as the same was diverted in and around Delhi - statement made by a witness - admissible evidence or not - case of the revenue is mainly based on the report from RTO Check Post, Commercial Tax Check Post and investigation carried out with transporter - HELD THAT:- As against the evidence relied upon by the revenue in the Show Cause Notice, the appellant have brought ample of evidences to prove the receipt of duty paid goods originated from Jammu and use thereof in the manufacture of their final product. There is neither any investigation nor any evidence on the aspects of alleged disposal of disputed inputs in or around Delhi. The investigation could not bring on record the single alleged buyer out of huge quantity of 303MT. Similarly, there are no details about transportation of goods or about financial transactions or any flow back from the suppliers of alleged buyers therefore, the alleged clandestine disposal of the disputed input remains unsubstantiated. As regard the allegation of the department about the substitution of the disputed inputs by scrap procured from market, there is no evidence showing details as to any single supplier of alleged substituted scrap or about transportation thereof, or any financial transaction with the alleged suppliers of the substituted scrap. This shows that the department s case of clandestine disposal of the disputed inputs and its substitution by procurement of scrap has no support of any evidence. The case of the revenue is based on some evidences such as RTO Report and Commercial Tax Check post report to allege that as per the said reports the vehicle has not passed from Delhi. On the contrary, the respondent have heavily relied upon various documents for movement of receipt of the duty paid copper inputs such as valid Central Excise Invoices, delivery challans, lorry receipts, entries in respondent s stores ledger, material inspection reports, etc. Against the said transaction payment through official bank channels for the full value of aforesaid duty paid copper inputs has been made against the Central Excise Invoice. It is also not disputed that the payment of the transport charges through the official bank channels to the transporter of copper inputs from Delhi to respondent s job worker s premises has been made - From the documents, it clearly shows that the respondent have received the copper goods transported from Jammu based manufacturers to the respondent s job workers. It is found that the revenue could not held the above documents as fake or incorrect. It is evident that except for the evidence in the form of records, statements of transporter s employee and check post records, the department has not been able to bring any acceptable evidence to prove non- receipt of the duty paid copper inputs . The department also not been able to disprove by any logical means the receipt and use of duty paid copper inputs in the manner prescribed in and due compliance with the provision of Cenvat Credit Rules, 2004. Alleged use of non-duty paid copper inputs required for manufacture of final product cleared on payment of duty - HELD THAT:- The department could not bring anything on record regarding the supplier of non duty paid copper inputs, its transportation, money transaction, etc. Therefore, it is proved without any doubt that the respondent have not purchased any non duty paid inputs without any documents to substitute the duty paid inputs therefore, on this basis also the department s allegation of non receipt of duty paid goods does not stand. The department in support of their allegation for non receipt of duty paid copper inputs by the Respondent could not bring a single buyer of the duty paid inputs which was alleged to have been diverted in an around Delhi. Therefore, in absence of any evidence the entire allegation is based on assumption, presumption and conjunctures. It is an admitted fact that the investigating officers have not enquired or investigated even a single supplier as regard actual supply of disputed inputs or as regard payment received by them for the value of disputed inputs. This is very vital to establish that the duty paid goods have not been transported to the respondent but diverted somewhere else. Thus, the department could not prove their case. The respondent have correctly taken the Cenvat credit, hence, there is no infirmity in the impugned order - Revenue s appeal is dismissed.

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• CST, VAT & Sales Tax

• 2022 (2) TMI 1006
  Liability to pay tax under the U.P. Motor Vehicles Taxation Act, 1997 - liability on the financier-in-possession of the transport vehicle or not - financier had extended a loan for the purchase of the transport vehicle and on default in payment of the loan is in possession of the vehicle in question - whether, a financier of a motor vehicle/transport vehicle in respect of which a hire-purchase, lease or hypothecation agreement has been entered, is liable to tax from the date of taking possession of the said vehicle under the said agreements? - HELD THAT:- In respect of a transport vehicle, the tax is to be paid in advance as monthly tax or yearly tax, as the case may be, and only thereafter such vehicle shall be put to use - therefore, before any transport vehicle is put to use or used, the owner is liable to pay the tax in advance and only thereafter the vehicle can be used or operated. The wordings of Section 4(2-A) are very clear that no public service vehicle SHALL BE USED in any public place unless a monthly tax at such rate as may be notified by the State Government is paid in respect thereof. As per Section 9(1)(iv)(a), the tax payable under sub-section (2-A) of Section 4 shall be payable in advance on or before fifteenth day of each month next following. Therefore, the requirement under law is to first pay the tax in advance as provided under Section 9 and thereafter to use the vehicle. In other words, it is pay the tax and use and not use and pay the tax . Therefore, the submission on behalf of the appellant-financier that tax has to be paid at the time of use or thereafter cannot be accepted. The owner or operator has to first pay the tax in advance and thereafter if the transport vehicle is not used for a continuous period of one month or more since the tax was last paid, he may have to apply for the refund, which may be granted subject to compliance of the necessary requirements as per first proviso to Section 12 and subject to satisfaction of the Taxation Officer that the transport vehicle has not been used for a continuous period of one month or more since the tax was last paid. The submission on behalf of the petitioner is that many a time, the documents referred to in sub-section (2) of Section 12 are not with the financier/owner and they remain with the registered owner and therefore such a financier/owner may not be able to get the refund under subsection (1) of Section 12 or exemption from payment of tax as per subsection (2) of Section 12 is concerned, on the aforesaid ground, the liability of the owner/financier to pay the tax will not cease. It is for the financier to acquire the documents such as original registration certificate, permit, token etc. from the registered owner at the time of seizure of the vehicle. If, for any reason, the financier/owner is not able to secure the documents, then he has to follow the procedure for getting fresh certificate of registration as provided under Section 51 of the Act, 1988 - before seeking refund under sub-section (1) of Section 12 or before he is exempted from payment of tax under sub-section (2) of Section 12, such an operator / owner has to comply with and fulfill all the conditions, which are mentioned therein. Appeal dismissed.

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• 2022 (2) TMI 1005
  Demand of interest on the differential amount arrived pursuant to re-assessment under Section 27 of the TNVAT Act - Attachment of Bank Accounts of petitioner - deemed assessment - Section 42(3) of the TNVAT Act - HELD THAT:- In this case, admittedly, the petitioner had disclosed a lower taxable turnover and therefore paid lesser tax. The petitioner was thereafter issued with a notice dated 18.01.2016 under Section 27(1)(a) read with Section 22(3) of the TNVAT Act, 2006. By an order dated 25.02.2016, the proposal contained in the above notice was confirmed and thus the petitioner was held liable to pay a gross amount of Rs. 3,92,633/- as tax due for the Assessment Year 2009-2010 and after adjusting an amount of Rs. 1,76,385/- already paid, the balance tax payable by the petitioner was determined as Rs. 2,16,248/-. The petitioner has also paid the said amount on 24.03.2016. Whether the petitioner can be absolved from payment of interest on the delayed payment of differential tax paid for the period from the date on which the tax was originally to be paid and the actual date of payment of the differential tax on 24.03.2016? - HELD THAT:- In this case, there was a deemed assessment in terms of proviso to Section 22(2) of the TNVAT Act, 2006. Therefore, the notice was issued to revise the self assessment made by the petitioner under Section 21 of the TNVAT Act, 2006 - the language in Section 42(3) of the TNVAT Act, 2006 makes it very clear that the interest is payable for the entire period of default. The default period of the petitioner started from the date on which the petitioner was originally required to pay tax on his turnover in the monthly returns under Section 21 of the TNVAT Act, 2006. This is a case where there was a suppression of taxable turnover by the petitioner in the returns filed under Section 21 of the TNVAT Act, 2006 read with Rule 7 of the TNVAT Rules, 2007. Since the petitioner failed to correctly declare the taxable turnover and paid the differential tax only after the proceeding was initiated vide notice dated 18.01.2016 against the petitioner under Section 27(1)(a) read with Section 22(3) of the TNVAT Act, 2006. There can be no premium for such lapse. There can be no waiver of interest for default period as such tax ought to have paid at the time of filing of return. By paying tax pursuant to revision of assessment, the petitioner is not doing a favour to the revenue. The petitioner is merely paying the tax which ought to have been earlier. Thus, there is no merit. Petition dismissed.

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• Indian Laws

• 2022 (2) TMI 1004
  Bribery - demand of illegal gratification - demand of Rs. 3,000/- by way of illegal gratification was made by the appellant for passing the assessment order - HELD THAT:- The offence under Section 7 of the PC Act relating to public servants taking bribe requires a demand of illegal gratification and the acceptance thereof. The proof of demand of bribe by a public servant and its acceptance by him is sine quo non for establishing the offence under Section 7 of the PC Act. The version of PW1 in his examination-in-chief about the demand made by the appellant from time to time is an improvement. As stated earlier, LW8 did not enter the appellant s chamber at the time of trap. There is no other evidence of the alleged demand. Thus, the evidence of PW1 about the demand for bribe by the appellant is not at all reliable. Hence, we conclude that the demand made by the appellant has not been conclusively proved - this is a case where the demand of illegal gratification by the appellant was not proved by the prosecution. Thus, the demand which is sine quo non for establishing the offence under Section 7 was not established. The conviction of the appellant for the offences punishable under Sections 7 and 13(1)(d) read with Section 13(2) of the PC Act is set aside - Appeal allowed - decided in favor of appellant.

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