TMI Tax Updates - e-Newsletter
February 26, 2021

Case Laws in this Newsletter:

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

News

1. Creating New Opportunities for Growth (Shri Shaktikanta Das, Governor, Reserve Bank of India - February 25, 2021 - at the Bombay Chamber of Commerce and Industry)

2. Shri Piyush Goyal addressed the 6th International Conference on Pharmaceutical & Medical Device Sector;

3. MCA & CBIC sign MoU for exchange of data for enhancing Ease of Doing Business in India and improve overall regulatory enforcement

4. MCA advises investors to verify status of Nidhi companies before investment

Notifications

Customs

1. 10/2021 - dated 25-2-2021 - ADD

Seeks to further amend notification No. 2/2016-Customs (ADD) dated 28th Jan, 2016 to extend the levy of Anti-Dumping duty on Melamine originating in or exported from China PR, up to and inclusive of 31st March, 2021.

2. 09/2021 - dated 25-2-2021 - ADD

Seeks to amend notification no 29/2017-Customs (ADD) dated 14.06.2017 so as to extend the said notification up to 28.06.2021.

3. 21/2021-Customs (N.T./CAA/DRI) - dated 23-2-2021 - Cus (NT)

Amendment in Notification No. 67/2020-Customs (N.T./CAA/DRI) dated 14.12.2020

4. 20/2021-Customs (N.T./CAA/DRI) - dated 23-2-2021 - Cus (NT)

Amendment in Notification No. 50/2020-Customs (N.T./CAA/DRI) dated 08.10.2020

5. 19/2021-Customs (N.T./CAA/DRI) - dated 22-2-2021 - Cus (NT)

Appointment of Common Adjudicating Authority

Highlights / Catch Notes

GST

• Court Dismisses Anticipatory Bail as No Arrest Threat; Co-Accused Still Held Without Bail.

  Case-Laws - DSC : Seeking grant of anticipatory Bail - Merely on the basis of the fact that department has the power to arrest no apprehension can be inferred at this stage when the department admittedly saying that they have not even thought of arresting the accused. The co accused is still in custody and have not released on bail. The bonafide of the department cannot be doubted at this stage - the present application of anticipatory bail is dismissed - HC
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• High Court Modifies Harsh Bail Conditions in GST Evasion Case; No Provisional Attachment u/s 83 C.G.S.T. Act.

  Case-Laws - HC : Seeking grant of Bail - GST evasion - The determination of input tax credit wrongly availed has not been finally made by the Department and no order under section 83 of the C.G.S.T. Act for provisional attachment of any property including the bank account belonging to the applicant has been made. The order granting bail to the applicant has also not been challenged by the Department. - The conditions imposed by Special Chief Judicial Magistrate is too harsh and unreasonable - Bail conditions modified - HC
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Income Tax

• High Court rules in favor of assessee on commission provision u/s 194H, citing Supreme Court principles.

  Case-Laws - HC : TDS u/s 194H - provision towards commission made - As similar provisions were made in earlier years as well as subsequent years by the assessee and the TDS was not deducted on the provisions. However, the Department has not made any additions with regard to the provisions made during the years in which returns of income were selected for scrutiny assessment. Therefore, the first substantial question of law on the analogy of the principles laid down by the Supreme Court in the aforesaid decision is answered against the revenue and in favour of the assessee. - HC
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• MAT Calculation: Doubtful Debt Provision Added, Book Profit Still Negative; No Negative Inference Against Assessee.

  Case-Laws - HC : MAT Computation - Even if the provision for doubtful debt is added back to the net profits, the resultant book profit is still negative and even though the assessee was prevented from adding back the provision for bad and doubtful debts to the net profit due to reasons beyond its control, it has at the first opportunity demonstrated to the authorities that book profits are still negative on adding back the provision for bad and doubtful debts and therefore, no adverse inference could have been drawn against the assessee. - HC
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• Transfer Pricing Adjustment Exceeds Chapter X Scope, Miscalculation by Officer Using Total Costs Instead of Associated Enterprise Sales.

  Case-Laws - AT : TP Adjustment - in case if a TP adjustment is allowed in respect of transactions entered into by the assessee with unrelated third parties then the same would be result into increasing of the profit in respect of such independent transactions which would be beyond the scope and ambit of Chapter X of the Act. Apparently, the claim of the ld. A.R that the TPO had wrongly worked out the TP adjustment in respect of the AE transactions by considering the total operating costs instead of the operating costs attributable to the AE sales is prima facie found to be correct. - AT
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• Assessees can avoid disallowance u/s 40(a)(ia) if payees report income and pay taxes per Section 201.

  Case-Laws - AT : Non deduction of TDS u/s 194A - Assessee could escape the rigors of Sec.40(a)(ia) in terms of second proviso to Section 40(a)(ia) read with first proviso to sub-section (1) of Section 201 by demonstrating that the payees have duly offered this income in their respective tax returns and paid due taxes thereon. In such a case, no disallowance u/s 40(a)(ia) is called for. - Matter restored back - AT
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• Assessee Fails to Prove Genuine Share Transactions; Additions Confirmed u/s 68 for Bogus Share Capital.

  Case-Laws - AT : Addition u/s 68 - bogus share capital & share premium - The assessee failed to prove that the transactions of share application money is genuine and the creditworthiness of Investor. Further, we have noted that the present appeal was filed in 2016, till date not a single piece of evidence is placed on record to prove the identity, genuineness of transaction of transaction and creditworthiness of the investor company. - Additions confirmed - AT
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• Foreign Currency Fluctuation Premiums Deductible u/s 37(1), Not Disallowed by Section 43A of Income Tax Act.

  Case-Laws - AT : Premium paid by the assessee to secure the fluctuation in the foreign currency - once the provisions of section 43A of the Act are not applicable on the deduction claimed by the assessee in the given facts and circumstances, there cannot be any disallowance by invoking the provisions of section 43A. - such expenses incurred by the assessee in the course of business are allowable as deduction u/s 37(1) - AT
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• CIT(A) Justifies Deletion of Additions: LTCG and Deduction u/s 54 of Income Tax Act Reviewed Independently.

  Case-Laws - AT : LTCG - Addition u/s 68 - Eligibility for deduction u/s 54 - When all the documents were placed before the AO who has not taken note thereof for the reasons best known to him particularly when AO has not raised any objection to the documents sent to him for comment, the ld. CIT (A) was well within his right to decide the controversy by examining all the documents himself. - CIT(A) rightly deleted the additioons - AT
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• Section 69B: Assessee's Explanation for Inflated Debtor Balances Accepted Due to Lack of Contradictory Evidence.

  Case-Laws - AT : Addition u/s 69B relating to difference in sundry debtors - On clarification sought by the AO, the assessee had explained the difference stating that the list of debtors with inflated balances was furnished to the bank for better credit facilities and the practice is prevalent in business community. The explanation appears to be correct, since, no other corroborative evidence is available to disprove the submission of the assessee. Though the list of sundry debtors obtained from the bank is source of information, the same cannot be a conclusive proof without having corroborative evidence to treat the difference as income. - AT
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• Court Dismisses Writ Petitions Due to Unregistered Agreements in Long-Term Capital Gains Dispute Under Income Tax Act, 1961.

  Case-Laws - HC : LTCG on sale of property - There are several disputed questions of fact which in my considered view are best left open to be decided by the authorities under the hierarchy of the Income Tax Act, 1961. Since none of the agreements which have been produced by the petitioner are registered documents, this Court cannot conclude that the value adopted by the petitioner reflected the correct value for the purpose of payment of stamp duty - there is no merit in these writ petitions. - HC
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• ITAT Rules High-Seas Sales Transactions Valid; Customs Verification Not Sole Basis for Doubt Under Income Tax Act Sections 68, 69C.

  Case-Laws - HC : Addition u/s 68 - allowability of the expenditure under section 69C - ITAT concluding that genuineness of the high-seas sales cannot be doubted merely because the customs authorities have verified the documents at the time of clearing the goods for home consumption and while approving the high seas sale. - The genuineness of the transactions has been accepted on the basis of documentary evidence and other material gathered, which cannot be re-appreciated under Section 260A of the Act. - HC
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Customs

• Court Remands Decision on Cost Recovery Charges; Stresses Importance of Personal Hearing for Appellant and Circular Consideration.

  Case-Laws - HC : Request for waiver of Cost Recovery Charges - If an opportunity of personal hearing had been granted to the appellant and the various circulars issued by the CBEC were placed for consideration, then a more informed decision could have been arrived at by the second respondent. Therefore, for such a reason alone, the order passed by the second respondent is interfered and the matter remanded back to the second respondent for taking a fresh decision, after affording an opportunity of personal hearing - HC
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• Customs Broker License Revocation Challenged: Erroneous Findings on Document Submission and Premises Verification Under 2018 Regulations.

  Case-Laws - AT : Revocation of Customs Broker License - forfeiture of security deposit - imposition of penalty - The finding recorded by the Commissioner that the required documents were not submitted is factually incorrect - The self attested Pan Card, Aadhar Card of the Director and Pan Card of the Company had been submitted by letter dated September 10, 2018. A physical verification of the premises, as noticed above, was not necessary to be carried out. The Commissioner, therefore, committed an error in holding that the appellant failed to ensure due compliance of the provisions of Regulations 10(n) of the 2018 Regulations. - AT
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IBC

• Court Finds DVI's Renegotiation Efforts Unjustified; Awaits NCLAT Decision on Resolution Plan Dispute.

  Case-Laws - SC : Contempt Jurisdiction - Approval of Resolution Plan - Undoubtedly, the conduct of DVI has not been bona fide. - DVI was not just seeking an extension of time but a re-negotiation of its resolution plan after its approval by the CoC. - However, it would not be appropriate to exercise the contempt jurisdiction of this Court - Since DVI is in appeal before the NCLAT, we express no opinion on the merits of the submission. The NCLAT will take a view on the tenability and merits of the submission of DVI that the conditions precedent under the resolution plan have not been fulfilled after hearing the parties. - SC
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Service Tax

• Appellant exempt from service tax on various fees but liable for Storage License fee with interest, no penalties imposed.

  Case-Laws - AT : Levy of service tax - The appellant is not liable to pay service tax on Export Pass fee, Import Pass fee, Permit fee, Excise Staff Salary and overtime allowances/charges - the service tax demand on Storage License fee for CO2 which the appellant is liable to pay along with interest is confirmed - appellants are not liable to pay penalties in view of the fact that demand itself is not sustainable - AT
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Central Excise

• High Court Rules Settlement Commission Can't Impose New Limitation Period; Refund Due for Excess Tax Paid Under Protest.

  Case-Laws - HC : Refund of tax amount paid - Amount paid under protest - applicability of time limitation - Though the petitioner had voluntarily paid the aforesaid amount during the course of investigation, in absence of the appropriation of the excess amount towards any other tax/duty liability of the petitioner, it was to be refunded back from the date of the impugned order of the first respondent Settlement Commission. The first respondent Settlement Commission cannot artificially impose a new period of limitation especially when the proceedings were pending before it - HC
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VAT

• High Court Rules in Favor of Assessee; Authorities Erred by Canceling Registration Without Due Process.

  Case-Laws - HC : Scope of SCN - Cancellation of assessee's registration - At present the assessing authority appears to have passed a wholly ex parte order inasmuch as in first place it had not disclosed to the assessee the exact nature of the charge leveled against him or the facts and circumstances in which his registration was being cancelled and in any case material that formed the basis of the charge was completely concealed from the assessee - appellate authority and the Tribunal have erred in not correcting the mistake thus committed by the assessing authority - answered in the negative i.e. in favour of the asseessee and against the revenue. - HC
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• High Court Rules Crane Supply Not a Transfer of Use Rights; No Tax Due u/s 4 of Tamil Nadu VAT Act.

  Case-Laws - HC : Levy of Tax - transfer of right to use of goods or not - supply of cranes under the agreement to the BHEL - In view of the decisin of SC, there is no transfer of right to use and no case was made out for recovery of tax amount from the petitioner under Section 4 of the Tamil Nadu Value Added Tax Act, 2006. - HC
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Case Laws:

• GST

• 2021 (2) TMI 1052
  Rectification of mistake - error apparent on the face of record - Rate of tax - Benefit Composition Scheme available or not - Supply of services and goods - appellant engaged in the business of supplying goods under the trade name Empathic Trading Centre and is also a supplier of ser-vice of renting of immovable property - rate of composition tax applicable is 1% for the turnover of goods (sales) and 6% for the turnover of service (rent) - challenging the AAR decision alleging a mistake in the Advance Ruling order IN RE: SRI. GHALIB IQBAL SHERIFF M/S. EMPHATIC TRADING CENTRE [ 2020 (4) TMI 874 - AUTHORITY FOR ADVANCE RULING, KARNATAKA ] where authority has ruled in the aforesaid order that the applicant is not eligible to opt to pay tax under Notification No.2/ 2019-Central Tax (Rate) dated 07.03.2019 as they are registered as a composition tax payer , where as they have not registered under the provisions of Section 10 of the Composition Scheme but opted for self payment of tax under Notification No. 2/2019-Central Tax (Rate) dated 07.03.2019, which is a mistake apparent on records and requested for rectification of ruling at SI.No.2, in the AAR order. HELD THAT:- It is observed that the applicant was a regular tax payer up to 31.03.2019, filed GSTR-3B returns regularly till 31.03.2019 on discharging applicable taxes. Thus the applicant was not a composition tax payer till 31.03.2019 - However, the applicant opted to avail the benefit of the Notification No.2/2019-Central Tax (Rate) dated 07.03.2019 , effective from 01.04.2019 and is discharging relevant taxes through self payment of tax basis PMT-08. The benefit of the notification can be availed effective from the beginning of the financial year or from the date of registration in cases where new registration has been obtained during the financial year. In the instant case the applicant has availed the notification supra effective from 01.04.2019. The required rectification the Ruling made - application allowed.

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• 2021 (2) TMI 1049
  Seeking grant of anticipatory Bail - non-payment of CGST even after collecting from customers - offence u/s 132 CGST Act - non-bailable offences or not - HELD THAT:- The allegations against the accused company is that they had collected the CGST from the clients of the company to the tune of Rs. 24.96 crores and not deposited the same with the government, thus committed offence u/s 132 CGST Act which is non bailable offence. Merely depositing of Rs. 7.7 crores do not in any manner drop the offence in bailable category. As far as the allegations against the present accused is concerned, he is director of company who is also responsible for affairs of company and matter is yet to be investigated from him. The huge economic loss to exchequer is caused and this practice appears writ large in business community. Merely on the basis of the fact that department has the power to arrest no apprehension can be inferred at this stage when the department admittedly saying that they have not even thought of arresting the accused. The co accused is still in custody and have not released on bail. The bonafide of the department cannot be doubted at this stage - the present application of anticipatory bail is dismissed - decided against applicant.

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• 2021 (2) TMI 1048
  Seeking grant of Bail - GST Evasion - supplier s firms of plastic scrap not found in existence - offence under section 132 (1)(c) and 132(1)((i) of the C.G.S.T. Act, 2017 - harsh and unreasonable conditions imposed for granting bail - HELD THAT:- This Court is of the view that conditions for grant of bail ought not to be so strict as to be incapable of compliance, thereby making a grant of bail illusory. The conditions while granting bail should be reasonable, so that it may not frustrate the very object of granting bail. Discretion exercised by the Court while imposing conditions should not be arbitrary, but it should be keeping in mind to strike balance between the accused and prosecution. In the present case, it is admitted facts to the counsel for the parties that as on date out of disputed amount of Rs. 9,51,00,000/-, the applicant has already deposited a sum of Rs. 5,00,00,000/- (rupees five crore only). Till date neither any criminal complaint has been filed, nor any proceedings under section 73 or 74 of the C.G.S.T. Act has been initiated against the applicant by the Department. The enquiry proceedings is still under process. The determination of input tax credit wrongly availed has not been finally made by the Department and no order under section 83 of the C.G.S.T. Act for provisional attachment of any property including the bank account belonging to the applicant has been made. The order granting bail to the applicant has also not been challenged by the Department. This Court is of the view that condition No. 4 imposed by Special Chief Judicial Magistrate, Meerut directing the applicant to deposit remaining amount of ITC Rs. 4,51,00,000/- before the Department within three months while granting bail to the applicant, is unsustainable, as it is too harsh and unreasonable, particularly in the situation where enquiry/investigation is still pending and applicant has already deposited Rs. 5,00,00,000/-, out of disputed amount of Rs. 9,51,00,000/- - in order to save the Government revenue, the interest of justice would be served in case, the condition No. 4 of bail order dated 24.11.2020 is modified directing the applicant to submit security equivalent to remaining disputed amount of Rs. 4,51,00,000/-, other than cash and bank guarantee along with his affidavit in place of deposit the remaining amount of ITC of IGST, before the Senior Intelligence Officer, DGGI, Regional Unit, Ghaziabad within three weeks from today, as per the undertaking given by the applicant before this Court. Bail application modified and then allowed.

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• 2021 (2) TMI 1045
  Seeking grant of bail - Input tax credit - bogus firms - offence under Sections 132(1)(c) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- This bail application is allowed and it is directed that accused-petitioner shall be released on bail provided he furnishes a personal bond in the sum of Rs. 1,00,000/- together with two sureties in the sum of Rs. 50,000/- each to the satisfaction of the trial Court with the stipulation that he shall appear before that Court and any Court to which the matter be transferred, on all subsequent dates of hearing and as and when called upon to do so. Bail application allowed.

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• 2021 (2) TMI 1043
  Seeking direction for opening of the GST portal to enable them to file the statutory Form necessary for migrating the eligible input tax credit under the GST regime - HELD THAT:- Although filing with the office of Commissioner/ VATO, Ward-71, Delhi was not in accordance with the procedure under the CGST Act, 2017 and perhaps the abovementioned officer was not competent to receive the TRAN-1 Form, but, notwithstanding the mistake, there is another hurdle that the Petitioner must cross i.e., the delay on the part of the Petitioner in approaching this Court. However, considering the fact that in a batch of petitions, this Court has examined similar issues and the same are pending decision, at this stage we consider it appropriate to issue notice to the Respondents, leaving all contentions open. Issue notice to the other Respondents by all modes, returnable on 5th July, 2021.

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• 2021 (2) TMI 1042
  Works Contract - Manner of payment of relevant tax for the period for which the work is continued - AVAT Act, 2005 or AGST Act, 2017? - HELD THAT:- Instead of issuing notice, public interest would be better served, if a direction is issued to the Commissioner of Tax, Assam to take a decision on the aspect as to for the work period after the advent of the GST regime, which of the tax regimes would be applicable i.e. whether the AVAT Act, 2005 or the AGST Act, 2017. As the matter involves public interest, it is directed that the Commissioner of Tax to take a final decision on the aforesaid aspect within a period of one month from today.

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• 2021 (2) TMI 1041
  Seeking direction to allow acceptance of Form GST TRAN-I as it could not be submitted in time on GSTN portal - transitional credit - HELD THAT:- Learned counsel for the GSTN, Mr. Amit Kumar and State, Mr. Piyush Chitresh are allowed 4 weeks time to file counter affidavit positively. The affidavit of GSTN shall, in particular, give the details of the log of the petitioner upto 27th December, 2017 to show whether petitioner had made an attempt to submit Form GST TRAN-I or not besides answering the plea relating to technical glitches. Petitioner may file reply, if so advised, within one week thereafter. Matter be listed after 5 weeks.

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• 2021 (2) TMI 1034
  Violation of principles of natural justice - petitioner was not heard in person prior to passing of the impugned order - Section 75(4) of the Central Goods and Service Tax Act, 2017 - HELD THAT:- It is true that neither Section 73 nor Section 74 specifically require an assessing officer to extend the opportunity of personal hearing to an assessee prior to completion of proceeding. However, Section 75 of the Act, a general provision relating to the procedure to be followed in determination of tax at sub section (4) thereof, contemplates that an opportunity of personal hearing shall be granted in all cases where a specific request is received, or where the officer contemplates adverse decision against the assessee. Thus, it is only in cases where the explanation offered by the assessee is accepted that there is no necessity for personal hearing. In all other cases, it is incumbent upon the revenue to extend an opportunity of personal hearing to the petitioner. This is the proper interpretation of Section 75(4). The petitioner will be heard on 29.01.2021 at 10.30 a.m. without expecting any further notice in this regard and consider materials, if any, circulated an order of assessment shall be passed denovo within a period of four (4) weeks from the date of hearing - Petition allowed - decided in favor of petitioner.

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• Income Tax

• 2021 (2) TMI 1062
  Maintainability of advance ruling application u/s 245Q - Liability towards Dividend Distribution Tax (DDT) under the provision of Section 115-O - Revenue has submitted that the application may not be admitted under clause (i) of Proviso of Section 245R(2) for the reason that the questions raised in the application was already pending before the Income Tax Authority in the assessment proceeding for the A.Y.2018-19 - whether the beneficial provisions of the India-Hungary Tax Treaty could be invoked by the applicant on payment of dividend to Signify Holding B. V. by virtue of presence of the Most Favoured Nation clause in the Protocol to the India-Netherlands Tax Treaty? - whether the rate of Dividend Distribution Tax payable by the Applicant on payment of dividend to Signify Holdings B. V. would be capped at 10% by invoking the favourable provisions of India-Hungary Tax Treaty? - Whether Applicant ought to be entitled to claim a refund of Dividend Distribution Tax, paid in excess of 10% of the dividends paid to Signify Holding B.V? HELD THAT:- As notice under section 143(2) was issued in this case for the A.Y. 2018-19 on 23.09.2019 whereas the present application was filed much before on 29.03.2019. It has been held by this Authority in the case of Mitsubishi Corporation, Japan, In re[ 2013 (12) TMI 1118 - AUTHORITY FOR ADVANCE RULINGS, NEW DELHI ] that the question raised in advance ruling application will be considered as pending for adjudication before Income tax Authorities, only when issues are shown in return and notice under section 143(2) is issued and, thus, an application for advance ruling is to be admitted which is filed prior to issue of notice under section 143(2). In the present case also the application for advance ruling was filed prior to the issue of notice u/s 143(2) of the Act. Therefore, the questions raised by the applicant in the present case were not already pending before the Income-tax Authorities and the clause (i) of proviso to section 245R(2) is not found attracted. In the present case the Applicant has merely sought ruling on application of beneficial provisions of DTAA for determination of DDT rate on the dividend to the non-resident shareholder. There is no design to avoid tax by any illegal or improper means. No such design to avoid tax is found present in this case. The revenue s contention that the applicability of tax treaty provision on the tax liability of the domestic company was designed for the avoidance of tax is far-fetched. In fact the basic issue to be decided in this case is whether the provisions of section 90 of the IT Act can be invoked in respect of liability of the Applicant u/s 115-O of the Act. Merely because the applicant has raised a question regarding availing the tax treaty benefit to minimize its tax liability u/s 115-O of the Act, it cannot be considered as a transaction designed to avoid the tax . Accordingly, the objection of the revenue in this regard is overruled. The Applicant vide submission dated 4 th December 2020 has raised fresh set of five questions to be decided in the present application. The Ld. AR submitted that first three revised questions were identical with the three original questions except that in the original questions beneficial provision of the India-Hungry Tax Treaty was sought to be invoked whereas in the revised questions beneficial provisions of the India- Slovenia Tax Treaty/India Hungry Tax Treaty has been sought to be invoked. It was further clarified that question numbers 4 5 were added in the eventuality of question number 2 3 being answered in negative, which was initially omitted to be taken in the application. The Ld. AR fairly agreed that these two questions (4 5) were of academic nature only. The Ld. DR objected to the admission of the revised questions. It was submitted that the revised questions were filed at a very late stage and the comments of the Principal CIT is yet to be obtained in this respect. In view of the objection of the Revenue the revised questions cannot be admitted at this stage. The Applicant is free to raise the issue of revised questions in the course of merit hearing. The application is admitted under section 245R(2) of the Act in respect of the three questions raised in the application

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• 2021 (2) TMI 1061
  Addition u/s 68 - allowability of the expenditure under section 69C - ITAT concluding that genuineness of the high-seas sales cannot be doubted merely because the customs authorities have verified the documents at the time of clearing the goods for home consumption and while approving the high seas sale. - HELD THAT:- On the aspect of additions being made under Section 68 of the Act, we notice that the ITAT was intrigued with the approach of the AO, and rightly so, in our view. The Assessee had worked out the business income after considering the sales and purchases of mobile phones which included the high-sea sales. In these circumstances, the ITAT observed that the addition under Section 68 or 69C is contradictory to the stand taken while accepting the business income. No justification is offered by the Revenue for attracting section 68, on this count except for contending there is no net-effect on the business income , which is not the relevant yardstick. The amount in question, as noted above had already been charged to the income of the assessee. The question of allowability of the expenditure under section 69C has been restored to the file of the AO for fresh adjudication. Therefore, we find no reason to interfere with the findings of the ITAT on this aspect. The genuineness of the transactions has been accepted on the basis of documentary evidence and other material gathered, which cannot be re-appreciated under Section 260A of the Act. We also do not find any perversity in the approach of the ITAT. Besides, the proposed questions of law and the arguments advanced by Mr. Hossain touch upon findings of fact rendered by the ITAT on the basis of material placed before the Lower Tax Authorities during the course of the assessment proceedings. No question of law, arises for our consideration.

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• 2021 (2) TMI 1060
  LTCG on sale of property - reference was made under Section 55A read with Section 50C of the Income Tax Act, 1961 for valuation by the second respondent District Valuation Officer, Valuation Cell, Income Tax Department - petitioner along with her sister sold a property which sale was apparently negotiated by their father during his lifetime but before the sale could be completed, their father passed away on 15.01.2012 and therefore the buyers negotiated the sale price with the petitioner and concluded the sale in respect of two parcels of land to two different buyers - it is the contention of the petitioner that the respondents ought not to have adopted the higher value as the price of the land in 2012 had increased manifold time and that the sale price was negotiated by the petitioner s father during his lifetime in 2010 - HELD THAT:- All the agreements are unregistered agreements. Though it is the case of the petitioner that the sales of the properties were negotiated by her father during his lifetime and had received an advance of Rs. 50 lakhs in respect of the first property in Varadharajapuram Village, Sriperumbadur Taluk, Kancheepuram District, Tamil Nadu from M/s.Tatia Development Private Limited on various dates and manifold increase in the guideline value by the Registration Department in 2012 cannot be the basis to countermand the value adopted in the sale agreement. It is therefore submitted that the higher value adopted was liable to be quashed. Such submission cannot be entertained in absence of any document particularly in absence of documents to substantiate that there was a concluded sale agreement in respect of these properties by the petitioner s father during his lifetime. The petitioner s father may also have had independent transactions and merely by looking at banking transactions in the Bank Passbook, one cannot determine existence of any concluded sale agreement. Therefore, it cannot be construed that the banking transactions of the petitioner s father pertain to the properties which were subject matter of the sale agreements. Further, under Section 17(1)(g) of the Registration Act, 1908, an agreement for sale of immovable property has to be mandatorily registered. There are several disputed questions of fact which in my considered view are best left open to be decided by the authorities under the hierarchy of the Income Tax Act, 1961. Since none of the agreements which have been produced by the petitioner are registered documents, this Court cannot conclude that the value adopted by the petitioner reflected the correct value for the purpose of payment of stamp duty. Therefore, even otherwise, based on the sale agreements enclosed by the petitioner, no relief can be granted to the petitioner in these writ petitions. The petitioner has an alternate and efficacious remedy by way of an appeal against the respective assessment orders before the Commissioner of Income Tax (Appeals). Therefore, I do not find any reasons to interfere with the impugned orders. Under these circumstances, there is no merit in these writ petitions. The petitioner is however given a liberty to file a statutory appeal against respective assessment orders before the Commissioner of Income Tax (Appeals), within a period of thirty days from date of receipt of a copy of this order. Pending disposal of the writ petitions, no such recovery proceedings have been initiated.

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• 2021 (2) TMI 1059
  Disallowance of Expenditure relating to loose tools - despite opportunity being given, the assessee has failed to produce the complete details of the materials received including inventory of materials, date, time and delivery of the loose tools - HELD THAT:- The assessee company has also failed to produce the material receipt register. Though it has been contended by the assessee before the tribunal as recorded in para11 of the order passed by the tribunal that assessee had produced the C.D. containing the details as requested by the Assessing Officer at the time of hearing. However, the tribunal has not recorded any finding with regard to aforesaid contention of the assessee and in para 14 has recorded the finding in favour of the assessee. In view of the reasoning assigned by the Assessing Officer in his order for disallowing the claim and in view of the assertion made by the assessee that it had furnished the details, the tribunal ought to have ascertained whether or not the assessee had furnished the details as contended by him. Therefore, in our opinion the matter requires adjudication afresh by the tribunal so far as first substantial question of law is concerned. Therefore, the first substantial question of law is answered accordingly. Addition of interest - interest free loan to two of its subsidiaries company - HELD THAT:- The assessee again has contended before the Commissioner of Income Tax (Appeals) as is evident from para 3(ii) of the order passed by the tribunal that the assessee s own funds were Rs. 124 Crores whereas, the loan advanced is to the tune of Rs. 64 Crores. However, in this regard also, we find that the tribunal has not recorded the any finding whether or not the interest free loans were given from the borrowed funds or from the assessee s own funds. Therefore, the aforesaid issue also requires adjudication afresh by the tribunal. Accordingly, the second substantial question of law is answered. Addition u/s 43B - deposit of property tax amounts to crystallized liability - difference between the taxes actually paid under Section 43B of the Act and taxes deposited as per the directions of the Court, when the liability to tax is disputed by the assessee and recorded a perverse finding - HELD THAT:- From perusal of Section 43B of the Act provides that any sum payable by way of tax, duty, cess or fee shall be allowed in the year in which it is actually paid. It is not in dispute that on account of directions issued by the court, the assessee paid a sum of Rs. 87,50,000/- towards property tax. Therefore, the assessee is entitled to deduction to the extent of property tax which was paid by it. The Commissioner of Income Tax (Appeals) appeal as well as the tribunal have rightly held that the liability was certain and has rightly deleted the disallowance. Reference in this connection may be made to decision of the Supreme Court in BHARAT EARTH MOVERS [ 2000 (8) TMI 4 - SUPREME COURT ]. Substantial question of law is answered against the revenue and in favour of the assessee.

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• 2021 (2) TMI 1058
  Assessment order passed against a non-existent company - company being amalgamated - HELD THAT:- As per MARUTI SUZUKI INDIA LIMITED (SUCCESSOR OF SUZUKI POWERTRAIN INDIA LIMITED) case[ 2017 (9) TMI 387 - DELHI HIGH COURT] in case the assessment orders are framed in the name of a non-existent company it does not mean a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292-B of the Income-tax Act. In the considered opinion of this Court, the legal proposition of law has already been crystallized and there could not have been any assessment order in respect of the respondent company as it was not in existence (amalgamating company). A similar view has been taken by a Co-ordinate Bench of this Court in the case of Commissioner of Income-tax, Central Circle, Bangalore vs. Intel Technology India (P) Ltd. [ 2015 (5) TMI 614 - KARNATAKA HIGH COURT] As the legal position is abundantly clear in the light of the decisions referred to above, this Court has no hesitation in answering the questions framed in the negative i.e., in favour of the Assessee and against the Revenue.

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• 2021 (2) TMI 1057
  Addition u/s 69B relating to difference in sundry debtors - difference between the debtors statement obtained from the Bank by the AO and the debtors balances outstanding as per balance sheet - CIT-A deleted the addition - HELD THAT:- In the instant case, no exercise or no effort was made by the AO to elicit the correctness of the sundry debtors balances given to the bank. On clarification sought by the AO, the assessee had explained the difference stating that the list of debtors with inflated balances was furnished to the bank for better credit facilities and the practice is prevalent in business community. The explanation appears to be correct, since, no other corroborative evidence is available to disprove the submission of the assessee. Though the list of sundry debtors obtained from the bank is source of information, the same cannot be a conclusive proof without having corroborative evidence to treat the difference as income. Assessee has provided the list of debtors, produced the books of accounts and all the necessary details were made available to the AO with ledger extracts and no difference was found in the outstanding balance of the debtors. There were no sales outside the books of accounts, there were no purchases found to have been made outside the books of accounts and not even a single defect was found by the AO in the books of accounts. Therefore, there is no reason to suspect the correctness of the balances outstanding as per the books of accounts. We cannot appreciate the attitude of the assessee to submit the inflated balances to the bank to obtain the better credit facilities, the same cannot be treated as undisclosed income as provided u/s 69B of the Act without the supporting evidence. In the instant case there is no dispute that the assessing officer has made the addition purely on the information obtained from the bank and balances of sundry debtors were never verified independently by the AO causing necessary enquiries. There was no other corroborative evidence to support the sundry debtors balances list given to the bank. The sundry debtors balances in balance sheet are in agreement with the books of accounts. No reason to interfere with the order of the Ld.CIT(A) and the same is upheld. Accordingly, the appeal of the revenue is dismissed.

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• 2021 (2) TMI 1056
  Addition u/s 68 - Eligibility for deduction u/s 54 - CIT-A held on perusal of the details filed by the appellant makes it clear that the appellant is eligible for relief u/s 54 on his Capital Gains and additions made u/s 68 in the impugned order on the bank interest, it is observed that these are found in the appellant s Capital Gains Account and therefore, the appellant s explanation on this is plausible - Whether CIT (A) has erred in admitting the additional evidence furnished before him by the assessee in contravention of the provisions contained under Rule 46 of the Income-tax Rules, 1962 - HELD THAT:- CIT (A) has not erred in admitting the additional evidence furnished before him by the assessee in the face of the impugned order passed by the ld. CIT(A). Because in para 4.1 it is specifically recorded by the ld. CIT (A) that detail filed by the assessee was duly sent to AO for a remand report who has given remand report extracted in para 4.1 stating therein that despite giving numerous opportunities to file evidence/details, assessee has not turned up. However, assessee duly filed rejoinder to the remand report in the appellate proceedings before the ld. CIT (A) stating therein that he has submitted all the documents and evidences now relied upon in the appellate proceedings with the AO during assessment proceedings but has not been considered by the AO and that AO refused to admit the reply dated 04.03.2016 in response to notice dated 24.02.2016. CIT (A) after examining the remand report and original assessment record pertaining to 213 pages and 6 order sheet pages noticed that in reply to the notice u/s 142 (1) dated 20.04.2015 issued to the assessee, entire detail of the capital gains and income from other sources have been attached with letter dated 01.05.2015 bearing pages 11 to 40. Aforesaid information also contains photocopies of the assessee s capital gains earned with Corporation Bank, Dwarka, New Delhi jointly opened in assessee and his wife s name on 06.02.2012 and has also filed copy of registered sale deed of the property in question. When the assessee has duly filed requisite details during the assessment proceedings with copy of his bank statement showing investment of capital gain in capital gain accounts to the extent of sale proceed of his 1/5th share and also brought on record copy of registered deed for purchase of new residential property on 11.11.2013 and its cost is more than the capital gain received by the assessee and thereby satisfied the provisions contained u/s 54F of the Act, addition made by the AO is apparently not sustainable. When all the documents were placed before the AO who has not taken note thereof for the reasons best known to him particularly when AO has not raised any objection to the documents sent to him for comment, the ld. CIT (A) was well within his right to decide the controversy by examining all the documents himself. When the assessee has been found to be eligible u/s 54 qua his capital gains which have been duly explained by virtue of the sale deed qua the property in question, bank statements and sale deed of the new residential property purchased with the capitals gains received, the ld. CIT (A) has rightly and legally deleted the additions by accepting the appeal. Finding no illegality or perversity in the impugned order passed by the ld. CIT (A), present appeal filed by the Revenue is hereby dismissed.

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• 2021 (2) TMI 1055
  Disallowance of advertisement expenditure u/s 40(a)(ia) - non-deduction of TDS - HELD THAT:- The law relied by the assessee i.e. CIT Vs. Ansal Land Mark Township Pvt. Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT] and M/s. Hindustan Coca Cola Beverage Vs. CIT [ 2007 (8) TMI 12 - SUPREME COURT] also speaks the same thing in same sense. In view of the above mentioned decision, we set aside the finding of the CIT(A) on this issue and restore the issue before the AO for making the necessary verification to the effect that the payee had paid the tax or not. Accordingly, the claim of the assessee would be liable to be allowed. Accordingly, this issue is decided in favour of the assessee against the revenue for statistical purposes. Disallowance of expenses - HELD THAT:- The assessee has furnished the detail of expenses. Some expenses have been incurred with the name of erstwhile company i.e. the earlier name of the assessee. The contention of Ld. Representative of the assessee is that the claim was not properly examined by the AO and the expenses incurred with the name of the erstwhile company were actually the expenses of the assessee which should be allowable. Actually facts need to be verified at the end of the AO before the allowance of the claim of the assesse, therefore, we set aside the finding of the CIT(A) on this issue and restore the issue before the AO to decide the matter of controversy afresh after going through the relevant record/verification of the evidence produced in this regard. Needless to say that an opportunity of being heard is required to be given to the assessee in accordance with law. Accordingly, this issue is being decided in favour of the assessee Non-granting of depreciation on capital expenses - HELD THAT:- Since the issue no. 3 has been restored before the AO to verify the claim of the assessee, therefore, capital expenses are in question and yet to be decided in accordance with law. Anyhow upon the capital expenses, the depreciation is required to be allowable u/s 32 of the Act. Accordingly, we set aside the finding of the CIT(A) on this issue and restore the issue before the AO to verify the claim of the assessee in accordance with law. Needless to say that an opportunity of being heard is liable to be given to the assessee in accordance with law. Accordingly, this issue is decided in favour of the assessee against the revenue. Unexplained cash credit under section 68 - HELD THAT:- CIT(A) went through each and every document filed by the assessee before the AO and concluded that the assessee had duly proved all the three necessary ingredients viz identity and creditworthiness of share subscribers together with the genuineness of transactions, apart from placing reliance on various decisions. We find that the same parties from whom share subscription money is received by the assessee has been the subject matter of adjudication and this tribunal in various decisions as listed by the CIT(A) had considered them to be genuine and having sufficient creditworthiness apart from proving their identity beyond doubt. The learned counsel for the assessee also placed reliance on the decision of Hon ble Jurisdictional High Court in the case of CIT vs Gagandeep Infrastructure Pvt Ltd [ 2017 (3) TMI 1263 - BOMBAY HIGH COURT] in support of his contentions and in support of the order of CIT(A). No contrary decision has been produced before us by revenue. On appraisal of the finding of the CIT(A), we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Therefore, we affirm the finding of the CIT(A) on this issue and decide this issue in favour of the assessee Bogus purchase - HELD THAT:- CIT(A) has decided the issue by considering the each and every facts of the case. The CIT(A) has relied upon the various decisions mentioned in the order. In the trade of diamonds, the addition has been restricted by the decision of Hon ble for the A.Y. 2007-08 @ 5% of the bogus purchase. The CIT(A) has also took into notice of gross profit of the assessee in the relevant year. Taking into account all the facts and circumstances and considering the fact that the assessee is not in appeal against this issue and also considering the task force report of Gems and Jewellery Industry, we are of the view that the finding of the CIT(A) is not liable to be interfered with at this appellate stage in the peculiar facts and circumstances of the instant case. Therefore, we affirm the finding of the CIT(A) on this issue and decide this issue in favour of the assessee against the revenue.

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• 2021 (2) TMI 1054
  Deemed dividend addition u/s 2(22)(e) - company had accumulated profits as on 31.3.2013 and the assessee is a substantial shareholder i.e. 15.13% of M/s. Tejdeep Engg Enterprises (P) Ltd.- assessee has shown the transaction as an unsecured loan in its books of account - HELD THAT:- We find that the assessee has entered into a share purchase agreement with M/s. Tejdeep Engg. Enterprises (P) Ltd, and has received consideration as on the date of agreement, and the transactions are also duly reflected in the Bank Statement of the assessee. Except for the reason that the assessee has shown the same as an unsecured loan in its books of account, there is no evidence brought on record by the AO that this is not a genuine sale transaction. The assessee has stated that subsequently, the transaction was completed and the shares were also transferred to Tejdeep Engg. Enterprises Ltd. Therefore, we deem it fit and proper to direct the AO to verify this contention of the assessee and if the contention of the assessee is found to be correct, then the addition u/s 2(22)(e) cannot be made. Therefore, the appeal of the assessee is treated as allowed for statistical purposes.

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• 2021 (2) TMI 1053
  Reopening of assessment u/s 147 - Addition u/s 68 - HELD THAT:- AO in his reasons to believe in the case of the assessee before us had merely referred to the information that was received by him from the DGIT(Inv.), Mumbai that the assessee as a beneficiary had received accommodation entries from two concerns, and dispensing with even the bare minimum requirement of pointing out the nature of the impugned accommodation entries i.e as to whether they were accommodation entries in the nature of sales or unsecured loans or share application money, on the basis of vague and scanty information and without any further verification, examination or any other exercise had jumped to the conclusion that the income of the assessee in respect of the accommodation entries had escaped assessment for the year in question. A.O had blatantly failed to apply his mind to the material available on record for forming a belief that the income of the assessee had escaped assessment. We, thus, are of the considered view that as the A.O had acted mechanically on the information supplied by the Directorate of Income-tax(Inv.) that the assessee was a beneficiary of the alleged bogus/accommodation entries provided by the aforesaid entry provider, viz. Shri Praveen Kumar Jain, and had failed to apply his mind to the material available on his record, the reopening of the assessment by him u/s 147 of the Act could not be held to be justified. A.O had failed to independently apply his mind to the material available on his record and mechanically acting on the information supplied by the Directorate of Income-tax (Inv.) had reopened the case of the asseessee u/s 147 of the Act, the same, thus, cannot be sustained and is liable to be vacated, Accordingly, in the absence of valid assumption of jurisdiction by the A.O u/s 147 of the Act, the consequential assessment framed by him u/s 143(3) r.w.s 147, dated 29.03.2015 cannot be sustained and is quashed. Appeal of the assessee is allowed

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• 2021 (2) TMI 1040
  TDS u/s 194H - provision towards commission made - addition u/s 40(a)(ia) - HELD THAT:- The Supreme Court in RADHASOAMI SATSANG Vs. COMMISSIONER OF INCOME-TAX [ 1991 (11) TMI 2 - SUPREME COURT ] has held that even though principles of res judicata do not apply to income tax proceedings, but where a fundamental aspect permeating through the different Assessment Years has been found as the fact one way or the other and the parties have allowed the position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in subsequent year. As similar provisions were made in earlier years as well as subsequent years by the assessee and the TDS was not deducted on the provisions. However, the Department has not made any additions with regard to the provisions made during the years in which returns of income were selected for scrutiny assessment. Therefore, the first substantial question of law on the analogy of the principles laid down by the Supreme Court in the aforesaid decision is answered against the revenue and in favour of the assessee. Addition u/s 35D - expenditure incurred towards cost reduction initiative for sustained profitability - CIT-A deleted the addition - tribunal has affirmed the aforesaid finding in appeal and has held that consultancy fee paid by the assessee is for the purposes of studying and preparing a strategy to reduce the cost of production by the assessee and as no new asset has come into existence and the study conducted was only for improving the sales and profitability of the assessee and has upheld the order of the Commissioner of Income Tax (Appeals) - HELD THAT:- The aforesaid concurrent findings of fact have not been challenged on the ground of perversity. Thus, concurrent findings of fact which have been recorded on the aforesaid issue, could not be demonstrated to be perverse. Therefore, no interference is called with the aforesaid concurrent findings of fact in this appeal under Section 260A - Decided in favour of assessee.

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• 2021 (2) TMI 1038
  MAT Computation - Reduction of the amount credited to the profit and loss account on the account of reversal of provision for bad and doubtful debts under Section 115JB - whether Tribunal in law failed to appreciate that the appellant had added back the provision for bad and doubtful debts for certain years and hence ought to have granted the deduction in respect of reversal of provision for bad and doubtful debts at least to that extent, on the facts and circumstances of the case? - HELD THAT:- As decided in M/S. KARNATAKA STATE INDUSTRIAL AND INFRASTRUCTURE DEVELOPMENT CORPORATION LTD [ 2021 (1) TMI 413 - KARNATAKA HIGH COURT ] provisions for bad and doubtful debts cannot be added under Explanation to Section 115JB. From perusal of para 40.2 of Circular dated 03.06.2010, it is evident that clause (i) in Explanation after Section 115JB(2) has been inserted so as to provide that if any provision for diminution in the value of any asset has been debited to the profit and loss account, it shall be added to the net profit as shown in the profit and loss account for the purpose of computation of book profit. It is well settled in law that law does not contemplate or require the performance of an impossible act. See LIFE INSURANCE CORPORATION OF INDIA VERSUS COMMISSIONER OF INCOME-TAX [ 1996 (2) TMI 5 - SUPREME COURT] . Even if the provision for doubtful debt is added back to the net profits, the resultant book profit is still negative and even though the assessee was prevented from adding back the provision for bad and doubtful debts to the net profit due to reasons beyond its control, it has at the first opportunity demonstrated to the authorities that book profits are still negative on adding back the provision for bad and doubtful debts and therefore, no adverse inference could have been drawn against the assessee. It is also pertinent to note that the assessee had added the provision for bad and doubtful debts for Assessment Years 1998-99 to 2000-01. Decided in favour of the assessee.

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• 2021 (2) TMI 1032
  Addition of cash deposits in the bank account of the assessee - assessee submitted that cash was deposited on behalf of his client Shri P.S. Narayana for Life Insurance Premium - HELD THAT:- We do not agree with the contention of assessee because assessee made a cash deposit of the impugned amount in his bank account, therefore, burden was upon the assessee to explain the source of the cash deposit in his bank account through evidence. However, assessee has failed to prove the source of the same, therefore, it being unexplained investment was rightly added to the income of the assessee. It is also unbelievable that cash amount if received earlier would have been deposited in installments in bank account of the assessee. The entire circumstances would lead to irresistible conclusion that when assessee was caught by the Revenue authorities to explain the cash deposits in his bank account, assessee made a frivolous claim of the alleged amount received from Shri P.S. Narayana for getting insurance policies. It is also a fact that no evidence has been produced before the authorities below of the source of the cash deposited in the bank account of the assessee. No creditworthiness of Shri P.S. Narayana is also established through any evidence of giving any cash to the assessee on different occasions as alleged in the letter of Shri P.S. Narayana. Totality of the facts and circumstances, clearly show that assessee failed to explain the source of the cash deposit in his bank account through any reliable and cogent evidence, therefore, authorities below were justified in making and confirming the addition of the impugned amount in the hands of the assessee - Decided against assessee.

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• 2021 (2) TMI 1031
  Claim for deduction u/s 54F - assessee is having more than one house property thus the AO rejected the claim for deduction u/s 54F - Ground floor is having a garage and one residential unit; first floor is having two 1BHK flats and second floor is having 2 single (with bath) units - AO, accordingly, took the view that each of the unit is separate house - whether each floor of a single stand alone building should be considered as separate house? - HELD THAT:- As decided in Shri Bhatkal Ramarao Prakash [ 2019 (2) TMI 1059 - ITAT BANGALORE ] an independent building can have a number of residential units and it will not lose the character of one residential house . Accordingly, we are unable to agree with the view taken by the tax authorities that each floor of the individual house/each portion in a floor is separate house property. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and hold that the house property received by the assessee is one residential house only within the meaning of sec.54F of the Act. Accordingly, we are of the view that the reasoning given by the AO to reject the claim for deduction u/s 54F is not justified. - Decided in favour of assessee.

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• 2021 (2) TMI 1030
  Penalty u/s 271(1)(c) - defective notice - non specification of charge - deduction of long term capital gain in computing book profit u/s 115JB - difference in the computation of book profit under bonafide mistake was subsequently rectified the mistake by filing revised return - HELD THAT:- Bare perusal of the notice issued u/s 274 read with section 271(1)(c) of the Act, extracted above, in order to initiate the penalty proceedings against the assessee goes to prove that the AO himself was not aware / sure as to whether he is issuing notice to initiate the penalty proceedings either for concealment of particulars of income or furnishing of inaccurate particulars of such income by the assessee rather issued vague and ambiguous notice by incorporating both the limbs of section 271(1)(c). When the charge is to be framed against any person so as to move the penal provisions against him/her, he/she is required to be specifically made aware of the charges to be leveled against him/her. Following the decisions rendered in the cases of CIT vs. Manjunatha Cotton and Ginning Factory, CIT vs. SSA s Emerala Meadows [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] and Pr. CIT vs. Sahara India Life Insurance Company Ltd. [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] we are of the considered view that when the notice issued by the AO is bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act the same has been issued, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. Even otherwise, when the assessee has duly produced balance sheet and profit loss account before the AO during the assessment proceedings and the income computed in the profit loss account has been accepted and at the same time, it is nowhere the case of the Revenue that assessee has furnished false information or has not furnished necessary information. So, mere mistake, claimed to be inadvertent by the assessee, is not a concealment of income by furnishing of inaccurate particulars in the facts and circumstances of the case, when the assessee has filed revised computation of book profit claiming correct figures acceptable to the Revenue. So far as question of filing the revised return only after issuance of notice u/s 143 (2) of the Act to the assessee is concerned, it is again undisputed fact that with the notice u/s 143(2), no questionnaire was issued pointing out wrongly computing the book profit, leading to the reasonable inference that the mistake was inadvertent on the part of assessee. Thus initiating penalty u/s 271(1)(c) of the Act on the basis of vague and ambiguous notice issued u/s 143 (2) of the Act is not sustainable in the eyes of law and that mere difference in the computation of book profit under bonafide mistake is not furnishing of inaccurate particulars of income particularly when assessee had filed balance sheet, profit loss account showing all the capital gains and has subsequently rectified the mistake by filing revised return - Decided in favour of assessee.

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• 2021 (2) TMI 1028
  Revision u/s 263 - assessee has claimed deduction on account of bad debts in spite of having credit balance in BDDR account - Pr. Commissioner of Income Tax further opined that the order of assessment passed u/s.143(3) dated 13.12.2016 was erroneous in so far as it was prejudicial to the interest of the revenue because assessment has been made without verification of the claim of written off bad debts as deduction.- Whether any verification or examination was done by the Assessing Officer or not with respect to the bad debts? - HELD THAT:- As already examined that such verification and examination on bad debts was not done by the Assessing Officer. The Assessing Officer has not called for any specific details regarding bad debts. He has also not called for or verified list of bad debts. The Assessing Officer has also not analyzed the Board Circular Instruction vis- -vis facts of the assessee case and therefore, the assessment order is erroneous and prejudicial to the interest of the revenue. We are of the considered view that the Ld. Pr. Commissioner of Income Tax was correct in assuming revisionary jurisdiction and passing order u/s.263 of the Act since the order of the Assessing Officer dated 13.12.2016 was erroneous so far as it is prejudicial to the interest of the Revenue. - Decided against assessee.

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• 2021 (2) TMI 1026
  Short-term capital gain or business profit transfer of computer software to its holding company - transfer of the CONNET computer software by the Appellate to its holding company - determination of value of assets on the date of transfer - transfer of the software with a notional fair market value of the computer software - As argued computer software was transferred to MPHR US at its book written down value being 1NR 1,27,31,017/-, which was less than the tax written down value of the computer software being INK 1,48,19,687/-, and thus the value at which the block had been adjusted resulted in a short-term capital loss to the Appellant - HELD THAT:- Assessee has developed this software and transferred the same to its holding company, certifying it as commercial unviable and whatever the cost received by the assessee from its holding company as the cost of writing off of the software. It is not clear whether if there is any commercial value to the software which was transferred to the holding company, at present it may not be commercially viable, but it is not clear whether this software will be of use to its holding company in future. Since assessee has invested lot of labour and invested resources to develop software which is used by the customers of the holding company. Assessee has developed this software and utilized the same in its business and claimed the depreciation as well during this intervening period. Therefore, it clearly indicates that software was utilized in the running of the business of the assessee vis- -vis holding company. Since, there is not record submitted by the assessee or its holding company that the software under consideration is completely discarded. In our considered view, the software which was transferred to the holding company which was used by the assessee in its business, the actual cost of the software was Rs. 2,01,87,114/- and assessee has used the above software in its business and claimed depreciation Cost of the assets Relevace at the time of writing off of the assets in the books of the assessee - The written down value of the assets at the time of writing off of the assets was Rs. 1,27,31,017/-. Since this assets was developed by the assessee and utilized by the assessee in it business and if at all mark up is applied, it can be applied only to the cost of the assets which was transferred to its holding company. Therefore, even though the AO has applied 20% as ad-hoc premium, in our considered view, normal premium charged on this type of assets are within 10-20% and AO has adopted higher value of the premium. For the sake of justice, in our considered view, premium of 15% may be proper and accordingly, we direct the AO to calculate the premium 15% on the value of assets on the date of transfer and accordingly complete the assessment. Resultantly, the ground of assessee are partly allowed.

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• 2021 (2) TMI 1025
  Revision u/s 263 - allowability or otherwise of the losses booked on account of revaluation of nonconvertible debentures and of futures options - HELD THAT:- In cases where there is inadequate enquiry but Lack of enquiry, again the Ld. CIT must give and record the finding that the order/enquiry made is erroneous. In the decision DG HOUSING PROJECTS LTD [ 2012 (3) TMI 227 - DELHI HIGH COURT] it was also observed by the Hon ble Court that the income tax officer in this case had made enquiries in regard to the nature of expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. Claim was allowed by AO on being satisfied with the explanation of the assessee. Such decision of the AO cannot be held to be erroneous simply because in his order he did not make an allowable discussion in that regard. In the given case of the assessee, we notice that assessee has filed the financial statement along with relevant notes to accounts. AO after verification of the return of income and notes to account, he sought certain clarification which was properly submitted by the assessee in writing. Ld. CIT observes that the note submitted by the assessee is nothing but notes forming part of accounts. AO has merely accepted those explanation without applying his mind completed the assessment. It is fact on record that the issue under consideration is not a new issue came up afresh in this assessment year, we notice that similar issue was came up in the earlier assessment year and the coordinate bench has decided the issue on merit as well. In our considered view the learned CIT is not appreciated the fact that AO has applied one of the possible view in this case. DR submitted that the case of the assessee falls under explanation 2 in section 263 of the Act and further relied in the case of Crompton Greaves Ltd [ 2016 (2) TMI 169 - ITAT MUMBAI] - The issue under consideration is, whether the AO has passed the order without enquiries or verification which he should have made. In this case, the assessee has filed the financial statement alongwith the notes and also findings of ITAT in the earlier Assessment Year. AO seeks clarification on those issues. The assessee responds to the query and files certain information. AO considers the same to complete the assessment and he takes the view that the claim of the assessee is proper. Therefore, it shows that AO has verified the issue. Whether it is adequate enquiry or not is the issue. The explanation 2(a) is applicable when no enquiries were made and it is proved on record that AO has made certain enquiry, therefore, for the improper enquiries, the explanation 2(a) is not applicable. Therefore, this line of argument is rejected. Moreover, if the notes to account is clear and explains the case of the assessee, the AO need not have to enquire further. Accordingly, the order passed u/s 263 is set aside and the grounds raised by the assessee are allowed.

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• 2021 (2) TMI 1024
  Capital gain computation on sale of lands - difference in value determined by DVO and value declared by assessee - CIT(Appeals) directing the AO to substitute the value determined by DVO on reference u/s.50(2) as deemed value of consideration received on sale of land u/s.50C - AO mad addition solely on the basis of difference between the rate adopted by stamp valuation authority solely on the basis of sale consideration shown by the assessee and the value determined by the stamp valuation authority - HELD THAT:- Difference between sale consideration and the value adopted by DVO is merely 9.11%, as it does not exceed 10%, fiction of section 50C of the Act will not came into play, therefore, capital gain will have to be computed with reference to actual sale consideration only. Hence, we direct the A.O. to delete the addition qua plot no.1. Addition with regard to plot no.2 - assessee vehemently submitted there was a 5 feet deep hole in the ground and a drainage next to the land, Slum cluster next to the plot, water of waste drainage was flooded in the said land and during the monsoon season part of the land remains water logged. All those factors are duly mentioned in clause 5 of the agreement to sale and that the market value of the land was less than the market value of surrounded land and was fixed keeping in view of such circumstances and relied upon the decision of Co-ordinate Bench in [ 2017 (4) TMI 1531 - ITAT AHMEDABAD] 4 - Assessee before the ld.CIT(A) categorically pleaded that rate of land was determined on the basis of actual position of considering the various factors as illustrated in clause 5 of agreement to sale dated 29.03.2011. Valuation of DVO has not considered those factors as illustrated in para 5 of agreement to sale deed. Co-ordinate Bench in Shri Vinubhai V.Navadia Vs. DCIT, [ 2017 (4) TMI 1531 - ITAT AHMEDABAD] while considering the various factors effecting the sale consideration granted 50% reduction in the deemed value of consideration in the basis of DVO Report. As assessee has brought on record that in second plot, there was a 5 feet deep hole in the ground and a drainage next to the land, Slum cluster next to the plot, water of waste drainage was flooded in the said land and during the monsoon season part of the land remains water logged and the market value of was fixed keeping in view of such circumstances. The Ld. CIT(A) has not examined those facts and simply accepted the report of the DVO. The report of the DVO is also based on certain estimation. Thus, keeping in all facts and circumstances of the preset case and the evidence available on record the assessee is allowed 6% of reduction in difference of sale consideration and value determined by the DVO. Therefore, we direct the AO to allow the deduction of 6% of difference on the actual sale consideration and the value determined by the DVO and compute the capital gain accordingly.- Appeal of assessee allowed.

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• 2021 (2) TMI 1020
  Penalty u/s 271(1)(c) - deduct tax at source u/s 194J - assessee company has suo motu deposited the tax deducted at source along with interest in the Government account to settle the dispute with the Revenue - HELD THAT:- We are of the considered view that when, in the undisputed facts and circumstances of the case, assessee company has voluntarily on its own deducted the tax and deposited the same with Government exchequer along with interest well prior to date of filing of income-tax return, it shows its bona fide creating a reasonable cause to be covered u/s. 273B of the Act, hence penalty imposed by the AO is not sustainable. So, finding no illegality or perversity in the impugned order passed by the ld. CIT(A), present appeal filed by the Revenue is hereby dismissed.

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• 2021 (2) TMI 1019
  Depreciation for assets classified under KILN-III - Whether CIT(A) has erred in law and on facts in admitting the assessee s additional evidence regarding the purchase of invoice (s) of the fixed asset in the nature of generator during the lower appellate proceedings and that too, in violation of Rule 46A of the Income Tax Rules.? - HELD THAT:-Assessee s statement of depreciation as per Income Tax Act sufficiently revealing that it had placed not only the details of the corresponding fixed asset generator but also filed necessary particulars during the course of assessment as per the certificate coming from the paper book. We thus see no merit in Revenue s foregoing technical grievance under Rule 46 of the Income Tax Rules. The same is accordingly declined. - Decided against revenue.

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• 2021 (2) TMI 1018
  TP Adjustment - addition on account of arm s length interest on loans advanced to the Associated Enterprises (AE) - Commissioner (Appeals) directed the Assessing Officer to determine the arm s length interest applying LIBOR rate - HELD THAT:- As assessee has submitted that advancing of interest free loans to the subsidiaries is a shareholder s activity, hence, should not be subjected to arm s length price determination, however, we are not convinced. A perusal of Explanation I(c) of section 92B of the Act makes it clear that capital financing including any type of long term and short term borrowing, lending, etc., comes within the ambit of international transaction. Since, the assessee has provided interest free loan to the AEs, which, under similar circumstances would not have been provided to unrelated parties, arm s length interest has to be determined. It is further observed, in the course of proceedings before the first appellate authority the assessee relying upon various judicial precedents had submitted that arm s length interest should be determined by applying LIBOR rate. Addition made on account of adjustment made towards fee on corporate guarantee - Assessee had not charged any commission/fee from the AEs for the corporate guarantee so provided, the Transfer Pricing Officer determined the fee/commission for corporate guarantee @ 1.25% on the quantum of loan availed and proposed an adjustment - HELD THAT:- As rightly observed by learned first appellate authority, the Tribunal, Mumbai Bench, in Everest Kanto Cylinders Ltd. v/s DCIT, [ 2012 (11) TMI 1099 - ITAT MUMBAI] while negating identical contention made by the assessee has held that provision of corporate guarantee is an international transaction. The aforesaid decision of the Co ordinate Bench has also been upheld in case of the same assessee as reported in [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] . That being the case, we do not find any merit in the submissions of the assessee that provision of corporate guarantee is not an international transaction. As regard the arm s length rate of fee/commission, the assessee relying upon the decision of the Asian Paints India Ltd. [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] has submitted that it should be reduced to 0.2%.On careful perusal of the decision rendered in case of Asian Paints (supra), we find that in the facts of the said case the assessee itself had charged commission @ 0.2% over the years and the Tribunal has accepted the claim of the assessee which was not contested by the Revenue. Taking note of these facts the Hon ble Jurisdictional High Court has dismissed the appeal of the Revenue. These are not the facts in case of the present assessee. Therefore, we are not inclined to interfere with the decision of learned Commissioner (Appeals) on this issue. This ground is dismissed. Disallowance made on account of alleged non genuine purchases - HELD THAT:- What should be the reasonable rate of profit which can be applied. As noticed, the Assessing Officer has referred to a report of the task group for Diamond sector published by the Government of India, Ministry of Commerce and Industry, New Delhi, wherein the benign / presumptive taxation threshold was set at 2.5%. Keeping in view the aforesaid threshold limit set by the task group, in our considered opinion the reasonable profit element on the alleged non genuine purchases can be estimated @ 3%. Therefore, we direct the Assessing Officer to restrict the disallowance to 3% on the purchases made from Sun Diam only. No disallowance should be made on the purchases made from Nayan Gems. Before parting, we must observe that on a careful examination of the decisions relied upon by the learned Counsel for the assessee, we found them to be not applicable to the facts of the present case, hence, we have not deliberated upon them at length. This ground is partly allowed.

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• 2021 (2) TMI 1017
  Validity of re-assessment notice u/s. 148 - Notice issued beyond 4 years - ex-parte orders - HELD THAT:- From the appeal papers and the orders of the authorities below i.e., CIT(A) s order and AO s order, it is noticed that practically both the orders are ex-parte. From the order of the CIT(A), it is noticed that the CIT(A) has not adjudicated the issue of re-opening, whether notice u/s. 148 can be issued beyond 4 years in the given facts and circumstances of the case. Secondly, the CIT(A) has not at all touched the issue of best judgment completed ex-parte, which is raised by the assessee. Even on merits we noted from the order of CIT(A), that CIT(A) has not given any finding on merits except accepting the version of the AO. CIT(A) has not adjudicated both the issues on jurisdiction i.e., best judgment made ex-parte as well as notice issued u/s. 148 of the Act beyond 4 years, which is beyond jurisdiction, according to the assessee. Since, these issues were not adjudicated, we are of the view that let the CIT(A) re-examine the issues in entirety, but it is also noticed that even the order of the AO is an ex-parte u/s. 144 r.w.s. 147 - Hence, purpose will not be served in case matter is restored back to CIT(A), because AO has to gather all the evidences and he has to adjudicate these issues. Hence in entirety, the assessment is set aside and appellate order is also set aside, matter remanded back to the file of the AO, to re-do the assessment afresh. The assessee is at liberty to raise jurisdictional issues as well as issues on merits before the AO. Appeal of the assessee is allowed for statistical purpose.

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• 2021 (2) TMI 1016
  TP Adjustment - interest on delayed export proceeds receivable by the assessee from its AEs - HELD THAT:- Facts involved in the appeal of the assessee for the year in question are in parity with those as were there before the Tribunal in the case of its abovementioned sister concern , viz. Dania Oro jewellery Pvt. Ltd. Vs. DCIT-9(3)(1) [ 2018 (1) TMI 240 - ITAT MUMBAI ] As the weighted average delay in realisation of the sale proceeds by the assessee from its AEs is less than that involved in realisation of the sale proceeds from the non-AEs, and the assessee adopting a uniform policy had not charged interest in either case, thus, finding ourselves in agreement with the view taken by the Tribunal in the aforesaid case, we respectfully follow the same. Accordingly, we herein and direct the A.O/TPO to vacate the transfer pricing adjustment of Rs. 1,07,01,654/- made towards interest on delayed export proceeds receivable by the assessee from its AEs. TP adjustment - computing the impugned adjustment LIBOR+ 200 basis points (2.583%) instead of the base rate of State Bank of India i.e 10.81% - We find is rendered as infructuous, for the reason, that the transfer pricing adjustment as regards the delayed realization of sale proceeds by the assessee from its AE had been vacated by us while disposing off its additional ground of appeal. Addition/disallowance under Sec. 2(24)(x) r.w.s 36(1)(va) - delayed the payments made in respect of the employees contributions to PF and ESIC by failing to deposit the same within the due dates (including the grace period) - HELD THAT:- On a perusal of the judgment of the Hon ble High Court of Bombay in the case of CIT (Central), Pune Vs. Ghatge Patil Transport Limited. [ 2014 (10) TMI 402 - BOMBAY HIGH COURT ] both the employers and the employees contributions to the various employees welfare funds are covered under Sec. 43B of the Act. In our considered view, as the employees contribution towards PF and Employees State Insurance therein aggregating to Rs. 8,65,227/- was deposited by the assessee prior to the due date of filing of its return of income hence, the same was not liable to be disallowed under Sec. 2(24)(x) r.w.s 36(1)(va) of the Act. Our aforesaid view is further supported by a subsequent order of Hon ble High Court of Bombay in the case of Geekay Security Services (P) Ltd. Vs. DCIT [ 2018 (12) TMI 702 - BOMBAY HIGH COURT ] Disallowance under Sec. 36(1)(iii) of the interest expenditure attributable to the interest free advances that were given by the assessee company to its directors - HELD THAT:- we concur with the claim of the ld. A.R that in case the interest free funds available with the assessee were sufficient to justify the loans advanced to the directors, it could safely be presumed that the same were made by the assessee from the interest free funds available with it. At the same time, we find that the claim of the assessee that it had sufficient self owned funds to justify the loans advanced to the aforesaid directors need to be verified on the part of the assessing officer, and if the said claim is found to be in order then no disallowance under Sec. 36(1)(iii) would be called for in its hands. Deduction u/s 10A computation - not including the interest income while computing the assessee s entitlement for deduction under Sec. 10A - HELD THAT:- We direct the A.O to consider interest income as a part of the eligible profits of the assessee s business for computing its deduction under Sec. 10A . Not considering claim that the unrealised export turnover as and when realised should be considered as forming part of its export turnover for the purpose of computing its deduction under Sec. 10A - HELD THAT:- As perused the order of the Tribunal in the assessee s own case for A.Y. 2010-11 [ 2018 (5) TMI 130 - ITAT MUMBAI ] ,we respectfully follow the same. Accordingly, we herein set aside the aforesaid matter to the file of the A.O, with a direction to consider any sum realised out of the unrealised export sales as part of the assessee s export turnover for the purpose of computing its deduction under Sec.10A of the Act, as and when the same is received as per the extant guidelines of the Reserve Bank of India.

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• 2021 (2) TMI 1015
  Benefit of Vivad Se Vishwas Scheme ( VVS Scheme ) - Substantial Questions of Law framed for consideration on account of certain subsequent developments - Option to appeal in case application for settlement is rejected - HELD THAT:- As relying on M/S. NANNUSAMY MOHAN (HUF) case. [ 2020 (11) TMI 484 - MADRAS HIGH COURT] the appeal is disposed off accordingly, with liberty to the assessee to file a miscellaneous application, in the event of either the assessee not opting for Vivad se Vishwas scheme as contemplated by it before the due date of the scheme in operation or in the event of the department not accepting the application made by the assessee under the said scheme, the appeal of the assessee shall be recalled by the Tribunal and restored for adjudication on merits. It is further made clear that if the assessee seeks to restore the appeal in the event of assessee s declaration made under Vivaad se Vishwas scheme is not accepted by the Revenue, the Registry shall not insist for filing of application for condonation of delay, if the Miscellaneous Application for recalling the order is filed beyond time on account of delayed communication of outcome under Vivaad se Vishwas scheme.

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• 2021 (2) TMI 1014
  Penalty levied u/s. 271(1)(c) - Bogus purchases - information received from DGIT (Inv.,), Mumbai that assessee has received accommodation entries from M/s. Vitraj Traders Impex without making any purchases but made purchases only in grey market - AO estimated the profit element from non-genuine purchases at 12.5% - HELD THAT:- It is a settled position of law that penalty cannot be levied when an adhoc estimation is made. In this case an adhoc estimation was made by the Assessing Officer restricting the profit element in the purchases @12.5%. See SHRI DEEPAK GOGRI VERSUS THE INCOME TAX OFFICER, WARD 25 (3) (2) , MUMBAI [ 2017 (11) TMI 1857 - ITAT MUMBAI] As decided in AERO TRADERS (P) LTD. [ 2010 (1) TMI 32 - DELHI HIGH COURT] estimated rate of profit applied on the turnover of the assessee does not amount to concealment or furnishing inaccurate particulars. In the case on hand the Assessing Officer has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. Thus, we do not observe any infirmity in the order passed by the Ld.CIT(A) in deleting the penalty u/s. 271(1)(c) of the Act levied by the Assessing Officer for the Assessment Year. Grounds raised by the revenue are rejected.

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• 2021 (2) TMI 1013
  TP Adjustment - MAM selection - benchmark the international transactions of freight receipts and expenses by taking TNMM as the most appropriate method and PLI of OP/VAE [Operating Profit/Value added expenses] - HELD THAT:- No infirmity did emerge from the adoption of the PLI of OP/VAE by the assessee for benchmarking of its international transactions of freight receipts and expenses, there was, thus, no justification for substitution of the same by the PLI of OP/TC by the TPO/DRP. We, thus, in terms of our aforesaid observations direct the A.O/TPO to benchmark the international transactions of freight receipts and expenses by taking TNMM as the most appropriate method and PLI of OP/VAE. Transfer pricing adjustment considering the entire turnover of the freight receipts and expenses - claim of the assessee before the DRP that for working out the TP adjustment the TPO was obligated to consider only the operating costs attributable to the AE sales - HELD THAT:- Admittedly, a TP adjustment envisaged in Chapter X is only in respect of the international transactions of the assessee with its AEs and cannot be extended to the transactions entered into by the assessee with the independent unrelated third parties. Insofar the aforesaid settled position of law as had been so canvassed by the ld. A.R before us is concerned, we are persuaded to be in agreement with the same. In fact, we find that in the case of CIT-8, Mumbai Vs. Tara Jewells Export (P) Ltd . [ 2015 (12) TMI 1130 - BOMBAY HIGH COURT] and CIT Vs. Thyssen Crup Industries India Pvt. ltd . [ 2015 (12) TMI 1076 - BOMBAY HIGH COURT] had clearly observed, that in terms of Chapter X of the Act the TP adjustment is mandated only in respect of International transactions and not the transactions entered into by the assessee with independent unrelated parties. We find that in case if a TP adjustment is allowed in respect of transactions entered into by the assessee with unrelated third parties then the same would be result into increasing of the profit in respect of such independent transactions which would be beyond the scope and ambit of Chapter X of the Act. Apparently, the claim of the ld. A.R that the TPO had wrongly worked out the TP adjustment in respect of the AE transactions by considering the total operating costs instead of the operating costs attributable to the AE sales is prima facie found to be correct. Accordingly, we restore the matter to the file of the A.O/TPO for the limited purpose of working out the TP adjustment only in respect of the transactions of the assessee with its AEs, and if the same is found to be within the safe harbour range of +/- 5% of the ALP then no adjustment shall be called for in its hands. Inclusion/exclusion of certain comparables by the TPO/DRP w.r.t benchmarking of the international transactions of freight receipts and expenses of the assessee - Exclusion of companies functionally dissimilar with that of assessee. Disallowance u/s 36(1)(iii) - disallowance of interest expenditure - HELD THAT:- More or less the assessee had been able to drive home its claim that the aforesaid amounts were advanced much prior to raising of the interest bearing loans/borrowings in question, as a result whereof no part of the interest expenditure was liable to be disallowed under Sec.36(1)(iii) of the Act. In sum and substance, the claim of the assessee that at the relevant point of time of giving the capital advances it had with it sufficient self owned funds to justify the same had not fairly been looked into by the lower authorities. In fact, both the lower authorities had approached the issue in question with a view that the assessee was obligated to disprove the existence of a one-to-one nexus between the capital advances and interest bearing loans/borrowings, which as observed by us hereinabove cannot be subscribed on our part. In the backdrop of our aforesaid deliberations, we are of a strong conviction that the aforesaid issue requires to be revisited and therein re-adjudicated by the A.O after calling for and considering the entire set of facts pertaining to the same. At this stage, we may herein clarify that in case if the assessee in the course of the set aside proceedings is able to establish that it had at the relevant point of time sufficient interest free funds available with it to justify the capital advances given w.r.t the aforesaid properties, then, it would be presumed that the aforesaid capital advances/investments were made by it from the interest free funds so available with it. Accordingly, in all fairness and in the interest of justice we restore the issue to the file of the A.O for the purpose of readjudication of the same in terms of our aforesaid observations. Needless to say, the A.O in the course of the set aside proceedings shall afford a reasonable opportunity of being heard to the assessee who shall remain at a liberty to substantiate its aforesaid claim on the basis of fresh material and submissions.

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• 2021 (2) TMI 1012
  Rectification of mistake - guarantee commission charge - Applicant submits that direction to the TPO/AO that the transfer pricing adjustment should be computed at 0.5% of the guarantee commission in additions to the commissions already charged by the assessee is an inadvertent error. The Applicant submits that the direction ought to be in case the commission already charged by the assessee is less than 0.5% - HELD THAT:- Upon careful consideration we agree that a mistake has crept into the order of the Tribunal. Hence, we direct that at page No. 14 in paragraph No. 12, line No. 16 17 the sentence in additions to the commissions already charged by the assessee is corrected as in case the commission already charged by the assessee is less than 0.5% .

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• 2021 (2) TMI 1011
  Penalty u/s. 271(1)(c) - disallowance of legal and professional expenses and disallowance account of building repair expenses - HELD THAT:- Disallowance of legal and professional expenses has been made merely on the ground that the invoice mentions that the assessee has received hence it was treated as capital in nature and not revenue in nature. Simply because, the consultancy services has been treated as capital in nature by the Assessing Officer that does not mean that assessee has furnished any inaccurate particulars of income so as to warrant levy of penalty u/s.271(1)(c), especially when there is no doubt about the factum of incurring of such expenditure and the genuineness of which stands established. In these facts, the penalty on such disallowance is directed to be deleted. Building repair expenses disallowance assessee has carried out repair and maintenance for which it has paid to third party M/s. Sarvamanglam Pvt. Ltd. and these repair and maintenance was carried out on the rented place taken by the assessee for its business. However, out of total disallowance of Rs. 31,93,239/- the amount finally sustained in the quantum proceedings was Rs. 19.93 lacs. Thus, part of the same expenditure has been allowed. During the course of penalty proceedings, before the ld. CIT (A), assessee has filed all the details and evidences for the amount of Rs. 19,93,239/- for which ld. CIT(A) has refused to admit. Penalty proceedings are separate and distinct from assessment proceedings and the assessee during the course of penalty proceedings can substantiate its claim by providing evidences or explaination that it is not guilty for furnishing of any inaccurate particulars of income - Penalty is not adjunct to assessment, it s a separate proceedings and assessee has right to rebut the charges levied on him which he may not have in quantum due to any circumstances. Accordingly, the action of the ld. CIT (A) to reject these evidences which goes to prove the incurring of expenditure by the assessee which is ostensibly revenue in nature - it cannot be held that the assessee had furnished any inaccurate particulars of income so as to warrant any levy of penalty u/s. 271(1)(c) - Decided in favour of assessee.

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• 2021 (2) TMI 1010
  income from house property - Deemed rental of the basement property owned by the assessee - HELD THAT:- AO had proceeded with on the basis of a misconception that the assessee had received an amount of Rs. 66 lac as an interest free deposit from a tenant without any monthly rent. Insofar the contention of the ld. D.R that as the assessee had not shown any deemed lettable value of the property under consideration, the A.O, thus, had rightly determined the same as per the mandate of Sec. 23(1) of the Act is concerned, we find that the same being devoid and bereft of any force cannot be sustained - it is the claim of the ld. A.R that as the property in question was being used by the assessee for its own business and had not been let out thus, the issue of determining the deemed annual lettable value of the same does not arise. In the absence of any material which would support the claim of the A.O that the assessee had let out the property in question, the same cannot be summarily accepted. Accordingly, finding no infirmity in the well reasoned deletion of the addition of Rs. 33.60 lac made by the A.O towards deemed lettable value of the property in question, we uphold the order of the CIT(A) to the said extent. Grounds of appeal Nos. (i) (ii) are dismissed. Addition u/s 68 - credits in the respective accounts of the shareholders as an unexplained credit - HELD THAT:- On a perusal of the ledger accounts of the shareholders w.r.t payment of stamp duty and registration charges, it can safely be gathered that on 20.03.2012 the amount of stamp duty/charges was distributed amongst them on the basis of their respective shareholdings. Admittedly, the assessee instead of debiting the stamp duty expenses to the premises in the fixed assets a/c had wrongly debited the respective accounts of the shareholders. As observed by us hereinabove, as and when the respective amount of contributions were received vide account payee cheques from the shareholders, the same were credited to their respective accounts. As the aforesaid transaction was not only fully explained, but there was no reason for treating the duly substantiated credits in the respective accounts of the shareholders as an unexplained credit within the meaning of Sec. 68 of the Act, the CIT(A), in our considered view had rightly vacated the addition that was made by the A.O u/s 68. Addition u/s 41(1) - Liability under the head BMC Charges Payable - A.O holding a conviction that the said amount was no more outstanding added the same u/s 41(1) - HELD THAT:- In order to substantiate the fact that the payments were made by the aforementioned respective shareholders, the assessee had placed on record the copy of the pass book of the assessee for the period April, 2007 to March, 2008, alongwith the ledger accounts of the respective shareholders. Before the CIT(A), it was the inter alia claim of the assessee that as the aforesaid amount paid to BMC in the year 2007-08 was never claimed as a deduction, the same, thus, by no means could have been added as the income of the assessee u/s 41(1) - In our considered view, the CIT(A) had rightly observed that as the assessee had at no stage claimed much the less was allowed any deduction of the BMC charges in question in assessment for any year, thus, the provisions of Sec. 41(1) could not have been invoked. Disallowance of security charges and repairs and maintenance charges pertaining to the property given on rent - CIT-A sustaining addition 20% - HELD THAT:- Nothing has been brought to our notice by the ld. D.R which would point out any perversity in the aforesaid observation of the CIT(A). Accordingly, in the backdrop of the fact that only 20% of the building in question was let out by the assessee, we concur with the view taken by the CIT(A). Accordingly, in the backdrop of the fact that only 20% of the building in question was let out by the assessee, we concur with the view taken by the CIT(A) that the security charges and repairs maintenance charges only to the said extent could have been disallowed on the pretext that the same were subsumed in the statutory 30% deduction allowed while computing the income under the head house property . As such, finding no infirmity in the view taken by the CIT(A) in context of the aforesaid issue under consideration, we uphold the same to the said extent.

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• 2021 (2) TMI 1009
  TP Adjustment - adjustment made in respect of availing of Management Services - HELD THAT: - In similar circumstances on identical facts this Tribunal in assessee s own case for A.Y. 2009-10 [ 2019 (9) TMI 1313 - ITAT PUNE ] reversed the order of DRP and directed the AO to accept the value of management services as claimed by the assessee. Similarly, this Tribunal in A.Y. 2010-11 [ 2020 (2) TMI 114 - ITAT PUNE ] also taking into consideration the findings of Tribunal in A.Y. 2009-10 allowed ground No. 3 raised therein and directed the AO to accept the value of management services as claimed by the assessee by reversing the order of DRP Comparability - In the light of the findings of this Tribunal in assessee s own case for A.Y. 2010-11 for exclusion of Asian Business Exhibition Conference Ltd. [ 2020 (2) TMI 114 - ITAT PUNE ] by placing reliance on similar issue on same identical facts involved in the case of M/s. John Deere India Pvt. Ltd. [ 2019 (5) TMI 97 - ITAT PUNE ] the order of CIT(A) is upheld and direct the Assessing Officer to exclude the Asian Business Exhibition Conference Ltd. from the list of comparables. Addition made on account of payment of royalty - HELD THAT:- This Tribunal in assessee s own case in A.Y. 2010-11 examined the details of payment of royalty on total sales made to Renishaw group entities in detail and held the payment of royalty @ 2% is in accordance with the agreement dated 01-04-2006 which is being renewed from time to time since then involving the year under consideration also and directed the Assessing Officer to accept the arm s length price adopted by the assessee.. In view of the above as there was no order contrary to the view taken by this Tribunal brought on record by the Revenue, we direct the Assessing Officer to accept the ALP computed by the assessee by adopting TNMM on account of payment of royalty.

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• 2021 (2) TMI 1008
  Non deduction of TDS u/s 194A - compensation on cancellation of booking of flats - Interest disallowance u/s 40(a)(ia) - assessee had not deducted tax at source on stated payments - HELD THAT:- The bookings were cancelled at the behest of purchasers and the assessee was under no obligation to pay any compensation in such an event. The payment was made as per mutual understanding. It is pertinent to note that the assessee was charging interest of 24% on delayed payments and therefore, the excess amount paid over and above the advances paid by the purchasers would be nothing but compensatory interest in nature. The buyer-seller relationship was snapped the moment the bookings were cancelled and the relationship of debtor-creditor would commence. As rightly held by Ld. CIT(A), there was no other way this payment could be interpreted because the assessee was under no legal obligation to pay compensation for cancellation of flat, the proposal for which came from the purchaser. Therefore, the impugned order would not require any interference on our part, in this regard. The said adjudication is also supported by assessment order for AY 2017-18 as placed on record by Ld. DR the perusal of which would reveal that the assessee, itself, has deducted tax at source on such excess payments during that year. Assessee could escape the rigors of Sec.40(a)(ia) in terms of second proviso to Section 40(a)(ia) read with first proviso to sub-section (1) of Section 201 by demonstrating that the payees have duly offered this income in their respective tax returns and paid due taxes thereon. In such a case, no disallowance u/s 40(a)(ia) is called for. Therefore, we deem it fit to restore the matter back to the file of AO for the limited purpose of providing an opportunity to the assessee to demonstrate fulfillment of these conditions by adducing requisite documentary evidences. Assessee s appeal stands partly allowed for statistical purposes

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• 2021 (2) TMI 1007
  Estimation of income - Bogus purchases - CIT(A) erred in restricting the disallowance of purchases to 12.5% - HELD THAT:- CIT(A) considered this aspect of the matter elaborately with reference to the submissions of the assessee and the averments in the Assessment Order and following the decision of Hon ble Gujarat High Court in the case of CIT v. Simit P. Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT ] restricted the disallowance to 12.5% of the non-genuine purchases. No infirmity in the order passed by the Ld.CIT(A) in restricting the addition/disallowance to the extent of 12.5% of the purchases. Grounds raised by the revenue are dismissed.

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• 2021 (2) TMI 1006
  Addition u/s 68 - bogus share capital share premium - assessee could only filed the confirmation and acknowledgment of Return of Income - The investor companies are only paper companies - HELD THAT:- We have noted that the Lower Authorities have made addition after making proper enquires and giving full opportunity to assessee to prove the genuineness of transaction and credit worthiness of Investor Company. The assessee failed to prove that the transactions of share application money is genuine and the creditworthiness of Investor. Further, we have noted that the present appeal was filed in 2016, till date not a single piece of evidence is placed on record to prove the identity, genuineness of transaction of transaction and creditworthiness of the investor company. The assessee was given a number of opportunities to represent their cases, but the assessee failed to respond and honour the notices issued by this Tribunal. In view of the aforesaid discussion, we do not find any merit in the grounds of appeal raised of the assessee, accordingly, grounds of appeal raised by assessee are dismissed.

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• 2021 (2) TMI 1005
  Capital gain computation - reference u/s.55A - CIT(A) upholding substitution of fair market value as on 01.04.1981 as worked out by DVO on a reference made u/s.55A by Assessing Officer of co-owner of the appellant - HELD THAT:- The value of the land shown by the assessee as on 1.4.1981 based on the registered valuer report is considered, it would reveal that the same was in fact even higher than the value subsequently determined by the valuation officer and therefore, the Assessing Officer was not empowered to refer the matter to the valuation officer even as per erstwhile provisions of section 55A(a) prior to amendment by the Finance Act, 2012. Considering the decision of Gauranginiben S Shodhan [ 2014 (2) TMI 78 - GUJARAT HIGH COURT] and Pooja Prints [ 2014 (1) TMI 764 - BOMBAY HIGH COURT] when the transaction of sale of land was taken during the financial year 2011-12 relevant to the assessment year 2012 -13, the amended provision of section 55A(a) would not be applicable and one shall be guided by the erstwhile provision of un-amended section 55 A(a) of the Act. Therefore, respectfully following the same, we allow the ground No. 1 raised by the assessee

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• 2021 (2) TMI 1004
  Exemption u/s 54 - purchase of house by assessee i.e. residential house - capital gains arising out of sale of flat invested in the flat situated at Crescent Bay apartments at Parel, Mumbai - assessee had made part payment of for Crescent Bay Flat, Mumbai and has deposited part amount in the Capital Gain Account Scheme for the A. Y 2013-14 - Assessing Officer restricted the claim to the extent as invested in purchase of flat at Nirala Nagar, Lucknow - HELD THAT:- Property at Lucknow was purchased vide agreement executed by assessee on 29.07.2013, which is later date. Original purchase was of residential flat in Crescent Bay apartments at Parel, Mumbai. It is a fact that the assessee has kept the money either in capital gain account scheme or made part payment for purchase of residential flat in Crescent Bay apartments at Parel, Mumbai and this has a direct nexus that the consideration received from sale of residential property was invested in purchase of this property. Hence, it is the choice of the assessee to claim exemption on one flat and CIT(A) rightly restricted the same to the investment made in purchase of residential flat at Crescent Bay apartments at Parel, Mumbai. The CIT(A) s direction to the Assessing Officer is perfectly within the provisions of law. We find no infirmity in the order of CIT(A) and hence, the same is confirmed.- Decided against revenue.

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• 2021 (2) TMI 1003
  Addition u/s 37(1) or 43A - forward contract premium expenses disallowed - AO was of the view that such amount of premium paid by the assessee to secure the amount of instalment, representing the principal amount, of the foreign currency loan cannot be allowed as deduction - HELD THAT:- The provisions of section 43A of the Act deals with the adjustment of the fluctuation in the liability of foreign currency pertaining to the capital assets acquired from outside India. This adjustment on account of change in the rate of exchange is made with respect to the amount/liability actually paid during the year by adding/deducting in the actual cost of imported assets acquired in foreign currency. This adjustment in the liability of foreign currency may result loss or gain to the assessee but the same needs to be adjusted with the capital assets as per the provisions of section 43A - Such loss arising to the assessee, is not deductible in the profit loss account. In the present case has secured such loss with respect to the liability in foreign currency which may arise at the time of payment by way of taking of forward contract. The assessee to secure the loss on account of foreign currency fluctuation has taken a forward contract and for which it has paid the premium which was claimed as revenue expenditure. Whether such premium paid by the assessee to secure the fluctuation in the foreign currency is subject matter of the provisions of section 43A ? - Provisions of section 43A of the Act deals with the loss/gain with respect to the liability in foreign currency for the assets acquired from a country outside India - it does not deal with respect to the cost incurred by the assessee to secure the loss which may arise at the time of repayment on account of fluctuation in the exchange rate with respect to foreign currency liability which was recorded in the books of the assessee in Indian currency. Thus once the provisions of section 43A of the Act are not applicable on the deduction claimed by the assessee in the given facts and circumstances, there cannot be any disallowance by invoking the provisions of section 43A. As the assessee incurred the cost to secure the foreign currency liability against the exchange fluctuation is akin to insurance policies. Therefore we are of the view that such expenses incurred by the assessee in the course of business are allowable as deduction under section 37(1) of the Act. Assessee has claimed similar expenses in the earlier years which was allowed by the Revenue. Accordingly, we are of the view that the assessee is also entitled for its claim based on the principle of consistency. - Decided in favour of assessee.

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• 2021 (2) TMI 1001
  Assessment u/s 153A - Disallowance of loss to be carried forwarded - addition of income tax expenses wrongly made by assessee company in original computation due to some clerical error - HELD THAT:- We find that both the authorities have not appreciated the exact reasons for the difference in the loss figures as per the original return and return filed in response to notice u/s 153A and has summarily rejected the assessee s position and as we have noted above, it is a case of mistake whereby the income tax expense which has been disallowed twice while filing the original return of income has been corrected while filing the return of income under section 153A of the Act and there is no fresh claim of any expenditure or loss which was not claimed earlier and has now been claimed for the first time while filing the return in response to notice u/s 153A of the Act. Though the original return of income was filed on 21.09.2012 and the time limit for filing the revised return had expired as contended by the ld CIT/DR, however, being a mistake apparent from record, the assessee can invoke the provision of section 154 and seek rectification of intimation issued u/s 143(1) dated 15.03.2013 before expiry of four years and which has not expired at the time of issuance of notice u/s 153A of the Act on 1.04.2015. Therefore, when the assessee filed the return in response to notice u/s 153A, the assessee still had time to rectify the original return of income and where such rectification is sought as part of return of income filed u/s 153A instead of initiating separate proceeding by way of filing a rectification application, no fault can be said to arise in such a case. We are of the considered view that it is a not a case of fresh claim of loss in the return filed u/s 153A and therefore, the decision of Hon ble Rajasthan High Court in case of Jai Steels ( 2013 (6) TMI 161 - RAJASTHAN HIGH COURT ) doesn t support the case of the Revenue. Decided in favour of assessee.

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• 2021 (2) TMI 999
  Non appearance by assessee - Condonation of delay in filing Rectification application - HELD THAT:- The order passed by the Income Tax Appellate Tribunal, Ahmedabad B Bench, Ahmedabad [ 2018 (7) TMI 2163 - ITAT AHMEDABAD ] declining to condone the delay and restore the appeal to its original file is hereby quashed and set aside. The order passed by the Appellate Tribunal dated 12.12.2014 [ 2014 (12) TMI 1366 - ITAT AHMEDABAD ] dismissing the appeal for non-prosecution is also quashed and set aside. The original IT Appeal is ordered to be restored to its original file

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• 2021 (2) TMI 998
  Proportionate deduction u/s 80IB(10) - flats measuring less than 1500 square feet - whether the benefit under section 80IB(10) is in respect of the entire housing project and not in respect of the flats/units specific independently? - Whether assessee would be entitled to deduction under section 80IB(10) in respect of 12th and 13th floor flats, when the flats were combined and were measuring more than 1500 square feet - Whether assessee was entitled to deduction of the flats at the 12th and 13th floor when the assessee has not claimed benefit in the return of income filed, without revising the original return of income? - computation of income of the assessee from project Mantri Sarovar on the basis of Project computation method - as per AS7 and AS9, the assessee has to follow percentage completion method as the assessee is a builder and developer? HELD THAT:- For the reasons assigned by us in the judgment passed today in[ 2021 (2) TMI 997 - KARNATAKA HIGH COURT] the substantial questions of law are answered against the revenue and in favour of the assessee.

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• 2021 (2) TMI 997
  Proportionate deduction u/s 80IB(10) - flats measuring less than 1500 square feet - whether the benefit under section 80IB(10) is in respect of the entire housing project and not in respect of the flats/units specific independently? - HELD THAT:- All substantial question of law has already been answered in favour of the assessee by judgment of this court in (i) CIT VS. BRIGADE ENTERPRISES LTD , [ 2020 (9) TMI 1137 - KARNATAKA HIGH COURT ] (ii) CIT VS. SJR BUILDERS [ 2012 (3) TMI 615 - KARNATAKA HIGH COURT ] and (iii) CIT VS. S.N.BUILDERS DEVELOPERS [ 2021 (1) TMI 789 - KARNATAKA HIGH COURT ] Tribunal held that the assessee would be entitled to deduction under section 80IB(10) in respect of 12th and 13th floor flats, when the flats were combined and were measuring more than 1500 square feet - Second substantial question of law has been answered in favour of the assessee in (i) UCO BANK VS. CIT [ 1999 (5) TMI 3 - SUPREME COURT ] (ii) STATE OF KERALA AND OTHERS VS. KURIAN ABRAHAM PRIVATE LIMITED AND ANOTHER [ 2008 (2) TMI 289 - SUPREME COURT ] (iii) NAVNITLAL ZAVERI VS. K.K.SEN [ 1964 (10) TMI 16 - SUPREME COURT ] and (iv) AZADI BACHAO ANDOLAN [ 2003 (10) TMI 5 - SUPREME COURT ] Whether assessee was entitled to deduction of the flats at the 12th and 13th floor when the assessee has not claimed benefit in the return of income filed, without revising the original return of income? - Third substantial question of law is covered by NATIONAL THERMAL POWER CO. LTD. VS. COMMISSIONER OF INCOME TAX [ 1996 (12) TMI 7 - SUPREME COURT ] Computation of income - ITAT held that income of the assessee from project Mantri Sarovar has to be computed for the Assessment year 2006 07 on the basis of Project computation method - as per AS7 and AS9, the assessee has to follow percentage completion method as the assessee is a builder and developer - HELD THAT:- As under Section 145(1) of the Act, the income chargeable under the head Profits and Gains of Business shall be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. The general provision is subject to accounting standards that the Central Government may notify. The assessee is a builder and developer and not a construction contractor simplicitor. Accounting Standard- 7, titled construction contracts is applicable only in case of contractors and does not apply to the case of developers and builders which is evident from opinion rendered by expert advisory committee of ICAI. It is pertinent to note that the assessee had offered the income for Assessment Year 2007-08 and no income from the project was offered for the Assessment Year 2007-08 on the basis of project completion method and that either method of accounting finally lead to the same results in terms of profits and therefore, revenue neutral. - Decided in favour of assessee.

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• 2021 (2) TMI 996
  Rectification of mistake u/s 254 - period of limitation - HELD THAT:- The captioned Miscellaneous Application was filed on 24/07/2020, which is clearly beyond the due date as prescribed u/s 254(2) of the Act. The Registry has pointed out the above defect mentioning that this MA is filed beyond the time limit prescribed u/s 254(2) of the I.T. Act, 1961 and therefore, the MA is not maintainable. Departmental Representative submitted that the Revenue would like to get the instructions from the A.O for filing of a petition for condonation of delay. However, in the case of Gayatri Infra Ventures Ltd [ 2018 (7) TMI 1917 - ITAT HYDERABAD] the Coordinate Bench of the Tribunal has held that the delay in filing the Miscellaneous Application cannot be condoned.

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• Customs

• 2021 (2) TMI 1050
  Seeking provisional release of export consignment - section 110A of the Customs Act, 1962 - HELD THAT:- The adjudicating authority as may be appointed by respondent No.2 shall pass an appropriate order regarding the prayer of the petitioner for provisional release of the export consignment under section 110A of the Customs Act by taking into consideration all the relevant materials including our order dated 10th February, 2021 - Let such order be passed within a period of 10 days from the date of receipt of a copy of this order. List this matter on 12th March, 2021.

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• 2021 (2) TMI 1039
  Principles of Natural Justice - opportunity of personal hearing sought, but not provided - Request for waiver of Cost Recovery Charges made by the appellant rejected - HELD THAT:- The appellant had specifically sought for an opportunity of personal hearing. It is not the case of the Department that there is no necessity for affording an opportunity of personal hearing. In fact in taxing statutes, when decisions are taken, an opportunity of personal hearing could go a long way to resolve very complicated issues, apart from giving satisfaction to the assessee that all materials, which are available with them, were placed for consideration before the adjudicating authority. One more fact which is to be noted is that the request made by the appellant was kept pending for several years and only after an order was passed in the earlier writ petition on 05.03.2008, the second respondent Department had passed an order dated 16.04.2008. If an opportunity of personal hearing had been granted to the appellant and the various circulars issued by the CBEC were placed for consideration, then a more informed decision could have been arrived at by the second respondent. Therefore, for such a reason alone, the order passed by the second respondent is interfered and the matter remanded back to the second respondent for taking a fresh decision, after affording an opportunity of personal hearing - Petition allowed by way of remand.

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• 2021 (2) TMI 1029
  Revocation of Customs Broker License - forfeiture of security deposit - imposition of penalty - It is the contention of the appellant that Encanterra Traders existed and was not a fictitious firm - HELD THAT:- It is clear from the decision of the Delhi High Court in MILLENNIUM EXPRESS CARGO PVT. LTD VERSUS COMMISSIONER OF CUSTOMS [ 2017 (6) TMI 1060 - DELHI HIGH COURT ] that there is no obligation on the Customs House Agent to look into the information made available by the exporter/exporter. The Customs House Agent is merely a processing agent of documents with respect to clearance of goods through Customs House and he is not an inspector to weigh the genuineness of the transaction. When the Importer/Exporter Code Number was provided and before this code was issued a background check of the said importer/exporter is undertaken by the Customs Authority, there should be no doubt about the identity of the said exporter. It would be too onerous to expect a Customs House Agent to inquire into what is stated in the documents when there is a presumption that an appropriate background check is done by the Customs Authorities. In fact, the grant of Importer/Exporter Code Number is a proof regarding verification of facts and if the grant of such a code number to an entity at the address mentioned is in doubt, then for such erroneous grant of the Importer/Exporter Code Number, the appellant cannot be faulted. The basic requirement of Regulation 10 (n) is that the Customs Broker should verify the identity of the client and functioning of the client at the declared address by using, reliable, independent, authentic documents, data or information. For this purpose, a detailed guideline on the list of documents to be verified and obtained from the client is contained in the Annexure to the Circular dated April 8, 2010. It has also been mentioned in the aforesaid Circular that any of the two listed documents in the Annexure would suffice. The finding recorded by the Commissioner that the required documents were not submitted is, therefore, factually incorrect - the KYC documents were submitted by the appellant and the verification was undertaken by Anil, an employee who had made the Directors. The communications with the Encanterra Traders was also done through mail. The self attested Pan Card, Aadhar Card of the Director and Pan Card of the Company had been submitted by letter dated September 10, 2018. A physical verification of the premises, as noticed above, was not necessary to be carried out. The Commissioner, therefore, committed an error in holding that the appellant failed to ensure due compliance of the provisions of Regulations 10(n) of the 2018 Regulations. The decision of the Tribunal in Multi Wings Clearing Forwaring P. Ltd. vs. C. C. (General), New Delhi [ 2019 (4) TMI 1189 - CESTAT NEW DELHI ] does not also help the Department as it was found as a fact that the KYC documents were not available with the assessee at the time of visit of the Investigating Agency. Appeal allowed - decided in favor of appellant.

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• 2021 (2) TMI 1021
  Revocation of Customs Broker License - forfeiture of security deposit - corroborative evidences or not - no fresh evidence was brought by the Revenue before the Inquiry Officer as well as before the Commissioner to prove that the appellant had information, knowledge or have connived in the overvaluation of the goods or misdeclaration etc. - violations of Regulations 10(d), 10(n) and 13(7) of CBLR - principles of natural justice - HELD THAT:- In the present case, the Department has failed to bring any corroborative evidence or statement of anybody on record to prove that the appellant had information, knowledge or have connived in the overvaluation of the goods or mis-declaration etc. It is also noted that the law is well settled that an element of mens-rea or direct or indirect involvement attributable to the appellant through active knowledge or connivance is required to prove in a proceedings under CBLR, 2018. We noted a series of judgments in our order dt. 14/07/2020 but both the authorities have not considered the same at all. Both the authorities have not even distinguished the authorities relied upon by the appellant and have been noted in the order dt. 14/07/2020. The learned Commissioner was bent upon revoking the licence of the appellant in spite of the fact that the appellant were not responsible for violating the regulations as alleged against them - Appeal disposed off.

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• Insolvency & Bankruptcy

• 2021 (2) TMI 1051
  Contempt Jurisdiction - Approval of Resolution Plan - whether recourse to the contempt jurisdiction is valid and whether it should be exercised in the facts of this case? - HELD THAT:- Undoubtedly, the conduct of DVI has not been bona fide. The extension of time in the course of the judicial process before this Court enures to the benefit of DVI as a resolution applicant whose proposal was considered under the auspices of the directions of the Court. DVI attempted to resile from its obligations and a reading of its application which led to the passing of the order of this Court dated 18 June 2020 will leave no doubt about the fact that DVI was not just seeking an extension of time but a re-negotiation of its resolution plan after its approval by the CoC. Then again, despite the order of this Court dated 18 June 2020 rejecting the attempt of DVI, it continued to persist in raising the same pleas within and outside the proceedings before the NCLAT. The conduct of DVI is lacking in bona fides. The issue however is whether this conduct in raising the untenable plea and in failing to adhere to its obligations under the resolution plan can per se be regarded as a contempt of the order of this Court dated 18 June 2020. DVI was undoubtedly placed on notice of the order that should it proceed in such terms, it would invite the invocation of the contempt jurisdiction. Having said that, it is evident that the order of this Court dated 18 June 2020 rejected the IA moved by DVI and as a necessary consequence, the basis on which the reliefs in the IA were sought. Therefore correctly, it has been now stated on behalf of the DVI that it will not set-up a plea of force majeure in view of the dismissal of its IA on 18 June 2020. However lacking in bona fides the conduct of DVI was, we must be circumspect about invoking the contempt jurisdiction as setting up an untenable plea should not in and by itself invite the penal consequences which emanate from the exercise of the contempt jurisdiction. Likewise, the default of DVI in fulfilling the terms of the resolution plan may invite consequences as envisaged in law. On the balance, we are of the considered view that it would not be appropriate to exercise the contempt jurisdiction of this Court - Since DVI is in appeal before the NCLAT, we express no opinion on the merits of the submission. The NCLAT will take a view on the tenability and merits of the submission of DVI that the conditions precedent under the resolution plan have not been fulfilled after hearing the parties. This is not an issue which arises before the Court in the present proceedings either upon the application for rectification moved by DVI or the contempt petition moved by the CoC. There is no merit in the application for rectification moved in appeal shall stand dismissed.

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• 2021 (2) TMI 1027
  Validity of decision of the first respondent/RP in rejecting the Expression of Interest (EOI) submitted by the applicant for submission of resolution plan in respect of the corporate debtor - Section 60(5) of the I B Code, 2016 - undischarged insolvent and an undischarged insolvent - relevant date for excess investment in the plant and machinery of the corporate debtor - HELD THAT:- Section 240A exempted the promoters of the MSME to be the resolution applicants of the same corporate debtor for which the resolution plans are sought to be invited. Section 240A has not exempted the corporate debtor itself, even though it happens to be an MSME, to be a resolution applicant to itself. In the present case, M/s Bhandari Deepak Industries Private Limited which is the corporate debtor itself submitted EOI for submitting resolution plan to itself i.e. for Bhandari Deepak Industries Private Limited. This is not permissible under the Scheme of I B Code, 2016. The applicant has not disputed the fact of submission of EOI by the corporate debtor itself, i.e. Bhandari Deepak Industries Private Limited itself, and not by its promoters, i.e. Mr. Deepak Bhandari and Mrs. Anita Bhandari. It is also not the case of the applicant at any stage that submitting the EOI on behalf of the corporate debtor Bhandari Deepak Industries Private Limited was a mistake and that the actual persons submitting the EOI were Mr. Deepak Bhandari and Mrs. Anita Bhandari, the promoters of the corporate debtor. Once a CP is admitted, the corporate debtor is to be represented by the RP alone and none else such as Suspended Directors of the Board of the corporate debtor. Therefore, we do not find any illegality in the RP rejecting the EOI submitted on behalf of the corporate debtor, M/s Bhandari Deepak Industries Private Limited itself. Admittedly, the corporate debtor Bhandari Deepak Industries Private Limited is an undischarged insolvent and an undischarged insolvent is ineligible to be the resolution applicant under Clause (a) of Section 29A and Section 240A has not exempted any person including MSME from the applicability of Clause (a) of Section 29A - the action of RP upheld. Relevant date for excess investment in the plant and machinery of the corporate debtor - Another reason for rejection of the EOI of the applicant given by the RP was that the corporate debtor does not fall under the definition of MSME or ME as defined in MSME Development Act, 2006, since the investment in plant and machinery as on the date of commencement of CIRP was Rs. 14,14,82,754/-, which is beyond the prescribed limit - HELD THAT:- The relevant date for consideration of exemption from applicability of Clauses (c) and (h) of Section 29A, in terms of Section 240A is the date of submission of EOI but not the date of consideration of the plan by the COC. Hence, the contention of the applicant, that the issue with regard to excess investment in the plant and machinery of the corporate debtor cannot be considered as on the date of submission of EOI, is untenable. Application dismissed.

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• 2021 (2) TMI 1002
  Seeking extension of CIRP period by 90 days beyond 180 days after excluding the lockdown period - Section 12(2) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 40 of the IBBI Regulations 2016 - HELD THAT:- The Hon ble Supreme Court of India in Suo Motu Writ Petition IN RE : COGNIZANCE FOR EXTENSION OF LIMITATION [ 2020 (5) TMI 418 - SC ORDER ] has held that a period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to be passed by this Court in present proceedings. Thereafter, the Insolvency and Bankruptcy Board of India, inserted Regulation 40C to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, vide notification dated 29.03.2020 has held that Notwithstanding the time-lines contained in these regulations, but subject to the provisions in the Code, the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process. Similarly, the Insolvency and Bankruptcy Board of India, vide notification dated 20.04.2020, inserted Regulation 47 A to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and the said regulation states that Subject to the provisions of the Code, the period of lockdown imposed by the Central Government in the wake of Covid-19 outbreak shall not be counted for the purpose of computation of the timeline for any task that could not be completed due to such lockdown, in relation to any liquidation process. The period of CIRP is extended by 90 days, beyond 180 days after excluding the period from 25.03.2020 to 31.07.2020 - application allowed.

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• 2021 (2) TMI 1000
  Professional Misconduct - Validity of accepting the assignment as the Interim Resolution Professional (IRP) in the Corporate Insolvency Resolution Process (CIRP) without holding a valid Authorisation for Assignment (AFA) from his IPA - contraventions of sections 208(2)(a) (e) of the Insolvency and Bankruptcy Code, 2016 (Code), regulations 7(2)(a) (h) and 7A of the IBBI (Insolvency Professionals) Regulations, 2016 (IP Regulations) read with clauses 1, 2, 11, 12 and 14 of the Code of Conduct contained in the First Schedule - HELD THAT:- It is clear from the Regulation that one of the essential condition for undertaking any assignment by an IP is that he should have a valid AFA which is issued by the IPA with which he is enrolled. In other words, without AFA, an IP is not eligible to undertake any assignments or conduct various processes thereof. Regulation 7A was inserted in the IP Regulations vide notification dated 23rd July 2019. The bye-laws of Indian Institute of Insolvency Professionals of ICAI defines in para 4(1)(aa) the expression authorisation for assignment as an authorisation to undertake an assignment, issued by an insolvency professional agency to an insolvency professional, who is its professional member, in accordance with its bye-laws regulation. An application for grant of AFA can be made by the IPs to the IPA under para 12A of said bye-laws. An IP who is more than 70 years of age is ineligible to make an application for AFA under para 12A (2)(e) of the said bye-laws. Section 208(2) of the Code provides that every IP shall take reasonable care and diligence while performing his duties and to perform his functions in such manner and subject to such conditions as may be specified. Further, the Code of Conduct specified in the First Schedule of the IP regulations enumerates a list of code of conduct for insolvency professionals including maintaining of integrity and professional competence for rendering professional service, representation of correct facts and correcting misapprehension, not to conceal material information and not to act with malafide or with negligence - DC finds that an order by the Disciplinary Committee of the IPA dated 1st December 2020 has been passed disposing the SCN issued by IPA dated 31st August 2020 to Mr. Samson, on the issue of accepting assignment as IRP after 31st December, 2019 without holding a valid AFA in the CIRP of the CD, wherein Mr. Samson was not held guilty of Professional Misconduct as Mr. Samson had given his consent on 4th April, 2019 and appointment of IRP was confirmed by the AA based on his written consent. The Disciplinary Committee of the Indian Institute of Insolvency Professional of ICAI has already passed order in this matter, the DC, in exercise of the powers conferred under Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, disposes of the SCN without any direction - SCN disposed off.

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• PMLA

• 2021 (2) TMI 1033
  Maintainability of petition - availability of alternative remedy - Money Laundering - search and seizure proceedings - confiscation of properties - It is the case of the petitioners that upon drawing the panchnama, the Assistant Director issued a letter dated 22.7.2020, intimating the petitioners not to part with any of the noted bank accounts, properties and insurance policies named therein, without prior sanction and further not to withdraw, renew or deal with the same in any manner without prior permission of the respondent No.2 - HELD THAT:- The judgment of the co-ordinate bench in the case of J JIGNESH KISHOREBHAI BHAJIAWALA VERSUS STATE OF GUJARAT AND ORS. [ 2017 (7) TMI 1377 - GUJARAT HIGH COURT] clinches the issue. The said writ petition was dismissed by this court, inter alia, holding that the PML Act was enacted to prevent money laundering and to provide for the confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto. It has been further held that in terms of Section 8 of the PML Act, the Adjudicating Authority independently considers the issue of such attachment and if it has reason to believe that the person is in possession of proceeds of crime, he shall issue show cause notice to such person. The accused is entitled to explain the sources of income, earning or assets, out of which or by means of which he has acquired the property, lead evidence and furnish any other information in his possession to justify the legitimate means of acquiring the properties in dispute. It is only after taking all the submissions of the accused and documents brought on record to establish the sources of his property so attached that the Adjudicating Authority takes a final decision on the same. In paragraph 22, it has been further observed that any person aggrieved by an order made by the Adjudicating Authority under Section 8 of PML Act can avail the remedy of appeal under Section 26 of PML Act to the Appellate Tribunal, whereby again the accused person is given ample opportunity of being heard, before any orders are passed. It is only when a person is aggrieved by the decision or order of the Appellate Tribunal that he may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him. The remedy of appeal under Section 42 of PML Act is in the nature of second appeal. Section 26 of the PML Act provides for remedy of appeal to the Appellate Tribunal to an aggrieved person. Any person aggrieved by an order made by the Adjudicating Authority under Section 8, can file an appeal under the aforesaid Section 26 to the Appellate Tribunal and the parties concerned will get an opportunity to put-forth his case. A further appeal is provided under Section 42 before the High Court within 60 days from the date of the communication of the decision or order of the Appellate Tribunal. Therefore, reading the provisions of Section 17 in juxtaposition with the provisions of Section 8 read with further provisions of Sections 26 and 42, an alternative efficacious remedy has been provided to the aggrieved person. The PML Act, therefore, is a Code unto itself. In view of the effective alternative efficacious remedy available to the persons aggrieved so also considering the object of enacting the PML Act and the principle enunciated by this court, this court would be loath to exercise its extra-ordinary power under Article 226 of the Constitution of India - Petition dismissed.

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• Service Tax

• 2021 (2) TMI 1036
  Reopening of matter - case closed for the purpose of statistics holding that the both sides are at liberty to file application before the Tribunal to reopen the matter as and when the case is disposed by the Hon ble High Court or in case of any change of circumstance - applicability of provisions of Section 35C of the Central Excise Act, 1944 - HELD THAT:- The writ petitions were heard by the learned Single Bench and by order dated 09.03.2012, this Court directed that the personal hearing of the respondent-assessee scheduled to be held on 09.03.2012, shall not go on until further orders. When this matter was brought to the notice of the Tribunal, the Tribunal has disposed of the appeal by the impugned order with liberty to the parties to file an application to reopen the matter - the correct approach would be to keep the appeal pending before the Tribunal, because the interim order is only to the effect that the personal hearing should not go on. The appeal may be kept pending before the Tribunal and should not be disposed of till the writ petitions are disposed of in one way or another or if any interim orders are passed in the writ petitions - The substantial question of law is answered in favour of the Department and the appeal is restored to the file of the Tribunal awaiting the orders passed in the writ petitions, either interim or final orders.

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• 2021 (2) TMI 1023
  Levy of service tax - Export Pass fee and Import fee - Storage License Renewal fee - Excise Staff Salary and Overtime charges - Permit fee paid to the State Excise department - Reverse charge Mechanism - Section 117 of the Finance Act, 2019 - HELD THAT:- The learned Commissioner has wrongly considered the fee paid by the appellant to the State Excise department and various other Government departments/agencies as having an element of a quid pro quo in it and hence services provided by the State Excise department. We also note that the fee charged for grant of license is not a consideration for service, but a price charged for exclusive privilege parted by the State, the export fee does not have an element of service and therefore not a service and accordingly not subject to levy of service tax. The State Legislature is empowered to make laws in terms of Article 246 read with the Seventh Schedule of the Constitution of India. The State Legislature is empowered to make laws in respect of Entries 8 and 66 of the State List which cover production, manufacture, possession, transport, purchase and sale of intoxicating liquors and fees in respect of any of the matters in this List excluding fees taken in any court. We further note that to deal with intoxicating liquor is part of the State responsibility and it is in exercise of these privileges, State has exclusive rights to manufacture, possession, consumption, transport etc. of liquor within its territory and to grant licenses and permits to ensure compliance - in August, 2019, the Finance Act, 2019 was enacted amending Section 66B of the Act, to the effect that service tax was not leviable on services provided by the State Government by way of grant of liquor licenses against consideration in the form of license fee or application fee by whatever name called , during 01.04.2016 to 30.06.2017 along with this amendment the dispute regarding the leviability of service tax on fee paid to State Government in relation to alcoholic liquor for human consumption has come to an end and it is clear that service tax is not leviable on the said fees from April 2016 to June 2017. Specific inclusion of word by whatever name called , the Legislature made it abundantly clear that any fee paid under the purview of State Excise legislation would not be leviable to service tax. Further, it is pertinent to note that the word License Fee is defined by Oxford Dictionary to mean a fee paid to an organization for permission to own, use or do something . Levy of service tax on Storage License fee - HELD THAT:- The learned Commissioner has observed that the said license is issued to the appellant by the State Excise department for the specific purpose of storing CO2. The appellant has paid the fee against the renewal of license for storing CO2 which fact is admitted by Ashish Jain, Manager of appellant in his statement dated 05.02.2018. The learned Commissioner has rightly upheld the demand of service tax on Storage License Renewal fee which cannot be considered as fee paid towards grant of liquor license - the demand of service tax on Storage License fee for CO2 along with interest is upheld. Liability on license fee and other application fee paid to the State authorities - HELD THAT:- The issue with respect to tax liability on license fee and other application fee paid to the State authorities continued to be an issue under GST as well and the GST Council in its 26th meeting on 10.03.2018 recommended that GST was not leviable on license fee and application fee, by whatever name called , payable for alcoholic liquor for human consumption and that this would apply mutatis mutandis to the demand raised by the Service Tax/Excise authorities on license fee for alcoholic liquor for human consumption in the pre-GST era i.e. for the period from April 2016 to 30th June 2017. The appellant is not liable to pay service tax on Export Pass fee, Import Pass fee, Permit fee, Excise Staff Salary and overtime allowances/charges - the service tax demand on Storage License fee for CO2 which the appellant is liable to pay along with interest is confirmed - appellants are not liable to pay penalties in view of the fact that demand itself is not sustainable - appeal allowed in part.

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• 2021 (2) TMI 1022
  Manpower Recruitment or Supply Agency Service - seconded employees - demand on the ground that the appellants have not paid service tax on receipt of Manpower Supply Service and had not complied with the conditions prescribed in Notification No. 12/2013-ST dated 01.07.2013 - HELD THAT:- In order to classify any service under the manpower recruitment or supply agency service the following conditions need to be satisfied: i. The agency must be any person ii. It must be engaged in providing a specified service iii. The specified service is recruitment or supply of manpower iv. The service can be provided temporarily or otherwise v. The service may be provided directly or indirectly vi. The service may be provided in any manner vii. The service must be provided to any other person. An identical issue was decided by this Tribunal in the case of Target Corporation India Ltd. [ 2021 (1) TMI 712 - CESTAT BANGALORE ] where it was held that in the case of seconded employees, service tax is not leviable under the category of manpower recruitment or supply of manpower service. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (2) TMI 1044
  Refund of tax amount paid - Amount paid under protest - applicability of time limitation - It is the case of the petitioner that by oversight it had not paid duty on goods captively consumed and had also wrongly availed Input Tax Credit, MODVAT Credit under the provisions of the Central Excise Rules, 1944 - HELD THAT:- Excess after adjustment of cumulative tax liability has to be refunded back. Question of invoking the limitation prescribed under Section 11B of the Central Excise act, 1944 is misplaced as the amount paid pending investigation are nothing but the amount paid under protest as has been held by the Hon able Supreme Court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT ]. Thus, the observation of the first respondent Settlement Commission that the petitioner was required to file a refund claim within one year from 11.01.2002, i.e on or before 11.01.2003, cannot be countenanced. The amount that was paid by the petitioner was otherwise liable to be adjusted or refunded subject to outcome of the Show Cause Notice dated 02.12.2002. The petitioner opted to settle the case before the first respondent Settlement Commission by offering an amount of Rs. 24,13,268/- in full and final settlement of its tax liability under the case initiated by the second respondent - Under the circumstances, the amount that was paid by the petitioner in excess of the amounts due for the period covered by the Show Cause Notice towards captive consumption of paper cone and bleach liquor was to be adjusted towards the tax liability towards input tax credit wrongly availed by the petitioner and balance if any was liable to be refunded to the petitioner. Though the petitioner had voluntarily paid the aforesaid amount during the course of investigation, in absence of the appropriation of the excess amount towards any other tax/duty liability of the petitioner, it was to be refunded back from the date of the impugned order of the first respondent Settlement Commission. The first respondent Settlement Commission cannot artificially impose a new period of limitation especially when the proceedings were pending before it - Having granted immunity and the waiver from payment of penalty, the amount paid in excess by the petitioner before the second respondent cannot be retained by the second respondent on the ground that the refund claim was time barred. The impugned order directing the petitioner to pay a sum of Rs. 9,36,279/- within 30 days and refusing to refund the balance amount is liable to be quashed - Refund allowed - petition allowed - decided in favor of petitioner.

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• CST, VAT & Sales Tax

• 2021 (2) TMI 1046
  Scope of SCN - Cancellation of assessee s registration on grounds different from those disclosed in the show cause notice - cancellation of registration of the assessee with retrospective effect - U.P. Value Added Tax Act, 2008 - HELD THAT:- There can be no dispute that before cancellation of registration, a reasonable opportunity of hearing has to be afforded to the affected dealer. In the present case, the notice does not disclose the exact nature of the charge leveled against the assessee inasmuch as it does not disclose the names of the other dealers with whom the assessee is alleged to have entered into fake and bogus transitions. Neither the show cause notice disclosed the exact nature of such transactions, nor the volume of such transactions nor the name of the dealer with whom asseessee is alleged to have traded in goods after cancellation of the registration of the other dealers or after closure of business by the other dealer. In absence of such disclosure contained in the show cause notice dated 24.10.2016, it is difficult to contemplate how a person in the shoes of present assessee could have responded to the show cause notice and defended the proceedings for cancellation of his registration. Unless the assessee had been confronted with the names of the dealers with whom it was alleged to have entered into bogus transactions and unless the details of such transactions had been disclosed in the notice itself and unless similar details of other dealers, who are alleged to have closed their business been disclosed the assessee could never have effectively responded to the charge/s leveled against him of having engaged in bogus transactions only for the purpose of availing I.T.C. Cancellation of registration is a very serious proceeding. It takes away the right of an assessee to do business. Therefore such a proceeding should be approached with that much more seriousness and case by the assessing authority. At present the assessing authority appears to have passed a wholly ex parte order inasmuch as in first place it had not disclosed to the assessee the exact nature of the charge leveled against him or the facts and circumstances in which his registration was being cancelled and in any case material that formed the basis of the charge was completely concealed from the assessee - appellate authority and the Tribunal have erred in not correcting the mistake thus committed by the assessing authority - answered in the negative i.e. in favour of the asseessee and against the revenue. The question relating to retrospective cancellation of registration, need not be answered - At the same time, keeping in mind the nature of allegation leveled against the assessee, the proceeding cannot be allowed rest here. It is then provided that the assessing authority shall issue a fresh notice in terms of the order dated 18.11.2016 and proceed in accordance with law. Revision allowed in part.

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• 2021 (2) TMI 1037
  Input Tax Credit - denial of ITC in the hands of purchasing dealer or recovery from the seller for failure to deposit the tax - Section 19(1) of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- The State had preferred an appeal in THE ASSISTANT COMMISSIONER (CT) CHENNAI VERSUS SRI. VINAYAGA AGENCIES [ 2020 (4) TMI 141 - MADRAS HIGH COURT ] has dismissed the writ appeal, holding that respondent are directed to allow the ITC in the hands of purchasing dealer under Section 19(1) of the Act. Appeal dismissed - decided against appellant.

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• 2021 (2) TMI 1035
  Levy of Tax - transfer of right to use of goods or not - supply of cranes under the agreement to the Bharath Heavy Electricals Limited - Section 4 of the Tamil Nadu Value Added Tax Act, 2006 - tax levied on the ground that the petitioner has effected sale within the meaning of extended definition of sale under Section 2(33) of the Tamil Nadu Value Added Tax Act, 2006 of transfer of right to use of goods - HELD THAT:- Though it is the contention of the learned counsel for the petitioner that they have paid the service tax and have registered with the Service Tax Authority, there are no records to substantiate the same before the this Court. The Hon ble Supreme Court in Bharath Sanchar Nigam Limited and Another Vs. Union of India and Others , [ 2006 (3) TMI 1 - SUPREME COURT ], has enumerated the situation, under which, there would be transfer of right to use where it was held that the lifts were in possession of the petitioner. Thus, there is no transfer of right to use. In the facts of the case, there is no transfer of right to use and no case was made out for recovery of tax amount from the petitioner under Section 4 of the Tamil Nadu Value Added Tax Act, 2006 - the impugned orders are liable to be quashed and are accordingly quashed - petition allowed - decided in favor of petitioner.

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• Indian Laws

• 2021 (2) TMI 1047
  Smuggling - Heroin - Alleged Recovery of 2.850 kgs of Heroin from the Office of Dart Air - Cross-examination of independent witnesses - Name of the appellant as mentioned in the Airway Bill - Testing of the contraband - Alleged Recovery of 180 grams of Heroin from the Premises of the Appellant - HELD THAT:- There are several questions that arise in the context of the evidence led by NCB. The first question that arises is why would a person who had already booked a consignment come to the courier agency on the next day to enquire about the parcel. Such enquiries could have been made telephonically and it may have been possible to make it online as well. However, Mr. Manchanda submitted that that is a matter of secret information and therefore, there is no evidence in this regard required to be led. This contention is not persuasive. Cross-examination of independent witnesses - HELD THAT:- It is also material to note that in his cross examination, Sh. Rajeev Sharma (PW-11) had stated that the accused did not fill the Proforma Invoice on 07.06.2011 and, had informed him that he would come on the next day, that is, on 08.06.2011 to fill up the same. However, no such explanation was given by any witness in their examination-in-chief. There is also no plausible explanation of why the appellant would not have filled up the Proforma Invoice on 07.06.2011. It is NCB s case that the accused had only come to make enquiries about his parcel. In his examination-in-chief, PW-11 had stated that the accused had come at around 4:00 PM and had enquired from him and Sh. Rajesh about the parcel that he had booked on 07.06.2011 for USA. PW-12 had also stated in his examination-in-chief, that a Nigerian had come to their office at about 4-4:30 PM and, had confirmed about the parcel from Sh. Rajeev Sharma - There is no evidence that these independent witnesses shared any information with the NCB officials. According to NCB, these witnesses were independent witnesses and were joined to witness the proceedings. Name of the appellant as mentioned in the Airway Bill - HELD THAT:- The said Airway Bill has not been filled in by the appellant. It is also relevant to note that none of the witnesses that testified had stated in their examination-in-chief, as to who had filled up the Airway Bill. However, PW-11, in his cross-examination, conceded that the Airway Bill in question had been filled up in his hand writing. Interestingly, the Airway Bill mentions the name of the appellant as Mosike . But, that is not the appellant s name in his passport or any of his identification documents. The officials from Dart Air (PW-10 and PW-11) had confirmed that they were required to fill-up the details as per the identification documents. A copy of the passport was allegedly made available along with the Airway Bill, which mentioned the name of the appellant as Mokibe MR Leepile Moses . It is also important to note that the Passport indicates that that the Passport had been issued by the Republic of Botswana and not by the Federal Republic of Nigeria. Therefore, PW10 and PW11 could not have known that the appellant was a Nigerian. It is material to note that none of the documents pertaining to the shipment bear the signatures of the appellant. Testing of the contraband - HELD THAT:- It is at once clear that the procedure followed for testing the substance and drawing samples was not in conformity with the procedure that would lend sufficient credibility to the assertion that the entire white powder was Heroin - It is incumbent upon NCB to have at least tested and ensured that the contents of each of the pouches are tested on a Field Testing Kit and further, ascertain that each of the one hundred and forty eight packages were identical in volume, weight and size. However, the NCB officials had failed and neglected to do the same. On mixing the substance from each of the pouches, the identity of the substances in each pouch was lost and a sample drawn from the mixture did not establish that the content of the sample was identical to the substance in each of the pouches. Thus, this Court is unable to accept that NCB had established beyond any reasonable doubt that the appellant had booked a parcel with Dart Air that contained Heroin weighing 2.850 kilograms. Alleged Recovery of 180 grams of Heroin from the Premises of the Appellant - HELD THAT:- Although, there does not appear to be any source of such secret information, on receipt of the said note (Ex. PW7/3), an authorisation for search was issued by the Superintendent, Sh. Yadav in favour of Sh. G.S. Bhinder, Intelligence Officer. He was authorised to search the said premises (B-75, Hardev Nagar, Second Floor, Burari) on the basis of the secret information placed before the Superintendent, Sh. Yadav. This Court is unable to accept that there are no doubts as to the recovery of 180 grams of Heroin from the premises in question as asserted by NCB. This Court is of the view that NCB has failed to meet the standard of proof for convicting the appellant for the offence for which he was charged. The appellant is acquitted of the offence for which he was charged. He is directed to be released forthwith, if not wanted in any other case - Appeal allowed - decided in favor of appellant.

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