Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 27, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
News
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
-
Notice/summons issued by the Central Tax Authority whereas adjudication u/s 74 had been made by the State Authority - the initiation of the proceeding for imposition of tax and penalty was with the issuance of the notice under Section 74 as contained in Chapter XV of UPGST Act and the inquiry under Section 70 of the Act was independent - - It goes without saying that all issues being raised by the petitioner herein including the issue of non-service of notice before passing the order u/s 74 shall have to be adjudicated by the appellate authority without being influenced by any of the observations made. - HC
Income Tax
-
Whether the assessee is right in contending that the assessee's case was selected for a limited scrutiny and the reference to the TPO was beyond the scope of the scrutiny? - We also agree and endorse the finding rendered by the learned Single Bench that the reason for selection of scrutiny by CASS was only for numerical reconciliation is a over simplification of the reason stated for selection. In fact, the learned Single Bench has observed that the officer might have been more detailed in the choice of words employed so as to specifically refer to the issue of total employee cost, however, non-reference to this, is not fatal, as the reason for selection by CASS has been produced and placed on record by the officer while seeking approval of a Principal Commissioner of Income Tax (PCIT) for reference to the TPO. - HC
-
TDS - Payments to non-resident sportsmen or sports associations - Obligation to withhold tax on payments made to IML for grant of commercial rights under the 'Marketing and Advertising Agreement ' - There was no requirement to ascertain that the amount paid under section 115BBA was chargeable to tax or not. Even if it was not chargeable it did not absolve the Applicant from the liability to deduct TDS under section 194E. This obligation was neither affected by the DTAA nor by the Notification issued by the CBDT as the benefit of the DTAA or the Notification could have been claimed only by the IML and not by the Applicant. - AAR
-
Income accrued or deemed to accrue in India - marketing and advertising rights that have been granted under the MAA [Marketing and Advertising Agreement'] - rights under MAA - source of income was the game of cricket played in India - In the absence of any permanent establishment of the payee in India, is not chargeable to tax in India. Therefore, the payment made by the Applicant to IML for grant of commercial rights under MAA is not taxable in India as per the provisions of the DTAA between India and Mauritius. - AAR
-
Addition of inflated expenditure - We do not agree with the procedure adopted by the Tribunal and without examining the fact situation, the Tribunal ought not to have granted relief especially when the assessee could not reconcile the difference before either the Assessing Officer or the CIT(A). - HC
-
Addition towards on-money - addition u/s.68 towards on-money received by the assessee for sale of flats - we direct the ld. AO to add only 12% of on-money receipts as undisclosed income of the assessee for the year under consideration. - AT
-
Taxability of receipts from the welfare trusts - the said receipt being the unutilized portions, received back from the welfare trusts by the assessee company would not partake the character of a revenue receipt constituting income and would merely have to be treated as a windfall or non-recurring receipt not liable to tax, though not exempted under specific provisions of the Act. - AT
-
Additions u/s 69C - unexplained expenditure - the provisions of section 69C of the Act, will apply but consequent loss is to be set-off against this income. As regards to applicability of section 115BBE of the Act, as clarified by the CBDT as provisions brought out by the Finance Act, 2016 in the statute book w.e.f. 01.04.2017, the same is prospective and not retrospective. - AT
-
Nature of expenditure - compensation to the Forest Department on account of the decision of Hon'ble Supreme Court - The AO admitted this fact that the amount paid was not for acquiring the new asset. - The said expenses are liable to be treated to be paid for business expenses.- AT
-
Penalty u/s 234E - delay in filling of TDS return - Contention of the AR that since the TDS statement pertains to the period i.e for the financial year 2013-14(1st quarter) even though the same has been filed in the year 2017, the Assessing officer is not empowered to levy late filing fees under section 234E unable to be accepted as we find that at the time of processing of the TDS statement i.e. on 14.10.2017, the Assessing officer was empowered to levy such late filing fees, there is no provision to make a distinction between the TDS statements pertaining to period prior to 01.6.2015 and post such period - AT
-
Condonation of delay in filing the present appeal by 515 days - The assessee has not received any notice for hearing of the appeal as well as the order passed by the CIT(A). - However, as soon as assessee came to know of subsequent penalty order being passed against it, it consulted its Counsel and basis his advice, the present appeal has been filed though with a delay of 515 day - there is no culpable negligence or malafide on the part of the assessee in delayed filing of the present appeal and it does not stand to benefit by resorting to such delay more so considering the fact that it has applied for settlement of present dispute and payment of appropriate taxes. - AT
-
Penalty u/s.271(1)(c) OR 271AAA - unexplained cash deposits - the rate of penalty @ 200% is contemplated only u/s.271(1)(c) of the Act and not u/s.271AAA of the Act. It is elementary that the provisions of Section 271AAA and Explanation 5A to Section 271(1)(c) are distinct and separate and totally operate on two independent fields for different assessment years containing different provisions altogether. - AT
Customs
-
Confiscation of imported goods - Old/Used Analogue Photocopiers and Old/Used Digital Multi functional (Print and Copying) Machines - DGFT notification No.31/2005 dated 19.10.2005 uses the expression “photocopier machines” and therefore, there is no warrant to read the expression appearing in the DGFT notification as conforming to any one particular expression used in the Tariff as these expressions are not identical and no Tariff item is mentioned in the DGFT notification. - The Tribunal rightly rejected the case of the appellant - HC
-
Benefits under Merchandise Exports from India Scheme (MEIS) - product of vitrified tiles exported to Sri Lanka - What has been pleaded all through out by the petitioner is of lack of knowledge of subsequent public notices which had included Sri Lanka as a country for seeking the reward under the MEIS and entire procedure having been simplified, instead of getting the declaration produced for the purpose of the reward, the ticking of N/Y would suffice in case of the EDI. The ticking itself had been made equivalent to such declaration - Benefit directed to be granted to the petitioner - HC
Indian Laws
-
Seeking grant of Anticipatory Bail - allegation of Receipt of Monthly Bribe - Tax officers - The complicity of the petitioners herein as alleged would be revealed and fortified only with further investigation, for which as a necessary corollary custodial interrogation of the petitioners would be required - In the case in hand, there has to be a deviation from normal rule of bail rather than jail, since the allegations and prima facie investigation revealed that there was evasion of tax at a very large-scale and officials were being paid bribes on a monthly basis. The investigation is at a very nascent stage regarding the role of the petitioners herein. The petitioners are also persons of influence and would be in a position to scuttle a proper investigation. - Bail cannot be granted - HC
IBC
-
Initiation of CIRP - existence of dispute - the dispute that is sought to be shown is a creation as an afterthought to escape from the responsibility of making good the operational debt - It stands to reason that the Operational Creditor Inspired Traveller should not be made victim of the unresolved issues of accounts reconciliation between Group M and Katalist View paper Pvt. Ltd. This dispute has no relevance to the provision of services or its quality by Inspired Traveller and, therefore, it is not a dispute as covered under Section 5(6) of IBC. - AT
Service Tax
-
SVLDRS - The scheme talks about quantification of the tax dues and not communication thereof. The quantification having been done vide letter dated 15.06.2019, receipt of copy thereof whether email or physical becomes immaterial. It is the date of quantification which is relevant because in this case the quantification has been done by the authority. - HC
-
Classification of services - Manpower Recruitment or Supply Agency Service or not - it can be seen that the control and supervision of the staff / qualified personnel supplied to the premises of the client (ABN AMRO Bank) is with the appellant (contractor) only. Though certain personnel are supplied to the premises of the client for carrying out work / job of the client, it cannot be said that the activity would fall under MRSA. - AT
Central Excise
-
Validity of Direction of the Tribunal to issue fresh SCN - demand beyond the scope of original SCN - the appeal was filed by the assessee and not the Revenue. The Revenue did not prefer any cross appeal/objection. Therefore, the assessee cannot be worse off in its own appeal before the Tribunal. - the Department can never proceed beyond such allegation and if done so, it would be wholly without jurisdiction. - HC
VAT
-
Recovery of Tax - Attachment and auction of property - Right of buyer of property in Auction - the dues as claimed by the respondent no.2, being a charge on the property, under Section 37(1) of MVAT Act, 2002, and the property having stood attached by the respondent no.2, before the auction, the petitioner, would be liable to pay the same to the respondent no.2, in order to obtain a clear and marketable title to the property, having purchased the same on 'As is where is and whatever there is basis'. In case the petitioner discharges the aforesaid dues of the respondent no.2, it would then be entitled to a no dues certificate from the respondent no.2 - the petitioner is not entitled to the reliefs as claimed in the petition. - HC
-
Validity of attachment order passed before the expiry of period of filing of an appeal - submission of the revenue to the effect that the entire tax becomes payable immediately upon dismissed of an appeal by the first appellate authority thus, appears to be misconceived - HC
Case Laws:
-
GST
-
2021 (2) TMI 1125
Arrest under section 69 of the Central Goods and Services Tax Act, 2017 - offence of availing ineligible Input Tax Credit - out of the alleged availing of ineligible Input Tax Credit of slightly more than ₹ 9 crores, petitioner No.1 has deposited ₹ 4.80 crores which is more than 50% of the alleged dues - HELD THAT:- It is directed that no coercive action shall be taken against petitioner Nos. 2 to 8 till the next date. However, petitioner Nos.2, 7 and 8 shall appear before the investigating authority as summoned on 26.02.2021 at 11:00 a.m. and thereafter as and when summoned. Rest of the petitioners shall appear before the investigating authority as and when summoned and co-operate with the investigation. Stand over to 16.03.2021 for filing of reply and rejoinder.
-
2021 (2) TMI 1124
Notice/summons issued by the Central Tax Authority whereas adjudication u/s 74 had been made by the State Authority - contention is that once the Central Tax Authority had initiated action, the proceeding was required to be brought to its logical end by the same authority - HELD THAT:- It appears from the perusal of the order dated 8th September, 2020 that the show cause notice had been served under Section 74(2) of the Act and the date was fixed for submitting explanation/objections by the petitioner. The order impugned dated 8th September, 2020 records that the petitioner did not appear before the proper Officer - As the proceedings for determination and levy of tax and penalty had been initiated by the State Tax Authority, this Court does not find substance in the challenge to the jurisdiction of respondent no. 2 to pass order for determination of tax and penalty to levy the same upon the petitioner, in view of the circular dated 5.10.2018. In the considered opinion of the Court, the initiation of the proceeding for imposition of tax and penalty was with the issuance of the notice under Section 74 as contained in Chapter XV of UPGST Act and the inquiry under Section 70 of the Act was independent - It goes without saying that all issues being raised by the petitioner herein including the issue of non-service of notice before passing the order under Section 74 of the Act shall have to be adjudicated by the appellate authority without being influenced by any of the observations made. Petition dismissed.
-
2021 (2) TMI 1121
Profiteering - Section 171 of the Central Goods and Services Act, 2017 (CGST Act) and Rules contained in Chapter XV of the central Goods and Services Rules, 2017 - HELD THAT:- Issue notice. Notice is accepted by the counsel for the respondents - Subject to the petitioner paying the entire demanded amount, less the GST amount already deposited, in six equal monthly instalments commencing from the month of February, 2021, there shall be stay of recovery.
-
2021 (2) TMI 1120
Refund sought of on amount deposited - petitioner was compelled to deposit amount with the respondents and though the said amount was deposited as far back as on 1st July, 2020 and 31st August, 2020 but the respondents are merely retaining the said amount and have not taken any further action - Provisional attachment of Bank Account of petitioner - Section 83 of the Central Goods and Services Tax (CGST) Act, 2017 - HELD THAT:- It appears that the respondents were required to issue notices under Sections 73 and/or 74 of the Act to the petitioner and which the respondents have not done till now. It prima facie appears that the respondents, taking advantage of the petitioner having been so compelled to make the deposit, albeit without prejudice to its rights and contentions, are not in a hurry. Thus, unless the respondents issue notice, within a time bound period, a direction needs to be issued for refund of the amounts so deposited by the petitioner; if the notices are issued, further remedy thereagainst would be available to the petitioner - counsel for the respondents seeks time to obtain instructions. List on 5th March, 2021.
-
2021 (2) TMI 1119
Cancellation of registration of selling dealer - submission of petitioner is that at the time of purchase of goods/stocks, the registration of the selling dealer was valid - HELD THAT:- Matter requires consideration. Learned counsel for the petitioner submits that 10% of the disputed tax liability has been deposited in terms of Section-107(6) of the Act, the appeal before the Tribunal (when constituted) would be maintainable upon deposit of 20% of the remaining tax amount. The petitioner is willing to deposit that amount - Learned Standing Counsel has accepted notice on behalf of State-respondents. He prays for and is granted four weeks' time to file counter affidavit. Petitioner shall have two weeks thereafter to file rejoinder affidavit. List thereafter.
-
2021 (2) TMI 1117
Provisional attachment of Bank Accounts - Section 83 of the CGST Act - petitioner submits that the attachment of the bank accounts has brought the entire functioning of the company to a standstill, as the Petitioner is unable to dispense salary to approximately 15000 employees and discharge statutory dues like EPF, ESIC and labour welfare schemes etc. - HELD THAT:- Issue notice. Mr. Satish Aggarwala, SPP accepts notice on behalf of respondents and submits that he would like to take instruction and file short affidavit/ status report within one day. List on 24th February, 2021.
-
2021 (2) TMI 1097
Interest for delay in payment of G.S.T. - validity of adjudication orders - HELD THAT:- Learned counsel for the State and the CGST Council are required to seek specific instruction s on this issue and make their stand clear by the next date. Let these cases appear on 14th January 2021.
-
Income Tax
-
2021 (2) TMI 1127
Reopening of assessment u/s 147 - notice issued u/s.148 before expiry of time limit for issue of notice u/s.143(2) - HELD THAT:- Respectfully following decisions of CIT Vs M/s.Qatalys Software Technologies Ltd. [ 2008 (7) TMI 240 - MADRAS HIGH COURT] and in the case of CIT vs. K.M Pachayappan [ 2007 (7) TMI 229 - MADRAS HIGH COURT] , we are of the considered view that notice issued u/s.148 dated 23.09.2016, before the expiry of time limit for notice u/s.143(2) for the impugned assessment year is invalid and thus, consequent reassessment order passed u/s.143(3) r.w.s. 147 is null and void. Hence, we quash reassessment order passed by the Assessing Officer. - Decided in favour of assessee.
-
2021 (2) TMI 1126
Maintainability of advance ruling application u/s 245R - TDS u/s 192 - Applicant' a company incorporated in India seconds its employees from time to time on long term assignment to other BMW Group entities in various countries such as Germany. Japan, etc, under the terms of Reimbursement Agreement - Residential Status of the employees with whom the Applicant had made transactions - Whether transaction or issue was designed prima facie for avoidance of income tax? - salary of seconded employees - taxes were already paid by the employees in the host country - ruling on allowability or eligibility of claiming a credit to avoid double taxation - HELD THAT:- In Order to claim such bar under clause (iii) of Section 245R(2), there must be some necessary facts pointing to prima facie inference to a design to avoid tax by any illegal or improper means. No such fact has been brought on record by the revenue. Obligation of the Applicant to deduct TDS under section 192 - As per the split payroll arrangement, part of the salary of the seconded employees was paid in India. The Applicant was deducting tax on such part salary paid in India. The Applicant has approached the Authority in respect of its obligation to deduct tax on salary paid to such employees for the years in which they qualify as non-resident in India and for taking credit for tax deducted in foreign country in their year of return to India. We, therefore do not find any merit in the objection raised of the Revenue that the transaction was designed prima facie for avoidance of tax. When the Applicant is merely enquiring about its obligation to deduct TDS or otherwise under section 192 of the Act, it cannot he said that the transaction was for avoidance of tax. The objection of the revenue that there was no clarity of the residential status of the seconded employees is also not correct. There residential status con be ascertained from the period of stay outside India as mentioned in Annexure-I of the application - The revenue has contended that such credit can be taken only by the concerned employees and not by the Applicant as tax-deductor. The objection of the Revenue is on merit of the question which needs to be examined and decided upon in the course of merit hearing. These have no impact on admission of the case as they do not establish that the transaction was designed for avoidance of tax. Similarly, the objection of the revenue that the Applicant was bearing tax on foreign salary of such employees is also not a material fact to decide the admission of the case. In fact this issue has not been raised in the present application and the revenue is free to examine the matter on its merit. In view of the above facts and discussions we do not find any merit in the objection of the Revenue that the transaction or issue was designed prima facie for avoidance of income tax. Accordingly. the objection or the revenue is rejected. application is admitted under section 245R(2)
-
2021 (2) TMI 1113
Revision u/s 263 - disallowance under Section 40(a)(ia) - Tribunal hold that assumption of jurisdiction under Section 263 was correct - HELD THAT:- From close scrutiny of Section 263 it is evident that twin conditions are required to be satisfied for exercise of revisional jurisdiction under Section 263 of the Act firstly, the order of the Assessing Officer is erroneous and secondly, that it is prejudicial to the interest of the revenue on account of error in the order of assessment. The aforesaid provision was considered by the Supreme Court in MALABAR INDUSTRIAL COMPANY VS. CIT [ 2000 (2) TMI 10 - SUPREME COURT ] and it was held that the phrase prejudicial to the interests of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer and every loss of revenue as a consequence of the order of the Assessing Officer cannot be treated as prejudicial to the interest of revenue. It was further held that where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, the order passed by the Assessing Officer cannot be treated as erroneous order prejudicial to the interest of the revenue. it is the claim of the assessee that the assessee has not claimed the benefit of the disallowance under Section 40(a)(ia) of the Act for the Assessment Year in question ie., 2008-09 and the same was claimed in the previous Assessment Year ie., 2007-08. Therefore, in our opinion, the matter requires factual adjudication. The Tribunal has not adverted to the aforesaid aspect of the matter and has not considered the submission made by the assessee that the amount of ₹ 2,36,07,661/- was not a real amount but only the provision that was directly reversed. In view of the preceding analysis, the matter requires factual adjudication. We are inclined to remit the matter. Therefore, it is not necessary for us to answer the substantial questions of law framed in the appeal. The impugned order of tribunal is hereby quashed and the matter is remitted to the Tribunal for decision afresh in accordance with the observations made in this order.
-
2021 (2) TMI 1112
Reopening of assessment u/s 147 - Whether the first re assessment order made u/s 143(3) r.w.s. 147 of the Act dated 17.02.2014 gets effaced when a subsequent re-assessment order was made u/s 143(3) r.w.s. 147 of the Act, on 22.03.2016, in respect of the same Assessment Year and on same facts? - HELD THAT:- It is well settled in law that when a subsequent order is passed in respect of the same assessment, the previous order of assessment passed by the Assessing Officer gets effaced. In the instant case, in view of the order dated 22.03.2016, the previous order of assessment passed by the Assessing Officer dated 17.02.2014 got effaced and therefore, the subsequent order passed by the Assessing Officer dated 22.03.2016 prevails. Therefore, the first substantial question of law is answered in favour of the assessee and against the revenue. We are informed that against the subsequent order of assessment, the appeal is pending before the Commissioner of Income Tax (Appeals). Therefore, in the facts of the case, it is not necessary for us to answer the remaining substantial questions of law and the appeal is disposed of with liberty to the parties to raise all legal contentions as are admissible to them in law in the appeal, which is pending adjudication before the Commissioner of Income Tax (Appeals).
-
2021 (2) TMI 1111
Validity of draft order u/s 144C passed by the Deputy Commissioner of Income Tax - whether the assessee is right in contending that the assessee's case was selected for a limited scrutiny and the reference to the TPO was beyond the scope of the scrutiny? - HELD THAT:- As rightly contended by Revenue the first respondent is not competent to check whether the value of the international transactions as furnished in Form 3CEB by a Chartered Accountant and return of income is correctly shown. Assessing Officer, being not competent to examine the said issue, necessarily, the case has to be referred to the TPO as per Section 92CA - the contention of the appellant/assessee that the case was selected for mere reconciliation is an incorrect interpretation. This is clear from the reason for which the case was selected for scrutiny and the issue arising there from. Thus, we find that there is no violation of the instructions issued by the CBDT. In our considered view, the learned Single Bench rightly took note of these aspects as well as paragraph 3.4 of the CBDT Instruction No.15/2015, which states that the issue on which a reference was thought to be necessary, has to be explicitly mentioned in the Assessing Officer's letter seeking reference to the TPO and such letter of the Assessing Officer dated 17.07.2018, was found to have complied with the said condition. We also agree and endorse the finding rendered by the learned Single Bench that the reason for selection of scrutiny by CASS was only for numerical reconciliation is a over simplification of the reason stated for selection. In fact, the learned Single Bench has observed that the officer might have been more detailed in the choice of words employed so as to specifically refer to the issue of total employee cost, however, non-reference to this, is not fatal, as the reason for selection by CASS has been produced and placed on record by the officer while seeking approval of a Principal Commissioner of Income Tax (PCIT) for reference to the TPO. As Court noted that after the interim order, which was initially granted, was not extended, the Assessing Officer issued show cause notice dated 11.10.2019, the appellant/assessee submitted their reply dated 23.10.2019, enclosing various details on the computation of the ALP as sought for by the Assessing Officer. However, the affidavit filed in support of the writ petitions was silent with regard to these facts. Thus, the learned Single Bench rightly concluded that the appellant has not only cooperated and participated in the conduct of assessment, but has also filed objections before the DRP that are pending disposal. Hence, we are of the considered view that the learned Single Bench rightly dismissed the writ petitions and the order does not call for any interference.
-
2021 (2) TMI 1110
Addition u/s 68 - Onus to prove - whether evidence against the assessee lies and the assessee failed to discharge his initial burden on this account - Tribunal shifting the responsibility of proving genuineness of share application money to the Assessing Officer - whether mere furnishing list of person who have claimed to have advanced towards share capital thus constitute sufficient compliance on the part of the assessee? - HELD THAT:- Assessee has not discharged the legal obligation cast upon them to prove the genuineness of the transaction, the identity of the creditors and creditworthiness of the investors, who should have the financial capacity to make the investment in question to the satisfaction of the Assessing Officer so as to discharge the primary onus - Since the assessee did not discharge the primary onus cast upon them, the question of the Assessing Officer to investigate the creditworthiness of the creditors/subscribers would not arise in the case on hand. We have no hesitation to conclude that the Tribunal erred in confirming the order passed by the CIT(A) by observing that merely because the share applicants are from Andhra Pradesh that cannot be a reason to disallow the claim of the assessee. The factual position being, the Assessing Officer did not do so, but disallowed the same on the ground that the assessee has not furnished any details, viz., the names and addresses of the persons, who paid the share capital advances, the cheque numbers, the name of the bank, PAN numbers etc. Thus, the order passed by the Tribunal calls for interference. Decided in favour of the Revenue
-
2021 (2) TMI 1107
Income accrued or deemed to accrue in India - marketing and advertising rights that have been granted under the MAA [Marketing and Advertising Agreement'] - rights under MAA - source of income was the game of cricket played in India - payment to be made by LG Electronics India Private Limited, a company incorporated in India (hereinafter called as 'LG India') to IDI Mauritius Limited, a company incorporated under the laws of Mauritius (hereinafter referred as 'IML') for grant of commercial rights under the 'Marketing and Advertising Agreement' - Whether payment to IML is taxable? - DTAA between India and Mauritius - HELD THAT:- Payment made by the Applicant under MAA was purely for advertisement and publicity of the brand name of the assessee and for promotion of its product during the Cricketing events of ICC and it was not royalty as defined in Article 12.3 of DTAA between India and Mauritius. These payments cannot, by any stretch of imagination, be said to relate to use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, any patent, trade mark, design or model, plan, secret formula or process or for information concerning industrial, commercial or scientific experience or for use of commercial equipments so as to constitute royalty . The payment does not qualify as Fee for Technical Services as well; as no service was rendered in this case. The payments may constitute business profits in the hands of the recipient to which Article 7 of the DTAA would apply, but in the absence of any permanent establishment of the payee in India, is not chargeable to tax in India. Therefore, the payment made by the Applicant to IML for grant of commercial rights under MAA is not taxable in India as per the provisions of the DTAA between India and Mauritius. Payments to non-resident sportsmen or sports associations - Obligation to withhold tax on payments made to IML for grant of commercial rights under the 'Marketing and Advertising Agreement ' - Payment made by the Applicant under the agreements is found to be payable to a non-resident sports association/institution in relation to game played in India. Had the sponsorship agreement not been sanctioned by ICC, neither the game could have been played in India nor could the payments have been made to IML in connection with the ICC Events. Further, all the rights transferred under the agreements were in respect of ICC Events and were pertaining to ICC only, particularly under GPA. Even under the MAA the trademark ICC was used in the advertisement, publicity campaigns etc. alongside the Applicant's logo which was held as incidental to the main services obtained by the Applicant under MAA. As the ICC did not undertake any financial transactions directly the payment for grant of rights under the agreements was received through the Group entities owned by ICC. In view of these facts we have no hesitation to hold that the payment made by the Applicant under the agreements with IML was income pertaining to a non-resident sports association or institution. Force Majeure clause of MAA stipulated that if any ICC Events or Matches were abandoned, postponed or cancelled, the Company was not entitled to terminate the Agreement, but the payment of the Rights Fee attributable to that event can be deferred without any penalty until such time as that event was replayed. This also reinforces the nature of payment as guarantee money. Further, what is relevant to consider is not the nomenclature of the payment in the agreement but its real nature. From the above discussions we find that though the payment was mentioned as right fee in the agreement, its real nature was guarantee fee . All the conditions as stipulated in section 115BBA of the Act are found fulfilled in this case. And once these conditions are satisfied, the obligation of the Applicant to deduct tax u/s 194E of the Act was absolute. Unlike section 195 there is no condition in section 194E that the payment being made should be chargeable under the provisions of this Act. Therefore, there was no obligation on the Applicant to examine whether the payment made under MAA was chargeable to tax in India in the hands of IML. Even if the income of IML was notified as exempt u/s 10(39), it did not mitigate the obligation of the Applicant to deduct tax u/s 194E of the Act. In the present case the source of income was the game of cricket played in India. Though the payments were described as rights money, in essence they were in the nature of guarantee money and were intricately connected with the cricketing event and the matches played in India. The close connection between the amount paid by the Applicant and the cricket matches played in India has never been denied. Thus the income of the Non-resident Sports Association had accrued in India under the provision of Section of the Act. There was no requirement to ascertain that the amount paid under section 115BBA was chargeable to tax or not. Even if it was not chargeable it did not absolve the Applicant from the liability to deduct TDS under section 194E. This obligation was neither affected by the DTAA nor by the Notification issued by the CBDT as the benefit of the DTAA or the Notification could have been claimed only by the IML and not by the Applicant. We, therefore, hold that the Applicant was liable to withhold tax under section 194E of the Act on payments made to IML for grant of commercial rights under the 'Marketing and Advertising Agreement' in respect of games played in India. Rate of withholding tax - whether on the stated facts and in law LG India is required to deduct tax at source on [he payment to IML for the commercial rights under the 'Marketing and Advertising Agreement ' at the rate of 10% plus applicable surcharge and cess as per the provisions of section of the Income-Tax Act, 1961 -The rate as prescribed in section 115A(1)(b)(AA) cannot be applied in the present case. The liability of the Applicant to deduct tax was u/s 194E of the Act in respect of the games played in India and the rate prescribed in this section was 10% which was increased to 20% with effect from 01/07/2012. Accordingly, the Applicant was required to deduct tax at the rate(s) as prescribed in section 194E of the Act at the relevant point of time. The Applicant cannot deduct tax at source at the rate prescribed under the treaty between Indian and Mauritius even if that rate is beneficial. As held by Hon'ble Supreme Court in the case of PILCOM [ 2020 (5) TMI 57 - SUPREME COURT] the obligation to deduct Tax at Source under Section 194E of the Act was not affected by the DTAA and it was only the recipient who can take the benefit of DTAA for the beneficial rate under the DTAA. So far as the Applicant is concerned, it was required to deduct Tax at Source at the rate(s) as prescribed under section 194E of the Act only. Advance ruling:- Que. 1 The payment made by the Applicant to IDI Mauritius Limited, for grant of commercial rights under the 'Marketing and Advertising Agreement' is not found taxable in India in the hands of IML as per the provisions of the DTAA between India and Mauritius. Que. 2 LG India was obligated to withhold tax on payments made to IML for grant of commercial rights under the 'Marketing and Advertising Agreement' in respect of games played in India. Que. 3 LG India was required to deduct lax at source on the payment to IML for the commercial rights under the 'Marketing and Advertising Agreement' in respect of games played in India at the rate as prescribed under section 194E of the Income-Tax Act, 1961.
-
2021 (2) TMI 1106
Addition of inflated expenditure - Whether the inflated expenditure admitted by the assessee is to be allowed despite the fact that the assessee could not reconcile the statements nor could prove the same with supporting documentary evidence? - Tribunal remanding the issue back for verification of inflated expenditure for the assessment year 2011-12 while allowing relief for another assessment year 2010-11 when the facts are similar on the same issue? - HELD THAT:- Tribunal appears to have examined certain documents, which seemed to have been produced by the assessee for the first time before the Tribunal and the Tribunal proceeded to hold that a perusal of the sub-contract as also the invoice showed that the area was an estimated quantity only and therefore, the Tribunal found no reason to interfere disallow the expenditure. Tribunal, while testing the correctness of the order passed by the CIT(A), is required to examine as to whether there is any error of fact or law committed by the CIT(A). In the assessee's case, both before the Tribunal and the CIT(A), the assessee could not reconcile the difference and for the first time, the assessee attempted to do so before the Tribunal. Two options would be available to the Tribunal, the first being, in our opinion, the most effective, is to call for a remand report from the Assessing Officer based on the documents presented by the assessee before the Tribunal for the first time and the second option is to remand the matter to the Assessing Officer for a fresh consideration. The Tribunal did not exercise any one of the options, but proceeded to take note of certain documents placed before the Tribunal for the first time and granted relief to the assessee. We do not agree with the procedure adopted by the Tribunal and without examining the fact situation, the Tribunal ought not to have granted relief especially when the assessee could not reconcile the difference before either the Assessing Officer or the CIT(A). Hence, we are of the considered view that the Tribunal ought to have remanded the matter to the Assessing Officer for a fresh consideration and ought not to have allowed the appeal. - Appeal of revenue allowed.
-
2021 (2) TMI 1103
Substantial question of law or fact - application for condonation of delay of 1350 days - HELD THAT:- There are concurrent findings of fact of the Assessing Officer, Commissioner of Income Tax (Appeals)-I and ITAT, and what the appellant is calling upon us to do, is to re-appreciate the evidence on the basis of which consistent findings, on the aspects from which the appellant is aggrieved, have been rendered. Appellant however has contended that a substantial question of law arises because the Income Tax Authorities and the ITAT have ignored material evidence. It is contended that owing to plethora of material in public domain, of the project, of which the appellant has been found to have earned commission, having been scrapped, the possibility of the appellant being paid commission did not exist. Appeal dismissed as no substantial question of law.
-
2021 (2) TMI 1095
Estimation of income - income from inflation of expenses - Assessment u/s 153A - search operation u/s.132 certain loose papers and digital forms were found and seized - HELD THAT:- It is not in dispute that assessee had resorted to inflation of expenses by making certain cheque payments and receiving back cash in return. It is not in dispute that the said cash had already also been utilised for the purpose of meeting business related expenses by the assessee. In this background what is to be taxed is only the left over portion of the cash remaining with the assessee on this subject mentioned transaction, being the profit element, which has been already accepted by the Hon ble Income Tax Settlement Commission at 12% vide its order dated 28/06/2018 in assessee s group company cases. CIT(A) ought to have followed the same in view of identical facts in the assessee herein also. Accordingly, we direct the ld. AO to make an addition @12% of inflation of expenses for the relevant assessment year in line with the direction of the Hon ble Income Tax Settlement Commission in assessee s group company cases. Addition towards on-money - addition u/s.68 towards on-money received by the assessee for sale of flats - HELD THAT:- It is not in dispute that the assessee had incurred certain business expenses out of such on-money which are kept outside the books of accounts. Hence, it will be just and fair that only the profit element embedded on any such undisclosed transaction could be brought to tax on an estimated basis. The assessee had already pleaded that on-money transactions were offered by the assessee s group concerns @12% of on-money receipts before the Hon ble Income Tax Settlement Commission and the same has been accepted by the Settlement Commission. Hence, the data and information was indeed available with the ld. CIT(A) to have some rational basis to make profit estimation in the hands of the assessee herein by following 12% thereof from the order of Hon ble Income Tax Settlement Commission. Accordingly, we direct the ld. AO to add only 12% of on-money receipts as undisclosed income of the assessee for the year under consideration.
-
2021 (2) TMI 1092
Condonation of delay in filing Rectification application - delay in filing this appeal against ex-parte order on account of non-prosecution - HELD THAT:- The assessee has explained the reason for not filing the Miscellaneous Application within six months from the end of the month in which the order was passed as elaborated supported by an affidavit and copies of other documents/details. The assessee has also pointed out that previous tax consultant has not attended his tax matter satisfactorily and new tax consultant has obtained various documents, these circumstances and his ill health caused delay in filing this appeal against ex-parte order which was passed on account of non-prosecution. After taking into consideration the facts narrated by the assessee supported by an affidavit/documents it appears that there was reasonable cause for non-appearance and delay in filing the Miscellaneous Application against ex-parte order passed on account of non-prosecution. Therefore, keeping in view of Rule 24 of the Income Tax (Appellate Tribunal, 1963) and after taking into consideration the decision of Hon ble Jurisdictional High Court cited in the case of Dolphin Metal (India) Ltd. vs. ITO.[ 2021 (2) TMI 999 - GUJARAT HIGH COURT] we condone the delay in filing the Miscellaneous Application. Considering the above facts and findings, the Miscellaneous Application is allowed and the Registry is directed to list this case for hearing on 30th March, 2021.
-
2021 (2) TMI 1091
Addition towards sundry creditors u/s.41(1) / 68 - addition of credit balances in appellant s books - HELD THAT:- Liability shown in the books of accounts under the head sundry creditors were not a trade liability for which allowances or deduction was claimed in the earlier financial years. Further, the assessee has filed necessary evidences to prove that said credits were received in the financial year 2006- 07 2007-08, out of family partition and the same were treated as sundry creditors because full effect was not given to family partition on account of certain differences among family members. AO as well as the CIT(A) were erred in invoking provisions of section 41(1) to bring to tax sundry creditors shown in the names of S/Shri ARKA. KaruthaPandian, K.A. Sekar and K. Sivasundarapappa, sundry payable amountingAO was erred in making additions towards credits shown in the books of accounts u/s.41(1) / 68 - CIT(A) without appreciating facts, has simply confirmed additions made by the AO. Hence, we reverse the findings of the CIT(A) and direct the AO to delete additions made towards sundry creditors u/s.41(1) 68 of the Act. As regards, other credits in the name of Late ARK Arunachala Nadar, Smt. Swarnalatha and Shri Dhanabalan amounting to ₹ 28,79,600/-, all these credits were carried forward from financial year 2007-08 and such credits were either a loan or advance but not trade credits for which deduction was claimed in the earlier financial year. Therefore, these credits cannot be brought to tax u/s.41(1) of the Act. Similarly, a sum of ₹ 10,00,000/- shown in the name of Shri Kumar was a land advance received in the financial year 2005-06 and the same has been carried forward since 2005-06. Any loan or advance including land advance cannot be brought to tax u/s.41(1) of the Act, because said loan or advance was never claimed as deduction of an expenditure or allowance or trade loss in the earlier financial years. Therefore, we are of the considered view that the AO as well as the CIT(A) were erred in invoking provisions of section 41(1) of the Act, to bring into tax sundry creditors shown in the name of above persons. Coming to invocation of section 68 AO has simultaneously invoked provisions of section 68 in addition to section 41(1), to bring into tax, said credit for the impugned assessment years, but fact remains is that all these credits were brought forward from earlier financial years for which necessary evidences has been placed on record. Credits cannot be brought to tax as unexplained cash credits u/s.68 of the Act, because in order to bring any credits within the ambit of provisions of section 68 of the Act, said credits should be found in the books of accounts of the assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by the assessee in the hands of the AO is not satisfactory. In this case, none of the credits were received during the current financial year and further, the assessee has offered explanation about source and nature of credits and further proved the identity / creditworthiness and genuineness of transactions. Therefore, these credits cannot be brought to tax even under section 68. AO was erred in making additions towards credits shown in the books of accounts u/s.41(1) / 68 - Decided in favour of assessee.
-
2021 (2) TMI 1089
Rejection of grant of approval under section 80G(5) - premises from which the appellant trust is operated are not owned by the appellant trust/shared along with other trusts and accounts of the appellant trust are not reliable since accounts are not audited. Consequently, he had come to the conclusion that the genuineness of the activities of the trust was not established by the appellant - HELD THAT:- Provisions of section 80G(5)(vi) of the Act nowhere stipulate that in order to be eligible for grant of approval u/s 80G(5)(vi) of the Act, the premises from which the appellant trust is operated, should be owned by the appellant trust. The ld. Commissioner of Income Tax (Exemption) cannot introduce any new condition nor stipulate a new condition which is not prescribed under the provisions of the Statute. It is not the case of the ld. CIT (Exemption) that the appellant trust had failed to fulfil any of the conditions prescribed u/s 80G(5)(vi) of the Act r.w. Rule 11AA of the Rules. The findings of ld. Commissioner of Income Tax (Exemption) that since the accounts of the trust are not audited the activities of trust are not genuine, is not based on any material nor it is possible to come to such conclusion by the CIT (Exemption) in view of the undisputed fact that the appellant trust still continues to enjoy the registration u/s 12AA. It is settled proposition of law that during the course of enquiry u/s 80G(5)(vi) of the Act, the scope of enquiry cannot extend to the actual assessment of income. Reliance in this regard can place on the decision of the Hon ble Gujarat High Court in the case of N.N. Desai Charitable Trust vs. CIT [ 1999 (5) TMI 11 - GUJARAT HIGH COURT] . In the circumstances, we are of the considered opinion that the ld. Commissioner of Income Tax (Exemption), Pune is not justified in denying the grant of approval u/s 80G(5)(vi) - Decided in favour of assessee.
-
2021 (2) TMI 1087
Addition u/s 69 - assessee had made payments for purchase of property, whereas it was a family transfer and no consideration exchanged hands - new evidences in the form of copy of Girdawari, Court decree of agriculture land submitted by assessee - HELD THAT:- Additional evidence now furnished by the assessee in the form of copy of Khasra Girdawari, Court decree dt. 24/11/2019 go to the root of the matter, so these new additional evidences are admitted. However the additional evidences, furnished by the assessee were not available to the authorities below. We therefore by keeping in view the principles of natural justice, deem it appropriate to set aside this issue back to the file of the A.O. to be adjudicated afresh in accordance with law after due and reasonable opportunity of being heard to the assessee and by considering the new evidences now furnished by the assessee - Appeals of the Assessee are allowed for statistical purposes.
-
2021 (2) TMI 1086
TP Adjustment - arm's length price adjustment - comparable selection - assessee's sole argument during the course of hearing is regarding the PLI pertaining to software development services challenges the alleged wrongful inclusion of M/s. Infosys Limited as a comparable entity in the TPO's order - HELD THAT:- We notice during the course of hearing that this tribunal's co-ordinate bench decision(s) in M/S. INFOR (INDIA) PVT. LTD. [ 2020 (12) TMI 235 - ITAT HYDERABAD ] as held that the very entity M/s. Infosys Ltd. to be not a valid comparable - Also in YAHOO SOFTWARE DEVELOPMENT INDIA PVT. LTD. [ 2020 (2) TMI 1365 - ITAT BANGALORE] has also directed the department to exclude M/s. Infosys Limited from the array of comparables by adopting the very reasoning. We adopt the above detailed reasoning and direct the TPO to redetermine assessee's ALP after excluding Infosys Ltd. in above terms. Import of free of cost software for the purpose of testing services - We express our agreement with the Revenue's arguments supporting the TPO's conclusion that such free of cost import services indeed form international transaction as per provisions of the Act. The fact however remains that the impugned addition made in the TPO's order has not taken into account any comparable or market condition(s) regarding captive service provider segment. Nor the TPO has adopted any of these methods, direct or indirect, provided in the Income Tax Rules so as to make the impugned adjustment. We find no reason to sustain the same on merits therefore. This impugned adjustment is directed to be deleted. Working capital adjustment - We accept assessee's working capital adjustment in principle and direct the TPO to verify the necessary facts as per law.
-
2021 (2) TMI 1085
TP Adjustment - ALP adjustment regarding its international transactions - Inclusion/exclusion of misc. income - HELD THAT:- We ex facie notice that assessee's misc. income is in no way related to its international transactions with overseas associated enterprise which would be liable to be considered for the purpose of arriving at ALP under Chapter X of the Act. There is no justification to include the same in this entire process therefore. We deem it appropriate to restore the instant first issue back to the Transfer Pricing Officer 'TPO' for his appropriate adjudication as per law with a specific direction that in case if it is found after verification of the relevant records coming from assessee's level that the impugned income is not relevant for determination of ALP pertaining to international transactions with the AE(s) it would not be considered in the said consequential computation exercise. Learned counsel has also placed on record the TPO's order for very next A.Y. 2015-16 stating he had himself excluded identical misc. income for the purpose of determining the ALP adjustment regarding its international transactions. Instant vth substantive ground (supra) is restored back to the TPO Addition of interest receivables - amounts due from overseas associate enterprises - taxpayer's plea was that its overseas receivables to its AE(s) were much more than amounting to ₹ 11.59 crores and therefore, even if it is held interest is to be charged from both ends, the net result would come in negative only - HELD THAT:- We find no merit to sustain the impugned addition/adjustment. Suffice to say, neither the TPO's order nor DRP's directions forming subject matter of the instant issue make it clear as to how the alleged interest rate of 14.75% had been adopted by drawing support from the relevant market comparables. Learned counsel referred us to assessee's pleadings that the lower authorities have been guided by SBI's short term interest rates to arrive at this figure. We see no reason to concur with this bench mark since we are dealing with international transactions with overseas associate enterprises having receivables from both sides involving international currency denomination where as the authorities have gone by domestic deposit rates only. We thereby direct the TPO to delete the impugned addition on this count alone without deeming it proper to consider all other aspects. The assessee succeeds in the instant ixth substantive ground. Reimbursement of expenses - HELD THAT:- We notice during the course of hearing that the TPO's observations in page 7 para 7.8 treating the impugned segment as covered under specified domestic transaction which stands repealed by the Finance Act, 2013. This tribunal decision in Texport Overseas Pvt. Ltd. vs. DCIT, Bangalore [ 2017 (12) TMI 1719 - ITAT BANGALORE] holds that the necessary consequence that flows from legislative action; after repealing corresponding provision, is that the same never existed in the Act. reverse lower authorities action on this count alone. The assessee succeeds in the instant xth substantive ground.
-
2021 (2) TMI 1084
Estimation of income - addition qua estimated profit @8% in banana trade - cash deposits as confirmed by the buyers of the Assessee on which the Assessee did not offer any income in his return of income, therefore, treating the said cash deposits as sale proceeds of the Assessee qua banana trading - HELD THAT:- CIT(A) did make any analysis qua comparable case and of the Assessee and passed the order in cryptic manner and affirmed the estimation @8%. CIT(A) further failed to base affirmation of estimation @8% on any material and/or circumstances while ignoring the comparable case. From the perusal of income tax return filed by the Viswajanani Fruit Company for the A.Y. 2012-13 as quoted by the Assessee as a comparable case, it reflects that the profit from banana trading has been estimated @ 3.6% only. Though the Ld. DR supported the orders of the authorities below, however failed to bring on record any material contrary to the comparable case. Though it is not the case of the Assessee that comparable case has attained finality, however there is no material to substantiate that the comparable case is under challenge or otherwise has not attained finality. Assessee's case and comparable case also relates to A.Y. 2012-13, hence, considering the comparable case (A.Y. 2012-13) and estimation thereof qua trading of banana, we are inclined to allow the plea of the Assessee and therefore direct the AO to re-compute the estimation @3.6% of the turnover qua banana trading. Appeal filed by the Assessee stands allowed.
-
2021 (2) TMI 1083
Taxability of receipts from the welfare trusts under normal provisions of the Act as well as while computing the book profits u/s 115JB - contributions received by the welfare trusts were partially invested in equity shares of listed / unlisted companies on which the trusts received dividends which were duly offered to tax in the respective years by the trusts and also claimed credit for Tax deducted at source thereon AND part of the contributions received by the welfare trusts were advanced by way of loans to parties on which interest was received, which was also duly offered to tax in the respective years by the trusts and also claimed credit for Tax deducted at source thereon - HELD THAT:- Unutilized portion lying in the trust funds which were claimed back by the assessee company was never in contemplation by the assessee company as assessee had all along treated the said contribution being made to an irrevocable trust fund and the eligibility to get back the monies got triggered only pursuant to insertion of provisions of Section 40A(11) of the Act in the statute and not otherwise. Hence, the said receipt being the unutilized portions, received back from the welfare trusts by the assessee company would not partake the character of a revenue receipt constituting income and would merely have to be treated as a windfall or non-recurring receipt not liable to tax, though not exempted under specific provisions of the Act. It is not in dispute that the welfare trusts had duly suffered taxes on the accretions to the contributions received in the form of dividends and interest on loans in its regular returns and assessed as such. Hence, the accretion portion had already suffered taxes in the hands of the welfare trusts. Taxing the same again in the hands of the assessee company while getting back the unutilized portion would tantamount to double taxation. Accordingly, we hold that the receipt have to be excluded while computing total income of the assessee under normal provisions of the Act. Ground raised by the assessee are allowed. Non-applicability of provisions of Section 115JB - HELD THAT:- All the companies in India are governed by the very same provisions wherein if they suffered nil taxes or zero taxes under the normal provisions of the Act or the tax payable under normal provisions is less than tax @18.5% of book profits, then the provisions of Section 115JB of the Act would be applicable to those companies and assessee company alone cannot be singled out or isolated from the same. These provisions are in force from the year 1987 onwards commencing from Section 115J which had gradually migrated to Section 115JB of the Act without digressing from the true intention behind introduction of these provisions in the Act. Hence, the primary argument that Section 115JB of the Act is not applicable to the assessee company in the instant case is hereby rejected. Accordingly, the ground No.1 raised by the assessee is dismissed. Non-taxability of the receipt from the welfare trusts by the assessee company while computing book profits u/s.115JB of the Act, even though the same was credited by it in its profit and loss account - HELD THAT:- Respectfully following the Co-ordinate Bench decision of JSW Ltd. [ 2017 (4) TMI 47 - ITAT MUMBAI] and the decision of the Hon ble Calcutta High Court in the case of Ankit Metal and Power Ltd. [ 2019 (7) TMI 878 - CALCUTTA HIGH COURT] we hold that the sum receipts from the welfare trusts is to be a capital receipt and not liable to tax while computing books profits u/s.115JB of the Act. Accordingly, the ground Nos. 2 3 raised by the assessee are allowed.
-
2021 (2) TMI 1082
Addition u/s 14A r.w.r. 8D - Interest on interest bearing funds that is utilised for the purpose of making such investment - Direct and indirect expenses attributable to the process of making such investment such as expenditure incurred for due diligence, managerial expenditure, clerical expense, stationary expenditure, and portfolio management expenditure - HELD THAT:- Since in the case of the assessee the assessee company has utilised only its non-interest-bearing funds for making investment in its own subsidiary company, no interest cost can be attributable to the same because, there is no interest cost to the assessee as it can be treated that the assessee has withdrawn from its capital and reserves which are assessee's interest free funds for making such investment. For making investment in its own company there cannot be any cost attributable with respect to direct and indirect expenses towards the process of decision making, due diligence, managerial expenditure, and portfolio management expenditure because no such cost can arise for making investment in one's own entity. Only meagre expenses can be attributable with respect to clerical and stationary expenses which is negligible and that is deserved to be ignored. Therefore, factually there cannot be any expenditure attributable to the investment made in sister company when the investment is out of its own interest free fund. When the above facts were pointed out to the Ld. DR, he could not controvert to the same however, he relied on the order of the Ld. AO. If the assessee has made the entire investment out of its non-interest-bearing funds in its sister company, then provisions of section 14A of the Act will not be applicable. Therefore, in the interest of justice, We hereby remit the matter back to the file of the Ld. AO to examine whether the assessee has made the entire investment in its sister companies and out of its non-interest-bearing fund and if found so delete the addition made by invoking section 14A of the Act and if found otherwise, pass appropriate order in accordance with law and merit after affording proper opportunity to the assessee of being heard. We also make it clear that if the assessee's equity share and reserves exceed the investment, it should be construed that the assessee had made the investment out of its own non-interest-bearing fund - Appeal of assessee allowed for statistical purposes
-
2021 (2) TMI 1081
Disallowance u/s 69C - unexplained expenditure claimed by the assessee - set off of losses against deemed undisclosed income - Eligibility of benefit of section 71 - provisions of section 115BBE Applicability - whether the provisions of section 115BBE of the Act is prospective or retrospective in nature? - HELD THAT:- In the present case, during survey an income was surrendered and added in the income of the assessee and consequent business loss was claimed, the same is available for set-off against business loss. Even the Hon'ble High Court of Madras in the case of CIT vs. Chensing Ventures [ 2007 (4) TMI 204 - MADRAS HIGH COURT ] has considered an identical issue and held that the AO cannot deny benefit of section 71 of the Act, and the AO has to consider the undisclosed income u/s. 69 of the Act, but once the loss is determined, the same should be set-off against the income determined under any other head of income. We are of the considered view that the provisions of section 69C of the Act, will apply but consequent loss is to be set-off against this income. As regards to applicability of section 115BBE of the Act, as clarified by the CBDT as provisions brought out by the Finance Act, 2016 in the statute book w.e.f. 01.04.2017, the same is prospective and not retrospective. Appeal of the assessee is allowed.
-
2021 (2) TMI 1080
Disallowance u/s. 40(a)(ia) - interest paid by the assessee to Indiabulls - HELD THAT:- We find that Hon'ble Delhi High Court in the case of CIT vs. Ansal Land Mark Township (P) Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT] has held that the second proviso to Section 40 (a) (ia) of the Act is declaratory and curative in nature and should be given retrospective effect from 1st April 2005. As long as the respective payee/resident has filed its return of income disclosing the payment received by and in which the income earned by it is embedded and has also paid tax on such income, then no disallowance can be made u/s. 40(a)(ia). We find that the assessee had made the submissions to the effect that the interest paid by the assessee to Indiabulls and Reliance have been included by the respective payees in their respective income, but there is no finding of the lower authorities on the aforesaid contention. We are therefore of the view that the issue needs re-examination by the AO in the light of the aforesaid decision rendered by Hon'ble Delhi High Court. We therefore, restore the issue back to the file of the AO to decide the issue afresh .
-
2021 (2) TMI 1079
Disallowance of fuel expenses - Assessee argued AO nowhere provide any opportunity before raising the addition, therefore, the addition is not justifiable - CIT(A) disallowed the claim of the assessee on the basis of this fact that the assessee failed to produce the documents before the AO - HELD THAT:- It is not the good reason to decline the claim because the assessee has under taking before us to the effect that all the documents were produced before the AO as well as CIT(A). However, the CIT(A) sought the remand report and the remand report speaks only about the submission of ledger but nowhere speak that the submission of bills which are on record. Any how the voucher/bills were produced before the AO. An another reason to decline the claim is that in the preceding year the fuel expenses were not allowed. It is not a good ground to decline the claim of the assessee. At least produced documents should be examined. No doubt the assessee submitted the undertaking before us in which the assessee claimed that the ledger as well as the vouchers/bills of petrol were produced before the AO. The books of account were not rejected. It seems that the evidence given by assessee was not properly considered. No reasons were given to decline the claim. Taking into account have been available on record. We are of the view that the claim of the assessee has wrongly been declined which is infact liable to be examined. Accordingly, we set aside the finding of the CIT(A) on this issue and restore the issue before the AO to decide the issue after giving an opportunity of being heard to the assessee. Disallowance of Repair and Maintenance Expenses - HELD THAT:- The assessee started its business in the preceding year in which fuel expenses has also been shown. Anyhow subsequently, the assessee expanded its business by repairing and maintenance of the water park. The AO nowhere concluded about this fact that the expenditure was capital in nature or revenue in nature. On seeing the facts and circumstances of the case, we find that in the case of amusement park, constantly repair and maintenance is required. The assessee submitted the ledger as well as bills on record - At the time of arguments, the Ld. DR draw the attention towards this fact that the specific bills of vehicle were not found proper, hence, the claim was rightly rejected. Considering all claim of the assessee is liable to be verified at the end of the AO who certify the claim of the assessee in accordance with law. Needless to say that an opportunity to be heard is liable to be given in accordance with law. Accordingly, this issue is allowed for statistical purposes. Disallowance of Directors Remuneration - As argued that the Directors of Shri Arunkumar Muchhala had conceived the idea of Suraj Water Park and had run it so successfully - HELD THAT:- It is not justifiable that in one year the claim of the assessee has been allowed and in an another year the claim of the assessee has been disallowed. There should be some reason to decline the claim of the assessee. Moreover, we find that the assessee has shown these incomes in their return of income and offered the tax. Taking into account all the facts and circumstances and by honoring the decision of Hon'ble ITAT in the assessee's own case [ 2017 (1) TMI 934 - ITAT MUMBAI] , we allowed the claim of the assessee. Accordingly, this issue is decided in favour of the assessee against the revenue. Disallowance of Depreciation - As argued assessee has submitted the details of addition of fixed assets and all necessary documents were filed before the AO but the AO did not allow the depreciation in accordance with law - HELD THAT:- As revenue has refuted the said contention. Since basic contention of the assessee is that the claim of the assessee was not examined in view of the details of addition to the fix assets and no opportunity of being heard was given to the assessee, therefore, we set aside the finding of the CIT(A) on this issue and restore the issue before the AO to examine the claim of the assessee in the light of the evidence adduced by the assessee. 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 this issue is allowed for statistical purposes. Disallowance of cash deposit - assessee was receiving the cash by selling the tickets in cash for the entry in the park as well as for the different activity going on in the park. The assessee was depositing the cash on the same day and if not possible then on an another day. In such type of business certainly no amount was paid by cheque etc. However, in some cases payments can be accepted through credit card/debit card - HELD THAT:- The assessee has given a complete list of entry fees for the verification of the claim. In another assessment year such claim of assessee was not disallowance which was not bothered to touch by the lower authority. The claim of the assessee was declined on the basis of surmises and conjectures which is not justifiable. In other years, the claim of the assessee was allowed. The AO nowhere brought into any other evidence to which it can be assumed that the cash was not belonging to the assessee or the same was unexplained. Taking into account all the facts and circumstances, we are of the view that the finding of the CIT(A) is not justifiable to decline the claim of Assessee, hence, we set aside the finding of CIT(A) in this regard, we ordered accordingly and allowed the claim of the assessee. Accordingly, this issue is decided in favour of the assessee against the revenue. Nature of expenditure - compensation to the Forest Department on account of the decision of Hon'ble Supreme Court - Revenue or capital expenditure - AO treated the said amount as capital in nature - HELD THAT:- The facts speak that at the time of purchase title of the assessee was clear and thereafter the assessee invested for the development of amusement park. The assessee also took the necessary permission from Municipal Corporation Thane in the year 2002. The defects came into notice on account of subsequent act of Forest Department. The compensation was paid in the A.Y. 2013-14 when the amusement park was running with its full swing. If the same was not paid then no doubt the business became closed. The paid amount has been shown as business expenditure. The AO admitted this fact that the amount paid was not for acquiring the new asset. Accordingly, in view of the decision of Hon'ble Supreme Court in the case of CIT Vs. Empire Jute Co. [ 1980 (5) TMI 1 - SUPREME COURT] . The said expenses are liable to be treated to be paid for business expenses. Moreover disturbance on account of administrative act if any and payment accordingly is liable to be treated as revenue expenses in view of the decision in the case of Bikaner Gypsum Ltd. Vs. CIT [ 1990 (10) TMI 2 - SUPREME COURT] . Accordingly, when the amount seems to be paid prima-facie for the business expediency, therefore, we are of the view that the said amount is liable to be treated as revenue in nature. Accordingly, we set aside the finding of the CIT(A) on this issue and allow the claim of assessee. Disallowance of claim of TDS - HELD THAT:- The claim of the assessee is that the TDS was deducted at source from the income of the assessee and credit of the same was not given at the time of the assessment. The contention of the assessee is that no opportunity of being heard was given to the assessee, therefore, opportunity of being heard is required to be given in the interest of justice. If the opportunity of being heard is not given to the assessee and its TDS claim was not set off, therefore, in the said circumstances, we are of the view that the finding of the CIT(A) is not justifiable, therefore, we set aside the same and restore the issue before the AO to decide the matter of controversy afresh by giving an opportunity of being heard to the assessee in accordance with law. Accordingly, this issue is decided in favour of the assessee against the revenue.
-
2021 (2) TMI 1077
Addition u/s 68 or 56 - addition of bogus share premium/share capital - as per AO valuation of the share premium charged by the assessee and observed that the provisions of section 56(1)(viib) are not applicable on the alleged transaction - AO not satisfied with the genuineness of the transaction and creditworthiness of the subscribers - HELD THAT:- Flow of funds shows that major fund was already lying with the assessee company in the form of loans/advance from partnership firms where the assessee is partners which was refunded to the respective entities and were received back from the share applicants in the form of share application money by the assessee. So there remains no question of doubt about the genuineness of alleged transaction and creditworthiness of the two investor Pvt. Ltd. companies with regard to share capital and share premium received from them during the year. As regards 3rd investor namely Pritesh Jain HUF who has subscribed 93333 equity shares for which it paid ₹ 9,33,330/- towards the share capital and ₹ 60,66,645/- towards share premium as mentioned above, the copy of Income Tax PAN card, copy of income tax return and bank statement reflecting the transaction was furnished. Karta of HUF is relative of Mr. Rajendra Jian who is director in the assessee company. So genuineness of transaction is proved being carried at through banking channel and with a related party who knows the assessee company. As regards the creditworthiness and the source of funds used to make investment tail of fund has been provided in this case. Details of funds leave no scope to doubt the genuineness of creditworthiness of the investor Pritesh Jain, HUF. Assessee has proved the identity of the alleged shareholders and there creditworthiness and has also proved the genuineness of transactions of applying for equity share along with share premium paid thereon. Since both the lower authorities have not found any iota of evidence to disprove the facts filed by the assessee to discredit the documents produced before them as well as before us, no addition was called for u/s 68 of the Act for the alleged amount of equity share capital and share premium received - no reason to interfere in the finding of Ld. CIT(A) and the same stands confirm. Accordingly all the grounds raised by the revenue stands dismissed.
-
2021 (2) TMI 1076
Denial of deduction u/s 54F - assessee alongwith 4 other family members sold a piece of land - Out of the sale consideration received assessee had invested in construction of house property and accordingly claimed deduction u/s 54 - as per revenue report of valuation submitted by the assessee cannot be considered as evidence for verification of claim u/s 54F of the Act on the grounds that valuation was made by the valuer on 25/02/2015 instead of year 2011 and the contractor from whom the construction of house was gone done was not produced and source of investment in the house property was not explained or proved by the assessee HELD THAT:- The valuer has determined the cost of construction on 30/07/2011 and the year of construction was certified by the valuer as 2010-11. The fact of construction being carried out has not been doubted by the lower authorities, thus, so far as the assessee has invested capital gain for construction within the time limit prescribed and the said fact has also been confirmed by the registered valuer, therefore, there was no reason to not consider the same. Had there been any doubts about the authenticity of the valuation report, then in that eventuality, the A.O. could have summoned the registered valuer or could have referred the matter to the DVO. Therefore, when once the valuation report of the registered valuer is submitted and the A.O. has not referred the same to the DVO then in that eventuality, the said report ought to have accepted by the A.O. Non-appearance of the contractor before the A.O. - We are of the view that the A.O. should not have taken an adverse inference merely on account of non-appearance of the contractor as practicably it is a common fact that a common man always hesitates in appearing before the Income Tax Department due to fear of being interrogated and getting into unwanted and prolonged litigation. As far as the allegation of the Revenue that the assessee has withdrawn cash to the tune of ₹ 4.00 lacs only till 31/07/2011 which was not invested in construction by that date nor deposited in the bank account notified under capital gain account scheme is concerned. In this regard, we noticed that Section 54(1) of the Act provides that if capital gain earned by assessee is invested within a period of one year before or two years after the date on which the transfer took place, purchased or has within a period of three years after that date, constructed one residential house in India, then exemption u/s 54 shall be available in respect of capital gain in accordance with clause (i) and (ii) thereof. We also draw strength from the decision of CIT vs Jagriti Agarwal [ 2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT] as held that provision of section 139(4) is not an independent provision, but is related to time contemplated under the provision of section 139(4) of the Act. Accordingly, section 139(4) had to be read alongwith sub section (1) of section 139 and the due date for furnishing the return of income u/s 139(1) is subject to the extended period provided u/s 139(4). Hence, extended period u/s 139(4) has to be considered for the purpose of utilisation of the capital gain amount.Thus the assessee has made investment in construction of house property within the specified time, therefore, we direct the A.O. to allow exemption U/s 54F of the Act to the assessee. Addition on account of cash deposits made in the bank account of the assessee - HELD THAT:- During the course of assessment proceedings, the AO sought explanation regarding source of such deposits which was duly replied by the assessee vide reply dated 23.02.2015 which is at page No. 13 and 14 of the paper book wherein it was categorically explained by the assessee that such sum was received by assessee as gift from his mother. In support of such claim, assessee furnished copy of bank pass book of his mother, wherein a sum of ₹ 12,35,000/- was reflecting as withdrawals on the same day. Copy of passbook showing withdrawals of the said amount has also been placed on record. Apart from this, the assessee had also submitted a declaration of gift of his mother - AO completely disregarded the same for the sole reason that the mother of the assessee is very old and assessee had discharged his onus by furnishing vital evidences in the shape of bank statement of his mother and declaration of gift. On the contrary, the A.O. could not place on record any cogent material to prove that the documents placed on record by the assessee are not reliable. Further, the A.O. also could not point out any discrepancy in the documents placed on record relied upon by the assessee. Thus we are of the view that the assessee has proved all the three conditions, i.e. (i) Identity (ii) Genuineness and (iii) creditworthiness of person from whom cash is explained to have been received. See NEK KUMAR VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX. [ 2004 (7) TMI 59 - RAJASTHAN HIGH COURT] - Decided in favour of assessee.
-
2021 (2) TMI 1075
Levy of penalty u/s 271(1)(c) - undisclosed salary income - omission of salary from income declared in the ROI - assessment proceedings u/s 153A - HELD THAT:- As during the course of assessment proceedings u/s 153A when the assessee prepared her statement of affairs it came to her notice that salary from M/s Bhatia Corporation Pvt. Ltd. which was credited in her account but not actually received was left to be included in the income by mistake. Accordingly, she filed revised computation of total income and offered the same for taxation. Thus, the omission of salary from income declared in the ROI filed u/s 153A is a bonafide mistake. On such bonafide mistake no penalty is leviable. The Hon'ble Supreme Court in case of Price Waterhouse Coopers (P.) Ltd. [ 2012 (9) TMI 775 - SUPREME COURT] wherein, in this case the assessee firm filed its return of income along with tax audit report. In its tax audit report, it was indicated that provision towards payment of gratuity was not allowable but it failed to add provision for gratuity to its total income. It was held that it was a bona fide and inadvertent error. The same can only be described as a human error which we all are prone to make. The assessee could not be held guilty of either furnishing inaccurate particulars or attempting to conceal its income. Therefore, imposition of penalty was unjustified. Salary was credited in the account of Yash Bhatia but was not actually received by him and therefore, it was left to be included in the income by mistake but when such mistake was noticed while preparing the statement of affair, the same was included in the income. Hence, for this reason it cannot be inferred that the assessee has intentionally not declared the salary income in the return of income. - Decided in favour of assessee.
-
2021 (2) TMI 1074
Addition u/s 68 - unexplained cash deposits - CIT-A non admitting additional evidence - default of appellate proceedings under Rule 46A of the Income Tax RulesHELD THAT:- Although, before the ld. CIT(A), all the documents placed on record by the assessee and the ld. CIT(A) had accepted without any objection and in furtherance of his action of having accepted the same, he forwarded it to the A.O. for seeking his remand report. This act of the ld. CIT(A) shown his intention that he had accepted the additional evidences and had no reservations about it but in absence of remand report submitted by the A.O., the ld. CIT(A) has taken contrary view and dismissed the appeal of the assessee by not admitting the documents submitted by the assessee which in our view, is not correct. Even the Hon ble Supreme Court in the case of Collector, Land Acquisition Vs Mst. Katiji [ 1987 (2) TMI 61 - SUPREME COURT] had categorically held that technical considerations are pitted against the cause of substantial justice it is the cause of substantial justice that must prevail. Therefore, in view of the above proposition as laid down by the Hon ble Supreme Court and also keeping in view the principles laid down in the decisions in the cases of CIT v. Virgin Securities and Credits P. Ltd [ 2011 (2) TMI 207 - DELHI HIGH COURT] . We allow both these grounds of appeal raised by the assessee and admit the documents placed on record by the assessee as additional evidences. In view of the above facts and circumstances, we have admitted the additional evidences, therefore, the matter is remanded back to the A.O. for the deciding the issue afresh. This appeal of the assessee is allowed for statistical purposes only.
-
2021 (2) TMI 1073
Penalty u/s 234E - delay in filling of TDS return - intimation u/s 200A - HELD THAT:- The filing of TDS statement has happened in year 2017 and thereafter, the same has been processed and intimation issued on 4.12.2017 under section 200A by ACIT-TDS levying late filing fees under section 234E - Assessing officer was thus well within his jurisdiction to levy fees under section 234E. Contention of the AR that since the TDS statement pertains to the period i.e for the financial year 2013-14(1st quarter) even though the same has been filed in the year 2017, the Assessing officer is not empowered to levy late filing fees under section 234E unable to be accepted as we find that at the time of processing of the TDS statement i.e. on 14.10.2017, the Assessing officer was empowered to levy such late filing fees, there is no provision to make a distinction between the TDS statements pertaining to period prior to 01.6.2015 and post such period and more, importantly, it will result in creating two classes of assessees who for the same default will suffer different penal consequences leading to unintended class discrimination which cannot be the intention of the legislature in absence of anything contrary provided under the statute. As relying on SHRI UTTAM CHAND GANGWAL [ 2019 (1) TMI 1355 - ITAT JAIPUR] there is a continued default beyond 01.06.2015, therefore, following the aforesaid decision, the levy of fees under section 234E, which is levied for each day during which the default continues, is upheld for the period 01.06.2015 to the date of actual filing of the TDS statement and the balance late filing fees so levied is hereby deleted. In the result, the appeal of the assessee is partly allowed.
-
2021 (2) TMI 1072
Condonation of delay in filing the present appeal by 515 days - whether sufficient cause on the part of the assessee company for not presenting the appeal within the prescribed time? - In the instant case, the ld. CIT(A) has passed ex-parte order. It has come to knowledge of the assessee when application under Vivaad to Vivad Scheme was rejected by the CIT, Ajmer and the reason was that no appeal is pending - HELD THAT:- The assessee has not received any notice for hearing of the appeal as well as the order passed by the CIT(A). The assessee was not aware about the passing of CIT(A)'s order till the rejection of application under Vivad se Vishwas Scheme by the PCIT, Ajmer. However, as soon as assessee came to know of subsequent penalty order being passed against it, it consulted its Counsel and basis his advice, the present appeal has been filed though with a delay of 515 days. In case of Collector, Land Acquisition vs MST Katiji [ 1987 (2) TMI 61 - SUPREME COURT] has held that the expression Sufficient Cause employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner to sub-serves the ends of justice that being the life-purpose of the existence of the institution of Courts. In the instant case, applying the same principles, we find that there is no culpable negligence or malafide on the part of the assessee in delayed filing of the present appeal and it does not stand to benefit by resorting to such delay more so considering the fact that it has applied for settlement of present dispute and payment of appropriate taxes. Therefore, in the factual matrix of the present case, we find that there exists sufficient and reasonable cause for condoning the delay in filing the present appeal and as held by the Hon ble Supreme Court, where substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserved to be preferred. Though assessment and penalty proceedings are independent proceedings but at the same time, there is a close connection between the two proceedings and where the assessee has filed the present appeal apparently to safeguard its rights in relation to the penalty proceedings, the assessee cannot be denied and deprived of his legal defence and pleadings which he may take as so advised in the course of the penalty proceedings. Therefore, without going into the merits of levy of penalty which is not the subject matter of present dispute, where the assessee wishes to plead against levy of penalty, the Tribunal cannot be oblivious of its duty by denying such right to the assessee on mere technicality of delay in filing the present appeal. In exercise of powers under section 253(5) of the Act, we hereby condone the delay in filing the present appeal as we are satisfied that there was sufficient cause for not presenting the appeal within the prescribed time and the appeal is hereby admitted for adjudication on merits.
-
2021 (2) TMI 1071
Invalid intimation passed u/s 143(1) issued in the name of a non-existent entity - scheme of amalgamation conducted - assessee filed revised return of income - HELD THAT:- Assessee s own folly has led to dismissal of appeal before Ld. CIT(A). The return was revised two times in the name of new entity to give effect to the scheme of amalgamation. Therefore, it was obligatory for the assessee to file the appeal in the name of new entity only since the appeal could not be filed in the name of non-existent entity and the appeal so filed would be invalid one as rightly held by Ld. CIT(A). Even in the additional ground, the assessee is seeking quashing of intimation which has merely processed assessee s revised return of income and the same has been issued in the same name in which the revised return has been filed by the assessee. If the intimation was to be quashed, as per assessee s additional ground, then the assessee would be liable to refund back the refund granted under the said intimation. There is a vast difference in mere processing of return vis- -vis framing of assessment. Therefore, we do not find any substance in the additional ground raised before us. The same stand dismissed. Proceeding further, we find that Form No.35 was filed within time and the assessee was diligent in preferring further appeal before Ld. CIT(A). Keeping in view the same, we direct assessee to suitably amend Form No. 35 in the name of new entity or alternatively file a fresh Form No. 35 which shall be taken up by Ld. CIT(A) on merits. However, the concession so granted to the assessee would come at a cost of ₹ 10,000/- which shall be deposited by the assessee in Prime Minister National Relief Fund within 15 days of receipt of this order. The proof of the same shall be submitted before the registry as well as before Ld. CIT(A) and the same shall enable Ld. CIT(A) to proceed for adjudication of appeal on merits.
-
2021 (2) TMI 1070
Disallowance of interest on customers deposit account - interest that accrues on the customers deposit account is also assessee s own income and is liable to be taxed in its own hands and relied upon the order passed by the AO - HELD THAT:- Undisputedly, in AY 2006-07 the entire outstanding amount under the head customer s deposit was held to be non-payable and consequently added to the income of the assessee and the corresponding interest was disallowed. It is also not in dispute that in AY 2006-07, ld. CIT (A) held that only the amount of ₹ 127,69,83,720/- was not payable out of the total deposit of ₹ 11,59,32,90,000/- having ratio of these two figures of 11.01% and this order was also followed in AYs 2008-09, 2009-10 2010-11. We are of the considered view that when the method of determining the ratio between the payable amount out of total deposits has been consistently followed by the Revenue Department since AY 2006-07 and the order passed by the ld. CIT(A) s has not been challenged nor any distinguishing facts and contrary provisions of law have been brought on record by the ld. DR for the Revenue, we find no scope to interfere the findings returned by the ld. CIT (A). So, ground no.1 is determined against the Revenue. Disallowance u/s 14A to 0.5% of the average investment income - HELD THAT:- We are of the considered view that when all the investment considered by the AO was not yielding any exempt income, disallowance u/s 14A read with Rule 8D(2)(iii) to the extent of 0.5% of the average investment has been rightly made by the ld. CIT (A). So, finding no illegality or perversity in the findings returned by the ld.CIT (A), ground no.2 is determined against the Revenue.
-
2021 (2) TMI 1069
Penalty u/s 271(1)(c) - assessment order passed u/s. 147 r.w.s. 144 that the AO issued only one notice u/s. 142(1) on 30.05.2016 and the ex parte assessment order was passed - HELD THAT:- After issuing the notice u/s. 142(1), the Assessing Officer has not mentioned any other notice or show cause notice issued to the assessee. Thus, it is apparent that the assessee was not given further opportunity by the Assessing Officer, either to show cause for passing the ex parte assessment u/s. 144 or to furnish the requisite details. Appeal appeals arising from the penalty order passed u/s. 271(1)(b) of the Act ought to have been decided after the adjudication of the quantum appeal pending before the Ld. CIT(A). Accordingly, the matter is set aside to the record of the CIT(A) for deciding the same afresh after adjudication of the quantum appeal as well as giving one more opportunity of hearing to the assessee. Appeal of the assessee is allowed for statistical purposes.
-
2021 (2) TMI 1068
Ex-party appeal decided by CIT-A - As per CIT-A appellant does not appear to be serious in prosecuting its appeal as despite number of notices were given on the last available address as per Form 35, no compliance has been made on behalf of the appellant - HELD THAT:- Nowhere it is mentioned in the impugned order, whether the notices sent by the Ld. CIT(A) were received by the assessee or not. As mentioned earlier, the assessee has filed before the AO a letter dated 30.11.2017 received in the office of the AO on the same date stating that the entire amount of ₹ 49,99,365/- does not form part of the purchases debited to the profit and loss account ; ₹ 22,93,114/- relates to fixed assets purchases and ₹ 27,06,250/- to other purchases. Assessee deserves reasonable opportunity of being heard by the Ld. CIT(A). Therefore, we set aside the impugned order and restore the matter to the file of the Ld. CIT(A) to make an order afresh after giving reasonable opportunity of being heard to the assessee. We direct the assessee to file the relevant documents/evidence before the Ld. CIT(A). Appeals are allowed for statistical purposes.
-
2021 (2) TMI 1067
Penalty u/s.271(1)(c) OR 271AAA - unexplained cash deposits - HELD THAT:- It is not in dispute that unexplained cash deposits of ₹ 51,63,987/- has been treated as undisclosed income by the ld. AO for the A.Y.2008-09. Hence, the said addition shall not be eligible for levy of penalty u/s.271(1)(c) of the Act in view of specific provisions contained in Section 271AAA(3) of the Act. Moreover, we also find that penalty in the instant case u/s.271(1)(c) of the Act has been levied by the ld. AO @200% of the tax sought to be evaded on the undisclosed income of ₹ 51,63,987/-. We find that the rate of penalty @ 200% is contemplated only u/s.271(1)(c) of the Act and not u/s.271AAA of the Act. It is elementary that the provisions of Section 271AAA and Explanation 5A to Section 271(1)(c) are distinct and separate and totally operate on two independent fields for different assessment years containing different provisions altogether. Hence, we hold that the lower authorities grossly erred in levying and confirming the penalty u/s.271(1)(c) of the Act in the facts and circumstances of the case for the A.Y. 2008-09 , being the year of search. No hesitation in directing the ld. AO to delete the said penalty for the A.Y.2008-09. Accordingly, the ground Nos. 1-5 raised by the assessee are allowed.
-
2021 (2) TMI 1066
Stay petition - applicant seeks a stay on collection/recovery of the outstanding amount of tax and interest etc, in respect of tax withholding demands under section 201 r.w.s. 194C - HELD THAT:- As assessee has admittedly paid more than 20% of the original demands raised on the assessee, and, therefore, it is not even necessary to deal with implications of first proviso to Section 254(2A). DR has filed a written wherein it is stated that at the time of filing of stay of demand petition by the assessee, demand/ sum payable denotes total demand (including interest) as reduced by the amount already paid by the assessee before filing of the stay petitions , but then this plea is only to be noted and rejected. On the fact of it, beyond any dispute or controversy, he reference to the said requirements of pre-payment of at least 20% of the amount of tax, interest, fees or any other sum payable under the provisions of this Act apparently refers to the statutory liability and not the outstanding amount. By no stretch of logic, therefore, these requirements of first proviso to Section 254 (2A) come into play in the present case. We need not, therefore, deal with that aspect of the matter at this stage. Stay petition is allowed in the terms indicated above.
-
2021 (2) TMI 1065
Reopening of assessment u/s 147 - no compliance was made by the assessee of notice under section 148 of the Act as well as subsequent notices issued under section 142(1) - notices issued by the learned CIT(A) to the assessee and sent by post were returned back with the remark that the assessee left the premises thus held it to be a valid service and dismissed the appeal of the assessee without any decision on merit - HELD THAT:- CIT(A) has dismissed the appeal of the assessee due to non-representation by the assessee, without giving any reason for arriving decision on merit. In our opinion, in terms of section 250(6) of the Act, the Ld. CIT(A) is required to pass a reasoned order on merit of the issue-in-dispute despite no-representation by the assessee. In view of the facts and circumstances of the case, we set aside the finding of the learned CIT(A) and restore the matter back to the file of the Ld. CIT(A) for deciding afresh, after providing adequate opportunity of being heard to both the assessee and the Assessing Officer. Accordingly, the ground raised by the assessee are allowed for statistical purposes.
-
2021 (2) TMI 1064
Deduction u/s 80JJA - Disallowance of claim in absence of complete note on collection/processing and treatment of biodegradable waste and supporting evidence - HELD THAT:- It is the submission of the assessee that given an opportunity, he is in a position to file the necessary details. Considering the totality of the facts of the case and in the interest of justice deem it proper to restore the issue to the file of the Ld. CIT(A) with a direction to grant one final opportunity to the assessee to submit the assessment orders for assessment year 2016-17 and 2017-18 and other documentary evidences as required by him for deciding the appeal. Ld. CIT(A) shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. Appeal filed by the assessee is allowed for statistical purposes.
-
2021 (2) TMI 1063
Non appearance by assessee - Condonation of delay in filing Rectification application - HELD THAT:- Order, dismissing the appeal for non-prosecution, was passed by the Appellate Tribunal on 12.12.2014 [ 2014 (12) TMI 1366 - ITAT AHMEDABAD] whereas the Miscellaneous Application was filed on 23rd May, 2017. Appellate Tribunal took the view that with effect from 1st June, 2016, the period of limitation, during which the rectification application can be filed, is six months. Prior to the amendment, it was four years. The argument is that the new law of limitation which came into force with effect from 1st June, 2016, providing for a shorter period, cannot extinguish a vested right of action. In other words, the amendment has been made effective virtually in case of the assessee with retrospective effect. Though the amendment does not show that it is applicable with retrospective effect, however, the existing right has been extinguished with retrospective effect in case of the assessee. Strong reliance has been placed on the decision of the Supreme Court in the case of M./P. Steel Corporation [ 2015 (4) TMI 849 - SUPREME COURT] and a Division Bench decision of the Madhya Pradesh High Court in the case of District Central Co-op. Banik Ltd.[ 2017 (10) TMI 691 - MADHYA PRADESH HIGH COURT] . The Madhya Pradesh High Court has relied upon the decision of the Supreme Court in the case of M.P. Steel Corporation (supra).We have thought fit to pass this short order so that the respondent can respond to the same on the next date of hearing.
-
Customs
-
2021 (2) TMI 1109
Confiscation of imported goods - Old/Used Analogue Photocopiers and Old/Used Digital Multi functional (Print and Copying) Machines - restricted goods - appellant did not produce the license for import of the said machines - redetermination of value of the goods under Rule 9 of the Customs Valuation [Determination of Price of Imported Goods] Rules, 2007 - appraisal of value of goods - whether the finding rendered by the Tribunal holding that what was imported by the appellant was a restricted item was correct? - whether the reasons assigned by the Tribunal to confirm the order of the adjudicating authority calls for any interference? - HELD THAT:- The appellant had imported 36 units of Old/Used Analogue Photocopiers without obtaining a license. Having accepted the stand taken by the Department, the appellant requested that his case may be adjudicated. All second hand goods except second hand capital goods are restricted for import. It is not in dispute that 201 machines which were imported by the appellant were second hand goods. Thus, going by the first limb of para 2.17, license is required. In the second para, the Policy allows import of second hand capital goods including refurbished/reconditioned spares without obtaining any license. There is a restriction for import of second hand Photocopier machines and other items mentioned therein. The appellant did not produce a Chartered Engineer's certificate when the goods were imported. Therefore, the goods were subjected to examination by Docks Officer in the presence of a Chartered Engineer and certified that the goods are 4 to 10 years old, they are used and not reconditioned and the value of the second hand goods was appraised as USD 69395 [C F] - The photocopying machines do not have any single entry in Tariff and copying machines whether or not combined with printers and facsimile machines are classified elsewhere as also machines which perform two or more functions of printing, copying or facsimile transmission as in the case of the imported goods. Further the Tribunal noted that DGFT notification No.31/2005 dated 19.10.2005 uses the expression photocopier machines and therefore, there is no warrant to read the expression appearing in the DGFT notification as conforming to any one particular expression used in the Tariff as these expressions are not identical and no Tariff item is mentioned in the DGFT notification. The Tribunal rightly rejected the case of the appellant - Appeal dismissed - decided against appellant.
-
2021 (2) TMI 1101
Benefits under Merchandise Exports from India Scheme (MEIS) - product of vitrified tiles exported to Sri Lanka - case of petitioner that Public Notice had been amended on 04.05.2016 being the Public Notice No.6 of 2015 -20 and MEIS scheme was extended to the export made to Sri Lanka at the rate of 2% interest - It is averred by the petitioner that the policy permits the eligibility of the goods which had been exported by the petitioner under the MEIS scheme and it is only the procedural lapse which has resulted into his being denied the benefit of the said scheme - HELD THAT:- Having noticed that the case of the petitioner falls under the MEIS which is a scheme meant for promoting the export, these are the rewards under the MEIS payable as percentage mentioned in the scheme itself can be transferred for the payment of number of duties and taxes. As can be gathered from material which has been placed on the record is that Sri Lanka was placed in Group C in the Public Notice No.2 of 2015 dated 01.04.2015. In Gazette of India, the Ministry of Commerce and Industry, Department of Commerce provided in exercise of the powers conferred under para 2.04 of the FTP 2015 -20, the schedule of country groups and the code wise list of product with reward rates under Appendix 3B as pointed out to us that Sri Lanka is not one of those country. It is not in dispute that by way of 73 shipping bills, export has been carried out by the petitioner exporter and he has substantiated the same by way of the documentary evidences, which had happened from 12.05.2016 to 05.01.2017. The Public Notice had been amended firstly on 04.05.2016 and thereafter, on 22.09.2016 whereby Sri Lanka was included and export to Sri Lanka has also been covered under the scheme of MEIS at the rate of 2% and 3% respectively. In the instant case, there is no doubt with regard to the exports having been made under the FTP 2015 -20 where, initially, Sri Lanka was not one of the countries where such reward was available on export to the said country. The petitioner has already exported its product 'vitrified tiles' to Sri Lanka and 73 shipping bills have also been produced before the respondent authorities. What has been pleaded all through out by the petitioner is of lack of knowledge of subsequent public notices which had included Sri Lanka as a country for seeking the reward under the MEIS and entire procedure having been simplified, instead of getting the declaration produced for the purpose of the reward, the ticking of N/Y would suffice in case of the EDI. The ticking itself had been made equivalent to such declaration. It is quite clear that for the purpose of the reward, the EDI has been simplified more particularly, by way of the Public Notice No.9 of 2015 dated 16.05.2016 and the marking of tick in pursuance of the earlier Public Notice No.47 dated 08.12.2015 had been treated as a declaration of intent in case of EDI shipping bills. Section 149 of the Customs Act, 1962 which has been taken recourse to by the petitioner does not prescribe any time limit. It is a discretion of the concerned officer, which can authorize any document after it has been presented in the Custom House to be amended. Of course, this has not to be amended after once the imported goods have been cleared for the home consumption and deposited in the warehouse where export goods have been exported, except on the basis of the documentary evidences, which are in existence at the time of the clearance, deposit or the export of the goods, as the case may be - it is essentially to avail the exporter the benefits prescribed under the MEIS that the request has been sent by the petitioner to make the same available to it. Therefore, it is also expected of the respondent authority to adopt an approach, giving progressive interpretation to all these provisions and the policy decisions rather than having conventional outlook. The impugned communication dated 10.06.2019 is quashed and set aside. Respondent No.2 is directed to issue No Objection Certificate to the petitioner for availing the benefits as provided under the policy - Petition allowed.
-
2021 (2) TMI 1100
Seeking direction to release goods imported - county of origin of the consignment - Section 110A of the Customs Act, 1962 - HELD THAT:- The determination of origin of the consignment is best left to the authorities as it involves examination of documents and relevant material. The respondents are thus directed to commence proceedings for investigation, issue a show cause notice at the earliest, complete adjudication and pass an order-in-original within a period of two months from today. Condition imposed for provisional release - HELD THAT:- The direction to the petitioner for furnishing of PD bond and bank guarantee covering the component of anti-dumping duty is sustained. However, the levy of fine and penalty at this stage is pre-mature and this condition is thus dispensed with. In the course of adjudication, the respondent /authorities will make a reference to the CAROTAR, 2020 (Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA)) which states that the designated director of the ICD/CBIC has been designated as a Nodal Officer for taking up issues relating to issuance of place of origin and obtain a determination from the Nodal Officer in this case - petition disposed off.
-
Corporate Laws
-
2021 (2) TMI 1088
Seeking approval for reduction of share capital - Section 66 of the Companies Act 2013 - HELD THAT:- The investments by shareholder in the equity share capital of the company are non- repatriable basis, hence the provisions of FEMA and the regulations made there under are not applicable to the company. The proposed reduction would not involve either diminution of any liability in respect to unpaid share capital or the payment to any shareholder, accordingly the provisions of Section 66(1)(a) of the Act will not be applicable. Further the net worth of the company shall remain positive and therefore not in any way have any adverse effect on the company s ability to honor its commitments and obligations. Notice has been served to income tax department. However, no objection has been raised by the Income tax department - In response to the observation made by RD in the report, the applicant has stated that the queries raised by the RD has already been dealt with vide compliance affidavit dated 25.02.2020. Further on 19.01.2021, during the hearing Ld. Counsel for RD made statement that they have perused the compliance affidavit and as per instructions the queries/objections of the department stands satisfied. Hence, they have no objection to the application being allowed. That the reduction of the share capital of the above company as resolved by the Board Of Directors at the Extra Ordinary General meeting held on the13.12.2019 is allowed - That the minutes for reduction of share capital as specified under section 66(5) of the Companies Act, 2013 is be and hereby approved. That a certified copy of this order including the minute as approved, be delivered to the Registrar of Companies within thirty days of receipt of the order - Application allowed.
-
Insolvency & Bankruptcy
-
2021 (2) TMI 1096
Stay on various action such as sale of mortgaged property till completion of Liquidation proceedings - Scope of Liquidation estate - Appellant is aggrieved by the order of Adjudicating Authority as they have directed the Appellant Bank not to take any coercive steps such as sale of the properties mortgaged to the bank by the Respondent Companies till the completion of the Liquidation proceedings of the corporate debtor - HELD THAT:- The assets of the subsidiaries are outside the purview of liquidation estate and as such cannot form part of the liquidation estate as per section 36 (4) of IBC - The Adjudicating Authority and Appellate Authority being the creation of statute will have to ensure generally all the statutory compliances, unless it goes against the principle of natural justice and the intention of the legislature. Since, these exclusive securities were not forming part of liquidation estate, correctly done by Liquidator to comply with the provisions of Section 36 of the Code and precedence of this Appellate Tribunal already exists the Code vide Section 36(4)(d) prohibits inclusion of assets of Indian or Foreign subsidiary of the Corporate Debtor in the liquidation estate, we have to set aside the impugned order of the Adjudicating Authority and allow the present appeal. Appeal allowed.
-
2021 (2) TMI 1094
Maintainability of the Application in the name of proprietorship firm - Jurisdiction - power of proprietorship firm to file a claim - legal entity or not - HELD THAT:- Although the Adjudicating Authority in para 15 referred to part of dispute raised by the Respondent, the Adjudicating Authority has not dealt with or decided the same. As such, in the Appeal, we are not going into the merits of the Application under Section 9 of IBC. Maintainability of the Application in the name of proprietorship firm - HELD THAT:- Section 2(f) of IBC in Judgement in the matter of NEETA SAHA VERSUS RAM NIWAS GUPTA AND ORS. [ 2020 (2) TMI 1442 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] where the Section provides that the provisions of this Code shall apply to partnership firms and proprietorship firm. - However, without entering into legal issue if such Trade Name is person , we find that it was a curable defect. The learned Counsel for Appellant has rightly relied on the Judgement in the matter of Neeta Saha . The Adjudicating Authority should have given opportunity to the Appellant to appropriately amend the Application in part 1 of the Format where name of the Operational Creditor is shown. Mr. Piyush Bangar can show his name and suffix that he is sole proprietor of M/s. Mateshwari Minerals. The matter is remitted back to the Adjudicating Authority. The Adjudicating Authority will give opportunity to the Appellant to correct the description of the name of the Operational Creditor in the Format - Appeal allowed by way of remand.
-
2021 (2) TMI 1090
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Corporate Debtor - Operational Creditor - designing of advertisement and allied services provided - existence of dispute regarding the operational debt between the corporate debtor and operational creditor prior to the filing of application by the Operational Creditor under Section 8 of the IBC. Whether Katalist View paper Pvt. Ltd. is the Corporate Debtor and Inspired Traveller (proprietor Saurav Keshan) the Operational Creditor with regard to the designing of advertisement and allied services provided? - HELD THAT:- There is certainly no dispute regarding the quality of work and service given or any other aspect of the services provided by the Operational Creditor to the Corporate Debtor. This is also supported by the fact that Katalist View paper Pvt. Ltd. has been making payments as per invoices raised by Inspire Travellers and only later some payments remained, when this imaginary dispute has been raised. Reading the e-mails the impression we have gathered is that after Corporate Debtor placed Purchase Orders and as per the purchase Orders services were rendered by Operational Creditor, Corporate Debtor released some payments but later made Operational Creditor run for its dues to other entities claiming amount had to come from Group M. In such situation only because Operational Creditor approached other entity does not mean that it was a tripartite relationships. It was plain and straight matter. Corporate Debtor placed Purchase Order and Operational Creditor rendered service accordingly which has only been partly paid by Corporate Debtor. In absence of any formal agreement entity placing Order for services is the entity liable to pay when matter is under I B Code, 2016 - it is quite evident that some dues as claimed by the Operational Creditor Inspired Travellers remained unpaid by the Corporate Debtor Katalist View paper Pvt. Ltd.This responsibility cannot be shifted or apportioned to any other party. Whatever informal and internal arrangements exist between Honor, Group M and Katalist View paper Pvt. Ltd. cannot affect or impact status of Inspired Traveller as Operational Creditor and also the relationship of Inspired Traveller with Katalist View paper Pvt. Ltd. as Corporate Debtor. It is abundantly clear that Appellant M/s Katalist View paper Pvt. Ltd. is the Corporate Debtor and Inspired Traveller (with its proprietor Saurav Keshan) is the Operational Creditor in accordance with the definitions given in the IBC. Whether any real dispute exists regarding the operational debt between the corporate debtor and operational creditor prior to the filing of application by the Operational Creditor under Section 8 of the IBC? - HELD THAT:- A dispute is sought to be raised by alluding to the trail of email exchanged between all the parties concerned, which are attached in the appeal paper book on pages 49-71. A close examination of these emails makes it clear that the dispute that is sought to be shown is a creation as an afterthought to escape from the responsibility of making good the operational debt owed by Katalist (the Corporate Debtor). A detailed discussion on this point has already been done. It stands to reason that the Operational Creditor Inspired Traveller should not be made victim of the unresolved issues of accounts reconciliation between Group M and Katalist View paper Pvt. Ltd. This dispute has no relevance to the provision of services or its quality by Inspired Traveller and, therefore, it is not a dispute as covered under Section 5(6) of IBC. Since it is not a pre-existing dispute regarding the services rendered by the Operational Creditor and hence, it will have no cover of help from the judgment of the Hon ble Supreme Court in MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT] . Thus, the Appellant has not been able to make a water-tight case in his favour by either refuting the relationship of Corporate Debtor with Operational Creditor (between itself and Inspired Traveller) or establish pre-existing dispute as is required in Section 8 (2)(a) of the IBC to escape from the rigours of CIRP - there is no pre-existing dispute with regard to the services rendered and considering the purchase orders issued by the Corporate Debtor, in the absence of any documents to the contrary establishing liability to the contrary, the Corporate Debtor was/ is liable for the Operational Debt. The dispute created in the e-mails by the Corporate Debtor to shift liability to Group M is not true dispute with regard to the services taken from the Operational Creditor and services rendered by the Operational Creditor. The defence raised by the Appellant is spurious and illusory and thus can be no basis to deny admission of the Application under Section 9. There are no merit in the appeal - appeal dismissed - decided against appellant.
-
Service Tax
-
2021 (2) TMI 1122
Scope of two SCN - different subject matter in both SCN - Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS), 2019 - petitioner contends that since the contracts of the petitioner with CIPL were the subject matter of the first show cause notice, the second show cause notice with respect to free of cost supplies under the contract with CIPL and/or with respect to constitution of NOIDA does not constitute a different matter but is the same matter - HELD THAT:- Though it is also the contention of the counsel for the petitioner that in any case, qua free of cost supplies there is no taxation element as held in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT ] has been held to be a corporation and thus the said questions are no longer res integra but we are of the opinion that in the challenge at this stage, we are not required to go into the merits of the grounds urged in the impugned show cause notice. The counsel for the respondents seeks time to show case law on, how the words same matter or different matter are to be interpreted in the context of the SVLDRS i.e. liberally or restrictively. List on 15th March, 2021.
-
2021 (2) TMI 1118
Seeking reconsideration of declaration of the petitioner filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - eligibility of the petitioner or maintainability of its declaration to avail the benefits of the scheme under the category of investigation, enquiry or audit on the ground that the service tax dues of the petitioner for the related period was not quantified on or before 30th June, 2019 - HELD THAT:- The issue decided in the case of THOUGHT BLURB VERSUS UNION OF INDIA AND ORS. [ 2020 (10) TMI 1135 - BOMBAY HIGH COURT] where it was held that petitioner was eligible to file the application (declaration) as per the scheme under the category of enquiry or investigation or audit whose tax dues stood quantified on or before 30th June, 2019. In the present case, Petitioner has stated that it received the email of the said letter dated 15.06.2019 on 29.06.2019 and the physical copy on 01.07.2019. Respondents have taken the stand that because the physical copy was received by the petitioner on 01.07.2019 the quantification would be construed to have been done on 01.07.2019 which was beyond the cut off date of 30.06.2019, thus rendering the petitioner ineligible. In our view, such a construction does not conform to the letter and spirit of the scheme as we have discussed above. The scheme talks about quantification of the tax dues and not communication thereof. The quantification having been done vide letter dated 15.06.2019, receipt of copy thereof whether email or physical becomes immaterial. It is the date of quantification which is relevant because in this case the quantification has been done by the authority. That apart, it was clarified by the Board that since 30.06.2019 was a public holiday being a Sunday, therefore, in terms of section 10(1) of the General Clauses Act, 1897 the relevant date should be considered as 01.07.2019 instead of 30.06.2019. Allegation that the letter dated 15.06.2019 did not indicate complete quantification as per letter of the Anti Evasion Wing dated 20.11.2019 - HELD THAT:- In the present case, there is a clear demand made by the respondents upon the petitioner and there is no reason not to accept the said figure as the amount of service tax dues payable by the petitioner for the period under consideration. Opportunity of personal hearing - HELD THAT:- The declarant had accepted the determination of tax dues by the designated committee and thus there was no question of providing any personal hearing because no such hearing would be required. In fact in Form SVLDRS No.2A, it is found that the same is a form pertaining to written submissions, waiver of personal hearing and adjournment under section 127 of the Finance (No.2) Act, 2019 read with Rule 6 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules 2019. From a perusal of the said form, we find that the petitioner had clearly mentioned that it agreed with the estimate made in SVLDRS Form No.2. In such circumstances, the question of availing any personal hearing did not arise. The rejection of the declaration of the petitioner was not justified - matter remanded back to the respondents (designated committee) to consider afresh the declaration of the petitioner dated 13.11.2019 as a valid declaration in terms of the scheme under the category of investigation, inquiry and audit and thereafter grant the consequential relief(s) to the petitioner. Petitioner shall be afforded an opportunity of hearing where-after a speaking order shall be passed - petition allowed by way of remand.
-
2021 (2) TMI 1099
Levy of Service Tax - supply of tangible goods - transfer of right to use or not - petitioner was providing material handling object, namely, cranes to Bharath Heavy Electricals Limited (BHEL), the sixth respondent herein, on transfer of right to use basis - Section 4 of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- The petitioner has rendered service. It was supplying tangible goods, viz. 10T Mobile Cranes numbering 11/12 on daily rental basis. These material handling equipments were hired by the sixth respondent BHEL as per the agreement dated 07.12.2011. The terms of the agreement which has been extracted above indicate that the petitioner has not transferred the Mobile Cranes to the sixth respondent BHEL. On the other hand, the petitioner has provided its driver for operating the Cranes. It was under the supervision of the sixth respondent BHEL. The agreement further states that crew of the petitioner who worked during the first shift shall not be engaged in the second shift - Under the agreement, the petitioner was merely required to supply required number of cranes for the purpose of material handling and for the purpose of loading/unloading. The facts that the lifts will be operated by the drivers of the petitioner and that the crane will not be parked inside the 6th respondent BHEL premises after the stipulated working hours make its clear that it is the petitioner who was in effective control of these material handle equipments / cranes. Further, the agreement also indicates that trip register should be maintained by the petitioner's driver and that in case the loss of original trip register, the sixth respondent BHEL should not entertain the claim of the petitioner. In RASHTRIYA ISPAT NIGAM LTD. VERSUS COMMERCIAL TAX OFFICER, COMPANY CIRCLE, VISAKHAPATNAM [ 1989 (12) TMI 325 - ANDHRA PRADESH HIGH COURT] , the the Andra Pradesh High Court came to a conclusion that the transfer of right to use goods necessarily involves delivery of possession by the transferor to the transferee and transfer to effective control. There is neither transfer of effective control nor transfer of possession over the material handling equipments / cranes in favour of the sixth respondent BHEL under the agreement - Petition allowed - decided in favor of petitioner.
-
2021 (2) TMI 1093
Classification of services - Manpower Recruitment or Supply Agency Service or not - period 16.6.2005 to 2007 08 - Department was of the view that for the period prior to 2008, as per the agreements entered by the appellant with various clients, the appellants have rendered MRSA services to the clients - appellant claims that the services are nothing but Information Technology Software Services for which they have been paying service tax after 2008 and that these activities will not fall under the definition of MRSA - suppression of facts or not - extended period of limitation - HELD THAT:- it can be seen that the control and supervision of the staff / qualified personnel supplied to the premises of the client (ABN AMRO Bank) is with the appellant (contractor) only. Though certain personnel are supplied to the premises of the client for carrying out work / job of the client, it cannot be said that the activity would fall under MRSA. The discussion in para 12.3 of the order in original indicates that mere supply staff / qualified personnel to premises of client is construed as MRSA by the lower authority which is erroneous. Even if parties agree that consideration will be based on the number of persons employed, what has to be looked into is whether the agreement is to execute the work for the client or merely supply the work force. What has to be examined is the core activity for which the agreement is entered between parties. The clients are not in IT related fields. They need services in the nature of annual maintenance of systems, testing, developing of software etc. The disputed transactions as per agreement do not reflect ingredients required for MRSA. There is no iota of evidence to show that the appellants were rendering MRSA service during the disputed period. On merits, the issue is settled by the decision in the case of Cognizant Tech Solutions [ 2010 (3) TMI 328 - CESTAT, CHENNAI ] where it was held that The assistance in recruitment and imparting of specialized training for the recruited personnel cannot be held against the appellants claim that they have not supplied the manpower but have merely recruited and retained the same for providing specialized services to Pfizer utilizing such manpower - The demand under MRSA cannot sustain and requires to be set aside. The Hon ble High Court has remanded the matter to reconsider the issue on limitation also. The entire demand is raised invoking the extended period. In Coromandel Infotech India Ltd. [ 2019 (1) TMI 323 - CESTAT CHENNAI ], the Tribunal had occasion to consider the issue of limitation when there were two conflicting views on the very same issue. Moreover, in the case before us, apart from bald allegation that the appellant has suppressed facts with intention to evade payment of service tax, there is no positive act brought out before us to establish the allegation of suppression. It is evident that the appellant was all along responding and cooperating with the department. The show cause notice is issued only on 23.4.2010. There are no evidence to support the allegation that the appellant has suppressed facts with intention to evade payment of service - the appellant succeeds on limitation also. Appeal allowed - decided in favor of appellant.
-
2021 (2) TMI 1078
Renting of immovable property service - Failure to file periodic ST-3 returns - service pertaining to commercial development of vacant rail land by construction of multifunctional complexes - HELD THAT:- The non-registration of appellant under service tax has been heavily objected. However, it is acknowledged that Development Agreement with respect to Sarai Rohilla Railway Station has got terminated and that the said termination will have an effect upon quantum of liability. Accordingly, the request of learned Counsel for appellant for remanding the matter for fresh decision has been acknowledged. The matter remanded back to the respective adjudicating authority and order accordingly with the direction to the Adjudicating Authority to re-adjudicate the issue after taking into consideration the termination of the said Development Agreement and subsequent proceedings - Appeal allowed by way of remand.
-
Central Excise
-
2021 (2) TMI 1123
Refund of Education Cess and Secondary Higher Secondary Education Cess - benefit under N/N. 39/2001-CE dated 31.7.2001 availed - period from January-2007 to May-2007 - HELD THAT:- The judicial discipline also would require to give effect to the order of the higher appellate authorities and not to once again initiate the actions of recovering the very refund claim, which has been given to the petitioner after a long drawn battle. Issue Notice for final disposal, returnable on 8.3.2021. Interim relief in terms of paragraph 18.B. is granted, till the returnable date. Learned Central Government Standing Counsel, Mr.Parth Divyeshvar waives service of Notice for and on behalf of the respondent No.1.
-
2021 (2) TMI 1114
Permission for withdrawal of appeal - amount involved in the appeal is below the prescribed monetary limit - HELD THAT:- Appeal is disposed of as withdrawn.
-
2021 (2) TMI 1104
Validity of Direction of the Tribunal to issue fresh SCN - demand beyond the scope of original SCN - power of Tribunal in making certain observations with regard to the validity of the CENVAT Credit Rules, 2004 qua the provisions of Section 37 of the Act - validity of proceeding to direct the original authority to issue a show cause notice to the appellant/assessee as regards its very entitlement for CENVAT credit - HELD THAT:- The Tribunal appears to have suo motu taken up for consideration as to whether credit of service tax paid or payable on taxable service is allowable. The Tribunal suo motu proceeded to refer to Section 37(2), Section 11AB of the Act and made certain observations, which are in the nature of conclusive observations. The learned counsel for the assessee had argued that the assessee had been put on notice only regarding the issue whether the debit note is an eligible document or not and not on the question whether the impugned taxable service is an eligible input service or an ineligible input service. After noting this submission, the Tribunal while remanding the matter to the Original Authority following the decision in Pharmalab Process Equipments Pvt., Ltd. [ 2009 (4) TMI 142 - CESTAT AHMEDABAD ], where it was held that debit notes issued by service providers contained details of service tax payable, description of taxable service, value of taxable service and registration number of service provider and name and address of service provider, which are the details required as per Rule 9(2) of the CCR, 2004 , issued one more direction to the Original Authority to issue a fresh show cause notice as to whether the impugned services are eligible input services or not. The assessee is aggrieved over such direction. Experts explain Debit notes to be a form of proof that one business has created a legitimate debit entry in the course of dealing with another business. This might occur when a purchaser returns materials to a supplier and needs to validate the reimbursed amount. In this case, the purchaser issues a debit note reflecting the accounting transaction. Debit notes and credit notes are almost always involved in business-to-business (B2B) transactions. They correspond to debit and credit entries in accounting logs, which further serve as proof of a prior business transaction. They may also be referred to as debit memos - A debit note or debit receipt is very similar to an invoice. The main difference is that invoices always show a sale, where debit notes and debit receipts reflect adjustments or returns on transactions that have already taken place. B2B transactions are typically based on an extension of credit, where a vendor sends a shipment to a company before getting paid, then invoices the company for the amount owed after delivery. Debits and credits are the accounting method used to keep track of these transactions. Debit notes can also be substituted for traditional invoices when a good or service is provided that is outside of the normal scope of business. This helps distinguish the transaction for both accounting departments, and also keeps the issuing company from creating a new type of invoice. The endeavour before us by the Revenue to sustain the argument is by referring to the powers of the Tribunal and that the Tribunal would be entitled to examine all issues, when it seized of an appeal arising out of an order in original or an order in appeal. This submission is not well founded in the facts and circumstances of this case for more than one reason. Firstly, the appeal was filed by the assessee and not the Revenue. The Revenue did not prefer any cross appeal/objection. Therefore, the assessee cannot be worse off in its own appeal before the Tribunal. Further, the Tribunal has not recorded as to who had advanced such submission. In the absence of any such observation, we are compelled to observe that it is suo motu exercise by the Tribunal, which is uncalled for and without jurisdiction. We say so because, the allegation in the show cause notice, which gives the cause of action for the entire matter, is that the assessee availed service tax input credit based on ineligible documents - Therefore, the Department can never proceed beyond such allegation and if done so, it would be wholly without jurisdiction. In other words, the Tribunal cannot sustain the case of the Revenue against an assessee on a ground not raised by the Revenue either in the show cause notice or in the order in original passed by it. Thus, the direction issued by the Tribunal to issue a fresh show cause notice to the appellant/assessee as to whether the impugned services are eligible input services or not is wholly without jurisdiction and the same is liable to be set aside - appeal allowed - decided in favor of appellant.
-
2021 (2) TMI 1102
Principles of Natural Justice - serious grievance on the part of the petitioner is that not only there has been no specific order passed by the concerned authority denying the opportunity of cross examination to the petitioner, it has chosen to decide both the show cause notices in a common order, which has been passed on dated 4.9.2020 without even availing opportunity of hearing - HELD THAT:- So far as insistence on the part of the petitioner for personal hearing is concerned, the Court is not inclined to entertain that plea as the virtual hearing is being conducted right from the time the lock-down had been effected, even in those matters which are quite contested and one of them is the present matter also. So far as the request of cross examination made by the petitioner dated 19.8.2020 is concerned, we notice that in the Order-in-Original itself, the authority concerned has denied such right to the petitioner without passing any separate order even on noticing the decision of this Court in case of Mahek Glazes Pvt. Ltd. [ 2013 (7) TMI 128 - GUJARAT HIGH COURT ]. Accordingly, let notice for final disposal as well as for interim relief be issued, returnable on 16.2.2021.
-
CST, VAT & Sales Tax
-
2021 (2) TMI 1115
Recovery of Tax - Attachment and auction of property - Right of buyer of property in Auction - Validity of action on the part of respondent no.1/ District Industries Centre in refusing to transfer the property - priority of dues - mortgage of property - HELD THAT:- The issue about priority of dues, inter se between the respondent nos.2 and 3, is no longer res integra but is covered by the judgment of the Full bench of the Madras High Court in THE ASSISTANT COMMISSIONER (CT) , ANNA SALAI-III ASSESSMENT CIRCLE VERSUS THE INDIAN OVERSEAS BANK, M/S. SUPER RECORDING CO. LTD. [ 2016 (12) TMI 373 - MADRAS HIGH COURT ] where it was held that the rights of a Secured Creditor to realise secured debts due and payable by sale of assets over which Security Interest is created, would have priority over all debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or Local Authority. This Section introduced in the Central Act is with ''notwithstanding'' clause and has come into force from 01.09.2016. The SARFAESI Act, is obviously a Central Statute, and therefore any priority of claim for debts due to a secured creditor, which is created by any provision, as contained therein (Section 26-E in this case), will prevail over any First Charge, which may have been created by Section 37 (1) of the MVAT Act, 2002, in view of the language used in Section 26-E of the SARFAESI Act which states that such a claim by a secured creditor shall be paid in priority over all other debts and all revenues, taxes, cesses, and other rates payable to the Central Government or State Government or local authority . The priority created by virtue of Section 26-E of the SARFAESI Act, also takes precedence over any crown debt, which is due or payable to the Central Government, State Government or local authority. Thus, creation of any priority for any debts due, to the secured creditor, under Section 26-E of SARFAESI Act would prevail over any charge created for payment of a liability, on account of tax etc., which is due or payable to the State Government under the provisions of the MVAT Act, 2002. As Section 37(1) of the MVAT Act, 2002, creates a charge on the property, a successful auction purchaser, thus would hold the property, upon which a statutory charge has been created, subject to such charge and the property would thus continue to be liable for any statutory charges created upon it, even in the hands of such auction purchaser, though for non disclosure of such charge by the secured creditor, the auction purchaser may sue the secured creditor and have such redress, as may be permissible in law. This is moreso for the reason that the priority given in Section 26-E of the SARFAESI Act, to the Banks, which is a secured creditor, would only mean that it is first in que for recovery of its debts by sale of the property, which is a security interest, the other creditors being relegated to second place and so on, in the order of their preference as per law and contract, if any, as the case may be. Thus the dues under Section 37(1) of the MVAT Act, 2002, being a statutory charge on the property, would also be recoverable by sale of the property, and that puts a liability upon the auction purchaser, who, in case he wants an encumbrance free title, will have to clear such dues - The provisions of Section 13(7) of the SARFAESI Act, thus also provide for the manner in which the money received by the secured creditor, by sale of the security interest, is to be applied, the residue after discharge of the debts of the secured creditor, has to be held in trust and paid to the person entitled thereto in accordance with his rights and interests, which in this case, would be the dues under the MVAT Act, 2002. It would thus be proper for the secured creditor, to ensure that all encumbrances, be known before hand; the amount to be received by auction of the property, should be sufficient to cover the costs, charges and expenses and discharge of the dues of the secured creditor and also discharge of the encumbrances upon the property. Thus, the dues as claimed by the respondent no.2, being a charge on the property, under Section 37(1) of MVAT Act, 2002, and the property having stood attached by the respondent no.2, before the auction, the petitioner, would be liable to pay the same to the respondent no.2, in order to obtain a clear and marketable title to the property, having purchased the same on 'As is where is and whatever there is basis'. In case the petitioner discharges the aforesaid dues of the respondent no.2, it would then be entitled to a no dues certificate from the respondent no.2 - the petitioner is not entitled to the reliefs as claimed in the petition. Petition dismissed.
-
2021 (2) TMI 1105
Attachment of immovable property - It is the case of the Department that it proceeded to attach the immovable property in question as it is the estate of the deceased (original assessee). On the other hand, the case of the writ applicant is that, it is not the estate of his deceased father, but it is his self acquired property - HELD THAT:- Let Notice be issued to the respondents, returnable on 09.03.2021. Mr. Kathiriya, the learned AGP waives service of Notice for the State Respondents. Mr. Kathiriya shall file reply prima facie pointing out that the materials on record indicate that the immovable property in question is the estate of the deceased.
-
2021 (2) TMI 1098
Validity of attachment order passed before the expiry of period of filing of an appeal - service of notice - HELD THAT:- submission of the revenue to the effect that the entire tax becomes payable immediately upon dismissed of an appeal by the first appellate authority thus, appears to be misconceived - An assessee aggrieved by an appellate order should have the full benefit of the period granted for filing of appeal and it is only thereafter that proceedings may be initiated recovery of the disputed demand. There is support in this regard from a decision of a learned Single Judge of this Court in COIMBATORE PIONEER MILLS LIMITED VERSUS COMMERCIAL TAX OFFICER, PEELAMEDU NORTH ASSESSMENT CIRCLE, COIMBATORE AND ANOTHER [ 2007 (3) TMI 696 - MADRAS HIGH COURT ] wherein a direction has been issued to the Department not to initiate steps for recovery till such time the time for filing of second appeal has expired. A direction is issued to the 2nd respondent to lift the impugned attachment forthwith - Petition allowed - decided in favor of petitioner.
-
Indian Laws
-
2021 (2) TMI 1116
Dishonor of Cheque - conviction under Section 138 of Negotiable Instruments Act, 1881 - debt payable to the complainant present or not - misuse of cheque - Section 357(3) of Cr.P.C. - HELD THAT:- The learned courts below have given consistent finding in favour of the opposite party no. 2 that the cheque was issued in discharge of debt. This court finds that the learned courts below have given consistent finding of facts after due appreciation of the evidences on record and have rightly held the petitioner guilty of offence under Section 138 of Negotiable Instruments Act, 1881. This court also finds that the basic ingredients of offence under Section 138 of Negotiable Instruments Act have been satisfied in the present case and accordingly, the judgement of conviction of the petitioner does not call for any interference in revisional jurisdiction of this Court - this Court fully agrees with the learned counsel appearing on behalf of the opposite party no. 2 that there is no scope for re-appreciation of evidence in revisional jurisdiction and coming to a different finding in absence of any perversity. This Court finds that no perversity as such has been pointed out by the learned counsel appearing on behalf of the petitioner. The sentence of the petitioner is modified by limiting it to the period already undergone by the petitioner in custody and impose fine of Rupees one lakh upon the petitioner over and above the compensation amount which has already been fixed by the learned court below with a further condition that the petitioner would deposit the fine amount alongwith the compensation amount before the learned court below within a period of two months from the date of communication of this order. If the amount is not so deposited within the said period, the petitioner would serve the sentence already imposed by the learned trial court. This petition is disposed of with modification of sentence.
-
2021 (2) TMI 1108
Seeking grant of Anticipatory Bail - allegation of Receipt of Monthly Bribe - Tax officers - It was alleged that the tax was being evaded by ensuring that there was no checking or verification of the documents or goods, while being transported to and from the State of Punjab - alleged register maintained by the Munshi cannot be looked into for the purpose of implicating the petitioner in the said FIR as there is no proof regarding the fact whether these books were maintained in the regular course of business nor is there any certificate to that effect - non-compliance of Section 17A of the Prevention of Corruption Act as amended - HELD THAT:- In the celebrity judgment of Devender Kumar vs. CBI [ 2019 (1) TMI 1665 - DELHI HIGH COURT ], it has been held that by incorporating Section 17A as it reads by itself, the intention of the Legislature was to protect the public servants in the bona fide discharge of their official functions or duties. It was further held that when act of a public servant is ex facie criminal or constitutes an offence, prior approval of the Government would not be necessary. Section 17A would be applicable to cases where offense is relateable to any recommendation made or decision taken. Thus, it would not be necessary by the respondent-State to have obtained prior approval of the State Government before initiating enquiry or investigation in the said matter. The bar to enquiry or investigation under Section 17A of the Prevention of Corruption Act is apropos such alleged offence, as may be relatable to any recommendation made or decision taken by a public servant in discharge of his official functions or duties. In the present case, there is no recommendation or decision on record by a public servant in the discharge of his official functions or duties. No doubt the personal liberty of the petitioners is at stake, as stated while praying for anticipatory bail, but in the instant case the custodial interrogation would be required to unearth the nexus between the petitioners and the intermediaries, as well as the amount of tax evasion involved in its entirety. The complicity of the petitioners herein as alleged would be revealed and fortified only with further investigation, for which as a necessary corollary custodial interrogation of the petitioners would be required - In the case in hand, there has to be a deviation from normal rule of bail rather than jail, since the allegations and prima facie investigation revealed that there was evasion of tax at a very large-scale and officials were being paid bribes on a monthly basis. The investigation is at a very nascent stage regarding the role of the petitioners herein. The petitioners are also persons of influence and would be in a position to scuttle a proper investigation. Bail cannot be granted - petition dismissed.
|
9911796707
