Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 5, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Cancellation of petitioner’s GST registration - Rule 21A as well as Rule 22(3) of the Delhi GST Rules, 2017 - The Commissioner, Delhi, GST, is directed to issue a practice direction so that in future, if any show-cause notice for cancellation of GST registration is issued, the same is not bereft of any material particulars or reasons. - HC
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Input tax credit - applicant has apprehension that he might be apprehended in a false case - it is hereby directed that if the respondent authority decides to proceed under Section 69 of the CGST Act and take coercive action against the applicant in the present case, a seven days advance notice shall be served upon the applicant, subject to the condition that he shall appear and join the investigation as and when directed to do so and provide all the necessary information and documents. - DSC
Income Tax
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Reopening of assessment u/s 147 - Cash deposits in an account other than a current account - The circumstance about the discovery of cash deposits against the assessee's PAN number and the circumstance that for this assessment year, the assessee chose not to file any return at all, were, sufficient as well as relevant to the formation of reason to believe. Therefore, no case is made out to interfere with the impugned notice and the impugned order. - HC
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Reopening of assessment u/s 147 - Short Term Capital Gain - applicability of Section 45(3) - Tribunal agreed with CIT(A) that after conversion of inventory into fixed asset the firm revalued the developed land including construction thereon in order to bring it in line with the current market value to justify the business assistance secured by the firm from the banks to extent of nearly ₹ 250 crores. Therefore, on facts the tribunal concluded that the revaluation was not a colourable device. - There was no withdrawal by the partners from capital accounts and therefore there cannot be any income liable to tax in their hands. - HC
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Correct head of income - interest income earned out of deposits made from the business funds including borrowed funds in the course of running the business of the appellant - The conversion of a portion of the sale proceeds as Fixed Deposits was done by the bank themselves and not on the volition of the assessee.Therefore, we are fully convinced that the transaction was connected and closely linked with the assessee's business activity - HC
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Reopening of assessment u/s 147 - it seems to us that during the original assessment proceedings, the assessee has not submitted entire books of accounts, bills, vouchers, bank statements, purchases/sales vouchers, details of direct and indirect expenses incurred by assessee and other necessary evidences to disclose fully and truly all material facts necessary for making original assessment, therefore, assessee cannot take the benefit of proviso to section 147 - AT
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TDS u/s 194A OR 194C - short deduction of TDS - compensation paid by the assessee for breach of contract u/s.40(a)(ia) - If at all there is shortfall in TDS deducted by the assessee, then the assessee can be treated as an assessee in default u/s.201(1) / 201(1A) and recover shortfall in TDS amount and consequent interest thereon, but sum paid by the assessee cannot be disallowed u/s.40(a)(ia) of the Act, by holding that the assessee has not deducted TDS on said payment. - AT
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Levy of penalty u/s.271(1)(c) - What is clear is that the assessee has disclosed necessary facts in relation to various expenses including expenditure relatable to exempt income for the year and thus, we are of the considered view that mere disallowance of expenditure u/s.14A by invoking Rule 8D of I.T. Rules, 1962 is not a ground to hold that the assessee has furnished inaccurate particulars of income. When the assessee makes a claim of any expenditure, it is for the authorities to accept the claim in the return of income or not, but merely because the assessee had claimed expenditure which was not accepted or was not acceptable to the Revenue, that by itself would not attract penalty u/s.271(1)(c). - AT
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Addition u/s 68 - maturity proceeds of FDRs, alleging unexplained cash credits - In this regard, assessee submits a copy of the bank certificates issued by the Dena Bank evidencing the fact that the said FDRs were not made during the current year but were made in the earlier years. Since the investments in the FDRs were not made during the year under consideration, the question of taxing the same alleging it as unexplained cash credit does not arise and hence, based on this factual position we delete the addition. - AT
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Disallowance on account of Bank Guarantee written off - The appellant claims that it does not have any clue regarding the amount being capital or revenue in nature nor has any evidences regarding whether the amount was actually a part of the income in the earlier years. Thus, as the onus was on the appellant to prove the genuineness of the claim, the ground of appeal is dismissed as nothing was placed on record to prove that the amount regarding Bank Guarantee written off was actually part of the income in the current or earlier year(s) - additions confirmed - AT
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Income of the assessee towards Excise duty, CST and VAT - the revenue authorities have proceeded on totally incorrect interpretation of facts of the case while making the impugned addition on account of Excise duty, VAT and CST debited to the profit and loss account which we find the assessee had duly explained for doing so and it is clearly not a case of any extra claim made on account of the same of the assessee. - AT
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Assessment u/s 11 - grant of registration u/s. 12AA denied - Reference is drawn to the provisions of Section 12AA which obligates/empowers ld. CIT(E) to make enquiries as to the genuineness of the objects and activities of the trust/institution seeking registration u/s. 12A and the compliances of such requirements of any other law for the time being in force by the trust/institution as are material for achieving its objects and further the ld. CIT(E) is also empowered to make such inquiries as he deemed necessary in this behalf, which may requires verification of records, inquiries to be made as to genuineness of the activities of trust/institution and investigation of facts in connection therewith. - AT
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Assessment of trust - surplus distributed among the members - The share of every beneficiary is quantified. - the assessee trusts and the SHGs are inter-related and they are all concerns governed by the principles of mutuality. The 95 per cent surplus distributed by the assessee trusts to the various SHGs working under them is nothing but the income of those SHGs themselves. It is not something that those groups are getting from outside by way of income. It is the fruit of their efforts. - all these SHGs working under the assessee trusts are concerns governed by the principles of mutuality and accordingly the 95 per cent of surplus distributed among them are not in the nature of income - AT
Customs
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Suspension of Custom Broker License - Since the impugned suspension order dated 15.06.2018 has not culminated in the order either revoking the order of suspension or continuing with the order of suspension followed by a proceeding under Regulation 20 of the aforesaid Regulations which has been extracted, it is deemed fit to hold that the suspension order has outlived its period of validity. - HC
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Classification of imported goods - Extended period of limitation - The argument of the department that this is a case of self-assessment is factually incorrect. Though the appellant-importer has filed the Bill of Entry in the EDI system goods were subjected to open examination and the proper officer has examined the goods and forwarded it to the concerned group for assessment. Under such circumstances, it cannot be said that the Bills of Entry were subjected to self-assessment. This being the case, it is not open for the department to issue show cause notice invoking longer period and that too alleging suppression, misdeclaration etc. with intent to evade payment of duty. - AT
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Benefit of exemption country of origin certificates - As per the documents submitted by the appellant it appears that there is no doubt on the authenticity of the country of origin certificate issued and signed by Mr. Rumaiti. However, to clear any doubt it is the burden on the department to get the verification from the Indonesian Government regarding authenticity of Certificate of origin which has not been discharged by the department. Therefore, in the interest of justice, one chance is given to the department to get the verification from concerned authorities about the genuineness of the certificate of origin issued by Mr.Rumaiti, thereafter to pass a fresh order. - AT
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Refund - Principles of Unjust enrichment - Rubber cess - The appellant have clearly shown the amount of refund as receivable in their Books of Accounts and the same was reinforced by Chartered Accountant certificate. Therefore, the appellant have established that the incidence of rubber cess paid by them, and for which the refund was sought for, has not been passed on to any other person, accordingly, the refund is not hit by unjust enrichment. - AT
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Maintainability of appeal - time limitation - No doubt there was no application seeking Condonation of delay was filed by the appellant as has been acknowledged by ld. Counsel as on date as well - The delay is so minuscule that the malafide intent cannot be opined against the appellant. Law is otherwise settled that the disposal of a lis shall always be on merits. Law of limitation is otherwise to be exercised liberally. - It is deemed to be a fit case where Commissioner (Appeals) should have decided the appeal on merits after liberally exercising his discretion of condoning the delay - AT
Indian Laws
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A substantive right should not be allowed to be defeated on account of a procedural irregularity which is curable. In this view of the matter, this Court is of the considered view that even in the absence of any formal letter of authority or power of attorney having been executed, a person by virtue of the office which he holds, could sign and verify the pleadings on behalf of the corporation. - HC
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Dishonor of Cheque - insufficiency of funds - rebuttal of presumption under Sections 118 and 139 of the NI Act - The failure of the appellant in showing the said amounts in the Income Tax Returns is also a relevant factor, which the Sessions Court took into consideration while reversing the conviction and sentence - it is found that the Magistrate had erred in proceeding to convict and sentence the respondent no. 1 under Section 138 of the aforesaid Act and that the Sessions Court was justified in interfering with the same. - HC
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Dishonor of cheques - acquittal of accused - based on the evidence on record, the appellants have proved the guilt of the respondent beyond a reasonable doubt. The acquittal is based on a misreading of the evidence on record and virtually ignoring the presumption that arises in terms of Section 139 of the N.I. Act. - This is a fit case where the respondent should be sentenced to undergo imprisonment of six months and pay a fine of ₹ 60,000/-. In default, the respondent will have to suffer further imprisonment of one month. - HC
IBC
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Initiation of CIRP - The Operational Creditor disputing the claim of supply back of the similar material itself is a dispute which is clearly mentioned in the reply notice of the Corporate Debtor. These issues could not have been gone into the proceeding under Section 9 and there being pre-existing dispute between the parties the Application under Section 9 filed by the Appellant has rightly been rejected. - AT
Service Tax
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Seeking to restore and reconsider SVLDRS declaration filed by the petitioner on merits - This Court held that it is not necessary that the figures on such admission should have Mathematical precision or should be exactly the same as the subsequent quantification by the authorities in the form of show cause notice etc. post 30th June, 2019. - It is held that the fact that there could be a discrepancy of figure but only when the tax dues admitted by the person concerned prior to 30th June, 2019 and subsequently quantified by the departmental authorities, would not be material to determine the eligibility to file Declaration in terms of the scheme under the category of enquiry, investigation or audit. - HC
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Levy of service tax / VAT - Supply of Tangible Goods Service - supply of mobile gensets by the appellant - The CBEC vide Circular No. 198/08/2016-SERVICE TAX, Dated: August 17, 2016 has provided that in order to distinguish such transactions as sale of goods or supply of services, it is essential to determine whether, in terms of the contract, there is a transfer of the right to use the goods - admittedly the appellant had duly discharged his liability under the VAT/Sales Tax law as per the VAT/ CST returns submitted in the paper book before this Court, and also it is an admitted fact in the order in original. Therefore, there remains no liability on the part of the appellant under the Service Tax law. - AT
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Taxability/non-taxability - business of sale of packed food and beverages on board the trains run by Indian Railways besides sale of packed food items/beverages at stalls at railway stations - In the facts of the present case, no machinery provision was also there for bifurcation of the transaction into service portion and sale portion, for levy of service tax. Rule 2C was introduced in the Service Tax Determination of Valuation Rules, 2006 with effect from 1 July, 2012 vide Notification No. 24/2012-ST, which has provided for mode of bifurcation by allowing abatement for the sale portion in the case of service of food in a restaurant or in the course of outdoor catering. Even under Rule 2C, the activity of the respondent assessee is not covered. - there is no element of service involved - AT
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Refund of service tax paid - Period of limitation - As the refund claim has been filed within one year from the date of the adjudication order wherein it has been held that the appellant is not required to pay service tax, therefore, in terms of Section 11B of the Act, refund claim is to be filed within one year, from the relevant date. The relevant date is the date of adjudication order date i.e 16.12.2019 - the refund claim filed by the appellant is within time. - AT
Central Excise
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CENVAT Credit - ineligible capital goods - M.S. Bars/Rods/Angles/Channels/Beams - CENVAT Credit is available only for those inputs which were used in production/manufacturing of end products. Therefore, this report cannot be made basis to establish that the goods under the impugned proceedings were used for making of capital goods, pollution control equipment or in repair & maintenance of capital goods. - AT
VAT
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Seeking grant of anticipatory bail - fake firms were created for claiming bogus Input Tax Credit - For managing the affairs as alleged in present case, it is a well prepared and planned net which is laid down. Each and every person has a specific role to be played and in such a case one loose end left ensures that the entire net disappears. If the petitioner is clothed with protection of pre-arrest bail, the deeper probe required to unearth the scam would be defeated. The custody of petitioner is necessary as he is the only person who can disclose the persons involved and unearth the modus operandi. - HC
Case Laws:
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GST
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2022 (2) TMI 194
Seeking permission to travel abroad for business work - issuance of directions to Respondent to return the passport - availment of fake input tax credit - violation of the provisions of Section 76 (for not paying the amount of tax to the Government though collected) punishable under Section 132(1), (c), (d), (f) of Central Goods and Service Tax Act, 2017 - HELD THAT:- The Petitioner may be required to visit foreign countries for attending the conferences as a part of his business curriculum. What the Court is required to ascertain is that whether he is likely to return to India or not? Considering the property details and family details furnished by the Petitioner, the Petitioner is unlikely to stay of out of India. So also conditions put by us will protect the interest of Respondents. The prayer is allowed subject to conditions raised - application allowed.
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2022 (2) TMI 193
Whether there are any reasoned Orders passed by the Respondent-State, of which such Summary of Orders were issued by Respondent No.2 on 12 December 2019, Exhibit D to the Petition? - HELD THAT:- The impugned Orders dated 12 December 2019 and 31 December 2019, being Exhibits D and E , respectively, are accordingly quashed and set aside. The Respondents are permitted to issue a show-cause notice under Section 73 of CGST Act and MGST Act to the Petitioner. The Respondents shall grant an opportunity of being heard to the Petitioner and to file a reply to the show-cause notice. Petition allowed.
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2022 (2) TMI 191
Cancellation of petitioner s GST registration - Rule 21A as well as Rule 22(3) of the Delhi GST Rules, 2017 - HELD THAT:- Since in the present case, petitioner s registration has been lying suspended for more than two months on the basis of a show cause notice which is bereft of any reason or fact, this Court quashes the impugned show cause notice dated 11th November, 2021 and directs the respondents to restore the petitioner s registration forthwith. However, the respondents are permitted to issue a fresh show-cause notice mentioning all the relevant facts and reasons within a week. The same shall be responded to by the petitioner within a period of seven working days from the date of the service of such notice (Rule 22, DGST). The Commissioner, Delhi, GST, is also directed to issue a practice direction so that in future, if any show-cause notice for cancellation of GST registration is issued, the same is not bereft of any material particulars or reasons. Petition disposed off.
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2022 (2) TMI 190
Exemption from GST - sale of the goods to the Theme Park and Water Park adopted by the petitioner - refund of the GST already paid - HELD THAT:- The respondent nos.1 and 2 are directed to file affidavit in reply within two weeks from today and shall serve a copy thereof upon the learned advocate for the petitioner s simultaneously. Rejoinder, if any, shall be filed within one week thereafter with a copy to be served upon the respondents advocate simultaneously. In the affidavit in reply to be filed by the respondent nos.1 and 2, they shall indicate whether they also are agreeable to pay the amount of CGST on the line of the recommendations made by the High Level Committee or not, and if not, why. Petitioner is at liberty to file a copy of the 14th Finance Commission s Report for consideration of this Court in support of the submission regarding sharing of the GST between the Central Government and the State Government - Place the matter on board for admission on 1st March, 2022.
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2022 (2) TMI 189
Input tax credit - applicant has apprehension that he might be apprehended in a false case - Section 70 of the CGST Act - HELD THAT:- In the facts and circumstances of the case, taking note of the role of the applicant and the fact that as of now the department itself is not having any material against the present applicant nor anything to show his involvement into the alleged offence, read in the light of the order passed by the Hon'ble High Court, in SAURAV GUPTA VERSUS CGST (DELHI EAST) [ 2021 (6) TMI 82 - DELHI HIGH COURT] , it is hereby directed that if the respondent authority decides to proceed under Section 69 of the CGST Act and take coercive action against the applicant in the present case, a seven days advance notice shall be served upon the applicant, subject to the condition that he shall appear and join the investigation as and when directed to do so and provide all the necessary information and documents. Application disposed off.
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Income Tax
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2022 (2) TMI 188
Reopening of assessment u/s 147 - Cash deposits in an account other than a current account - HELD THAT:- We do not think that any case has been made out to interfere with the impugned notice or the impugned order. In this case, based on the material on record, we cannot say that the respondents had no reason to believe that income had indeed escaped assessment for the relevant assessment year. The circumstance about the discovery of cash deposits against the assessee's PAN number and the circumstance that for this assessment year, the assessee chose not to file any return at all, were, sufficient as well as relevant to the formation of reason to believe. Therefore, no case is made out to interfere with the impugned notice and the impugned order. Though we are dismissing the present petition, we make it clear that none of the observations in this order should either influence or affect the assessment proceedings taken out in pursuance of the impugned notice - respondents examine the matter in some detail, including, the defense of the petitioner herein in the context of the letter subsequently issued by the Goa Urban Cooperative Bank. The assessment will have to be completed by adverting to all this material no doubt after verifying the same in accord with the law. To this extent, therefore, even the petitioner will not be seriously prejudiced. - Decided against assessee.
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2022 (2) TMI 187
Stay beyond a period of 365 days - scope of provision of IT Act stipulated in Sec.254(2A) read with the provision thereto - HELD THAT:- Hon'ble Supreme Court in Deputy Commissioner of Income tax v. Pepsi Foods Ltd. [ 2015 (5) TMI 655 - DELHI HIGH COURT] has ruled that any order of stay shall stand vacated after the expiry of the period mentioned in the section 254(2A), only if the delay in disposing of the appeal is attributable to the assessee and the same is applicable to the facts of the present case, in favour of the assessee. Tribunal was of the opinion that the application under consideration is liable to be succeeded, having regard to the fact that the delay in disposing of the appeal is not attributed to the appellant in any manner whatsoever, we have no hesitation to decide the substantial question of law in favour of the assessee. Accordingly, we dismiss the tax case appeal against the revenue.
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2022 (2) TMI 186
Reopening of assessment u/s 147 - Short Term Capital Gain - applicability of Section 45(3) - capital gain arose from transfer of land to the partnership firm by way of capital contribution as the assets was converted to Fixed Capital Asset by the partnership firm on March 31, 2008 - Whether Tribunal, erred in law in upholding the order of the CIT (Appeals) in deleting the Short Term Capital Gainignoring the sham arrangement between the ground concerned wherein the nomenclature of the impugned asset was intentionally shown as stock-in-trade and undervalued to escape the provision of Section 45(3) whereas it is evident from the audited accounts of the year that the asset taken over by the firm was nothing but a capital asset? - As contended that Section 45(3) not come into operation for the assessment year 2008-09 and by reason of conversion of the developed land and building into fixed asset by the firm or due to revaluation by the firm of the asset so converted during the previous year ended March 31, 2008. HELD THAT:- After elaborately considering the facts the tribunal held that, if at all any income accrues or arises owing to such revaluation, it is an issue which had to be dealt with in the assessment of the firm M/S. Salapuria Soft Zone which is the separate taxable entity. After noting the facts the tribunal held that in terms of the Section 10 (2A) of the Act partners share in the total income of the firm is not to be included in the total income of the partner. Therefore, it was held that the there was no reason for initiating proceedings under section 147 of the Act. Section 45(3) applicability in the year of transfer by the partner of his capital asset to the partnership firm by way of capital contribution - In the instant case, the year of transfer was the financial year ended March 31, 2006. The ITO was wholly unjustified in invoking Section 45(3) which had no application in the assessment year 2008-09 or for that matter in the assessment year 2006-07. Even otherwise, Section 45(3) seeks to determine the capital gains with reference to the value of the asset recorded in the books of account of the firm. The value so recorded is statutorily deemed to be the full value of consideration received or accruing to the partner as a result of the transfer of the capital asset to the firm. Thus, Section 45(3) does not seek to substitute by any other figure the value agreed between the partners at which the asset is transferred by a partner to the firm. With regard to the revaluation, tribunal re-appreciated the facts which were considered by the CIT-A. With regard to the development of the area in question, as to how there was steep rise in the value of the properties and the state government revised the guideline value for the purpose of stamp duty several times between 2004-07 and after noting the price rise the tribunal held notwithstanding the said fact in accordance with the accounting principles the land held as inventory was shown at its cost and therefore it cannot be said that under valuation was done by the assessee as alleged by the Assessing Officer. Tribunal agreed with CIT(A) that after conversion of inventory into fixed asset the firm revalued the developed land including construction thereon in order to bring it in line with the current market value to justify the business assistance secured by the firm from the banks to extent of nearly ₹ 250 crores. Therefore, on facts the tribunal concluded that the revaluation was not a colourable device. There was no withdrawal by the partners from capital accounts and therefore there cannot be any income liable to tax in their hands. No substantial questions of law arises for consideration in this appeal. In the result, the appeals are dismissed
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2022 (2) TMI 185
Nature of receipts - Sale of Carbon Emission Reduction (CER) - Whether Carbon Credits to be considered as capital receipt and not liable to tax? - HELD THAT:- This appeal has already been decided in favour of the assessee, by a decision of this court in S.P. Spinning Mills (P) Ltd . [ 2021 (1) TMI 1081 - MADRAS HIGH COURT] as held the receipt by way of sale of carbon credit has been held to be capital receipt. - Decided in favour of assessee.
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2022 (2) TMI 184
Correct head of income - interest income earned out of deposits made from the business funds including borrowed funds in the course of running the business of the appellant - income from other sources or income from business - Whether Appellate Tribunal is right in holding that that interest on borrowed capital cannot be set off against the interest earned on Fixed deposits ? - alternative submission that proportionate interest paid on the borrowed capital should be u/s 57(iii) accepted - HELD THAT:- The substantial questions of law 1 and 2 are squarely covered in favour of the assessee and against the Revenue in JVS EXPORTS VERSUS ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-I, MADURAI. [ 2019 (8) TMI 361 - MADRAS HIGH COURT] wherein held that Fixed Deposits have been created by the bank themselves by carving out a portion of the export sale proceeds on realisation and retaining them as Fixed Deposits in the name of the assessee to be retained by the bank as additional security for the loan availed by the assessee for their export business. As mentioned earlier, the conversion of a portion of the sale proceeds as Fixed Deposits was done by the bank themselves and not on the volition of the assessee.Therefore, we are fully convinced that the transaction was connected and closely linked with the assessee's business activity. - Decided in favour of assessee.
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2022 (2) TMI 183
Addition u/s 68 - Unsecured loan and on account of interest against the said unsecured loans - CIT-A deleted addition admission of additional evidence under Rule 46A - HELD THAT:- No violation of Rule 46A of the IT Rules by the ld.CIT(A) while passing impugned order because an application was moved by the assessee vide letter dated 3.11.2017, requesting for admission of additional evidence under Rule 46A and the same was forwarded to the AO, and the AO was given sufficient time to rebut the same. As a matter of fact, the AO in his detailed remand report had confirmed of having verified the additional evidence submitted by the assessee to establish the identity and creditworthiness of the concerned creditors, and genuineness of the transactions entered into by the assessee with the 15 creditors, based on which the CIT(A) has passed the impugned order giving relief to the assessee. We therefore, do not find any infirmity in the impugned order of the CIT(A) calling for any interference and upholding the same, we dismiss the appeal of the Revenue.
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2022 (2) TMI 182
Employees contribution to PF ESI - amount same was not paid before the due date as provided u/s 36(1)(va) - HELD THAT:- If the assessee has paid the PF and ESI payments before the due date of filing of return income u/s 139(1) of the Act, no disallowance is warranted as held by the coordinate bench in case in case of Value Momentum Software Services Private Limited [ 2021 (5) TMI 989 - ITAT HYDERABAD] . We direct the AO to delete the addition made towards employees PF ESI contribution and confirmed by the CIT (A) and accordingly, the grounds raised by the assessee on this issue are allowed.
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2022 (2) TMI 181
Penalty u/s 271(1)(c) - ad-hoc addition/disallowance - disallowance of 25% of the various expenses claimed by the assessee - HELD THAT:- The only reason given by the AO for making such disallowance on estimate or on ad-hoc basis was the unverifiable element involved in the said expenses, compliance of TDS provisions etc. It is noted that while making such disallowance, the AO has not pointed out even a single instance of any bogus expenditure claimed by the assessee. He has also not brought any adverse material on record to establish that the assessee was guilty of concealing of particulars of its income or furnishing inaccurate particulars of such income. We are of the view that the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Act and sustained by the learned CIT(A) in respect of additions made on estimated basis on account of disallowance of expenses on ad-hoc basis is not sustainable; and, cancelling the same, we allow this appeal of the assessee.
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2022 (2) TMI 180
Addition of Excess Share premium amount made u/s 56(2)(viib) and sec.68 - change the method of valuing shares - HELD THAT:- As both the additions arise out of common issue only. The assessee has also filed certain additional evidences. We earlier noticed that the assessee had adopted DCF method for valuing the shares, while the AO has adopted NAV method. In view of the above said decision rendered by the co-ordinate bench, which in turn has followed the decision rendered by Hon ble Bombay High Court in the case of Vodafone M-Pesa Ltd [ 2018 (3) TMI 530 - BOMBAY HIGH COURT ] AO is not entitled to change the method of valuation of shares. Accordingly, we set aside the order passed by LD CIT(A) and restore all the issues to the file of AO with the directions similar to the one given by the co-ordinate bench in the above said case. Appeal filed by the assessee is treated as allowed for statistical purposes.
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2022 (2) TMI 179
Disallowance on account of late deposit of employees' share of EPF and ESI but before the due date u/s. 139 - HELD THAT:- It is an admitted position that the assessee did deduct employees' share of EPF and ESI but paid the same after the due date under the respective legislations but before the time for filing return u/s.139(1). This issue is no more res integra in view of several judgments allowing deduction u/s. 36(1)(va) of employees' share of contribution deposited after due date under the respective Acts but before the date prescribed u/s. 139 of the Act. As in CIT vs. Nipso Polyfabriks Ltd.[ 2012 (11) TMI 592 - HIMACHAL PRADESH HIGH COURT] has held that there exists no difference between employees' or employer's contribution and both are to be allowed as deduction if deposited before the due date. Finance Act, 2021 has inserted Explanation 2 below section 36(1)(va) providing that the provisions of section 43B shall not apply for the purpose of determining the due date under this clause w.e.f. 01.04.2021. The effect of this amendment is that if the amount of employees' contribution towards EPF, ESI, etc is delayed by an employer beyond the due date under the respective Acts, the disallowance will be called for notwithstanding the fact that it was deposited before the due date u/s.139 - The Memorandum explaining the provisions of the Finance Bill, 2021, provides that this amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to assessment year 2021-2022 and subsequent assessment years. Since the assessment year under consideration, namely, 2018-19 is anterior to the amendment carried out with effect from A.Y. 2021-22. Instant case thereby not warranting any disallowance since the amount in question was admittedly deposited before due date u/s.139(1) of the Act. The addition is therefore, directed to be deleted. - Decided in favour of assessee.
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2022 (2) TMI 178
Reopening of assessment u/s 147 - assessee has challenged reopening of assessment on the grounds that the impugned reopening u/s 148 of the regular assessment already concluded u/s 143(3) of the Act, after the expiry of the statutory period of 4 years is illegal and bad-in-law requiring outright annulment - HELD THAT:- So far this plea of assessee we note that ld Counsel did not submit the copy of the original assessment order therefore, it can not be ascertained that assessee has submitted entire books of accounts, bills, vouchers, purchases/sales invoices, bank statements etc. for verification of assessing officer. We have examined the paper book submitted by the assessee and noticed that during the reassessment proceedings the assessee submitted, ITR copy, PAN, ledger account, VAT return and affidavit in respect of Sun Daim, Vitrag and Moulimani. We do not find any documents which were submitted during the original assessment proceedings. Therefore, it seems to us that during the original assessment proceedings, the assessee has not submitted entire books of accounts, bills, vouchers, bank statements, purchases/sales vouchers, details of direct and indirect expenses incurred by assessee and other necessary evidences to disclose fully and truly all material facts necessary for making original assessment, therefore, assessee cannot take the benefit of proviso to section 147 of the Act, hence, we dismiss the ground no.1 raised by the assessee. Whether assessment order was framed without providing opportunity to cross examine? - HELD THAT:- We find merits in the submissions of ld DR for the Revenue that assessee is doing transactions with these benami entities of Shri Rajendra Jain Group, Shri Sanjay Choudhary Group and Dharmichand Jain Group of Mumbai, they know to each other, hence opportunity to cross examine is not necessary. We also note that during the assessment stage the assessee did not ask the assessing officer to provide an opportunity for cross examination. We note that during the assessment stage assessee did not submit required details and documents and did not assist the assessing officer in making the reassessment, (vide last para of the assessment order). The ld DR also submits that Fraud vitiates everything , these all are associated concerns and interconnected business concerns, hence opportunity to cross examine is not necessary. Hence, we dismiss ground no.4 raised by the assessee. Bogus purchases - HELD THAT:- The issue raised by the assessee is covered by the judgment of Pankaj K. Choudhary [ 2019 (8) TMI 1769 - ITAT SURAT] as held AO. did not make any inquiry on the documentary evidences filed by assessee and did not doubt the explanations. Since the documentary evidences filed on record have not been doubted by A.O. and no adverse finding have been given and no inquiry have been made into the claim of assessee, therefore, there was no basis to treat such purchases as bogus - Entire addition is wholly unjustified and even it is not a fit case where Gross Profit rate of 5% be applied for sustaining the part addition - Decided in favour of assessee. Grounds raised by the assessee are partly allowed.
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2022 (2) TMI 177
Disallowance of Equity Stock Options ( ESOP ) expenditure - eligible criteria for acquiring the shares under the ESOP - HELD THAT:- In order to be eligible for acquiring the shares under the ESOP, the concerned employees are obliged to render services to the company during the vesting period as given in the scheme. On the completion of the vesting period in the service of the company, such options vest with the employees. The options are then exercised by the employees by making application to the employer for the issue of shares against the options vested in them. The company, on the exercise of option by the employees, allots shares to them who can then freely sell such shares in the open market subject to the terms of the ESOP. It is during the vesting period that the options granted to the employees vest with them. This period commences with the grant of option and terminates when the options so granted vest in the employees after serving the company for the agreed period. By granting the options, the company gets a sort of assurance from its employee for rendering uninterrupted services during the vesting period and as a quid pro quo it undertakes to compensate the employees with a certain amount given in the shape of discounted premium on the issue of shares. As per the Revenue, the vesting of shares after award is contingent upon many subsequent events and accordingly, the provision made by the assessee on account of award of shares is only a contingent liability. Similar contentions of Revenue for denying deduction to employees stock options expenses have been specifically dealt in Biocon Ltd.[ 2013 (8) TMI 629 - ITAT BANGALORE] as confirmed by HC [ 2020 (11) TMI 779 - KARNATAKA HIGH COURT] to be in favour of assessee. Quantification of deduction u/s 10A by considering revised computation - denial of revised claim of deduction under section 10A as per auditor s certificate dated 11.10.2010 - HELD THAT:- The audit certificate for claiming deduction under section 10A of the Act was dated 11.10.2010 which was the same date of filing the return of income by the assessee. Audit certificate in Form No. 56F is enclosed in pages 194 to 196 of the paper book filed by the assessee which contains the detailed workings for computation of deduction u/s 10A of the Act together with a note stating that the export turnover was not realised within 6 months from the end of the financial year i.e 31.3.2010 and is expected to be received within the time allowed by RBI vide Circular RBI/2004-05/264 dated 1.11.2004. We also find from paper book filed before us that the assessee during the course of assessment proceedings vide letter dated 21.2.2014 had duly submitted that the revised claim of deduction under section 10A as against that claimed in the return. The assessee had also submitted the detailed reconciliation of the difference in claim thereon in the said letter. Since no finding has been given by the lower authorities with regard to the computation of enhanced deduction u/s 10A we deem it fit and appropriate to remand this issue to the file of ld AO for verification of the veracity of the workings of enhanced claim made by the assessee and decide the same in accordance with law. Accordingly, Ground No.2 raised by the assessee is allowed for statistical purposes. Incorrect recording of Long Term Capital Loss as NIL - HELD THAT:- We find from the return of income, the assessee had incurred Long Term Capital Loss during the previous year which is duly reflected in Schedule CFL thereon. The workings of Long Term Capital Loss - But by inadvertence, this figure of Long Term Capital Loss was not mentioned by the assessee in the computation of income which had triggered the ld. AO to reject the claim of the assessee despite the fact that it is a genuine claim of the assessee. We are unable to persuade ourselves to accept to the observations made by the ld. DRP and the ld. AO in this regard. Despite the fact that the correct loss figure is reflected in the relevant schedule in the return of income, the legitimate claim of the assessee has been denied by the revenue. Hence we have no hesitation in directing the ld. AO to allow the Long Term Capital Loss to be carried forward to subsequent years. Accordingly, the Ground No. 3 raised by the assessee is allowed. Deduction on account of Education Cess and Higher and Secondary Education Cess paid by the appellants - HELD THAT:- As the issue raised by the assessee by way of additional ground of appeal is purely legal issue which can be decided on the basis of material available on record, we are of the view that same can be admitted for consideration and adjudication in view of the ratio laid down by Hon ble Supreme Court in NTPC Ltd. V. CIT [ 1996 (12) TMI 7 - SUPREME COURT] Coming to the additional ground of appeal, same is squarely covered in favour of the assessee by the decision of Hon ble Jurisdictional High Court in the case of Sesa Goa Ltd. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] and in the case of Chambal Fertilizers Chemicals Ltd. [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] . As per the above decisions, the amount of education cess and higher secondary education cess is not tax as covered under section 40(a)(ii) of the Act and accordingly allowable as deduction in computing the income from business or profession. Though coordinate bench of Tribunal has taken a contrary view in the case of M/s Kanoria Chemicals Industries Ltd.[ 2021 (10) TMI 1153 - ITAT KOLKATA] , however, as the decision in the case of Sesa Goa Ltd. (supra) has been rendered by Hon ble Jurisdictional High Court, we are bound to follow same. Accordingly, the additional ground raised by the assessee is allowed. Transfer pricing adjustment - Comparable selection - HELD THAT:- We hold that Accentia Technologies Ltd., is functionally not comparable with the assessee company and hence, we direct the ld. TPO / AO to exclude the same from the final list of comparables. AR before us stated that once Accentia Technologies Ltd., is excluded, the assessee would be within the tolerance band of +/- 5% and accordingly, there will be no need to make any adjustment in arm s length price of international transactions of the assessee. Considering the same, we direct the ld. TPO to re-work the arm s length margin in view of the above directions.
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2022 (2) TMI 176
TDS u/s 194A OR 194C - short deduction of TDS - compensation paid by the assessee for breach of contract u/s.40(a)(ia) - assessee has deducted TDS at lower rates or under wrong TDS provisions of the Act - Contradictory views - HELD THAT:- Admittedly, facts borne out from records clearly indicate that the assessee has paid compensation for breach of contract for non-supply of iron ore and such payment has been made after deducting TDS @ 2% in terms of the provisions of section 194A as applicable to contractors / subcontractors. AO has disallowed part of compensation paid by the assessee u/s.40(a)(ia) on the ground that the assessee has deducted TDS at lesser rates and thus, it is as good as non-deduction of TDS on remaining part of the amount. As gone through the reasons given by the AO in light of the provisions of section 40(a)(ia) and arguments advanced by the assessee in the case of CIT Vs. S.K. Tekriwal [ 2011 (10) TMI 10 - ITAT, KOLKATA] and we ourselves do not subscribe to the reasons given by the Assessing Officer for disallowing part of the amount u/s.40(a)(ia) of the Act for simple reason that once the assessee deduct TDS on any payment made, then said payment cannot be disallowed u/s.40(a)(ia) of the Act, even if, the assessee has deducted TDS at lower rate or under different TDS provisions of the Act. The sole reason for inserting provisions of section 40(a)(ia) in statute book was to put check on payments made by an assessee for various services and to track such payments in the hands of recipients. When sole object of insertion of provisions in the statute to comply with TDS provisions for tracking payments, then it cannot be said that when the assessee has deducted TDS at different rates and for shortfall in deduction of TDS impugned payment cannot be allowed as deduction u/s.40(a)(ia) - If at all there is shortfall in TDS deducted by the assessee, then the assessee can be treated as an assessee in default u/s.201(1) / 201(1A) and recover shortfall in TDS amount and consequent interest thereon, but sum paid by the assessee cannot be disallowed u/s.40(a)(ia) of the Act, by holding that the assessee has not deducted TDS on said payment. This legal principle is supported by the decision of CIT Vs. S.K. Tekriwal (supra), where it has been very clearly held that where the assessee deduct TDS at lower rates or under wrong provisions of TDS, provisions of section 40(a)(ia) of the Act cannot be invoked. We prefer to follow decision in the case of CIT Vs. S.K. Tekriwal (supra), because law is very clear from the decision of the Hon ble Supreme Court in the case of CIT Vs. M/s. Vegetable Products Ltd [ 1973 (1) TMI 1 - SUPREME COURT] where it was clearly held that when two views are possible in respect of an issue from different High Courts, then view which is in favour of the assessee needs to be followed. In this case, there is no doubt with regard to compliance of TDS provisions by the assessee, because, the assessee has deducted TDS @ 2% as applicable to contractors / sub-contractors u/s.194C - we are of the considered view that once any payment made by the assessee which is covered under the provisions of section 40(a)(ia) of the Act is subjected to TDS, then even if, the assessee has deducted TDS by applying wrong provisions of the Act or at lower rates, then sum paid by the assessee cannot be disallowed u/s.40(a)(ia) of the Act, on the ground that the assessee has deducted TDS at lower rates or under wrong TDS provisions of the Act. AO as well as the learned CIT(A), without appreciating facts has simply disallowed compensation paid by the assessee for breach of contract u/s.40(a)(ia) - Hence, we direct the AO to delete additions made towards disallowance of expenses u/s.40(a)(ia) of the Act. Disallowance of foreign travel expenses - assessee has failed to prove nexus between foreign travel expenses and business connection in the countries to which the assessee has travelled - HELD THAT:- It is an admitted legal position of law that unless the Assessing Officer points out specific defects in expenditure claimed by the assessee, no ad-hoc disallowance can be made for reason that the assessee has not filed any evidence to justify expenses. In this case, admittedly, the AO has accepted fact that the assessee has incurred foreign travel expenses for business purpose and out of total expenditure claimed by the assessee he has allowed 50% of expenses. Made ad-hoc disallowance of ₹ 5.00 lakhs without any valid reason. At the same time, the assessee has also failed to adduce proper evidence to justify huge foreign travel expenses claimed for the year under consideration. Therefore, to resolve dispute between the parties and also in the interest of justice, we deem it appropriate to direct the Assessing Officer to restrict disallowance of foreign travel expenses. Accordingly, we direct the AO to restrict disallowance of foreign travel expenses out of total foreign travel expenses claimed by the assessee.
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2022 (2) TMI 175
Delayed remittances of employees contribution towards PF/ESI - Scope of amendment brought in by the Finance Act, 2021 in section 36(1)(va) - HELD THAT:- Respectfully following the above decision of the Coordinate Bench in the case of Adyar Ananda Bhavan Sweets India P. Ltd.[ 2021 (12) TMI 558 - ITAT CHENNAI ] we hold that the amended provisions of section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year 2019-20, but will apply from the assessment year 2021-22 and subsequent assessment years. Accordingly, we direct the Assessing Officer to allow the claim of deduction as claimed by the assessee. Thus, the grounds raised by the assessee are allowed.
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2022 (2) TMI 174
Late remittance of employees contribution to PF and ESI - payments made prior to the due date of filing of the return of income u/s 139(1) - HELD THAT:- Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company [ 2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down in the case of Essae Teraoka Pvt. Ltd Vs. DCIT [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) - Also further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. Therefore, the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration. By following the binding decision of the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction - Decided in favour of assessee.
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2022 (2) TMI 173
Search seizure and survey operation - Reliance on seized material or any incriminating material used by the Revenue - Addition of unaccounted proceeds out of waste cotton sales u/s.69A - HELD THAT:- Addition of unaccounted sale of waste cotton is estimated only on the basis of statement of Cotton Clerk Shri B. Anandha Rajan on 29.06.2017 and Shri S. Thirumalai Kumar, AGM (Admin) on 30.06.2017. We have gone through the statement reproduced by the AO in his order and noted that there is no reference to any seized material or any incriminating material used by the Revenue. Also gone through the orders of the lower authorities including case records and noticed that there is no reference to any seized materials on the basis of which unaccounted sales of cotton waste is estimated. We are conscious of the fact that the CBDT has issued instruction time and again as to how confession of additional income during the course of search seizure and survey operation is to be added. There is no incriminating material for making any estimation of unaccounted sale of waste cotton despite search was conducted. Even no substantial assets or cash was found from the assessee to support the claim of the Revenue. It seems that the total unaccounted cash found during the course of search was only ₹ 26,36,572/-, out of which ₹ 20 lakhs belong to Shri Sadiq and it has been accepted by the Settlement Commission. The balance amount ₹ 6,36,572/- remains after the order of CIT(A). This cash cannot be equated with the quantum of addition made by the AO and confirmed by the CIT(A) at ₹ 42 lakhs in each of these six assessment years. Hence, we have no hesitation in stating that the addition made by the AO and confirmed by CIT(A) is just mere on suspicion, conjectures and surmises without any evidence. Assumption of jurisdiction for making addition u/s.69A - We noted that the amount determined by the AO as unaccounted sale of cotton waste is without any basis, without any corroborative documentary evidence or any evidence found from the premises of the assessee during search seizure operation. In the given facts, we are of the view that once there is no money, bullion, jewellery or other valuable article is found from the procession of the assessee during the course of search or there is no evidence seized or found or corroborated with the alleged unaccounted sale of cotton waste, no addition can be made by invoking provisions of section 69A of the Act. Hence, on this legal issue also, addition is to be deleted. Addition of amount as already been declared as income in the application filed before the Hon ble Settlement Commission in the hands of M/s. Seyadu Beedi Company, in which firm the managing director of the appellant is a partner - HELD THAT:- As the assessee as well as the ld. Senior DR fairly agreed that the matter can be restored back to the file of the AO for verification and adjudication, whether this cash is declared by the assessee before Settlement Commission as income in the hands of M/s. Seyadu Beedi Company and in case, this is accepted by Settlement Commission, the same can be deleted. This issue of the assessee s appeal is set aside and allowed for statistical purpose.
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2022 (2) TMI 172
Levy of penalty u/s.271(1)(c) - Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Assessee has disclosed primary facts in respect of various expenditure and income, including exempt income earned for the year. The facts borne out from records further indicate that the assessee has made suo motu disallowance of expenditure relatable to exempt income - Assessing Officer was not satisfied with suo motu disallowance made by the assessee and has invoked Rule 8D of Income Tax Rules, 1962 to determine disallowance of expenses relatable to exempt income u/s.14A. What is clear is that the assessee has disclosed necessary facts in relation to various expenses including expenditure relatable to exempt income for the year and thus, we are of the considered view that mere disallowance of expenditure u/s.14A by invoking Rule 8D of I.T. Rules, 1962 is not a ground to hold that the assessee has furnished inaccurate particulars of income. When the assessee makes a claim of any expenditure, it is for the authorities to accept the claim in the return of income or not, but merely because the assessee had claimed expenditure which was not accepted or was not acceptable to the Revenue, that by itself would not attract penalty u/s.271(1)(c). As decided in RELIANCE PETROPRODUCTS PVT. LTD. [ 2010 (3) TMI 80 - SUPREME COURT] that merely because claim of assessee was not accepted that by itself would not attract penalty u/s.271(1)(c) of the Income Tax Act, 1961. Also see SHRI S. MARTIN [ 2019 (1) TMI 91 - ITAT CHENNAI] - Decided in favour of assessee.
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2022 (2) TMI 171
Validity of Scrutiny under CASS - reason for selecting the case for limited scrutiny was difference in opening stock figure of the current year with the closing stock figure of the previous year - HELD THAT:- The copy of screen shot showing the reason for selection of scrutiny and the type of selection for scrutiny under CASS has been produced and highlighted by the ld. D.R. Therefore, we are satisfied that the present case is not a limited scrutiny case and hence, we do not find any infirmity in the additions made by the Assessing Officer on account of want of jurisdiction. In any case, the assessee has filed a letter stating that it does not want to press the Additional Ground of appeal. The Additional Ground of Appeal is, accordingly, rejected. Addition u/s 69C - capital expenditure incurred by the assessee during the year, for purchase of fixed assets, addition of closing balance in the Customers Advances Account, addition on account of expenses incurred during the year and capitalized to work-in-progress - HELD THAT:- As the additions under sections 68 and 69C of the Act can be made provided the transaction takes place during the previous year / financial year. Further, for making addition under section 68 of the Act, the assessee must fail to offer explanation and for making addition under section 69C of the Act, the source of the expenditure must remain unproved. In the present case, the assessee had duly explained the sources of the credit and the expenditure, respectively. As apparent that the transactions pertaining to the additions made by the Assessing Officer, i.e in respect of advances from customers and in respect of opening inventory (WIP)] did not pertain to the previous year relevant to A.Y. 2012-13, but the same are related to the previous year relevant to A.Y. 2011-12. Therefore, these additions are not in accordance with the provisions of Sections 68 and 69C of the Act. We are not satisfied about the correctness of the additions made by the Assessing Officer and confirmed by the ld. CIT(A) in respect of Capital Expenditure, Closing Balance of Customer Advance, Expenses incurred on W.I.P. during the year and Expenses incurred on W.I.P. in the last year, i.e. assessment year 2011-12. Accordingly, we direct the deletion of the same by accepting Ground Nos.1 to 4 of the Concise Grounds of Appeal. Reopening of assessment u/s 147 - Whether first appellate authority has no jurisdiction to direct the Assessing Officer to bring the amount to tax in another assessment year? - HELD THAT:- CIT(A) had no power to issue directions to the Assessing Officer to reopen the assessment for Assessment Year 2011-12. Apart from this, we fail to understand as to how, having confirmed all the items of additions in Assessment Year 2012-13, the ld. CIT(A) can still come to a conclusion that the income has escaped assessment. The directions given by the ld. CIT(A) are, thus, not only beyond jurisdiction, but also self-contradictory. We find our this view to be supported by the direct decisions in the cases of KIIC Investment Company vs. DCIT [ 2019 (1) TMI 391 - ITAT MUMBAI] and DCIT vs. Bullion Investments and Financial Services Pvt. Ltd. [ 2008 (6) TMI 311 - ITAT BANGALORE] - The direction issued by the ld. CIT(A) to the Assessing Officer to reopen the assessment for Assessment Year 2011-12 is held to be unsustainable and is hereby expunged - Decided in favour of assessee.
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2022 (2) TMI 170
Addition u/s 69 - deposits made in the regular bank account of the brother of the assessee who is separately assessed to tax - HELD THAT:- During the course of the assessment proceedings, the assessee filed an affidavit stating that he is one of the co-owner in the account along with his brother which is only for the sake of convenience and all the funds and the transactions in the said bank account belongs to his brother, who has confirmed all the said transactions in his bank account. Thereafter, the assessing officer without properly appreciating the aforesaid facts has made an addition in the hands of assessee, of entire deposits made in the bank account of the brother of the assessee, which is absolutely erroneous. Assessee has submitted books of accounts of his brother and submitted affidavit also - AO has not made any adverse finding in any of these documents even, though all the details were furnished by the assessee before him. AO ought to have examined all these details and refuted / rejected them, with a cogent adverse findings and discernable line of reasoning, in order to arrive at a conclusion. AO has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. Therefore, based on this factual position we delete the addition made by the assessing officer. Thus, ground no.1 raised by the assessee is allowed. Addition u/s 68 - maturity proceeds of FDRs, alleging unexplained cash credits - HELD THAT:- Learned Counsel submits that aforesaid FDRs at Sr. Nos. 1 to 4 were made by the assessee, his wife and the brother of the assessee before the commencement of the current assessment year i.e. well before 01-04- 2007 and thus, these FRD were not made during the assessment year under consideration. In this regard, assessee submits a copy of the bank certificates issued by the Dena Bank evidencing the fact that the said FDRs were not made during the current year but were made in the earlier years. Since the investments in the FDRs were not made during the year under consideration, the question of taxing the same alleging it as unexplained cash credit does not arise and hence, based on this factual position we delete the addition. Addition in respect of investment in Mutual Funds - HELD THAT:- As ld Counsel submits that Investments in mutual funds each vide account Nos. 42652075101 and 42677326502 belonging to the assessee and his brother and referred to by the assessing officer gets fully accounted for in the regular books of account of the assessee and his brother. The assessee submitted before assessing officer, the relevant bank statement and the ledger account of investment in mutual fund reflecting the impugned investments. We note that assessing officer did not find any defect in these evidences. Hence the impugned investments should not be treated unexplained, therefore, we delete the addition. The ground raised by the assessee is allowed.
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2022 (2) TMI 169
Assessment u/s 153A - Addition on account of unsecured loan and on account of share application - proof of incriminating material for the relevant assessment year found or not? - HELD THAT:- As decided in own case [ 2021 (12) TMI 550 - ITAT DELHI] satisfaction note recorded by the AO does not mention or is based on any seized material belonging to the assessee company and consequently, the additions made by the AO has no co-relation with any seized material. The aforesaid finding of the Learned CIT(A) has not been rebutted by any material placed on record. Therefore, the aforesaid findings of Learned CIT(A) is based on legal principles upheld by the Hon ble Jurisdictional High Court as well as Supreme Court in the case of PCIT vs. Sinhgad Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT] - Thus the ground of Revenue is dismissed.
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2022 (2) TMI 168
Disallowance on account of Bank Guarantee written off - as per revenue assessee could not prove its claim with the supporting evidences - HELD THAT:- As the appellant did not submit any documentary proof regarding the amount written off. Being a private limited enterprise, it is difficult to assume that an amount being a bank guarantee was not traceable by the appellant nor does has it have any documentary proof regarding the same. The appellant claims that it does not have any clue regarding the amount being capital or revenue in nature nor has any evidences regarding whether the amount was actually a part of the income in the earlier years. Thus, as the onus was on the appellant to prove the genuineness of the claim, the ground of appeal is dismissed as nothing was placed on record to prove that the amount regarding Bank Guarantee written off was actually part of the income in the current or earlier year(s) - Decided against assessee. Disallowance on account of depreciation - assessee could not prove the higher depreciation with material evidences even the facts as per audit report claimed depreciation - HELD THAT:- The assessee has not given any supporting evidences to substantiate its contention that the disallowance of depreciation was uncalled for when the closing WDV of Assessment Year 2012-13 has been taken as closing WDV of Assessment Year 2011-12. All other additions and adjustments for purchase and sales have been accepted, depreciation has been claimed as the figure had been wrongly taken from the computation of taxable income given erroneously as against the correct computation which was subsequently submitted and reason for difference in computation and return for income was taken for wrong depreciation. As find that the auditor has computed depreciation in the audit report. The assessee has not furnished any certificate from the Auditor as there was any error or mistake in his audit report. Therefore, in the absence of such certificate by the Tax Auditor, we do not see any reason to interfere in the findings of the authorities below, the same is hereby affirmed. - Decided against assessee.
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2022 (2) TMI 167
Late payments towards EPF and ESI u/s 36(1)(va) - deposits prior to filing of the return of income u/s. 139(1) - HELD THAT:- As relying on RAJA RAM VERSUS THE ITO, WARD 3 AND SANCHI MANAGEMENT SERVICES PRIVATE LIMITED [ 2021 (11) TMI 370 - ITAT CHANDIGARH] the impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s. 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee.
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2022 (2) TMI 166
Late deposit of employee's contribution to ESI/EPF - amount paid before the due date of filing of return of income u/s 139(1) - HELD THAT:- As relying on case of Raja Ram [ 2021 (11) TMI 370 - ITAT CHANDIGARH] the impugned additions made by the Assessing Officer and sustained by the CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s. 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee.
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2022 (2) TMI 165
Estimation of income @15% on gross sales after rejection of Books of accounts - HELD THAT:- As bounden duty of the assessee not only to cast its onus of proving the corresponding contracts as well as sub-contracts executed in the relevant previous year but also the cogent supportive evidence of the expenditure items wholly and exclusively incurred for deriving the business income/turnover. The fact also remains that the AO had nowhere commented upon the assessee's voluminous evidence even if it is accepted that it has placed on record before us some additional details as well. We make it clear that in Mech Engineers [ 2021 (3) TMI 738 - TELANGANA HIGH COURT] holds that contractual and sub-contractual receipts have to be assessed @9% and 6%; respectively. Faced with this situation, we restore the Revenue's instant grievance back to the Assessing Officer with a clear cut direction that it shall be incumbent upon the assessee to prove all kinds of receipts forming part of turnover as well as the corresponding expenditures' claims failing which the same would stand assessed in light of the hon'ble jurisdictional high court's foregoing decision. Revenue's appeal is treated as allowed for statistical purposes.
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2022 (2) TMI 164
Income of the assessee towards Excise duty, CST and VAT - unexplained Excise duty, VAT and CST debited to the profit and loss account - sales were shown net of Excise duty and taxes, in the profit and loss account, the assessee had debited these above duties and taxes along with purchases in its trading and profit and loss account - assessee ought to have debited purchases, net of taxes and duties, as in the case of sales, the taxes and duties so debited to the profit and loss account tantamounted to excess claim and the same was accordingly disallowed and added to the income of the assessee - HELD THAT:- The reasoning of the Ld. CIT(A) talks about entire CST sale made by the assessee in its different branches for dismissing this contention of the assessee, which does not address the specific contention of the assessee that the same related to Pune Branch alone and could be set off against CST sales in Pune which were not there. The fact that assessee had made total CST sales of 10.59 crores does not help the case of the Revenue in meeting and controverting the specific contention of the assessee as aforestated. The same therefore cannot form the basis for rejecting the assesses explanation, we hold. Similarly, we find that in the case of VAT while the assessee's explanation of VAT debited to the profit and loss account was that it represented the excess of amount of VAT receivable on purchases as against amount payable on sales and which was not available for set off, the Ld. CIT(A) has rejected the same by stating that the assessee has shown the same amount of VAT as debited in the profit and loss account as receivable in his balance sheet The presumption of the Ld. CIT(A), is therefore probably that the VAT receivable was very much available for set off as per the books of the assessee and as opposed to that claimed by it that it was not available for set off. We find that this finding of the Ld. CIT(A) is not based on correct appreciation of facts. Firstly as per double entry system of accounting which is universally followed for book keeping every transaction is represented by both debiting and crediting different accounts. And the outstanding debit and credit balances in the different accounts are reflected either in the profit and loss account or balance sheet as per its nature. As per the Ld. CIT(A) the assessee has both debited the profit and loss account and also shown the debit balance in the VAT receivable account in the balance sheet, which is not possible. A debit balance in an account can either be reflected in the profit and loss account as expense or as an asset in the balance sheet. It cannot be reflected in both the financial statements at the same time. Therefore surely the amount of VAT debited to the profit and loss account is not the same as that reflected as receivable in the balance sheet. This is further cemented by the fact on record that the said two amounts are not the same also. While the amount debited to the profit and loss account of VAT amounts to ₹ 6,02,804/- the amount reflected as receivable as per the Ld. CIT(A) himself amounts to ₹ 5,77,764/-. Therefore the basis of the Ld. CIT(A) for rejecting the assessee's explanation of VAT debited to the profit and loss account, we find, has no legs to stand on and is therefore dismissed. Thus we hold that the revenue authorities have proceeded on totally incorrect interpretation of facts of the case while making the impugned addition on account of Excise duty, VAT and CST debited to the profit and loss account which we find the assessee had duly explained for doing so and it is clearly not a case of any extra claim made on account of the same of the assessee. - Decided in favour of assessee.
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2022 (2) TMI 163
Income taxable in India - Permanent establishment in India or not? - business connection in India - HELD THAT:- As respectfully following the decisions of the co-ordinate benches in assessee's own case for assessment years 1999-2000 [ 2009 (7) TMI 1341 - ITAT DELHI] and the orders of the subsequent assessment years, we also hold that there is no infirmity in the order of the learned assessing officer in holding that assessee has permanent establishment in India and, therefore, income of the assessee is chargeable to tax in India. It further held that assessee has also a business connection in India in terms of the provisions of the Income-tax Act. Accordingly, ground 2 of the appeal is dismissed. Income attributable to the permanent establishment - HELD THAT:- As decided in own case [ 2009 (7) TMI 1341 - ITAT DELHI] the income attributable to the functions performed by the permanent establishment is 15% of the gross receipts. It further held that if the amount paid by the assessee to its agency PE is higher than the above amount, then no further income is attributable to the permanent establishment in India. In the present case, we find that the gross receipts attributable to India is ₹ 231,77,31,028/- and 15% thereof is the income which amounts to ₹ 34,76,59,654/- against which the subsidiary has offered the service for income of ₹ 78,32,46,525/- and, therefore, no further income is required to be attributed. No change in the facts and circumstance of the case has been pointed out before us. Therefore, respectfully following the decision of the co-ordinate benches in assessee's own case for earlier assessment years, we allow ground 3 of the appeal of the assessee. 10% of the reimbursement of expenditure held to be the income of the assessee - HELD THAT:- The details of the reimbursement were furnished along with documentary evidences. The above sum was reimbursed by Indian entity to the assessee for various activities undertaken by the assessee on behalf of Indian subsidiary. The assessing officer held it to be the business income holding that 10% of such payment received by the assessee from subsidiary should be the income of the assessee. Accordingly ₹ 1,26,355/- were held to be liable to be taxed in India. The assessee preferred an objection before the learned DRP, which was rejected, and the order of the assessing officer was confirmed. Assessee submitted before us that identical issue arose in the case of the assessee, fist in assessment year 2004-05 and the co-ordinate bench held that 10% of the gross income of the reimbursement along with other income attributed to the PE is lower than the sum paid by the assessee to entertain subsidiary and therefore, no further income is required to be attributed. No change in the facts and circumstances of the case were shown before us. Therefore, respectfully following the decision of the co-ordinate bench in the case of the assessee itself for earlier assessment years, we confirm the action of the learned assessing officer by treating the 10% of the sum as income out of the reimbursement. However, in the present year, as the amount paid by the appellant to its dependent agency PE is higher, no separate addition is required. Accordingly, ground 4 of the appeal is allowed with above direction. Interest under section 244A - Claim of interest on such refund till the date on which the refund is actually received by the assessee - HELD THAT:-. We direct the learned assessing officer to re-compute the interest under section 244A of the Act up to the date of grant of refund. Accordingly, ground 6 of the appeal is allowed.
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2022 (2) TMI 162
Revisionary petition u/s. 264 - Assessment u/s 11 - grant of registration u/s. 12AA denied - HELD THAT:- Assessee vide its reply dated 29.12.2020 filed before ld. CIT(E), merely required the ld. CIT(E) to hold the proceedings for grant of registration u/s.12AA in abeyance till the disposal of revisionary petition u/s. 264. It is a different matter that the application for registration u/s. 12AA is to be disposed of by ld. CIT(E) within the time provided under the statute and the request of the assessee to keep it in abeyance may not be acceded to keeping in view statutory limitation of time imposed by the 1961 Act. Thus, under these circumstances wherein the application filed by the assessee seeking registration u/s. 12AA was disposed of by ld. CIT(E) in limine on the grounds that the assessee is seeking withdrawal of its application and without disposing of the said application on merits, we are of the considered view that the order dated 04.03.2021 passed by ld. CIT(E) rejecting the registration sought by the assessee u/s. 12AA of the 1961 Act, be set aside and the application of the assessee seeking registration u/s. 12AA be restored back to the file of the ld. CIT(E) for fresh decision on the application filed by the assessee for grant of registration u/s. 12AA of the 1961 Act. Reference is drawn to the provisions of Section 12AA which obligates/empowers ld. CIT(E) to make enquiries as to the genuineness of the objects and activities of the trust/institution seeking registration u/s. 12A and the compliances of such requirements of any other law for the time being in force by the trust/institution as are material for achieving its objects and further the ld. CIT(E) is also empowered to make such inquiries as he deemed necessary in this behalf, which may requires verification of records, inquiries to be made as to genuineness of the activities of trust/institution and investigation of facts in connection therewith. The relevant provision of the statute to that effect are contained in Section 12AA(1)(a) of the 1961 Act. Now, in denovo proceedings as ordered by us, the assessee is directed to file all necessary replies before ld. CIT(E) to queries as were raised or as may be raised by ld. CIT(E) in connection with the application filed by the assessee seeking registration u/s. 12AA - CIT(E) will admit all evidences/explanations filed by the assessee in its defense, and then decide on the application of the assessee for registration u/s. 12AA on merits in accordance with law. Assessee appeal allowed for statistical purposes.
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2022 (2) TMI 161
Assessment of trust - Mutuality of interest - surplus distributed among the members - whether 95% of surplus of the assessee trust distributed among its members can be brought to tax at maximum marginal rate in the hands of the assessee treating the assessee as AOPs? - HELD THAT:- As decided in own case [ 2014 (8) TMI 1221 - ITAT CHENNAI] relying on [ 2013 (11) TMI 1270 - ITAT CHENNAI] upheld the order of CIT (A) in holding that 95% of surplus distributed among the members is not liable to be taxed. The share of every beneficiary is quantified. Therefore, we find that the Commissioner of Income-tax(Appeals) is justified in coming to the conclusion that the assessee trusts and the SHGs are inter-related and they are all concerns governed by the principles of mutuality. The 95 per cent surplus distributed by the assessee trusts to the various SHGs working under them is nothing but the income of those SHGs themselves. It is not something that those groups are getting from outside by way of income. It is the fruit of their efforts. After finalising the accounts and computing the surplus, the profits are divided among those members, whose shares are determinate and whose roles are well defined. We endorse the view of the CIT (Appeals) that all these SHGs working under the assessee trusts are concerns governed by the principles of mutuality and accordingly the 95 per cent of surplus distributed among them are not in the nature of income - grounds raised by the Revenue on this point are rejected. TDS u/s.194A on the interest payment made by the assessee's trust - HELD THAT:- As in assessee's own case in earlier years [ 2013 (11) TMI 1270 - ITAT CHENNAI] wherein the Tribunal exactly on same facts held that no disallowance can be made u/s. 40(a)(ia) of the Act, as there is no need for deducting TDS u/s. 194A of the Act.
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2022 (2) TMI 160
TP Adjustment - comparable selection - Functional dissimilarity - HELD THAT:- Kicons Limited - Once it is an admitted fact that this company is engaged in executing contracts relating to solar power projects and other civil activities which are entirely different from the activities and functions carried out by the assessee company. Apart from that, this company is also involved in various other activities like legal, accounting, book-keeping auditing activities, tax consultancy, market research and public opinion polling services, whereas the assessee company is engaged in business of providing various management and technological solutions in the sector of water waste management, infrastructure development, oil gas, transportation, energy, chemicals, master planning and environment services. Thus, on functional dissimilarity, this company cannot be held to be comparable for the purpose of benchmarking the PLI of the assessee, hence we hold that the ld. CIT (A) has rightly excluded the said company from the final set of comparables. Korus Engineering Solutions Limited - What has been referred to is the extract from the website of this company that the company is engaged in the development of steel industry. In absence of any annual report, these services cannot be held to be similar to the services in which assessee has been engaged into. What is available only the functional statement but nowhere management discussion, director's report, etc. were available, hence it is difficult to analyse the FAR of the said company. On this ground alone, this company has rightly been excluded by the ld. CIT (A). Mitcon Consultancy Engg. Services Ltd. - This company is engaged in providing multiple services, such as, banking financial solution services, securitisation financial restructuring services, MITCO e-School and other services which are in the field of textiles, market research, infra consulting, wind power generation, decentralised power generation, projects, energy and carbon consultancy service etc.. This company is deriving revenue from (i) consultancy fees; (ii) vocational training; (iii) IT courses; and (iv) income from laboratories. No doubt, the consultancy fees can considered to be similar to the services rendered by the assessee but in absence of any segmental details, it is difficult to see the profit margin under various streams of revenue. As per Note 41 of the segmental report of the company given in the financial statement, it has two segments viz., consultancy training and wind power generation. Neither wind power generation nor training segment can be said to be comparable to the services provided by the assessee. Accordingly, we are of the opinion that ld. CIT (A) has rightly excluded this company as comparable from the final set of comparables. - Decided against revenue.
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2022 (2) TMI 159
Set-off of unabsorbed depreciation pertaining to AYs 1997-98 to 1999-2000 - beyond the period of eight assessment years - CIT(A) reversed the stand of Ld. AO and held that the unabsorbed depreciation available to the assessee as on 01.04.2002 could be carry forward and set-off for any number of years - HELD THAT:- Unabsorbed depreciation of AYs 1997-98 to 1999-2000 would become part of depreciation of AY 2002-03 and subsequent years and therefore, the same could be set-off during any number of years. The same was as per the ratio laid down by Hon'ble Gujarat High Court in the case of General Motors India (P) Ltd. [ 2012 (8) TMI 714 - GUJARAT HIGH COURT] wherein Hon'ble High Court referred to Board's Circular No. 14 of 2001 and held that any unabsorbed depreciation as available to the assessee as on 01.04.2002 shall be dealt with in accordance with the provisions of Sec. 32(2) as amended by Finance Act. 2001 and not by the provisions of Sec. 32(2) as it stood before the amendment. See KMC SPECIALITY HOSPITALS INDIA LTD.[ 2021 (7) TMI 868 - MADRAS HIGH COURT] and M/S. HARVEY HEART HOSPITALS LTD. [ 2021 (1) TMI 296 - MADRAS HIGH COURT] as held unabsorbed depreciation pertaining to the assessment year can be carry forward and adjusted after the lapse of eight assessment years in view of the section 32(2) as amended by the Finance Act, 2001. - Decided against revenue. Disallowance u/s. 14A r.w.r. 8D - Mandation of recording satisfaction - assessee had earned exempt income and already offered suo-moto disallowance - AO was directed to make the aforesaid disallowance while computing income under normal provisions as well as while computing Book-Profits u/s. 115JB - HELD THAT:- AO has failed to record any objective satisfaction as to why the assessee's stand was not acceptable, having regards to the accounts of the assessee, as per the mandate of Sec.14A. This jurisdictional requirement was not satisfied by Ld. AO in the present case and Ld. AO straightway proceeded to compute disallowance as per Rule 8D. The application of Rule 8D, in our considered opinion, was not mechanical or automatic. It is also settled law that disallowance made u/s. 14A could not exceed the exempt income earned by the assessee. Further, disallowance u/r 8D(2)(iii) was to be computed only by considering those investments which have yielded exempt income during the year. See M/S. REDINGTON (INDIA) LTD. case [ 2017 (1) TMI 318 - MADRAS HIGH COURT] Thus on the given facts and circumstances of the case, we direct Ld. AO to record an objective satisfaction as to why the disallowance made by the assessee was not sufficient or acceptable. If Ld. AO is satisfied, then he could proceed to apply Rule 8D and compute the disallowance subject to our observation made in preceding paras. Needless to add that adequate opportunity of hearing shall be granted to the assessee. MAT Adjustment u/s 115JB - We would also hold that the adjustment of disallowance u/s. 14A could not be made while computing Book Profits u/s. 115JB as per the decision of Special Bench of Delhi Tribunal in ACIT V/s Vireet Investment (P) Ltd.[ 2017 (6) TMI 1124 - ITAT DELHI] and M/S. SOBHA DEVELOPERS LTD. [ 2021 (1) TMI 378 - KARNATAKA HIGH COURT] .
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2022 (2) TMI 158
Reopening of assessment u/s 147 - As amendment to section 115JB of the Act by the Finance Act, 2009 w.r.e 01.04.2001 by which Explanation 1 to the section has been inserted book profit u/s. 115JB of the Act had to be reworked out. - HELD THAT:- All the facts were available before the Assessing Officer when he framed the assessment order u/s. 143(3) of the Act. It can be seen from the computation of total income mentioned elsewhere, the Assessing Officer has computed book profit as per MAT u/s. 115JB of the Act.As decided in ODAFONE WEST LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX [ 2013 (7) TMI 536 - GUJARAT HIGH COURT] that beyond a period of 4 years, retrospective amendment u/s. 115JB of the Act could not be a ground for reassessment. Such legal proposition requires no authority of law. We are of the considered view that all the relevant facts were available on record and it could not be said that at the time when the assessee filed return, he had failed to disclose fully and truly all material facts necessary for assessment because the amendment which was introduced retrospectively was not there. No hesitation to hold that there was no failure on the part of the assessee to fully and truly disclose all material facts to justify the reopening of the completed assessment. Therefore, we set aside the notice dated 04.12.2012 issued u/s. 148 of the Act and quash the same resulting into the quashing of the assessment order dated 22.03.2013 framed u/s. 143(3)/148 - Decided in favour of assessee.
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Customs
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2022 (2) TMI 157
Release of seized imported goods - Black Pepper of Sri Lankan origin - over valuation to circumvent a custom notification - Section 110A of 'the Customs Act, 1962 - HELD THAT:- The issue decided in the case of M/S. TRAVANCORE SOLVENTS OILS VERSUS THE COMMISSIONER OF CUSTOMS, THE JOINT COMMISSIONER OF CUSTOMS, THE ASSISTANT COMMISSIONER OF CUSTOMS (SIIB) , THE SUPERINTENDENT OF CUSTOMS [ 2022 (1) TMI 817 - MADRAS HIGH COURT] where on similar issue it was held that the second respondent i.e., the Joint Commissioner of Customs is directed to quantify the duty, bond amounts etc., communicate the same to the petitioner forthwith and release the said consignment within one week of said remittance i.e., quantified duty/bond amounts/execution of bonds by the petitioner. In the light of the undisputed position that the matter is directly and squarely covered and in the light of the fact that M/s.Travancore Solvents Oils case has been made by following orders of Hon'ble Division Bench, there shall be a similar order in this matter also. To be noted, the earlier orders have been complied and there has been provisional release of the consignment which has been captured in the aforementioned order. Petition disposed off.
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2022 (2) TMI 156
Benefit of Scrip based FTP Schemes - Notification dated 31 December 2021 - HELD THAT:- Respondents seeks time to file an affidavit-in-reply in this writ petition. The Petitioner would be at liberty to file online application for SEIS and other benefits, which are part of this petition. It is made clear that if such application is received, the same shall be processed in accordance with law. Place the matter on Board on 31 January 2022 (HoB) under the caption of Directions .
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2022 (2) TMI 155
Suspension of Custom Broker License - forging the signature and fabricating the documents by misusing the license of the petitioner - alleged infraction of Custom Broker Licensing Regulation, 2013 - HELD THAT:- If the respondent Customs Department wanted to revoke the license, the respondent ought to have issued notice under Regulation 20 of the aforesaid Regulations - Since the impugned suspension order dated 15.06.2018 has not culminated in the order either revoking the order of suspension or continuing with the order of suspension followed by a proceeding under Regulation 20 of the aforesaid Regulations which has been extracted, it is deemed fit to hold that the suspension order has outlived its period of validity. The impugned suspension order is no longer in force. At the same time, liberty is given to the respondent to examine whether, on merits, the proceedings can be initiated under Regulation 20 of the aforesaid Regulations, in accordance with the well settled principles of law which has been repeatedly followed by this Court including the case of SANTON SHIPPING SERVICES VERSUS THE COMMISSIONER OF CUSTOMS, THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL [ 2017 (10) TMI 621 - MADRAS HIGH COURT] . Petition disposed off.
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2022 (2) TMI 154
Seeking amendment in the Bills of entry - whether the petitioner was entitled to file an application under Section 149 of the Customs Act, 1962 for amending the Bill of Entry which were filed between December 2018 to March 2019 and another three set of Bill of Entries during December 2018? - violation of principles of natural justice - HELD THAT:- The appeal filed by the petitioner before the second respondent ought to have been decided on merits as to whether the petitioner had a case for interference. Section 128 of the Customs Act, 1962 contemplates an appeal against the decision or order passed under the Act by an officer of the Customs lower in rank than the Principal Commissioner or Commissioner of Customs and such appeal can be filed within a period of 60 days from the date of communication of the order. The proviso further grants 30 days time period subject to appeal giving substantial reasons for not filing an appeal within 60 days. Therefore, the dismissal of the appeal filed by the petitioner against the communication dated 21.07.2020/24.09.2020 by the second respondent vide impugned cannot be sustained. There is a violation of the principles of natural justice, the impugned order passed by the second respondent is quashed and the case remitted back to pass orders on merits by deciding the issue as to whether the petitioners was indeed entitled to file an appeal against the impugned communication - appeal allowed by way of remand.
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2022 (2) TMI 153
Classification of imported goods - True Beam Linear Accelerator with all accessories and other accessories (apparatus) - whether classifiable under CTH 90229030 along with apparatus as claimed by the importer or the main instrument to be classified under 90221490 as other equipment under different heading as proposed by the SCN? - time limitation - this is a case of self assessment or otherwise? - HELD THAT:- The show cause notice alleges that the assessments initially were made by the appellant-importer by wrongly claiming the exemption notification and mis declaring the classification of the goods and therefore extended period is rightly invokable. However, it is a fact that they have filed Bill of Entry on line. However, ongoing through the records of the case, it is evident that the departmental officers have examined and assessed the goods and only after their satisfaction the goods were released and payment was allowed availing the exemption. Therefore, it cannot be said that the assessment initially was done by the importer himself. The argument of the department that this is a case of self-assessment is factually incorrect. Though the appellant-importer has filed the Bill of Entry in the EDI system goods were subjected to open examination and the proper officer has examined the goods and forwarded it to the concerned group for assessment. Under such circumstances, it cannot be said that the Bills of Entry were subjected to self-assessment. This being the case, it is not open for the department to issue show cause notice invoking longer period and that too alleging suppression, misdeclaration etc. with intent to evade payment of duty. Time limitation - HELD THAT:- The importer (appellant) rightly submits that claiming of exemption notification does not tantamount to suppression with intent to evade payment of duty - appeal of importer (filed by Dr. Rai Memorial Cancer Institute) succeeds on the issue of limitation. Appeal allowed - decided in favor of appellant.
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2022 (2) TMI 152
Benefit of exemption N/N. 46/2011 dated 01.06.2011 denied - country of origin - denial of Exemption Notification which is available on the basis of Country of Origin on the ground that there are two country of origin certificates issued and both were signed by different Authorities therefore, the Country of Origin Certificate is under serious doubt - HELD THAT:- The revenue without getting confirmation from the Indonesian government about their doubt of authenticity of the country of origin certificate concluded that the certificate of origin signed by Mr. Rumaiti is not genuine and consequently denied Exemption Notification No. 46/2011 dated 01.06.2011 and consequential demand was confirmed. As per the documents submitted by the appellant it appears that there is no doubt on the authenticity of the country of origin certificate issued and signed by Mr. Rumaiti. However, to clear any doubt it is the burden on the department to get the verification from the Indonesian Government regarding authenticity of Certificate of origin which has not been discharged by the department. Therefore, in the interest of justice, one chance is given to the department to get the verification from concerned authorities about the genuineness of the certificate of origin issued by Mr.Rumaiti, thereafter to pass a fresh order. Appeal is allowed by way of remand to Adjudicating authority for passing a fresh order preferably within a period of 3 Months from the date of this order.
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2022 (2) TMI 151
Recovery of sanctioned refund of Rubber cess paid - recovery sought on the ground that the Bill of Entry were neither reassessed nor assessment was modified in appeal proceeding and hence the refund was not maintainable - violation of principles of unjust enrichment - HELD THAT:- As per the facts of the case, the bills of entry assessed at nil rate of duty. Subsequent to the final assessment of Bills of entry,the revenue has insisted for payment of Rubber Cess in cash on the imported rubber, consequently, the appellant have deposited the Rubber Cess through various challans. Since the Bills of entry were assessed at nil rate of duty, there is no issue arises out of the Bills of entry which can be challenged by the appellant. The bills of entry assessed can be challenged only in those cases where the duty was on a higher side and excess duty was not payable in order to claim the refund of such excess paid duty. The assessee is first required to challenge the bills of entry and consequential to outcome of the challenge to assessment the appellant become entitle for the refund - However, in the present case, admittedly the bills of entry were assessed at the nil rate of duty therefore, there was nothing exist to challenge in the Bills of entry. The rubber cess was paid by the appellant separately through challan only on insistence of the department. However, even such payment has not been assessed by the department therefore, as regard the payment of rubber cess there was neither any assessment nor any need to challenge the same therefore, in our considered view the learned Commissioner (Appeals) has wrongly held that the appellants were required to challenge the assessment of Bills of entry. There is no dispute that the rubber cess paid by the appellant was legally not payable therefore; the amount of rubber cess paid by the appellant under protest became refundable. This very same issue has been considered by the Hon ble Bombay High Court in the case of SESA GOA LTD. VERSUS COMMISSIONER OF CUSTOMS, GOA [ 2015 (5) TMI 879 - BOMBAY HIGH COURT] , where it was held that when the assessment is at nil rate of duty any amount paid separately, for the purpose of the refund of the same the assessment of bills of entry need not be challenged. Principles of Unjust enrichment - HELD THAT:- The appellant have clearly shown the amount of refund as receivable in their Books of Accounts and the same was reinforced by Chartered Accountant certificate. Therefore, the appellant have established that the incidence of rubber cess paid by them, and for which the refund was sought for, has not been passed on to any other person, accordingly, the refund is not hit by unjust enrichment. The appellant are entitled for the refund of Rubber cess paid by them - Appeal allowed - decided in favor of appellant.
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2022 (2) TMI 150
Maintainability of appeal - time limitation - appeal has been rejected for being not filed within the statutory period as provided under Section 35 of Central Excise Act, 1994 - HELD THAT:- The Order in Original was received by the Appellant on 10th May, 2018 as has duly been acknowledged by Commissioner (Appeals) in para 5.2 of the order under challenge. Though Commissioner (Appeals) has recorded that the appeal before him was filed on 13th July, 2018 but as is apparent from Annexure D on record that the appeal was filed on 11.07.2018 itself. These facts make it clear that a miniscule delay of two days over and above the 60 days has occurred in the present case while filing an appeal before Commissioner (Appeals). As per Section 35 of Central Excise Act 1944, no doubt an appeal has to be filed before Commissioner (Appeals) within 60 days of receipt of Order-in-Original but the proviso therein extends a discretion to Commissioner (Appeals) itself to condone the delay for a further period of 30 days. No doubt there was no application seeking Condonation of delay was filed by the appellant as has been acknowledged by ld. Counsel as on date as well - The delay is so minuscule that the malafide intent cannot be opined against the appellant. Law is otherwise settled that the disposal of a lis shall always be on merits. Law of limitation is otherwise to be exercised liberally. It is deemed to be a fit case where Commissioner (Appeals) should have decided the appeal on merits after liberally exercising his discretion of condoning the delay - appeal allowed by way of remand.
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2022 (2) TMI 129
SEIS - benefits in excess of cap as imposed (i.e. ₹ 5 Cr per IEC) - prayer for manual submission of claim - HELD THAT:- We are not inclined to permit the petitioner to submit any application manually. However, without prejudice to its rights and contentions, the petitioner will be at liberty to file online application for SEIS benefits and if such application is received, the same shall be processed in accordance with law. Let reply affidavit be filed by the respondents by January 17, 2022; rejoinder thereto, if any, may be filed by January 21, 2022. The writ petition may be listed for further consideration on January 25, 2022.
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Corporate Laws
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2022 (2) TMI 149
Oppression and Mismanagement - Seeking stay on any transfer, alienation or creation of any encumbrance by the respondents on the shareholding and assets of respondent No. 1 and its subsidiaries - allegations of the applicant is that respondent Nos. 2 and 3 have certain understanding with the buyers of the land in question for gaining monetary benefit out of the transaction - HELD THAT:- We are not going into the entire jurisprudence on the powers of this Tribunal to give relief in a case of whether or not a case of oppression or mismanagement is made out. There is a judicial view that this Tribunal can give substantial relief in such cases. In our view, by expanding the scope the powers of Tribunal under Section 242(2) and also rewording the Section 241 in the new Act, this judicial view has been recognized. We are also conscious of the various judicial decisions that it is necessary for this Tribunal to first consider the interest of the company, irrespective of what the parties plead. Therefore, the Authorities relied upon by respondent Nos. 1, 2 3 are relevant only at the stage of interim relief to the extent that the interest of Respondent No. 1 is paramount. Any transfer, alienation or creation of any encumbrance by the respondents on the shareholding and assets of respondent No. 1, can be effected only after consideration of these issues at the level of the Board of Directors and after passing a suitable resolution to that effect - respondents including Respondent No. 2 3 are required to be temporarily restrained from changing the share holding pattern and assets of Respondent No. 1 including land the land in question except with the prior approval of the Board of Directors or till the final disposal of the main petition. The applicant has prayed that the present authority may pass an order directing that the scheme sanctioned by this Tribunal by way of order dated 30.09.2021 passed in CP(CAA) No. 12/Chd/Hry/2021 be implemented and that the order dated 10.12.2021 passed in IA(CA) No. 10 of 2021 in CP No. 81/Chd/Hry/2021 shall not in any manner imply to impede the implementation of the Scheme - In this background, the records were perused and it is noticed that the two companies i.e. Orient Craft Fashion Private Limited and Orient Craft Exchange Limited are not parties to IA (CA) No. 10/2021 in CP No. 81/Chd/Hry/2021. In the interest of the principles of natural justice, by following the principle of audi alteram partem, no person should be judged or criticized without a fair hearing in which each party is given an opportunity to respond to the evidence against them - Thus, when any party is not impleaded in IA No. 10 of 2021 no adverse order could be passed against it. Thus, the directions passed against the subsidiaries, i.e. Orient Craft Fashion Private Limited and Orient Craft Exchange Limited in the order dated 10.12.2021 are hereby required to be modified. The status quo order dated 10.12.2021 passed in IA(CA) No. 10/2021 is modified to the effect that respondent Nos. 2 and 3 are hereby temporarily restrained from changing the shareholding pattern and assets of respondent No. 1-company including land in question except with the prior approval of its Board of Directors or till the final disposal of the main CP No. 81/Chd/Hry/2021 - application disposed off.
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Insolvency & Bankruptcy
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2022 (2) TMI 148
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The Operational Creditor before the Adjudicating Authority claim extension of limitation on the basis of account confirmation dated 01.04.2017 allegedly signed by one Devpal the Accountant of the Corporate Debtor. The Corporate Debtor in reply has disputed the claim of the Appellant and has filed a criminal complaint regarding forgery of the document dated 01.04.2019 on which First Information Report has been registered and criminal proceedings are pending. When the very basis of the claim of the Operational Creditor that their Application is within time is under cloud and is disputed by the Corporate Debtor, no error has been committed by the Adjudicating Authority by not placing reliance on account confirmation document dated 01.04.2017 for giving extension of the limitation to the Operational Creditor. The allegation of supply back of the material is being disputed. The claim of supply back of the material was raised by the Corporate Debtor on 05.03.2017 in response to meeting dated 18.02.2017. The notice under Section 8 was issued by the Operational Creditor on 20.03.2019 i.e. much after the claim of the Corporate Debtor to supply back the material which was in 2017 i.e. two years thereafter. The Operational Creditor disputing the claim of supply back of the similar material itself is a dispute which is clearly mentioned in the reply notice of the Corporate Debtor. These issues could not have been gone into the proceeding under Section 9 and there being pre-existing dispute between the parties the Application under Section 9 filed by the Appellant has rightly been rejected. No case has been made out to interfere with the order passed by the Adjudicating Authority rejecting Section 9 Application - Appeal dismissed.
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2022 (2) TMI 147
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - discrepancies found in the claim of Appellant/Operational Creditor and objections raised by the Respondent/Corporate Debtor - three invoices and related delivery of goods or dispute of a price - HELD THAT:- Regarding Invoice 1 the Respondent's claim is that there are two invoices, one a handwritten one and other the computerized copy, and both state different price rates for the same goods - The relevant invoice is the computerized invoice, which is the same as issued by the Appellant to the Respondent for many other supplies, and the price rate mentioned in the invoice is the rate prevailing on the day the supply was actually made. The Appellant has also said that the issue of short supply raised by the Respondent is basically due to the different weights recorded at different weigh bridges and the Appellant has given due credit for the short supply claimed by the Respondent. Thus the Appellant has given credit for the deficient weight which was claimed by the Respondent. With regard to Invoice 2, the Respondent has disputed the delivery of goods pertaining to the said invoice though the Appellant has claimed that vide mail dated 11.4.2017, the Respondent had confirmed the delivery of goods - Appellant had to submit unimpeachable proof of delivery of goods to establish his case under section 9 of IBC. Such evidence was also necessary since the respondent had disputed delivery of goods in his reply to the demand notice. Therefore, we are inclined to believe the claim of the Respondent that the goods were actually not delivered at the site. Regarding Invoice 3, the Respondent has alleged that it is forged and fabricated and has also disputed the signature on the left bottom corner of the tax invoice which is claimed by the Appellant as evidence of supply of goods to the Respondent - Though the Appellant has claimed that the same lorry carried both Bitumen and Emulsion to the site of the Respondent he has not submitted any proof of the same and moreover, in the absence of any receipt of the delivery of Bitumen at the site of the corporate debtor we are not convinced that the goods (Bitumen) claimed to have been supplied vide Invoice 3 were actually received by the corporate debtor/respondent. The Appellant has not been able to show convincingly that it had actually supplied materials relating to Invoice 2 and invoice 3 as claimed. We also agree with the Respondent that it could raise the dispute regarding non-supply for the first time in its reply to the demand notice under section 8 as it did not have knowledge of the said Invoices 2 and 3 before it received the demand notice. These disputes therefore relate to the dates of purported invoices and in this sense they are legitimate disputes and not sham disputes - the application under Section 9 filed by the Appellant lacked merit and was correctly rejected by the Adjudicating Authority by the Impugned Order. Appeal dismissed.
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2022 (2) TMI 146
Admissibility of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - It is submitted that efforts were made for settlement in the year 2010-2019 but no settlement could be arrived at - time limitation - validity of assignment agreement - HELD THAT:- The only interim order granted by the High Court was that no coercive action shall be taken against the petitioner till the next listing. The said order cannot be read to mean that assignment in favour of the Respondent was stayed by the High Court. Thus, there are no illegality in filing Application by Respondent No.1 under Section 7. Thus, the said submission does not help the Appellant. Second submission is that objections were raised by the Appellant regarding question of limitation in pursuance of the liberty granted by the Hon ble Supreme Court on 08.11.2019 which has not been considered on merits by the Adjudicating Authority - HELD THAT:- The Appeal was dismissed by the Hon ble Supreme Court affirming the judgment of this Appellate Tribunal meaning thereby the view of the Appellate Tribunal that Application is not barred by time was upheld. The fact that liberty was granted to raise certain objections by the Appellant cannot be read to mean that Appellant was permitted to re-agitate the question of limitation again before the Adjudicating Authority which had become final - there are no substance in the submission that objection of limitation could have been raised by the Appellant before the Adjudicating Authority. The question of limitation has become final between the parties since judgment of this Appellate Tribunal was affirmed by the Hon ble Supreme Court. Efforts made by the Appellant for settlement with the Bank - HELD THAT:- It is always open for the Appellant to settle the matter and file an appropriate Application under Section 12A before the Adjudicating Authority, who if satisfies, can always consider the Application and pass appropriate order. Appeal dismissed.
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2022 (2) TMI 145
Seeking to handover the physical possession of the mortgaged leasehold land of the Corporate Debtor (both Express Lease Implied Lease lands used by the Corporate Debtor) into the Liquidation Estate of the Corporate Debtor - addition of mortgaged land into the Liquidation Estate of the Corporate Debtor - the liquidator impleaded the Personal Guarantors of the Corporate Debtor - main contention is that the liquidator cannot proceed against their properties, even though they have given to the Corporate Debtor on lease for constructions of the Doctors quarters in their properties, which forms part of the liquidation estate now decided by the liquidator. HELD THAT:- The respondents 1 2 are agreeable to the proceeding of the liquidation against all the properties mortgaged by the Corporate Debtor. Second respondent even though stated that they will be proceeding against the Personal Guarantors, till date no steps taken by them against the guarantors. Hence, both parties are in favour of the liquidation proceedings against the Corporate Debtor. The only thing is that the Personal Guarantors are opposing the action taken by the liquidator, which they are not entitled to because they have given on lease their properties to the Corporate Debtor and the Corporate Debtor has been put under liquidation. In such an event, the respondents 3 to 8 are estopped from seeking a relief from this Tribunal, that their properties cannot be treated as properties of the Corporate Debtor, which is proceeded under the IBC. In view of the fact that they have mortgaged their properties to the Corporate Debtor and the Corporate Debtor is now reached in the stage of Corporate Insolvency Process. The liquidator has rightly proceeded against their properties also for completion of the liquidation process. We do not find any merit in the contention of Respondents 3 to 8. Since the Resolution Professional has to conclude the proceedings, it is highly necessary to get the possession of the property, as it is the duty of the Resolution Professional to dispose of the Liquidation Assets of the Corporate Debtor, if necessary, to settle the claims of all claimants including the Financial Creditors. Since, the Building/hospital is situated in the very same land having 16.55 Ares, no purpose would be served without getting the hospital property also into the Liquidation Assets - There is no doubt that the Liquidator will consider all the claims and make payments to each person/authority, as per the Regulations/Rules. Hence, the 2nd Respondent s apprehension cannot be sustained. Both Respondents are directed to hand over the physical possession of the mortgaged leasehold land of the Corporate Debtor (both Express Lease Implied Lease lands used by the Corporate Debtor) to the Applicant in order to use as the Liquidation Estate of the Corporate Debtor - Applicant is also permitted to add the mortgaged land into the Liquidation Estate of the Corporate Debtor of the respondents 3 to 8, to the liquidation Estate of the Corporate Debtor - Application disposed off.
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2022 (2) TMI 144
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - pre-existing dispute regarding the invoices raised by the applicant - discrepancies between the log books and the monthly reports of the applicant - breach of contract by the applicant - HELD THAT:- In the present case, the main documentary evidences placed on record by the Applicant are the ledger statement, the invoices raised and the cheque for part-payment of ₹ 4,00,00/- only which was received from the corporate debtor but got dishonored and returned vide Return Memo dated 17.10.2018 with the remark Account Closed - It is the case of Corporate Debtor that it had much before the date of issuance of the demand notice under Section 8 of the IBC had raised dispute regarding the discrepancies in the Log books, monthly report and the issuance of incorrect invoices. However, we notice that the corporate debtor has failed to place on record or produce any communication, exchanged with the applicant, evidencing any 'PreExisting Dispute' prior to the issue of Demand Notice. It is also pertinent to mention that in its Reply to the Application, the applicant apart from raising a bald denial of liability, has not filed any substantive material in support of their contentions. The contention of the Corporate Debtor regarding false and fabricated invoices is unsustainable having regard to the fact that the invoices on record have even been acknowledged by the Corporate Debtor as per the attachment to its email dated 12.11.2018. Monetary amount involved - HELD THAT:- As per the averments made in the application in Form-5 : Part IV, a sum of ₹ 5,64,618/-, has only been received by the Applicant and a sum of ₹ 9,29,120/- is still due and payable. Accordingly, an unpaid operational debt of more than 1 Lakh is clearly due and payable to the Applicant. Further, the cheque issued by the Corporate Debtor towards part-payment of its liability is a clear admission of the outstanding liability. Also, during the course of hearing, the corporate Debtor has time and again stated that they are in the process of settling the matter amicably with the applicant, which is again, an admission of unpaid operational debt due and payable by them to the Applicant. Time Limitation - HELD THAT:- The invoices raised by the applicant pertain to the period from February 2018 to August 2018. The present application is filed on 12.11.2019. Hence, the present application is well within the limitation period. The present Application is filed in the Form prescribed under Rule 6 of the Insolvency and Bankruptcy Code, 2016 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 r/w Section 9 of the Code and is complete - application admitted - moratorium declared.
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2022 (2) TMI 143
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Corporate Debtor requires 6 to 7 months' time for repaying the debt - HELD THAT:- The Counsel when suggested that payment schedule to pay the debt amount in instalments can be furnished, expressed his inability stating that the Corporate Debtor cannot make any payments before 6 or 7 months. He also submits that they have to pay debts to the Operational Creditors also. Hence, it is evident that the Corporate Debtor is not only indebted to the Financial Creditor herein. But also other debts to the Operational Creditor and that the Corporate Debtor is not a viable condition is obvious from the said submitted facts. In these circumstances, there cannot be any other option for the Tribunal except to order for Corporate Insolvency Resolution Process (CIRP). The Company Petition is admitted. The Corporate Insolvency Resolution Process of the Corporate Debtor shall commence from this date and shall be completed within 180 days - moratorium declared.
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2022 (2) TMI 142
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - High Sea Sale Contract - Operational Creditors - existence of debt and dispute or not - identity of the applicant - principles of res-judicata - HELD THAT:- The Doctrine of Constructive Res Judicata does not apply to the issues/points or any 'lis' between parties that has not been decided previously, and despite being pleaded, has not been considered by a court/tribunal and expressly dealt with in the order so passed. In Indian law, the principle has been recognized in Section 11 of the Code of Civil Procedure 1908 - while res judicata may have been codified in Section 11, that does not bar its application to other judicial proceedings, such as the one in the present case. In the present case, the applicant has intentionally withdrawn the application after the application has been served on other side, and that, if considered and decided by the Tribunal, the fate will be against the applicant. Moreover, the application was allowed to be withdrawn with costs of ₹ 25,000/- which itself shows that the Tribunal was ready to hear and dispose of the matter so that a final order can be passed. Smelling the outcome, the applicant withdrew the application and filed the present application - It is pertinent to state that the applicant did not obey the directions to pay costs instead he filed the present application, which is definitely hit by res judicata. Thereafter, after an extended period, the costs were paid. Whether the case is finally decided by the Tribunal does not arise, as the intention behind the withdrawal of the application is well known to both parties. Identity of the applicant - HELD THAT:- On a verification of the records, it is seen that nowhere the applicant has put his signature, even though, while the High Sea Sale Contract was executed on 31.05.2017, the same person who, stated to have been filed this application has put his signature. Nowhere in the application, it is stated why the applicant could not sign and on whose presence the Left Thumb impression has been taken and that anybody has counter signed or attested the Left Thumb Impression of the applicant in the application - the applicant has not annexed Form No. NCLT 14 with the application. Hence, there is every reason to believe that this application has been filed without the actual knowledge or authority of the applicant, as rightly argued by the learned counsel for the Corporate Debtor. Pre-existing dispute or not - HELD THAT:- The Corporate Debtor could establish the Sub-Section 6 of Section 5 of the Code to determine what 'dispute' is, and established that there is a pre-existing dispute between the parties in this matter regarding the quality of goods or services. There are no reason to order initiation of Corporate Insolvency Resolution Process against the Corporate Debtor - application dismissed.
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Service Tax
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2022 (2) TMI 192
Seeking to restore and reconsider SVLDRS declaration filed by the petitioner on merits - issuance of summons to the petitioner under the provisions of Section 83 of Finance Act, 1994 and Sections 70 and 174 of the Central Goods and Services Act, 2017 - HELD THAT:- A perusal of the Show Cause cum Demand Notice dated 30 th December 2020 issued by the office of DGGI indicates that the statement made by the Joint Director of the petitioner in paragraph 3.3 is referred. It is clearly admitted that the petitioner had accepted their unpaid/short paid Service Tax liability of ₹ 72.37 lakhs. We are thus not inclined to accept the submission made by Mr.Ochani, learned counsel for the respondents that the petitioner had not admitted the complete tax dues in the said statement of the Director of the petitioner recorded by the Investigating Officer. This Court held that it is not necessary that the figures on such admission should have Mathematical precision or should be exactly the same as the subsequent quantification by the authorities in the form of show cause notice etc. post 30th June, 2019. The object of the scheme is to encourage persons to go for settlement who had bonafidely declared outstanding tax dues prior to the cut off date of 30th June, 2019. It is held that the fact that there could be a discrepancy of figure but only when the tax dues admitted by the person concerned prior to 30th June, 2019 and subsequently quantified by the departmental authorities, would not be material to determine the eligibility to file Declaration in terms of the scheme under the category of enquiry, investigation or audit. The impugned order dated 12th February 2020 rejecting SVLDRS-1 declaration submitted by the petitioner is quashed and set aside - the petitioner is held eligible to file the said SVLDRS-1 declaration and to avail benefits under the said Scheme - petition allowed.
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2022 (2) TMI 141
Levy of service tax or VAT - Supply of Tangible Goods Service - supply of mobile gensets by the appellant - consideration charged, as the effective control and possession of gensets was with clients - deemed sales or not - F.Y. 2011-12 to 2015-16 - specific events or where clients required transportable gensets (fixed on vehicle/ trolley) for short-term period, and supplied along with technicians / operators, who run the gensets as per the instructions of the clients - invocation of extended period of limitation - HELD THAT:- In view of the Article 366(29A)(d) of the Constitution, transfer of the right to use any goods for any purpose, whether or not for a specified period, for cash, deferred payment or other valuable consideration, has to be considered as deemed sale or purchase of goods - In the instant case it is observed that the appellant have supplied the mobile gensets to his clients for short periods along with technicians and fuel. It is the requirement of the client to use such gensets when there is no electricity or the electricity goes off or as desired by client, and the gensets are put to use to keep or ensure uninterrupted supply of electricity at the clients place/site. Thus, the use of the gensets is purely on the requirement or order of the clients. It is not necessary that the gensets provided to the client is surely put to use or generate electricity for the period of time for which it is hired by the client, but the genset is dedicated/ delivered to the client and is under his effective control and pocession. In view of such condition, the effective control of the gensets is purely in the hands of the clients of the appellant, as the client is at his liberty to run or not to run the gensets hired by him for generation of electricity. In any case, he is liable to pay the hire or lease rent. The CBEC vide Circular No. 198/08/2016-SERVICE TAX, Dated: August 17, 2016 has provided that in order to distinguish such transactions as sale of goods or supply of services, it is essential to determine whether, in terms of the contract, there is a transfer of the right to use the goods - admittedly the appellant had duly discharged his liability under the VAT/Sales Tax law as per the VAT/ CST returns submitted in the paper book before this Court, and also it is an admitted fact in the order in original. Therefore, there remains no liability on the part of the appellant under the Service Tax law. Extended period of limitation - HELD THAT:- It being an issue of interpretation and no case of concealment found, etc. is made out, accordingly, it is held that extended period of limitation is not available. Appeal allowed - decided in favor of appellant.
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2022 (2) TMI 140
Taxability/non-taxability - business of sale of packed food and beverages on board the trains run by Indian Railways besides sale of packed food items/beverages at stalls at railway stations - unjust enrichment - applicability of the ruling of Hon ble Delhi High Court in INDIAN RAILWAYS CATERING AND TOURISM CORPORATION LTD. VERSUS GOVT OF NCT OF DELHI AND ORS [ 2010 (7) TMI 989 - DELHI HIGH COURT] - HELD THAT:- In the case of IRCTC they were supplying food under contract to the railways through their agent or sub-contractors, for which they were being paid by the Indian railways. Further Indian railways are paying to IRCTC out of the consolidated ticket value collected by them from the passengers which does not contain any breakup of the amount towards travel charges and food charges. Whereas in the facts of the present case, the appellant is a licensed vendor who were entitled to sell food on the trains and at the stations. The assessee is paying license fee to the railways for such entitlement to sell such packed food and are further paying service tax separately on the license fee. The staff or hawkers of the respondent assesee move in the trains or at the station offering food for sale to the passengers. The passengers are under no obligation to buy food from the respondent. Thus, it is found that the transaction between the respondent assessee and the passenger who purchases the food is a simple sale transaction of food involving no element of service. In the present case, there is no element of service involved in the sale of food by the respondent assessee to the passengers. Further, it is found that the law has been clarified and declared by Hon ble Delhi High Court in the case of IRCTC and accordingly, the respondent assessee is rightly entitled the refund of the service tax paid under erroneous advice, subject to passing the test of unjust enrichment. The pendency of appeals of the service tax department as well as M/S INDIAN RAILWAYS CATE. TOUR. CORP. LTD. VERSUS GOVT. OF NCT OF DELHI ORS. [ 2011 (10) TMI 762 - SC ORDER] before Hon ble Supreme Court have got no bearing in the facts and circumstances of the present case. In the facts of the present case, no machinery provision was also there for bifurcation of the transaction into service portion and sale portion, for levy of service tax. Rule 2C was introduced in the Service Tax Determination of Valuation Rules, 2006 with effect from 1 July, 2012 vide Notification No. 24/2012-ST, which has provided for mode of bifurcation by allowing abatement for the sale portion in the case of service of food in a restaurant or in the course of outdoor catering. Even under Rule 2C, the activity of the respondent assessee is not covered. Commissioner (Appeals) have without examining the issue of unjust enrichment and without giving proper opportunity of hearing and to lead evidence on the issue of unjust enrichment, have simply made a bald allegation that the assessee did not lead evidence before him, by a non-speaking order. He also did not indicate if the assessments have been modified - the respondent assessee is also directed to appear before the Commissioner (Appeals) within a period of 60 days from the date of receipt of copy of this order along with evidence as regards unjust enrichment and evidence regarding assessments being modified in appeal and seek opportunity of hearing. The appeal is allowed by way of remand.
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2022 (2) TMI 139
Refund of service tax paid - appellant filed a refund claim of service tax paid inadvertently on 16.09.2020 - refund claim was rejected holding that refund claim is barred by limitation under Section 11B of the Act - HELD THAT:- The facts which are not disputed by both the sides that a show cause notice dated 04.10.2018 was issued to the appellant to demand differential service tax on Renting of Immovable Property Service and it was held by the adjudicating authority that appellant is not required to pay service tax under the category of Renting of Immovable Property Service vide order dated 16.12.2019, thereafter, the appellant has filed refund claim on 16.09.2020. As the refund claim has been filed within one year from the date of the adjudication order wherein it has been held that the appellant is not required to pay service tax, therefore, in terms of Section 11B of the Act, refund claim is to be filed within one year, from the relevant date. The relevant date is the date of adjudication order date i.e 16.12.2019 - the refund claim filed by the appellant is within time. Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (2) TMI 138
Condonation of delay in filing appeal - appellant has given plausible explanation for delay and the appeal was filed within 90 days and the same is within the power of Commissioner (Appeals) to condone the delay - grant of interest on the refund amount under Section 35FF - HELD THAT:- The appellant was due to sufficient cause prevented from filing their appeal within the prescribed period of limitation of sixty days. Further, on the issue of appeal filed on 90th day, which is within time. Accordingly, the delay before the Commissioner (Appeals) is condoned. The applicable section for grant of interest is Section 35FF, which provides for grant of interest on the amount refundable pursuant to order of the Appellate Court. It is further provided in this section that interest should be granted from the date of deposit till the date of refund, without any discrimination - Division Bench of this Tribunal in M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) [ 2021 (5) TMI 870 - CESTAT ALLAHABAD] , wherein interest on pre-deposit (made during investigation), have been enhanced from 6% to 12%, following the ruling of the Apex Court in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT] . The Adjudicating Authority is directed to grant interest @ 12% per annum from the date of deposit till the date of refund. Such interest should be granted within a period of 45 days from the date of receipt or service of the copy of this order - appeal allowed - decided in favor of appellant.
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2022 (2) TMI 137
CENVAT Credit - ineligible capital goods - M.S. Bars/Rods/Angles/Channels/Beams - H.R. Coils - Lubricating Oils - M.S. Girder/ Shape and Sections - alleged improper documents - documents as prescribed under Rule 9 of CCR not produced - extended period of limitation. M.S. Bars/rods/channels, etc. - HELD THAT:- The Chartered Engineer in this report dated 21.08.2013 has mentioned that certain quantities of goods were required to manufacture certain specific capital goods as mentioned in their report. But the said Chartered Engineer Report, nowhere has declared that the very same goods, which are the subject matter of the impugned proceedings, were used to manufacture these capital goods. Their report just mentions that such inputs can be used in manufacturing of capital goods, as well as for laying foundation/structures also. However, CENVAT Credit is available only for those inputs which were used in production/manufacturing of end products. Therefore, this report cannot be made basis to establish that the goods under the impugned proceedings were used for making of capital goods, pollution control equipment or in repair maintenance of capital goods. Thus, he held that CENVAT credit of ₹ 20,07,588/- availed by the assessee on such items is not admissible to them. Extended period of limitation - HELD THAT:- It was observed that the appellant have not put forth any evidence to suggest that they have informed the Department in this regard for having taken cenvat credit on the items in dispute. Further, these were detected during inspection by the officers of the AE Team. Further, it is held that extended period of limitation has been rightly invoked. Duty paying documents - HELD THAT:- Taking of cenvat credit has to be decided on the date of receipt of the inputs or capital goods. There is no requirement of one to one correlation. Admittedly, in the facts of this case, the Court Below has found such inputs were required for fabrication of the capital goods in question and further, found that these are essential for manufacture of dutiable goods. Further, there is no allegation in the show cause notice that the appellant has clandestinely cleared any of the goods on which cenvat credit is in dispute. It is found from the perusal of the invoices, copies of which have been filed before this Tribunal, in separate paper book, the invoices have been issued in proper format and contain the proper address of the appellant as well as central sales tax and VAT No. Further, excise duty has been separately reflected in the invoices - amount of ₹ 36,232/- is available as cenvat credit. Appeal allowed in part.
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CST, VAT & Sales Tax
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2022 (2) TMI 136
Validity of assessment order - time limitation - notice for assessment is rightly treated to have been served on the applicant or not - applicant unit having closed business on 06.11.2003 for A.Y. 2003-04 - service of notice on Naresh Agarwal was sufficient or not - section 21(6) of the U.P. Trade Tax Act - HELD THAT:- From bare perusal of the provisions of Rule 77(3) of the Rules and rule 72(g), it is evidently clear that if the noticee refuses to accept notice, the process server has not only to submit his report, but such report shall also be verified on oath. The assessing authority concerned, thereafter, in the facts circumstances and after making such further inquiry in the matter, if any, as it deems fit, consider such refusal to be proved serviced. Under the VAT Act, a further caution/condition has been imposed that the process server is required to file an affidavit or verification. In absence of such an affidavit/verification, the process server shall be examined by another authority. This, in itself, shows the intention of the Legislature that the power of the assessing authority through process server may not be misused - In the case in hand, all the authorities have just relied upon the report of the process server and failed to note that such report of the process server was required to be examined on oath. The said primary duty required by the assessing authority is missing. From perusal of the assessment order, it reveals that the first appellate order had only relied upon the report of process server, which is bad in view of rule 77 of the U.P. Value Added Tax Rules. Further, Tribunal, by its order dated 29.05.2014, being last Court of fact, has recorded a finding of fact in favour of the applicant that the notice served upon Mr. Naresh Agarwal was not proper, but still remanded the matter. By this, the Tribunal tried to give second inning to the Revenue. In other words, a thing cannot be done directly was permitted to be done indirectly - The affidavit is also of no help to the Department as, even assuming Naresh Agarwal was authorized on behalf of the Company, even though the Company was closed down on 06.11.2003. Once a stand clearly taken by the Department that there was refusal of service, then the provisions provide under the Rules have to be complied with in its totality, but case in hand, process server was not verified as required under rule 77(3) of the U.P. Trade Tax Rules read with rule 72(9) of the Value Added Rules - the authorities are not permitted to improve their version, which was not in original proceedings. Once it has come on record that there was neither proper service, nor verification on oath of the process server, which is mandatory, the whole proceedings are rendered vitiated and are liable to be set aside. The impugned orders passed by the Tribunal as well as the assessment orders are hereby set aside - revision allowed.
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2022 (2) TMI 135
Seeking grant of anticipatory bail - fake firms were created for claiming bogus Input Tax Credit - utilization of 'C' forms cancelled by the Excise and Taxation Department - HELD THAT:- In the present case, the allegations are of creating bogus firms for using or facilitating bogus ITC, public money is involved and State exchequer is affected. The contention of learned counsel for the petitioner that he was an Advocate who had assisted in compliance of procedure for registration of the concern, in view of the pleadings in the reply prima facie falls on the face of it. It would not be appropriate to make any further comments on the issue at this stage. For managing the affairs as alleged in present case, it is a well prepared and planned net which is laid down. Each and every person has a specific role to be played and in such a case one loose end left ensures that the entire net disappears. If the petitioner is clothed with protection of pre-arrest bail, the deeper probe required to unearth the scam would be defeated. The custody of petitioner is necessary as he is the only person who can disclose the persons involved and unearth the modus operandi. No case is made out for grant of anticipatory bail - Petition dismissed.
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Indian Laws
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2022 (2) TMI 134
Invocation of arbitration clause (clause 19) in the retirement deed - failure to serve the notice of the petition under Section 11 - time limitation - HELD THAT:- It is not in dispute that along with advocate s notice dated 8th November 2019, the appellant and the respondent nos.2 to 5 were served a copy of the petition filed under Section 11 of the Arbitration Act by the respondent no.1. In the impugned Order, the learned Single Judge of the Bombay High Court has referred to the affidavit of service of notice filed on behalf of the respondent no.1. A judicial notice will have to be taken of a long standing and consistent practice followed on the Original Side of the Bombay High Court. The practice is that the advocates serve a notice of the proceedings filed in the Court even before it comes up before the Court - the appellant could have always made arrangements to contest the said petition. Therefore, we reject the first submission made by the learned Senior Counsel appearing for the appellant regarding the failure to serve the notice of the petition under Section 11. This Court held that while dealing with petition under Section 11, the Court by default would refer the matter when contentions relating to non-arbitrability are plainly arguable. In such case, the issue of non-arbitrability is left open to be decided by the Arbitral Tribunal. On perusal of the impugned order, we find that the issues of non-arbitrability and the claim being time barred have not been concluded by the learned Single Judge of the Bombay High Court. In fact, in clause (vii) of the operative part of the impugned Order, the learned Single Judge has observed that the contentions of the parties have been kept open. The petitions filed by the appellant under Section 34 of the Arbitration Act, challenging the Order dated 25th May 2021 are pending before the High Court in which the appellant can raise all permissible contentions. The appeal is dismissed, while leaving open the contentions raised by the appellant in pending petitions under Section 34 of the Arbitration Act before the High Court of Bombay.
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2022 (2) TMI 133
Dishonor of Cheque - misuse of cheque by appellant or not - legally enforceable debt or not - rebuttal of statutory presumption - section 138 of NI Act - HELD THAT:- There is no dispute with regard to the signatures found on the cheques and also their execution. Once the signature on the cheques and also the execution of the cheque are admitted, there is a statutory presumption that the cheques were issued for legally enforceable debt and the said presumption is a rebutted presumption. The petitioner has not rebutted the statutory presumption. Both the courts below have found the petitioner guilty for the offence under Section 138 of the NI Act. The judgments of the courts below are concurrent since the issuance of the cheques and also the signature found in the cheques are admitted and also the statutory presumption has not been rebutted by the petitioner. While exercising the revisional jurisdiction, this Court need not to sit in the armchair of the judgments of the courts below. It is enough to see as to whether there is any perversity in the orders of the courts below while appreciating evidence of finding regarding the facts. A substantive right should not be allowed to be defeated on account of a procedural irregularity which is curable. In this view of the matter, this Court is of the considered view that even in the absence of any formal letter of authority or power of attorney having been executed, a person by virtue of the office which he holds, could sign and verify the pleadings on behalf of the corporation. On reading of the entire material placed before this Court, this Court does not find any perversity in the judgments of both the courts below while appreciating evidence - taking into consideration the peculiar facts circumstances of the case coupled with the fact that an amount of ₹ 10 lac had already been paid by the petitioner after dishonor of cheque(s) and an amount of ₹ 10 lac was deposited in the Treasury Account with State Bank of India, Treasury Branch, Mini Secretariat, Kaithal, vide order dated 25.09.2009 passed by this Court, receipt of which is annexed with the file as Annexure P-4; as also all assets of petitioner were sold by the respondent Corporation resulting in realization of gross amount of ₹ 80.10 lac, taking a lenient view, period of sentence qua imprisonment of petitioner is reduced to the period already undergone by him, while maintaining the conviction. Application disposed off.
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2022 (2) TMI 132
Dishonor of Cheque - insufficiency of funds - rebuttal of presumption under Sections 118 and 139 of the NI Act - HELD THAT:- The material available on record shows that the case of the appellant before the Magistrate was that since he was having friendly relations with the respondent no. 1, he had advanced certain amounts to the said respondent on different dates, totaling to an amount of 6 lakhs. It was claimed ₹ that the respondent no. 1 failed to repay the said amounts, despite several visits and eventually, the subject cheques were issued in favour of the appellant - The statutory scheme of the aforesaid Act is that presumption operates in favour of the complainant under Sections 118 and 139 of the said Act. As long as the signature on the cheque is not denied, it is presumed that the cheque has been issued in discharge of legal debt or liability and the onus is on the accused to demonstrate why the presumption ought not to operate against him. There cannot be any doubt about the proposition that the presumption can be rebutted by the accused. It can be rebutted by the accused by leading defence evidence or by discrediting the claims made by the complainant by effective cross examination or confronting the complainant with certain documents. Another aspect of the matter is that the presumption would operate when foundational facts are established by the complainant. One of the relevant facts in this regard is the material, which is required to be placed on record by the complainant as regards the details of when and the manner in which the amounts were advanced to the accused and the source of such amounts supported by cogent material on record. The failure of the appellant in showing the said amounts in the Income Tax Returns is also a relevant factor, which the Sessions Court took into consideration while reversing the conviction and sentence - it is found that the Magistrate had erred in proceeding to convict and sentence the respondent no. 1 under Section 138 of the aforesaid Act and that the Sessions Court was justified in interfering with the same. Appeal dismissed.
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2022 (2) TMI 131
Dishonor of Cheque - legally enforceable debt or liability - rebuttal of presumption - case of the Respondent-Bank was that although the loan amount was disbursed for a particular purpose, the utilization of the same did not appear to be for the said purpose - HELD THAT:- The material on record demonstrates that an account of the Applicant was opened with the Respondent-Bank. The Respondent-bank adjusted the balance amount i.e. ₹2,64,100/- towards the outstanding loan and proceeded on the basis that amount of ₹3,00,000/- withdrawn by the Applicant was to be returned with applicable interest. The record shows that the Respondent-Bank placed on record statement of the savings bank account of the Applicant with the Society as exhibit 34 and statement at exhibit 28 was also placed in support of the claim of the bank that the amount recoverable from the Applicant along with interest came to ₹3,60,910/-. Since the aforesaid documentary evidence was placed on record to support the oral evidence of the witnesses examined in support of the case of the Respondent-Bank, it becomes clear that the conclusion rendered by the Magistrate that the subject cheque was indeed for satisfying the said outstanding amount and therefore relatable to legal debt or liability, cannot be said to be erroneous. The conclusion is based on proper appreciation and interpretation of oral and documentary evidence on record. There is no dispute about the fact that the subject cheque was signed by the Applicant and that, therefore, the presumption under Sections 118 and 139 of the aforesaid Act applied in full force. There was nothing brought on record on behalf of the Applicant to rebut such presumption and hence, it cannot be said that the conviction of the Applicant was erroneous. The sentence imposed by the Magistrate also appears to be reasonable given the facts and circumstances of the present case. This Court finds that no case is made out for interference with the concurrent orders passed by the two Courts below - the Revision Application is dismissed.
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2022 (2) TMI 130
Dishonor of cheques - acquittal of accused - rebuttal of presumption - offence under Section 138 of the N.I. Act - HELD THAT:- In this case, the respondent chose not to examine himself. The defence witness (DW1) examined by the respondent has not succeeded in rebutting the presumption that arises in these types of matters. The evidence of DW1 also does not inspire confidence because there is material on record that even this witness was charged with certain offences along with the respondent and the two were together facing prosecution for offences like cheating, etc. - based on the evidence on record, the appellants have proved the guilt of the respondent beyond a reasonable doubt. The acquittal is based on a misreading of the evidence on record and virtually ignoring the presumption that arises in terms of Section 139 of the N.I. Act. This is a fit case where the respondent should be sentenced to undergo imprisonment of six months and pay a fine of ₹ 60,000/-. In default, the respondent will have to suffer further imprisonment of one month. The conviction and sentence will however become effective from 31.03.2022. However, if within two months from today the respondent deposits in this Court an amount of ₹ 75,000/- in each of these appeals i.e. a total amount of ₹ 2,25,000/-, then, the offence will be deemed to have been compounded and the respondent will not be required to suffer any conviction or sentence - It is made clear that though these appeals are being disposed of by a common Judgment and Order, the conviction is in respect of different and distinct offences, and therefore there is no question of the sentences running concurrently. These appeals are disposed of.
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