TMI Tax Updates - e-Newsletter
February 6, 2021

Case Laws in this Newsletter:

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

Articles

1. Analysis of Union Budget 2021 on Amendment to GST

   By: Rachit Agarwal

2. AMENDMENTS TO THE PROHIBITION OF BENAMI PROPERTY TRANSACTION ACT, 1988

   By: DR.MARIAPPAN GOVINDARAJAN

3. VERY SHORT NOTICES ASKING ELABORATE DETAILS AND EVIDENCES IN FACELESS PROCEEDINGS IS NOT JUSTIFIED - REASONABLE TIME MUST BE ALLOWED AND UN-NECESSARY DETAILS AND EVIDENCES MUST NOT BE ASKED TO AVOID WASTAGE OF TIME OF TAX AUTHORITY AND ASSESSEE AND ALSO TO AVOID LITIGATION.

   By: DEVKUMAR KOTHARI

4. CPGRAMS Grievance Redressal Portal of GOI-Its Efficacy

   By: shivaprasad chhatre

News

1. Private sector has a key role in India’s growth recovery, Government will be a good facilitator: Finance Minister Smt. Nirmala Sitharaman

2. Revenue Deficit Grant of ₹ 6,195 crore released to 14 States

3. Policy to boost Agricultural Exports

4. Efforts to increase exports

5. MCA21 Version 3.0 to be launched in Fiscal 2021-22

6. Budget 2021-2022 minimizes Regulatory Compliance Burden to improve Ease Of Doing Business for industry, says Secretary DPIIT

7. Secretary DPIIT says increase in FDI limit in Insurance Sector will have positive impact on the Indian Economy

8. Measures envisaged in the Budget 2021-22 will boost the Start-ups in the country : Secretary DPIIT

9. Startup India Seed Fund Scheme

10. Single Window Approval System for Industries

11. Industrial parks and industries in the country

Notifications

Central Excise

1. 01/2021 - dated 4-2-2021 - CE (NT)

Amendment in Notification No. 13/2017-Central Excise (N.T.), dated the 9th June, 2017

Customs

2. 15/2021 - dated 5-2-2021 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver

SEBI

3. SEBI/LAD-NRO/GN/2021/08 - dated 4-2-2021 - SEBI

Securities and Exchange Board of India (Mutual Funds) ( Amendment) Regulations, 2021

Highlights / Catch Notes

GST

• Taxable Supply Valuation: Manpower Services Determined by Transaction Value Including Wages and 2% Fee.

  Case-Laws - AAR : Valuation - The applicant (supplier) and the recipients are not related and the price is the sole consideration. Therefore the value of the taxable supply of manpower services of the applicant shall be the transaction value i.e. the total bill amount inclusive of actual wages of the manpower supplied and the additional 2% amount paid to the applicant. - AAR
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• Kuvempu University Exempt from Reverse Charge; Applicant Must Pay 18% GST on Security and Housekeeping Services.

  Case-Laws - AAR : Classification of services - rate of GST - providing security guards and housekeeping services to Kuvempu University, Shivamogga - The Kuvempu University is an establishment of the State Government. Therefore, Kuvempu University is not liable to discharge tax under reverse charge basis. Hence the applicant is liable to discharge GST @ 18% on forward charge mechanism on the said supply of manpower services. - AAR
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• GST Applies to Indian Agent's Business Promotion Services for Foreign Company Under IGST Act Section 13(8.

  Case-Laws - AAR : Levy of GST - Export of Supply of services or not - providing business promotion services on behalf of the foreign company, as an agent, by utilizing his medical expertise - the applicant who is the provider of services is located in India and the recipient of service, i.e. the foreign company, is located outside India. The payment for such service is received in foreign currency and the applicant and the foreign company are not related persons. The place of supply is India, in terms of Section 13 (8) of the IGST Act 2017 and hence the impugned services are not covered under export of services, as all the required conditions are not fulfilled. - AAR
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• Research Support Services Classified Under SAC 998599 Not Exempt from GST Due to Lack of Healthcare Connection.

  Case-Laws - AAR : Classification of services - HSN Code - Healthcare services or not - The services provided by the applicant, as explained earlier is not in connection with the diagnosis or treatment or care for illness and is related to support services for research and is covered under SAC 998599 and hence is not covered under healthcare services - Benefit of exemption from GST is not available - AAR
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• Court Grants Bail to Accused in Fake ITC Invoice Fraud Due to Health Concerns and Lengthy Incarceration.

  Case-Laws - DSC : Grant of Bail - fraudulent availment of ITC upon the strength of fake invoices providing fabricated information on E-way bill portal - Considering the peculiar health condition of the applicant/accused and the period of incarceration, the applicant/accused is ordered to be released on bail on his furnishing bail bond in sum of ₹ 5,00,000/- with two sureties in the like amount - DSC
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Income Tax

• Court Allows Late Filing of Form No. 10 for Tax Exemption; Flexibility Emphasized u/s 11 of Income Tax Act.

  Case-Laws - HC : Exemption u/s 11 - delay in filing the Form no.10 - Condonation of delay u/s.119(2)(b) - the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either beore the Income Tax Officer or before the appellate authority by assigning sufficient cause. - HC
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• Negative Working Capital Adjustment Unnecessary for Captive Service Providers Due to Risk-Free, Total Cost-Plus Compensation Model.

  Case-Laws - AT : TP Adjustment - negative working capital adjustment shall not be made in case of a captive service provider as there is no risk and it is compensated on a total cost plus basis. - AT
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• Inter-corporate deposits in regular business operations are not deemed dividends under Income Tax Act Section 2(22)(e).

  Case-Laws - AT : Deemed dividend u/s. 2(22)(e) - the loans and advances were made as inter corporate deposits in ordinary course of its business which are not subject to the provisions of deemed dividend as provided under section 22(2) - AT
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• Court Clarifies Taxability of Share Premiums u/s 56(2)(viib); Timing of Valuation Report Not a Barrier.

  Case-Laws - AT : Taxability of share premium collected by assessee u/s.56(2)(viib) - fair market value of shares - when the assessee has substantiated share price to the satisfaction of the AO with the help of valuation report, even if, such valuation report is obtained subsequent to the date of issue of shares, it does not alter the situation. Assessing Officer as well as learned CIT(A) were erred in rejecting valuation report filed by assessee on this count. - AT
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• Unexplained Cash Credit Addition Deleted: Section 68 Ruling Overturned After Evidence from Sundaram Finance Ltd. Acknowledged as Valid.

  Case-Laws - AT : Unexplained cash credit u/s 68 - non-existing liability - AO as well as the ld.CIT(A) without considering reconciliation filed by the assessee along with necessary evidences including confirmation letter from M/s. Sundaram Finance Ltd., has made addition towards difference in liability u/s.68 of the Act, although said liability was non-existing liability, but continued to live in the books of account of the assessee due to inadvertent error. - Additions deleted - AT
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• Income Tax Officer's estimated addition u/s 69 unjustified without identifying specific broker in MCX transaction losses.

  Case-Laws - AT : Addition u/s 69 - When the AO does not know as to who is the broker to whom alleged amount is given, AO was not justified in making estimate based on general information that assessee has given the impugned amount to the broker for transaction in MCX. Since, it is an admitted case that assessee suffered loss in MCX transactions, therefore, there was no justification to make estimated addition - AT
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• Interest Paid on Borrowings for Partnership Capital Contribution Deductible, Even Without Interest Income from Firm.

  Case-Laws - AT : Disallowance of interest expenditure in the hands of partner - investment as capital in the business of the partnership firm - Absence of earning any interest income on capital from the firm is no bar to claim the interest paid on borrowings for the purpose of contributing capital to the firm by the assessee as deductible expenditure. In such an event there would be loss under the head”PGBP” subhead “interest, salary from the partnership firm” and the assessee is entitled to set off the said loss against other income under the same head “PGBP”. - AT
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• Management Incentive Reward Not a Bonus u/s 36(1)(ii); Allowed as Business Expenditure u/s 37.

  Case-Laws - AT : Addition u/s 43B - Bonus - Disallowance of provision for management incentive performance reward - the payment under the good work reward does not constitute bonus within the meaning of section 36(1)(ii) of the Act and it is allowable as normal business expenditure u/s. 37 - AT
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• Tax Case: Section 68 Cash Credit Misreported in AY 2013-14 Cannot Be Assessed Just for Voluntary Declaration.

  Case-Laws - AT : Addition u/s 68 - Cash credit surrendered - Income erroneously offered by the assessee in current AY - The above said credits/ amount were not received during the financial year relevant to AY 2013-14. - the income erroneously offered by the assessee in AY 2013-14 cannot be assessed in that year, merely for the reason that the assessee has offered the same voluntarily. - AT
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Indian Laws

• Petitioner Fails to Rebut Presumption of Debt u/s 118 of Negotiable Instruments Act; Cheque Dishonored for Insufficient Funds.

  Case-Laws - HC : Dishonor of Cheque - Insufficiency of funds - The petitioner has not been able to discharge the initial burden on him to rebut the presumption under Section 118 of the N.I. Act. The fact that the petitioner took financial assistance from the respondent is admitted. The petitioner has not been able to show as to how there was no subsisting debt on the date when the cheques were dishonoured due to insufficiency of funds - HC
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Service Tax

• Refund of Unutilized CENVAT Credit: Legitimacy of Claim Focused, Not Initial Entitlement Reassessment.

  Case-Laws - AT : Refund of lying unutilized in their CENVAT credit account - at the time of availement of the cenvat credit, it was never disputed that the appellant is not entitled to the cenvat credit on the service in question. - At the time of entertaining the refund claim, the issue of admissibility of the CENVAT credit cannot be raised - AT
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• Appeals Abate Upon Appellant's Death Unless Legal Representative Continues u/r 22 of CESTAT Procedure Rules 1982.

  Case-Laws - AT : Continuation of proceedings after death or adjudication as an In-solvent of a party to the appeal or application - as per Rule 22 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982, the appeal shall abate on the death of the appellant unless an application is made for continuation of such proceedings by or against the successor in interest, executor, administrator, receiver, liquidator or other legal representatives of the appellant or applicant or respondent, as the case may be - no proceedings can be initiated against a death person - AT
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• Time Spent in Wrong Forum Excludable from Limitation Period for Appeals; Department Must Redirect Misfiled Appeals.

  Case-Laws - AT : Maintainability of appeal - time limitation - time spent before wrong fora to be excluded from limitation period or not? - if the appeal was filed wrongly before the Commissioner of Service Tax, then it was the duty of the CST to have sent the same to the Commissioner(Appeals) who was located in the same building but the same was not done by the Department and therefore the time spent in pursuing the appeal before the wrong forum is condonable. - AT
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• Service Tax on Electricity Charges Exempt u/s 66F(3) of Finance Act; Late Fees, Meter Rent, Supervision Charges Included.

  Case-Laws - AT : Levy of Service tax - tolerating an act of electricity consumers - amount of late payment surcharge, meter rent and supervision charges received by the appellant from the electricity consumers - - all services related to transmission and distribution of electricity are bundled services, as contemplated under section 66F(3) of the Finance Act, and are required to be treated as a provision of a single service of transmission and distribution of electricity, which service is exempted from payment of service tax. - it is not possible to sustain the levy of service tax on such amount - AT
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Case Laws:

• GST

• 2021 (2) TMI 198
  Valuation - rate of GST - manpower services only on the services charges or on the total bill amount - GST chargeable @ 18% or not - HELD THAT:- The applicant is being paid services charges @2%, in addition to the wages and hence they directed the applicant to charge GST on the service charges only but not on the bill amount. We proceed to examine the valuation of the manpower services. We invite reference to Section 9 of the CGST Act 2017, which is relevant to levy and collection of GST - Section 9(1) of the CGST Act 2017 stipulates that CGST shall be levied on all intra-state supplies of goods or services or both, on the value determined under Section 15. Thus the value of the instant service need to be decided in terms of Section 15. Section 15 of the CGST Act 2017 deals with value of taxable supply and Section 15 (1) stipulates that the value of supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration of the supply . In the instant case, the applicant (supplier) and the recipients are not related and the price is the sole consideration. Therefore the value of the taxable supply of manpower services of the applicant shall be the transaction value i.e. the total bill amount inclusive of actual wages of the manpower supplied and the additional 2% amount paid to the applicant.

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• 2021 (2) TMI 197
  Classification of services - rate of GST - providing security guards and housekeeping services to Kuvempu University, Shivamogga - GST chargeable @ 18%? - HELD THAT:- The recipient of the applicant i.e Kuvempu University does not provide education by way of pre-school and education upto higher secondary school or equivalent, and also due to the fact that the services provided to the University are not security or cleaning or housekeeping services but supply of manpower services as stated above. Hence the applicant is also not eligible to get exemption under entry number 66 of entry (b) of Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017 - the applicant is of the view that they are providing supply of Security service as well as manpower service used for maintenance and cleaning of University premises and play ground, campus area and building office to Kuvempu University, Shivamogga and hence the impugned transaction attracts reverse charge mechanism as per section 9(3) of the GST Act vide Notification No. 13/2017-Central Tax (Rate) dated 28-06-2017 as amended by the Notification No. 29 / 2018-Central Tax (Rate) dated 31-10-2018. The Kuvempu University is an establishment of the State Government. Therefore, Kuvempu University is not liable to discharge tax under reverse charge basis. Hence the applicant is liable to discharge GST @ 18% on forward charge mechanism on the said supply of manpower services.

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• 2021 (2) TMI 196
  Levy of GST - requirement of registration - services rendered to the Hospitals / Laboratories/ Biobanks registered in United States of America (USA) and other countries includes export of intellectuals like clinical data completions, analysis, clinical opinion advisory consultation through Phone calls, Video Conference, Mails and other Electronic devices and the applicant is living in India and services rendered from the place of India - Heath Care Services - Medical Services and Paramedical Services (Part-time practicing in Clinic) rendered in India to the recipient from India. HELD THAT:- The applicant is a clinical establishment as it is a place established to carry out diagnostic or investigative or treatment services of diseases - it is clear that the services provided by the applicant are covered under clause (a) of Entry no. 74 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and hence are exempt from tax under the CGST Act. Similarly, it is also exempted from tax under the KGST Act, 2017 and also under the IGST Act, 2017. Business Promotion Services provided by the applicant to the foreign companies - HELD THAT:- It is seen that the applicant is a registered person in India and the recipient of services is the foreign company. The applicant is getting the consideration in foreign currency from the foreign company to which he is providing services - The contract is examined with regard to the compensation and it is seen that the applicant is paid a monthly retainer of US $5000 and the applicant shall submit an invoice for each billing period on the last day of the corresponding month. In addition to this, the foreign recipient shall also pay the applicant funds for carrying out projects requested by the foreign company. Further, the foreign company shall reimburse for expenses incurred by the applicant and his agents or employees on behalf of the foreign company, including travel, lodging, meals for customer visits or conferences. These expenses should be pre-approved by the foreign company and the applicant shall submit expense reports and reasonable documentation on a periodic basis to the foreign company. In the instant case, the applicant is providing business promotion services on behalf of the foreign company, as an agent, by utilizing his medical expertise in organising collaborative projects, histopathological consulting and business development. Thus the applicant indubitably is committed through the agreement to facilitate the supply of services, in relation to establishment of Indian clinical centres in India, on behalf of the foreign company, as an agent, but not on his own account. Hence the impugned services squarely get covered under intermediary services. In the instant case, with regard to this service, the applicant who is the provider of services is located in India and the recipient of service, i.e. the foreign company, is located outside India. The payment for such service is received in foreign currency and the applicant and the foreign company are not related persons. The place of supply is India, in terms of Section 13 (8) of the IGST Act 2017 and hence the impugned services are not covered under export of services, as all the required conditions are not fulfilled. Applicable tax rate on the impugned services - HELD THAT:- The nature of services provided by the applicant are business promotion and management services, covered under SAC 9983 and are liable to tax at 9% CGST under entry no. 21 (ii) of the Notification No.11/2017- Central Tax (Rate) dated 28.06.2017 and 9% KGST under entry no.21(ii) of Notification (11/2017) No. FD 48 CSL 2017 dated 29.06.2017 and at 18% under IGST Act under entry 21(ii) of Notification No.08/2017- Integrated Tax (Rate) dated 28.06.2017 - The applicant is providing Business Promotion Management Services, covered under SAC 9983 and are taxable as discussed at para 11 supra. The applicant being a service provider, as an intermediary, becomes a taxable person and hence is liable for registration in terms of Section 22(1) of CGST Act 2017. Therefore the applicant is liable for registration subject to threshold limit of turnover. It is observed that the applicant has already been registered under section 22 of the Central Goods and Services Tax Act, 2017 and also the Karnataka Goods and Services Act, 2017. Applicability of tax liability on the health care services - Medical Services and Para-medical services (part time practicing in Clinic) rendered in India to the recipient from India - HELD THAT:- It is clear that the diagnostic and treatment services provided by the applicant from his clinical establishment to any person in India would be exempt as per the entry 74 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 and entry 74 of Notification (12/2017) No. FD 48 CSL 2017 dated 29.06.2017 and entry 77 of Notification No. 09/2017- Integrated Tax (Rate) dated 28.06.2017.

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• 2021 (2) TMI 195
  Classification of services - HSN Code - Healthcare services or not - clinical research activities carried out in India to determine the safety and effectiveness (efficacy) of medications, devices, diagnostic products and treatment regimens intended for human use - applicability of exemption given under Notification No. 9/2017- Integrated Tax (Rate) dated 28.06.2017 - input tax credit of tax paid or deemed to have been paid - tax on outward services - requirement of registration - HELD THAT:- The study undertaken by the applicant is being conducted in three Government Medical Colleges in Calicut, Bengaluru and Hubballi and is in partnership with the National Health Mission of the Government of India. It has been approved by all relevant ethics committees and the Indian Council of Medical Research. The Study is funded by the UK Government (National Institute for Health Research) at the request of WHO, for reducing epilepsy in India. It is sponsored by Imperial College, London and is entirely for non-profit and for the benefit of the poor people in India. If the study shows the care bundle intervention is effective, then it would form the basis for Health Policy in India. Compensation, invoicing and payment - HELD THAT:- It is seen in the agreement that the sponsor shall compensate only for the completed patient visits, laboratory and other investigations, pharmacy costs and other comparable costs as defined by the protocol and approved by the sponsor. Any other expenses shall not be compensated for without a separate written agreement concluded with the sponsor thereof. The sponsor shall compensate for any extra travelling costs attributable to the trial subject using public transportation and caused by his/her participation in the trial. In order to ensure the privacy of the subjects, the institution (i.e. applicant) takes care of the payments of compensations to the subjects and charges the sponsor these costs. The sponsor shall bear the costs of all necessary training, meetings, other travelling and events related to the trial - All payments relating to the trial, including compensation paid to the investigators and other research personnel shall be directed to the account indicated in the invoice of the institution. Relationship between the parties - HELD THAT:- The agreement states that each party at all times are to be considered as independent contractor and transacting on principal to principal basis and shall have no authority to assume or create any obligation whatsoever express or implied, in the name of the other Party or to bind the other Party in any way or manner. Nothing in the agreement shall be deemed to constitute either party a partner, agent, joint venture or legal representative of the other party, or to create any fiduciary relationship between the parties - It is clear from the tripartite agreement, that the applicant is entering into contractors or agreements with the trial sits, provide equipments to enable the conduct of research, engage research staff, manage the safe conduct of research and liaise with the investigators. This clearly states that the applicant is managing the research in India and in not per-se involved in the research. It is a support activity and the principal investigators conducting the research are the actual persons doing research and providing the data to the sponsor. Research activities - HELD THAT:- The sample consultant agreement submitted by the applicant is examined and found that the consultant hired are rendering services to the applicant and the manner in which the consultant chooses to complete the services is in the sole discretion and control of the consultant. The consultant s obligations shall be conditioned upon receiving such information and co-operation from the applicant as may be reasonably necessary to perform the services. It is also made clear that the agreement would not constitute an employer-employee relationship and it would be the intent of the applicant and the consultant that the consultant at all times be an independent contractor. It is also made clear that the applicant would be liable to pay the consideration of the contract - it is seen that the outsourced consultants by the applicant are also engaged in providing support services and not actual research activities. The opinion of the applicant that their activity would be covered under health care services is examined and found that the term health care services is defined in Notification No.09/2017 - Integrated Tax (Rate) dated 28.06.2017 - The services provided by the applicant, as explained earlier is not in connection with the diagnosis or treatment or care for illness and is related to support services for research and is covered under SAC 998599 and hence is not covered under healthcare services and thereby not covered under entry no. 74 of Notification No.12/2017- Central Tax (Rate) dated 28.06.2017. Whether the transaction is an export of service? - HELD THAT:- In the present case, the applicant is the supplier of service 86 is located in India and the recipient of service, i.e. the Imperial College of London, is located outside India. The payment for such service is received in convertible foreign currency and the supplier and recipient are not related persons. Hence the determination of whether the service provided by the applicant to the Imperial College London is an export of service or not is wholly dependent on the place of supply. Whether the applicant is an intermediary or not? - HELD THAT:- The applicant is involved in the arranging and facilitation of the supply of research services by the principal investigator to the Imperial College London and he is not covered under the exclusion clause as he is not supplying such research services on his own account, therefore the applicant is covered under the definition of an intermediary under section 2(13) of the IGST Act, 2017. The activity of the applicant is squarely covered under the entry no.23(ii) of Notification No.11/2017- Central Tax (Rate) dated 28.06.2017 and is liable to tax at 9% CGST and similarly liable to tax at 9% KGST, in case the transaction is a intra-State supply - Since the services provided by the applicant is not exempt, the applicant is eligible to claim and avail input tax credit in terms of section 16 of the CGST Act, 2017 and section 16 of the KGST Act, 2017 - Since the applicant is involved in intra-State supply of services, as the location of the supplier and the place of supply is the same state, the applicant is liable to register as per the terms of section 22 of the CGST Act, 2017.

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• 2021 (2) TMI 194
  Principles of Natural Justice - validity of assessment orders - petitioner has not been afforded an effective opportunity of hearing in the matter - HELD THAT:- he petitioner has not been afforded an effective opportunity of hearing in the matter. The order has been passed exparte. The petitioner has placed on record a medical certificate dated 05.03.2020 certifying that the partner of the petitioner firm was suffering from Infective Hepatits and on bed rest between 06.09.2019 and 18.02.2020. - It is not in dispute that the petitioner has received the orders of assessment and filed statutory appeals on 28.02.2020 with a delay of 30 days/ Applications seeking condonation of delay were also filed. However, on 13.03.2020, the appeals were returned for the reason that they were not filed online, date of receipt of orders was not produced and pre-deposit of 10% of the disputed tax was not effected. Around then, the COVID pandemic struck and the petitioner appears to have lost sight of proceedings thereafter. In the interim, a bank account of the petitioner also appears to have been attached in July, 2020. The impugned orders have been passed without the petitioner having been extended an effective opportunity of hearing to put forth its contentions - appeal allowed by way of remand.

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• 2021 (2) TMI 193
  Prayer for and is allowed 10 days time to file counter affidavit - HELD THAT:- Put up this case as a fresh case on 25.02.2021 . Till then the applicant will not be arrested but he will appear before the Proper Officer for investigation.

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• 2021 (2) TMI 192
  Classification of services - demand under works contract relating to immovable property - validity and legal sustainability of the said order - violation of principles of natural justice - HELD THAT:- The present impugned order is assailable before the appellate authority. It is submitted by the learned Government Pleader for Commercial Tax that the Joint Commissioner is the appellate authority constituted under the above said provision of law. In view of the above provision of law, this court is not inclined to entertain the present writ petition under Article 226 of the Constitution of India and this court also does not propose to express any opinion on the merits of the matter as this court is relegating the petitioner to an alternative remedy of appeal. It is also submitted by the learned Government Pleader that according to Sub-section (1) of Section 107 of the Act, the appeal needs to be filed within three (3) months from the date of the order. The writ petition is disposed of, at the stage of admission, leaving it open for the petitioner herein to avail the statutory remedy of appeal under Section 107 of the Act.

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• 2021 (2) TMI 191
  Grant of Bail - fraudulent availment of ITC upon the strength of fake invoices providing fabricated information on E-way bill portal - HELD THAT:- The sacrosanct right of life prevails upon any other contention of the complainant department resisting the grant of bail to the applicant/accused. Even otherwise also applicant/accused is reported to be in J/C since 10.12.2020. The investigation in the instant case primarily hovers around documentary evidence which is reported to be in possession of complainant department and the complainant department is not seeking any further custodial interrogation of the applicant/accused. Considering the peculiar health condition of the applicant/accused and the period of incarceration, the applicant/accused is ordered to be released on bail on his furnishing bail bond in sum of Rs. 5,00,000/- with two sureties in the like amount - the applicant/accused shall continue to cooperate in the investigation as and when called by the IO - the applicant/accused shall scrupulously appear at each and every stage of the proceedings before the concerned court so as not to cause any obstruction or delay to its progress.

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• Income Tax

• 2021 (2) TMI 190
  Addition u/s 68 - proof of source of the donor - whether amount has received by way of Gift from his brother (relative) through banking channel? - HELD THAT:- There is delay of 1233 days in preferring the Special Leave Petition. The explanation offered in the application seeking condonation thereof is far from being satisfactory. We, therefore, refuse to condone the delay. Consequently, this Special Leave Petition is dismissed on the ground of delay.

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• 2021 (2) TMI 189
  Ex-parte action taken by the Respondents for adjusting the refund for the AY 2019-20 against the disputed income tax demand for the AY 2017-18 - HELD THAT:- As we have enquired from Mr. Vohra, whether the Petitioner would be satisfied incase time-bound directions are issued for disposal of the appeal pending before CIT (A), and that, if the outcome of the decision results in any refund due to the Petitioner, the same can follow. Mr. Vohra, on instructions, states that Petitioner is agreeable to the same. He, however, submits that once the appeal is decided and in case any tax refund becomes due to the Petitioner, the same should be expeditiously dealt with. We have also heard Mr. Zoheb Hossain, Senior Standing Counsel for the Revenue. Accordingly, having considered the entire conspectus of the case, we feel that instead of issuing the directions as sought for, it would be in fitness of things that, the pending appeal of the Petitioner before CIT (A) is disposed of in a time-bound manner. We accordingly direct the concerned CIT (A), Delhi to decide the pending Appeal No.-1/10701/2019-20, within a period of two months from today. It is further directed that, in case the CIT (A) requires a report from the Assessing Officer, the same shall also be furnished within the timeline as specified by CIT (A).

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• 2021 (2) TMI 188
  Disallowance u/s 14A r.w.r. 8D - whether the disallowance under Section 14A of the Act can be made while computing book profit of a Company under Section 115JB? - HELD THAT:- The first two questions, as proposed by the Revenue, are no longer res integra in view of the decision in the case of Deputy Commissioner of Income Tax vs. Vasco Sales Marketing Corporation [ 2015 (10) TMI 1088 - KERALA HIGH COURT] - This judgement refers to and rely upon the Supreme Court decision in the case of S.A. Builder Ltd. vs. Commissioner of Income Tax (A), Chandigarh [ 2006 (12) TMI 82 - SUPREME COURT] . In view of the settled position of law, the disallowance under Section 14A would not be permissible. We do not find that the Tribunal has committed any error. Disallowance of bad debt claim - stand of the assessee was rejected by Revenue authorities on the ground that since it has advanced fresh loans during the year, therefore, it cannot be said that recovery of interest has become bad - according to the ld. CIT(A) taxes in actuality were not paid by the QFL on cessation of this liability - HELD THAT:- We are in agreement with the view taken by the Tribunal that The moment debts have been written off in the books, it is to be allowed without expecting the assessee to demonstrate whether debts have actually become bad or not. A reliance can be made to the decision of TRF Ltd. [ 2010 (2) TMI 211 - SUPREME COURT] . It is altogether irrelevant, whether QFL actually paid tax or not. If a liability has ceased, then it will be added back in the taxable income of the QFL. Now, if that concern was suffering huge loss, then that cannot be the reason to disallow claim of the assessee. If this type of logic is being accepted, then every business organization was required to show profit only. This is a misplaced notion at the end of the ld. CIT(A) for rejecting the claim of the assessee. We allow this ground of appeal, and delete disallowance of bad debts. None of the three questions as proposed could be termed as the substantial questions of law for the purpose of Section 260A of the Act, 1961.

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• 2021 (2) TMI 187
  TP Adjustment - TPO adopted transaction net method or bench marking cost as the profit level indicator and the CIT(Appeals) has confirmed the aforesaid finding - Whether Tribunal erred upholding the Commissioner of Income Tax (Appeals) s order ignoring the basic mistake therein that having accepted Transaction Net Margin Method and the Profit Level Indicator as OP/TC when the application of the Profit Level Indicator on the total cost is proper and not on the payments made to the Associated enterprises? - HELD THAT:- Section 92(1) of the Act provides that any income arising from an international transaction shall be computed having regard to Arms Length Price. Section 92B(1) deals with meaning of international transaction, which means a transaction between two or more associated enterprises either or both of whom are non residents in the nature of purchase, sale or lease of tangible or intangible property or provisions of services or rendering or borrowing money. Section 92C of the Act deals with computation of Arms Length Price. CIT (Appeals) has recorded a finding that since the assessee had earned profit in a technical service segment in contracts other than contracts with SKF and therefore, Transfer Pricing Officer should not have loaded the mark-up on the costs / expenses incurred in meeting the obligations under contracts other than the contracts with SKF on which the assessee had earned a profit of 36% on operating cost. The aforesaid finding of fact has been affirmed in appeal by the tribunal. The aforesaid findings are findings of fact, which have been arrived at by the Commissioner of Income Tax (Appeals) as well as the tribunal on the basis of meticulous appreciation of evidence on record. It is the cardinal principle of law that tribunal is fact finding authority and a decision on facts on the tribunal can be gone into by the High Court only if a question has been referred to it, which says the finding of the tribunal is perverse. [SEE: SUDARSHAN SILKS SAREES VS. CIT [ 2008 (4) TMI 5 - SUPREME COURT] and MANGALORE GANESH BEEDI WORKS VS. CIT [ 2008 (4) TMI 5 - SUPREME COURT]

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• 2021 (2) TMI 186
  Validity of TP order - AO ought to have passed an order of draft assessment in terms of Section 144C of the Act and not an order of regular assessment quantifying the final demand and imposing penalty - HELD THAT:- The error committed is not a technical lapse as sought to be explained away, but one that is substantive. It is an admitted position that the assessment of this petitioner involves issues of transfer pricing and an order has been passed by the Transfer Pricing Officer determining the arms length price. The scheme of assessment in terms of Section 144C statutorily requires the officer to pass a draft assessment order at the first instance and put the same to the assessee for its acceptance or for filing of objections before the Dispute Resolution Panel. The language of Section 144 C makes this position more than abundantly clear. As draw support in this regard from a decision of this Court in VIJAY TELEVISION (P.) LTD. [ 2014 (6) TMI 540 - MADRAS HIGH COURT] confirmed by the Division Bench [ 2018 (10) TMI 1125 - MADRAS HIGH COURT] that reiterates the settled proposition that Section 144C sets forth a mandatory scheme of assessment and it is incumbent upon the Assessing Officer to pass an order of draft assessment at the first instance before proceeding to finalise the assessment in line with the procedure set out under Section 144C. The impugned order has been passed inadvertently by choosing of the wrong field in the Income Tax Department software would not just be an over-simplification, but a wrong statement since a perusal of the order of assessment reveals that the assessment has been styled consciously, as an order of regular assessment only. A draft order of assessment would normally indicate, in conclusion, that the assessee has the option of either acquiescing with the proposed assessment or proceeding to file objections to the same within 30 days. This statement is conspicuously absent in the present order. Thus no hesitation in quashing the impugned order and consequential demand. The Writ Petition is allowed.

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• 2021 (2) TMI 185
  Exemption u/s 11 denied - delay in filing the Form no.10 - Condonation of delay u/s.119(2)(b) - rejecting the application filed by the writ-applicant for condonation of delay in filing the Form no.10 - whether genuine hardship had been shown which prevented it from filing the Form no.10.? - HELD THAT:- Approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, the respondent might be justified in denying the exemption under Section 12 of the Act by rejecting such condonation application, but an assessee, a public charitable trust past 30 years who substantially satisfies the condition for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned. We may also refer to the decision of this Court in CIT v. Gujarat Oil and Allied Industries Limited [ 1992 (9) TMI 67 - GUJARAT HIGH COURT ] wherein it is held that the provision regarding furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment. This Court took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either beore the Income Tax Officer or before the appellate authority by assigning sufficient cause. Writ-application succeeds and is hereby allowed - The delay condonation application filed by the writ-applicant before the respondent is hereby allowed.

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• 2021 (2) TMI 184
  Deduction u/s. 54 - Claim denied on the reason that assessee has not filed any supporting evidence to show the sale consideration was reinvested in new residential property - HELD THAT:- Before us, the ld. AR pointed out to the copies of bank statements and submitted that the amount is accounted out of sale consideration towards construction of new residential house and deduction u/s. 54 has to be granted - assessee has not produced the relevant bills, vouchers and receipts towards incurring the cost of construction of new residential property. The assessee pleaded for an opportunity to produce the relevant evidence in support of the cost of construction of new residential house. Assessee submitted that the Schedule of property in original sale deed dated 7.4.2017 itself shows that assessee has purchased the Site No.20 at Cholanayakanahalli Village, Kasaba Hobli, Bangalore North Taluk situated within Ward No.96 Guddadahalli Main Road, BMP, measuring East to West: Northern Side 37 ft, Southern Side : 45 ft., and North to South : Eastern side 78 ft. and on the Western side 94 ft. along with two squares A.C Sheet shed with electric amenity and the same was sold vide Sale Deed dated 29.8.2012. Being so, in our opinion, the CIT(Appeals) is not justified in holding that the property sold was not a residential house. We are of the opinion that the ld. AR s request for opportunity to produce all the relevant documents has to be accepted - we remit the entire issue to the file of the Assessing Officer for fresh consideration and direct the assessee to produce all the evidence in support of his claim for deduction u/s. 54. Appeal of the assessee is treated as allowed for statistical purposes.

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• 2021 (2) TMI 183
  TP Adjustment - Comparable selection - application of turnover filter in choosing comparable companies - companies had turnover which was in excess of Rs. 200 crores and therefore these companies cannot be regarded as a comparable in the case of the assessee whose turnover was only Rs. 18 crores - HELD THAT:- As decided in in the case of Autodesk India (P.) Ltd. [ 2018 (7) TMI 1862 - ITAT BANGALORE ] decisions cited by the learned DR before us cannot be the basis to hold that high turnover is not relevant criteria for deciding on comparability of companies in determination of ALP under the Transfer Pricing regulations under the Act. For the reasons given above, we uphold the order of the CIT(A) on the issue of application of turnover filter and his action in excluding companies accordingly. Assessee seeks inclusion of only 1 comparable being, Akshay Software Technologies Ltd. - As decided in case of M/s NXP India Pvt Ltd. [ 2020 (5) TMI 86 - ITAT BANGALORE ] this company is engaged in providing professional services, implementation, support and maintenance of ERP products and other services. These are nothing but software development services, as is evident from the notes forming part of financial statements which is placed in paper book at page 1825. Further the revenue from software services accounts for 99.45% of the total revenue of the company is evident from the financial statements placed on record. Being so, we direct TPO to consider this company as comparable to assessee s case while selecting the comparables. Negative working capital adjustment without appreciating the fact that assessee is a captive service provider - We find that in the case of M/S. SOFTWARE AG BANGALORE TECHNOLOGIES PVT. LTD. [ 2016 (3) TMI 1384 - ITAT BANGALORE ] passed by this Tribunal, it has been held that negative working capital adjustment shall not be made in case of a captive service provider as there is no risk and it is compensated on a total cost plus basis. We therefore direct Ld.TPO to compute the ALP in accordance with the directions contained in this order after affording assessee opportunity of being heard.

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• 2021 (2) TMI 182
  Revision u/s 263 - Addition u/s 68 - HELD THAT:- CIT(A) in his order was wrong in presuming that the AO had passed his order u/s 143(3) of the Act as a consequence to the order passed u/s 263 of the Act by the Pr. CIT. This is not a case where the Pr. CIT has passed any order u/s 263 of the Act. This wrong presumption in our view influenced the decision of the ld. CIT(A). There are five shareholders in this case. The documents and evidences that were filed by the assessee in support of the transaction are given at page 2 of the AO s order. Copies of the same are fled before us by way of a paper book. The identity of the investor companies stand proved. As far as the justification for the question of share premium is concerned, the assessee has furnished a share valuation certificate. The AO has not pointed out any infirmities or errors in this share valuation certificate. He has not rejected any of the documents filed by the assessee. Thus the share premium charged is justified in this case. The assessments of the share subscriber companies have been completed by the Income Tax Department u/s 143(3) of the Act. When the assessments of the share applicant companies are completed u/s 143(3) of the Act, the identity of the shareholder companies cannot be doubted. When the share applicant companies who have invested in the share capital of the assessee company, and when their respective assessments are completed u/s 143(3) of the Act, no addition can be made in the hands of the assessee company u/s 68 - See M/S. C.P RE-ROLLERS LTD. VERSUS D.C.I.T, CIR-1, DURGAPUR [ 2019 (4) TMI 557 - ITAT KOLKATA] We hold that the assessee in this case has proved the identity and creditworthiness of the share applicant companies and the genuineness of the transaction. The Revenue has not brought out any contrary evidence on record. Under these circumstances, we delete the addition made u/s 68 of the Act and allow the appeal of the assessee.

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• 2021 (2) TMI 181
  Validity of assessment - No Notice u/s 143(2) issued - Jurisdiction ITO or DCIT - HELD THAT:- In the remand report, the AO clearly stated that notice u/s 143(2) of the Act was issued by DCIT, Circle-1, Kolkata. The ld. D/R could not controvert the contention of the assessee that no notice u/s 143(2) of the Act was issued by the DCIT-13(1), Kolkata, who completed the assessment. The income of each of all these four assessee companies which are in appeal before us is below Rs.2 lakhs. Thus, as per the CBDT Instruction No. 1/2011, the jurisdiction of these assessees, based on monetary limits lies with the ITO and not with the DCIT. This fact could not be controverted by the ld. D/R. CBDT instructions are binding on all the Income Tax Authorities. See HILLMAN HOSIERY MILLS PVT. LTD. VERSUS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11 (1) [ 2021 (2) TMI 26 - ITAT KOLKATA] The orders are bad in law for the reason that the assessing authority passed the order u/s 143(3) of the Act i.e. DCIT-13(1), Kolkata has not issued a notice u/s 143(2) of the Act and also for the reason that the jurisdiction of these cases lies with the ITO and not the DCIT. Appeals of the assessees are allowed.

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• 2021 (2) TMI 180
  Rectification of mistake - Addition u/s 68 - ITAT Confirmed addition - HELD THAT:- Huge payments of Rs. 40 lacs being fresh cash credit were received by assessee during the previous year relevant to impugned assessment year, which is without any interest liability being incurred by assessee. The peak cash credit during the year (inclusive of opening balance) was to the tune of Rs. 90 lacs from said M/s R R Steel Industries, which did not bear any interest and sale transaction made by assessee to said M/s R R Steel Industries was merely Rs. 39,399/-. In our considered view based on material on record , the tribunal has passed well reasoned order in which conscious decision is taken by tribunal in allowing Revenues appeal by holding that creditworthiness of the lender did not stood proved by the assessee and the order of the tribunal does not deserve our interference within limited scope of provisions of Section 254(2) of the 1961 Act as in our considered view, there is no mistake apparent from records in the appellate order passed by tribunal. - Decided against assessee.

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• 2021 (2) TMI 179
  Disallowance u/s. 14A - assessee is engaged in life insurance business and accordingly computed income as per the provisions of section 44 of the Act read with First Schedule of the Act - HELD THAT:- This issue was considered in the case of Pr. CIT v. The Oriental Insurance Co. Ltd. [ 2020 (3) TMI 507 - DELHI HIGH COURT ] wherein held 44 is a special provision applicable in the cases of insurance companies and applies, notwithstanding anything to the contrary contained in the provisions of the Income-tax Act relating to the computation of income chargeable under different heads. For computing the profits and gains of the business of insurance company, the AO had to resort to section 44 and the prescribed rules, and could not have applied section 28 to 43B, since the same were excluded from the purview of section 44. This necessarily includes the exception provision enshrined under section 14A of the Act. Therefore, in our view, the AO could not have travelled beyond section 44 in the first schedule of the Act. Disallowance u/s. 14A of the Act in the proceedings u/s. 154 - HELD THAT:- In AY 2012-13 the AO himself dealt with this issue in the proceedings u/s. 154 of the Act dated 23.03.2016 and specifically observed that the disallowance u/s. 14A includes expenditure relating to pension account and since the entire losses from pension account are excluded from the computation and the above expenditure are included in the losses, the computation of disallowance u/s. 14A was mistake apparent from the record. As such, the ld. DR is precluded in objecting to entertaining a ground relating to disallowance u/s. 14A in the proceedings u/s. 154 of the Act by this Tribunal. Accordingly the ground of appeal by the assessee with regard to disallowance u/s. 14A of the Act is allowed in favour of the assessee. Relief in respect of provisions of section 10(23AAB) - AO did not allow the loss incurred from pension fund which is exempt u/s. 10(23AAB) of the Act to be excluded while determining the actuarial valuation surplus u/s. 44 - HELD THAT:- Tribunal in assessee s own case for the AY 2010-11 it would be the case when income is computed under the normal provisions of the Act. However, in the case of Assessee s engaged in life insurance business Income has to be computed as laid down u/s 44 - Section 44 of the Act starts with a non obstante clause and overrides the provisions of the Act relating to computation of income under the various heads of income including income under the head profit and gains of business of insurance. Therefore, we are of the view that stand taken by the DRP cannot be accepted. We, therefore, direct that loss from pension fund which is exempt u/s 10 (23AAB) be excluded while determining surplus as per actuarial valuation surplus u/s 44 - Decided in favour of assessee.

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• 2021 (2) TMI 178
  CIT (A) passing the ex-parte order - Assessment order under section 144 - addition on the ground that the assessee has not complied with the notices and lack of explanation on the bank deposits - HELD THAT:- Since the impugned order of the ld. CIT (A) does not touch the merits of the issue regarding the addition made by the AO, therefore, having regard to the facts and circumstances of the case as well as in the interest of justice, we grant one more opportunity to the assessee to present its case for the assessment year under consideration before the ld. CIT (A). Accordingly, subject to the cost of Rs. 5,000/-, we set aside the matter pertaining to the assessment year 2007-08 to the record of the ld. CIT (A) for deciding the same afresh after giving one more opportunity to the assessee

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• 2021 (2) TMI 177
  Deemed dividend u/s. 2(22)(e) - inter corporate deposits - whether it is sine qua non that the assessee, being a registered shareholder has to obtain the benefit out of the loan provided to the companies in which he was holding the substantial interest? - HELD THAT:- A plain reading of the provisions reveals that the provisions of section 2(22)(e) of the Act will be attracted in a situation where the company, in which the assessee was the registered shareholder, advances loans and advances to the other companies in which the assessee was holding the substantial interest and the assessee get some benefit out of such loans and advances. CIT (A) has given very clear-cut finding that there was no benefit accrued to the assessee out of the loans and advances given by the company namely JP Infrastructure Pvt. Ltd. to the companies as discussed above. It is also pertinent to note that, same contention was also raised by the assessee before the AO during the assessment proceedings as well as before us which was not disputed either by the AO or by the ld. DR Once it is established that there is no benefit accrued to the assessee out of the loan transactions as discussed above, the provisions of section 2 (22)(e) of the Act cannot be attracted. We find that the contention of the assessee has not been disputed by the AO. Similarly, the learned CIT (A) has also observed that the company has advanced money to the parties as inter corporate deposits which has not been disputed by the learned DR appeared for the revenue. In the absence of any adverse finding from the side of the AO and the favorable finding of the learned CIT (A), it seems that the loans and advances were made as inter corporate deposits in ordinary course of its business which are not subject to the provisions of deemed dividend as provided under section 22(2) - No reason to interfere in the finding of the learned CIT (A) and thus we set aside the same with the direction to the AO to delete the addition made by him. Hence the ground of appeal of the Revenue is dismissed Reopening of assessment u/s 147 - HELD THAT:- On perusal of the reasons recorded by the AO, we find that the AO at the threshold has recorded that it is seen that the assessee is having substantial share in JPIL which has advanced loan to the companies namely M/S Gujarat Mall Management Pvt. Ltd, and M/S Aryan Arcade Pvt. Ltd and the assessee also holds 50% and 22% shares in both the companies. Thus the entire transaction of advancing loan fall under the preview of section 2(22)(e) of the Act and represent deemed dividend of the assessee. AO nowhere mentioned that he has new information or fresh material in possession from where he has seen such fact. AO has recorded that assessee is having 22% share in M/S Aryan Arcade Pvt Ltd. which came to be factually wrong as the assessee is not holding any share in such company. There were also incorrect information recorded in reason by the AO with regard to amount of loan and accumulated profit. All this fact suggest that the AO has not applied his/her mind in reaching to the reason to believe or formed believe in mechanical order without adducing supporting material that income of the assessee has escaped to assessment. Thus reopening of assessment in absence of tangible material and without applying mind is not permissible - See CENTRAL WAREHOUSING CORPORATION [ 2015 (1) TMI 825 - DELHI HIGH COURT] . We hold that the reopening was made without bringing any fresh material on record. Thus we quash the assessment framed under section 147 - Decided in favour of assessee.

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• 2021 (2) TMI 176
  Reopening of assessment u/s 147 - addition on account of shifting ascertained losses - reason to believe or reason to suspect - HELD THAT:- It is well settled law that validity of the reassessment proceedings is to be determined on the basis of the reasons recorded for reopening of the assessment. AO in the same has mentioned that provisions of section 147(b) are applicable in this case for reopening of the assessment, however, this section does not exist in the statute for assessment year under appeal. Further, the entire reopening is based on information received from ADIT(Inv.) Ahmedabad for shifting out profits using client code modification. It is alleged in the reasons that on the basis of information received from ADIT(Inv.) M/s SMC Global Securities Limited broker has shifted out the profits using client code modification for the assessee to claim losses. Pr. CIT while approving the reasons merely mentioned yes I am satisfied The assessee filed objections to the reopening of the assessment and explained before AO that M/s SMC Global Securities Ltd. broker has not done anything for assessee and assessee did not deal with such broker, therefore, there is no question of loss claimed through this broker. The assessee further explained that assessee had carried out transactions through M/s Mansukh Securities Finance Limited. AO recorded incorrect and wrong facts in the reasons for reopening of the assessment. Though the AO rejected the objections of the assessee but in the rejection order confirmed that assessee carried out the transactions through Mansukh Securities Finance Limited, therefore, there is no question of assessee arranging any loss through transaction involving CCM through SMC Global Securities Broker. The reasons do not indicate the basis for the Assessing Officer to come to reasonable belief that there has been any escapement of income on the ground that the modifications done in the client code was not on account of genuine error, originally occurred while punching the trade. The material available is that there is a client code modification done by assessee broker which fact is also incorrect and there is no link from there to conclude that it was done to escape assessment of a part of its income. In case incorrect, wrong and non existing reasons are recorded by the AO for reopening of the assessment and that AO failed to verify the information received from Investigation wing, the reopening of the assessment would be unjustified and is liable to be quashed. Considering the above discussion, it appears to be a case of reason to suspect and not reason to believe that income chargeable to tax has escaped assessment, therefore, reopening of the assessment is bad in law and the AO would not get valid jurisdiction to proceed for reassessment. The decisions cited by the DR would not be applicable to the facts of the case - we set aside the orders of the authorities below and quash the reopening of the assessment. Resultantly all additions stands deleted. - Decided in favour of assessee.

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• 2021 (2) TMI 175
  Taxability of share premium collected by assessee u/s.56(2)(viib) - fair market value of shares as on the date of issue and such valuation report is based on assets of the company - As per assessee fair market value of shares is more than value of shares issued by assessee, hence, there is no place for invoking provisions of section 56(2)(viib) - AO was not convinced with explanation furnished by the assessee and according to him, valuation certificate obtained from independent Chartered Accountant as well as from statutory auditor of the company is being submitted by the assessee for first time - HELD THAT:- It is very clear that assessee has filed necessary evidences including valuation report from independent Chartered Accountant to support fair market value of shares arrived at as on date of issue of shares as per explanation (a)(ii). Assessee has substantiated fair market value of shares as on the date of issue of shares As gone through reasons given by AO for rejection of valuation report and we do not ourselves subscribe to the findings recorded by Assessing Officer, because he cannot reject valuation report merely for the reason such valuation report was not filed at the time of assessment proceedings. Timing of filing valuation report at the time of original assessment proceedings u/s.143(3) or during revision proceedings u/s.263 of the Act is not a relevant criteria to decide whether fair market value of shares issued by assessee is substantiated to the satisfaction of Assessing Officer or not. But, what is relevant is whether valuation report supports share price determined by the assessee or not. In this case, valuation report obtained by the assessee from independent Chartered Accountant supports share price. Therefore, when the assessee has substantiated share price to the satisfaction of the AO with the help of valuation report, even if, such valuation report is obtained subsequent to the date of issue of shares, it does not alter the situation. Assessing Officer as well as learned CIT(A) were erred in rejecting valuation report filed by assessee on this count. CIT(A) observation that relevance of valuation report of Chartered Accountant comes into play only when assessee chooses Explanation (a)(i) to determine fair market value of shares, but not when assessee has resorted to Explanation (a)(ii) to section 56(2)(viib) is contrary to law and absurd, because provisions of explanation (a)(ii) of the Act is very specific, as per which, when share price is determined in accordance with explanation (a)(ii), fair market value of share should be substantiated to the satisfaction of Assessing Officer and such satisfaction may be by way of valuation report or asset value of the company. In this case, there is no dispute of whatsoever with regard to the fact that assessee has filed valuation report to substantiate fair market value of shares to the satisfaction of the Assessing Officer. Therefore, we are of the considered view that learned CIT(A) has erred in holding that when assessee has chosen net asset value method, the relevance of valuation report from Chartered Accountant does not come into play. When assessee has exercised its option given as per Explanation (a)(ii) to Section 56(2)(viib) of the Act, then he should substantiate fair market value of shares to the satisfaction of Assessing Officer based on the value as on date of issue of shares of its assets etc. Since assessee has filed valuation report to substantiate fair market value of shares as on the date of issue and such valuation report is based on assets of the company, we are of the considered view that assessee has satisfied conditions prescribed under Explanation (a)(ii) to Section 56(2)(viib) of the Act and in such situation, there is no scope for the Assessing Officer to invoke provisions of Section 56(2)(viib) of the Act to tax share premium collected on issue of shares. - Decided in favour of assessee.

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• 2021 (2) TMI 174
  Unexplained cash credit u/s 68 - addition made towards non-existing liability on account of loans availed - HELD THAT:- Assessee has reconciled difference in loan liability shown in its books of account in the name of M/s. Sundaram Finance Ltd., and has passed necessary entries to rectify the duplicate entries passed towards loans with corresponding debit in work-in-progress account and has explained the difference in loan account as per books of account and loans confirmed by the creditor. The said discrepancy is due to the fact that the assessee by inadvertent error had twice accounted loan [old cleared loans and newly availed loans] in the books of account of the assessee, whereas the creditor M/s. Sundaram Finance Ltd., has confirmed only new loan amount which telescope the aforesaid transactions including loans squared up during the year. AO as well as the ld.CIT(A) without considering reconciliation filed by the assessee along with necessary evidences including confirmation letter from M/s. Sundaram Finance Ltd., has made addition towards difference in liability u/s.68 of the Act, although said liability was non-existing liability, but continued to live in the books of account of the assessee due to inadvertent error. Therefore, we direct the AO to delete addition made towards non-existing liability on account of loans availed from M/s. Sundaram Finance Ltd. Appeal filed by the assessee is allowed.

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• 2021 (2) TMI 173
  Revision u/s 263 - scope and powers under Section 263 of CIT - No enquiries during the course of the assessment proceedings. In the present case the tribunal found as a fact that the Principle of Mutuality - HELD THAT:- As decided in own case [ 2017 (2) TMI 1475 - DELHI HIGH COURT] order would be erroneous only when the assessing officer makes no enquiries during the course of the assessment proceedings. In the present case the tribunal found as a fact that the Principle of Mutuality had been examined threadbare by the assessing officer itself and therefore it was not a case where the Commissioner could have exercised jurisdiction under Section 263 of the said Act. In these circumstances, we do not feel that there is any substantial question of law which arises for the consideration, of this Court. - no substantial question of law.

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• 2021 (2) TMI 172
  Reopening of assessment u/s 147/148 - addition u/s 69 - undisclosed loss in MCX transaction - HELD THAT:- It is condition precedent before invoking jurisdiction u/s 147/148 of the Act that the AO has reason to believe that income chargeable to tax has escaped assessment for any assessment year - in the present case, there is no material what to say of tangible material is available on record to establish that AO has reason to believe if income chargeable to tax has escaped assessment. The information of loss receipt from MCX was not deliberately mentioned by the AO in the reasons. Thus, the AO did not have any definite material or information to record/reasons that there is an escapement of income in the case of the assessee. AO recorded incorrect and non-existing facts in the reasons recorded for reopening of the assessment. AO did not apply his mind to the material on record before recording reasons for reopening of the assessment. AO also failed to verify the information so received due to non-application of mind, therefore, reopening of the assessment would be unjustified and is liable to be quashed. Reopening of the assessment is illegal, bad in law and is liable to be quashed. We, accordingly, set aside the orders of the authorities below and quash the reopening of the assessment. As may also be noted here that the AO without any justification and without bringing any material on record as to which broker assessee has given margin money for trading has made addition of Rs. 11,49,060/-. When the AO does not know as to who is the broker to whom alleged amount is given, AO was not justified in making estimate based on general information that assessee has given the impugned amount to the broker for transaction in MCX. Since, it is an admitted case that assessee suffered loss in MCX transactions, therefore, there was no justification to make estimated addition - Decided in favour of assessee.

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• 2021 (2) TMI 171
  Correct head of income - Income from FDRs during pre-operative period - Income from other sources OR capital gain - HELD THAT:- Considering the above facts in the light of the Order of the Tribunal [ 2018 (4) TMI 1853 - ITAT DELHI] in the case of the same assessee, we find the issue is covered in favour of the assessee as held since the business of the assessee had not commenced, the interest received in the period prior to the commencement of business was in the nature of capital receipt and was required to be set off against the preoperative expenses. Therefore, the impugned interest income is a capital receipt not chargeable to tax during the year under consideration. We, accordingly, following the same reasons for decision, set aside the Orders of the authorities below and direct that impugned interest income is capital receipt not chargeable to tax during assessment year under appeal. Accordingly, appeal of the Assessee is allowed.

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• 2021 (2) TMI 170
  Validity of reopening of assessment u/s 147 - As argued by assessee that no notice u/s 148 was served upon the assessee - HELD THAT:-Since the issue of service of notice dated 11.11.2016 have already been considered by the Tribunal vide order dated 14.12.2017 and 16.11.2018 and the contentions of the Revenue have already been accepted that notice dated 11.11.2016 u/s 142(1) read with show-cause notice u/s 144 containing the notice u/s 148 of the Act was duly served upon the assessee through speed post, therefore, the issue stands finally settled by order of the Tribunal dated 16.11.2018 and, as such, the subsequent Bench would not be sitting in appeal against the order dated 16.11.2018 passed by the SMC Bench. The issue of service of notice u/s 148 has thus, already reached the finality and, as such, there is no need of interference in the findings of the Tribunal in the order dated 16.11.2018. The contention of Ld. Counsel for assessee is thus, devoid of merit and is, accordingly, rejected Addition as cash deposited in the bank account of the assessee - HELD THAT:- The assessee did not appear before AO and no source of cash deposits in bank account has been explained through any evidence. Though the assessee appeared before Ld. CIT(A) but no steps have been taken for making a request for admission of the additional evidences. The assessee merely contended that source of the cash deposits in the bank account of assessee is sale proceeds on selling the agricultural land for which no evidence or material were produced before the Ld. CIT(A). The assessee has also not produced any evidence before me to contradict the findings of fact recorded by the authorities below. In absence of any evidence on record and in absence of any argument advanced by Ld. Counsel for assessee during the course of hearing, no interference is required in the orders of authorities below. - Decided against assessee. No addition can be made in view of the judgment in the case of CIT vs. Intezar Ali [ 2013 (8) TMI 704 - ALLAHABAD HIGH COURT] as not considered by the Ld. CIT(A) - HELD THAT:- The order of the Ld. CIT(A) shows that Ld. CIT(A) has considered this decision in the impugned order and did not find the same to be applicable in the case of the assessee, therefore, no fault could be found with the order of the Ld. CIT(A) because assessee did not led any evidence before the authorities below. Assessee s this ground is also dismissed.

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• 2021 (2) TMI 169
  Disallowance of interest expenditure in the hands of partner - Whether it is in relation to business of the assessee - assessee claimed deduction of interest on funds borrowed for the purpose of investment as capital in the business of the partnership firm - Assessing Officer however held that no income has accrued to the assessee from the partnership business during the financial, expenses do not have any nexus with the other source of income under the head PGBP i.e., vehicle hire, consultancy or commissioner expense. Hence, the interest expense was proposed to be disallowed u/s 37 as the expenses were not laid out wholly and exclusively for the purpose of business or profession - HELD THAT:- Since the funds were borrowed from external sources, interest was payable by the assessee to its unsecured lenders. The partner claimed the deduction which it was entitled u/s 36(1)(iii) and 37 with income earned from other sources of income under the same head i.e. Vehicle hire, Commission Income and Consultancy income. This resulted in a loss arising from one source under the head business which was set-off with another source of income under the head of PGBP in terms of section 70. Interest, salary, bonus, commission or remuneration received or receivable from the firm by the partners shall be assessable in the hands of the partners as income from business or profession under section 28 of the Act. The partner shall be entitled to all expenditure which is incurred to earn such income or for purposes of the said business. Other deductions as admissible in law can also be claimed by the partner against such income. Under the old provisions, section 67(3) entitled a partner to claim deduction in respect of any interest paid by a partner on capital borrowed by him for the purposes of investment in the firm from the share income. Absence of earning any interest income on capital from the firm is no bar to claim the interest paid on borrowings for the purpose of contributing capital to the firm by the assessee as deductible expenditure. In such an event there would be loss under the head PGBP subhead interest, salary from the partnership firm and the assessee is entitled to set off the said loss against other income under the same head PGBP . Reasoning of the CIT(A) that the interest expense would be expenditure incurred for the purpose of earning income from the partnership firm in the form of share income and therefore the expenditure would be not allowable in terms of Sec.14A of the Act. This reasoning of the CIT(A) is incorrect because admittedly the firm incurred loss and the assessee did not receive any exempt income in the form of share of profits from the firm. - Decided in favour of assessee.

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• 2021 (2) TMI 168
  Upward adjustment to the arm s length price of international transactions - Non giving any finding in respect of the action of TPO in exclusion/inclusion of comparables - HELD THAT:- Having accepted TNMM and aggregation of the nature of transactions involving manufacturing segment the only contention remains for our consideration whether contention to consider the exclusion and inclusion of comparables in determining the ALP of the international transactions in manufacturing segment. DR, Shri Shivraj Morey also submitted that neither AO/TPO/CIT(A) could not give any finding in respect of inclusion or exclusion of comparables. Therefore, as observed above, we deem it proper to remand the matter to the file of TPO for determining the ALP of international transactions in manufacturing segment. The assessee is liberty to file evidences, if any, in support of its contentions. The TPO shall afford reasonable opportunity for the assessee and decide the issue of manufacturing segment as indicated above. Thus, ground No. 1 raised by the assessee is allowed for statistical purpose. Addition u/s 43B - Disallowance of provision for management incentive performance reward - CIT(A) held the said bonus is payable to the higher management employees in relation to the services rendered by them and it is covered u/s. 36(1)(ii) of the Act r.w.s. 43B - HELD THAT:- Similar issue on same identical facts in assessee s own case this Tribunal for A.Y. 2009-10 by placing reliance on the decision in the case of Shriram Piston and Rings Ltd.[ 2008 (4) TMI 273 - DELHI HIGH COURT ] held the payment under the good work reward does not constitute bonus within the meaning of section 36(1)(ii) of the Act and it is allowable as normal business expenditure u/s. 37 - the order of CIT(A) in confirming the disallowance u/s. 43B of the Act made by the AO is required to be deleted. Thus, ground No. 2 raised by the assessee is allowed.

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• 2021 (2) TMI 167
  Denial of the deduction u/s.80IA - assessee had not directly entered into agreement with Government or any statutory body and thus the condition mentioned in clause [b] of section 80IA[4][i] of the Act was not complied with under the facts - HELD THAT:- Taking a consistent view [ 2015 (11) TMI 401 - ITAT BANGALORE] we are of the opinion that the facts and circumstances of the case being the same for this assessment year also, assessee has to be granted deduction u/s. 80IA of the Act. It is not possible for us to review the earlier order of the Tribunal which is not disturbed by any higher forum so as to take a different view on the issue disputed before us. Taking a consistent view, we are inclined to reject the arguments of the ld. DR and allow the grounds taken by the assessee in this appeal.

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• 2021 (2) TMI 166
  Addition u/s 68 - Cash credit surrendered - Income erroneously offered by the assessee in current AY - Non-consideration of return of income filed in response to notice u/s 148 - whether an income voluntarily offered by the assessee can be held to be not assessable? - Rejection of the plea not to assess income, which was wrongly offered in the return of income - HELD THAT:- Assessee has offered the amount which formed part of sundry creditors balance. Major portion of very same amount was assessed in AY 2008-09 by the AO and deleted by the Ld CIT(A). AO has accepted the above said creditors in AY 2012-13. We have also noticed that the above said credits were not received during the financial year relevant to AY 2013-14. Even the assessee has surrendered above said amount voluntarily, yet the same is not legally assessable as income of AY 2013-14 as per the provisions of Income tax Act. As observed by Honourable Third member in the case of R Natarajan [ 2012 (4) TMI 329 - ITAT CHENNAI] the Income tax Act does not authorize levy of tax on the same amount of income more than once. It is also well settled proposition that income pertaining to a particular year can be assessed only in that year, i.e., the income pertaining to one year cannot be assessed in any other year. In the case of CIT v. Milton Laminates Ltd [ 2013 (3) TMI 192 - GUJARAT HIGH COURT] held that the Assessing Officer is free to give effect to order of Commissioner (Appeals) without restricting income to returned income, i.e., the assessing Officer can compute income lower than that returned income. In the case of Nirmala L. Mehta v. A. Balasubramanian [ 2004 (4) TMI 43 - BOMBAY HIGH COURT] held that, There cannot be any estoppel against the statute, Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law . We hold that the income erroneously offered by the assessee in AY 2013-14 cannot be assessed in that year, merely for the reason that the assessee has offered the same voluntarily. Appeal of the assessee is allowed.

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• Corporate Laws

• 2021 (2) TMI 165
  Oppression and Mismanagement - Seeking declaration that the applicant is not a necessary party and to remove him from the array of parties - contention of the applicant is that the Applicant being the statutory auditor of the 1st Respondent Company has not in any manner failed to discharge his statutory as well as fiduciary duties - HELD THAT:- Impleadment of parties is only a matter of fact and not a matter of law. Addition of parties/ striking out parties, of course, is a matter of discretion to be exercised by a Tribunal/ Court based on sound judicial principles. The said discretion can be exercised either on the application of a Petitioner/ Respondent or suo-motu or on the application of a person who is not a party to any pending proceedings. However, the said discretion cannot be exercised in a cavalier and whimsical fashion. On 28.09.2020, an order has been passed in I.A/ 107/ KOB/2020 directing that Mr. Paul Sebastian (M.No.037057), Paul Joseph Chartered Accounts, New Kalavath Road, Palarivattom, Cochin-682025 be impleaded as Respondent No.5 in the above Company Petition. Whether a party is a proper/ necessary party for an effective and efficacious adjudication of the controversy involved in a given case, although it is for the concerned Tribunal/ Court/ Authority to subjectively consider the same based on facts and circumstances of a case, which will be evident from C.P/12/KOB/2020 only. In this regard, with an utmost care and caution a finding has to be rendered by passing necessary orders in an objective and dispassionate manner for not removing R5 from party array and to take part in the main arena of proceedings. Undoubtedly, a just, fair and final order in main Company Petition can only be passed after hearing the Objections/ Reply of the said party along with the other Respondents - Once a party has been impleaded in a petition/application, after considering his contentions and hearing him, that party cannot subsequently come forward and say that the order is not correct and he may be removed from the party array. Judicial propriety has to be given the utmost importance in such matters. Hence, this Tribunal do not find any reason to pass an order to remove the applicant/ 5th respondent applicant from the party array. Application dismissed.

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• 2021 (2) TMI 164
  Approval of Scheme of Amalgamation of wholly owned subsidiary - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- Various directions regarding holding and convening of various meetings issued - directions regarding issuance of notices for the meetings also issued. Application allowed.

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• 2021 (2) TMI 163
  Seeking to restore the name of the Company in the Register of Companies, maintained by the Registrar of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- Considering the report of the learned counsel for the appellant, this Tribunal is of the opinion that it would be just and equitable to order restoration of the name of the Company in the Register of Companies. The Registrar of Companies, the respondent herein, is ordered to restore the original status of the Appellant Company as if the name of the company has not been struck off from the Register of Companies and take all consequential actions like change of company s status from Strike off to Active (for e-filing) and to intimate the bankers about restoration of the name of the company so as to defreeze its accounts - The Appellant Company is directed to file all the statutory document(s) along with prescribed fees/additional fee/fine as decided by Registrar of Companies within 30 days from the date on which its name is restored on the Register of Companies by the Registrar of Companies.

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• Insolvency & Bankruptcy

• 2021 (2) TMI 162
  Approval of Resolution plan - Appeal has been filed primarily on the basis that the Resolution Plan was approved after deducting part of the claim of the Appellant and the Resolution Plan was approved by the Adjudicating Authority without taking into account effect of 2019 Amendment to IBC (Insolvency and Bankruptcy Code, 2016) - HELD THAT:- In view provisions of amended Section 30(1)(2)(ii) and read the same with Section 53(1) of IBC with paragraphs 2 and 3 of the Affidavit filed by the Resolution Professional is material. The Resolution Professional has accepted that the average value of the secured asset of the Appellant is Rs. 12.86 Crores and has given his calculation in para 3 of the Affidavit that even if the amended Section was to be applied, the figure arrived at under Section 53 (1) for the Appellant would be Rs. 8.60 Crores. It is claimed that this has been provided in the Resolution Plan. The challenge put up by the Appellant to the Resolution Plan with regard to provisions made for the Appellant in the Resolution Plan even if looked at from the alternative angle considering the amended provisions of Section 30 of IBC, would not survive.

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• 2021 (2) TMI 161
  Approval of Resolution plan - Section 30 (6) of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- This Bench observes as under: (i) Several opportunities were given by this Tribunal to the applicant in full compliance of the rules of natural justice in the proceedings of MA/10/KOB/2020. But they had chosen not to appear before this Bench. (ii) In view of the Final order dated 26.02.2020 in MA/10/KOB/2020, the order dated 12.02.2020 declaring R3 as ex parte has attained finality. (iii) There is no reason to modify the order or dispense with the proceedings of this Tribunal in MA/10/KOB/2020 which had been concluded and have attained judicial finality. (iv) The Proviso to Section 420(2) of the Companies Act, 2013 states as under: Provided that no amendment shall be made in respect of any order against which an appeal has been preferred under this Act . This Bench find no merit in this application - Application dismissed.

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• Service Tax

• 2021 (2) TMI 160
  Recovery of service tax based on the returns shown in the income tax returns - HELD THAT:- Issue notice. In the meanwhile, there shall be stay of the impugned show cause-cum-demand notice dated 30.12.2020 - Stand over to 15.03.2021.

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• 2021 (2) TMI 159
  Refund of lying unutilized in their CENVAT credit account - admissibility of CENVAT Credit - denial to the appellant on the ground that the service on which they are taken the cenvat credit is not input service in terms of Rule 2(l) of the CENVAT Credit Rules, 2004 - N/N. 27/2012 dt. 18.06.2012 - HELD THAT:- It is an admitted fact on record that the appellant has taken the cenvat credit on rent a cab service where the service provider has charged the service tax from them and for the remaining invoices, they have paid the service tax under reverse charge mechanism and availed the cenvat credit of the same. It is also a fact on record that at the time of availement of the cenvat credit, it was never disputed that the appellant is not entitled to the cenvat credit on the service in question. The dispute in the matter is of sanction of refund claim of unutilized cenvat credit in their account not the issue of availment of the cenvat credit on the input service, therefore, the Revenue has fell in error and wants to raise the issue of availment of the cenvat credit while entertaining the refund claim. In case, the appellant had not filed the refund claim, the appellant was entitled of the cenvat credit which was not objected at the time of availment. At the time of entertaining the refund claim, the issue of admissibility of the CENVAT credit cannot be raised - Appeal allowed.

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• 2021 (2) TMI 158
  Continuation of proceedings after death or adjudication as an In-solvent of a party to the appeal or application - appellant has died on 09/05/2019 during the pendency of the present appeal - Rule 22 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 - HELD THAT:- As per the death certificate produced on record, the appellant has died on 09/05/2019 when the appeal was pending. We also find that the appellant was a proprietor and has died during the pendency of the proceedings. We also find that in view of Rule 22 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982, on the death of a proprietor, the proceedings shall abate. Hon ble Supreme Court in the case of SHABINA ABRAHAM AND OTHERS VERSUS COLLECTOR OF CENTRAL EXCISE CUSTOMS [ 2015 (7) TMI 1036 - SUPREME COURT] has been held that no proceedings can be initiated against a death person as it amounts to violation of natural justice inasmuch as the death person, who is proceeded against, is not live to defend himself. Further as per Rule 22 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982, the appeal shall abate on the death of the appellant unless an application is made for continuation of such proceedings by or against the successor in interest, executor, administrator, receiver, liquidator or other legal representatives of the appellant or applicant or respondent, as the case may be - in the present case, the business of the appellant has not devolved upon any of his surviving heirs including the applicant, as per the application filed by the applicant. The application of the applicant is allowed and the present appeal stands abated.

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• 2021 (2) TMI 157
  CENVAT Credit - service tax received from the sub-contractors - service tax paid by the appellant on import of services under reverse charge mechanism for period prior to April 18, 2006. CENVAT Credit - service tax received from the sub-contractors - HELD THAT:- Larger Bench of the Tribunal in COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI] also observed that a sub-contractor renders a taxable service to a main contractor - thus, it has to be held that the Commissioner was not justified in denying CENVAT Credit to the appellant on the services received from the sub-contractor. CENVAT credit - service tax paid by the appellant on import of service under a reverse charge mechanism for the period prior to April 18, 2006 - HELD THAT:- In view of the decision of the Tribunal in ADITYA BIRLA NUVO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, LTU MUMBAI [ 2016 (3) TMI 619 - CESTAT MUMBAI] , it has to be held that the Commissioner was not justified in denying CENVAT credit on the service tax paid by the appellant on import of services for the period prior to April 18, 2006. Appeal allowed - decided in favor of appellant.

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• 2021 (2) TMI 156
  Maintainability of appeal - time limitation - time spent before wrong fora to be excluded from limitation period or not? - Business Auxiliary Services - HELD THAT:- Admittedly, the appellant has filed the appeal on 19/12/2007 but the same was wrongly filed before the Commissioner of Service Tax which was located in the same building. The factum of receipt of the appeal in the office of Commissioner of Service Tax is admitted in the correspondence between the appellant and the Department. Further, it is found that after filing the appeal, the appellant vide its letter dt. 01/12/2008 and subsequent reminder dt. 12/12/2010 requested the Commissioner(Appeals) for grant of personal hearing. The appellant even filed RTI application to find out the where about of the appeal and came to know that the appeal is lying with the Commissioner of Service Tax. Further it is found that if the appeal was filed wrongly before the Commissioner of Service Tax, then it was the duty of the CST to have sent the same to the Commissioner(Appeals) who was located in the same building but the same was not done by the Department and therefore the time spent in pursuing the appeal before the wrong forum is condonable. Matter remanded back to the learned Commissioner(Appeals) with direction to decide the appeal on merits after complying with the principles of natural justice - Appeal is allowed by way of remand.

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• 2021 (2) TMI 155
  Levy of Service tax - amount of late payment surcharge, meter rent and supervision charges received by the appellant from the electricity consumers - period of dispute is from July, 2012 to March, 2017 - HELD THAT:- The late payment surcharge, meter rent and supervision charges are collected by the appellant in terms of Madhya Pradesh Electricity Regulatory Commission (Recovery of Expenses and Other Charges for Providing Electric Line or Plant used for purpose of giving supply) Regulations, 2009 [M.P 2009 Regulations ] - The period of dispute is from July, 2012 upto March, 2017. Section 66D of the Finance Act provides for a negative list of services. This negative list comprises, amongst others, in sub-clause (k), transmission or distribution of electricity by an electricity transmission or distribution utility . The issue involved in this appeal is not regarding the amount collected by the appellant for supply of electricity; the dispute is regarding the amount collected towards late payment surcharge, meter rent and supervision charges. These three charges have been collected by the appellant in terms of the 2009 Regulations. The Principal Commissioner has confirmed the demand of service tax on late payment surcharge under section 66E(e) of the Finance Act by holding that the same is a consideration received by the appellant for tolerating an act of electricity consumers by receiving the payments after the prescribed due date for payment of electricity bills. The Principal Commissioner has confirmed the demand of service tax on meter rent as a declared service under section 66E(f) of the Finance Act by holding that the same is the consideration received by the appellant for transfer of goods by way of hiring. The Principal Commissioner has also confirmed the demand of service tax on supervision charges collected from electricity consumers by holding that the same is taxable as it is not covered under any exemption. Whether the exemption granted for transmission and distribution of electricity would also include directly connected activities such as meter rents? - HELD THAT:- The Government of India issued a Circular dated December 07, 2010 clarifying that supply of electricity meters to the consumers was an essential activity having direct and close nexus with transmission and distribution of electricity and was, therefore, covered by the exemption granted to transmission and distribution of electricity - thereafter, the negative list regime was introduced with effect from July 01, 2012. As noticed above, section 66D(k) includes transmission or distribution of electricity by electricity transmission or distribution utility in the negative list . The issue as to whether the charges collected in connection with transmission of electricity even after July 01, 2012 would be subjected to tax as according to the Department they would not be exempted under section 66D(k) of the Finance Act, came up for consideration before the Gujarat High Court in TORRENT POWER LTD. VERSUS UNION OF INDIA [ 2019 (1) TMI 1092 - GUJARAT HIGH COURT] after referring to the position prior to the introduction of the negative list and the Notifications referred to above and the introduction of the negative list regime w.e.f July 01, 2012, the Gujarat High Court observed that the activities that are related/ancillary to transmission and distribution of electricity would be exempt from payment of service tax since transmission and distribution of electricity is exempted - It is also clear from aforesaid decision that all services related to transmission and distribution of electricity are bundled services, as contemplated under section 66F(3) of the Finance Act, and are required to be treated as a provision of a single service of transmission and distribution of electricity, which service is exempted from payment of service tax. Thus, it is not possible to sustain the levy of service tax on the amount collected by the appellant for late payment surcharge, meter rent and supervision charges. Levy of penalty on the lease rent collected from the customers - HELD THAT:- The appellant claims that since it has deposited the lease rent, the levy of penalty may be set aside. It is not possible to accept this contention of the learned counsel for the appellant. The imposition of penalty under lease rent is, therefore, confirmed. The confirmation of demand by the Principal Commissioner on late payment surcharge, meter rent and supervision charges are set aside. The levy of penalty on the lease rent amount is confirmed - Appeal allowed in part.

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• Central Excise

• 2021 (2) TMI 154
  Seeking refund of unutilized input service tax credit - Section 33A of the Central Excise Act, 1944 - whether the petitioner ought to have been heard in the light of conditional waiver expressed? - HELD THAT:- The entirety of the impugned order discusses the methodology of quantification put forth by the petitioner and the Officer also distinguishes the decisions of the Appellate Authority. Incidentally, he notices a lacunae in regard to the FIRCs that were submitted stating that some were ineligible since bank statements had been submitted in place of the FIRCs, drawing adverse inference from the same. However, this issue appears to have escaped the realm of discussion on account of the non-issuance of show cause notice. Conditional Waiver - HELD THAT:- Section 33A of the Act sets out the procedure for adjudication and Section 33 A(1) states that the Adjudicating Authority shall give an opportunity of being heard to a party in a proceeding, if the party so desires - In this case, the desire of the party to be heard is clear and it is only if the authority were convinced with its written submissions and the decisions of the appellate authority that the personal hearing stood waived. Thus, it was incumbent upon the authority to have proceeded to issue show cause and personal hearing notice to the petitioner, frame the issues for resolution and thereafter pass an order-in-original. This has not been done in the present case and the impugned order dated 07.01.2019 is thus set aside. Petition allowed.

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• 2021 (2) TMI 153
  Commodity and area based exemption to excisable goods manufactured in a unit falling in specific khasra numbers in specified villages of specified tehsil in the State of Uttarakhand - Wrongful availment of benefit of Exemption Notification dated June 10, 2003 - khasra numbers 54 and 55 of village Alakhdevi - HELD THAT:- The Notification refers to tehsil Kichcha for these two khasras. According to the appellant, khasra numbers 54 and 55 in village Alakhdevi at the time of the issue of Notification dated June 10, 2003 were in tehsil Kichcha, but upon issue of the Notification dated February 11, 2004, when 70 villages from tehsil Kichcha were transferred to the tehsil Gadarpur, khasra numbers 54 and 55 of village Alakhdevi came to be transferred to tehsil Gadarpur. khasra number 54 and 55 in village Alakhdevi, prior to February 11, 2004, were in tehsil Kichcha but upon issue of the Notification dated February 11, 2004 these khasra numbers 54 and 55 of village Alakhdevi fall in tehsil Gadarpur. It is also clear that after the issue of the Notification dated February 11, 2004 tehsil Kichcha does not contain khasra numbers 54 and 55 of village Alakhdevi. These Khasra numbers exist on the ground and have to fall in a certain tehsil - The Commissioner has gone strictly by the tehsil mentioned in the Notification dated June 10, 2003 and has held that it is only khasra numbers 54 and 55 of village Alakhdevi of tehsil Kichcha that have been exempted from the whole duty of excise. The Commissioner failed to appreciate the developments that had taken place after the issue of the Exemption Notification dated June 10, 2003 namely that khasra numbers 54 and 55 of village Alakhdevi which were initially in tehsil Kichcha were subsequently transferred to tehsil Gadarpur. The Commissioner has also referred to entry at serial number 22 of the Notification dated June 10, 2003 wherein village Barakheda is shown to be situated in tehsil Gadarpur, but as noticed above, upon issue of Notification dated February 11, 2004, 70 villages of tehsil Kichcha were transferred to tehsil Gadarpur. The Commissioner was, therefore, not justified in observing that since Gadarpur tehsil was also mentioned in the Notification dated June 10, 2003, plot numbers 54 and 55 would also have been shown in the said tehsil if that was the intention of the authority issuing the Notification - Such being the position, it is not possible to sustain the finding recorded by the Commissioner that since khasra numbers 54 and 55 of village Alakhdevi are not situated in tehsil Kichcha, the manufacturing unit of the appellant would not be entitled to exemption from the whole of the duty of the excise leviable thereon. The contention of the learned Authorised Representative of the Department that an Exemption Notification should be interpreted strictly is, therefore, not required to be examined in view of the aforesaid factual position that has emerged. The Department has filed Excise Appeal No. 50497 of 2019 to assail that part of the order passed by the Commissioner that has dropped the demand of duty for the reason that the extended period of limitation could not have been invoked. As the demand itself has been found to be not justified, it would not be necessary to examine the contention raised by the Department to assail this part of the order. Excise Appeal No. 50497 of 2019 filed by the Department is, therefore, liable to be dismissed. Appeal allowed in part.

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• CST, VAT & Sales Tax

• 2021 (2) TMI 152
  Rebate of tax - sale of cement @ 9% which is not a sale of any manufacturer of cement within the State of U.P. but the same was purchased from Satna outside the State of U.P. - case of Revenue is that assessee had not maintained the specified accounts and had thus not fulfilled one of the conditions for grant of rebate of tax - N/N. 592 dated 27.02.1998 - HELD THAT:- Though the notification does not make any separate consideration of the manner in which claim for rebate may be made by traders yet it cannot be forgotten that the rebate granted is not to a person but to the goods. In the instant case, State Government has notified that goods containing more than 10% fly ash contents by weight, would be entitled to a rebate of tax @ 25%. Any goods that would have been thus manufactured containing more than fly ash content would attract the rebate of tax. Merely because the goods may exchange hands from the manufacturer to the trader in a retail chain, before they reach the consumer, the same would be of no material consequence to the rate of tax applicable to such goods. Once goods are found eligible to rebate of tax owing to fly ash content of more than 10%, and that fact gets established at the hands of the manufacturer then subject to the goods remaining the same, they would continue to remain taxable at the reduced rate (upon rebate being given effect to), though they may change hands many times, before they come to be consumed - the observations of the Tribunal that the goods were certified by the manufacturer to be containing fly ash more than 10% by weight, has remained unrebutted, is material. It also does not appear that the goods had been taxed at the full rate when they came to be sold to the assessee. In fact, it appears that the goods were brought by the assessee at the reduced rate of tax. The enquiry to be made in the assessment of a trader would be only two fold. First, whether upon sale by the manufacture the goods were entitled to rebate. Once the claim of rebate was established at the hands of the manufacture, the only thing remaining relevant to be examined would be whether the identity of the goods sold by the trader was the same - the revenue authorities rejected the claim of the assessee only on account of absence of accounts required to be maintained - Revision dismissed.

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• 2021 (2) TMI 149
  Condition of deposit of amount for grant of stay - Whether the discretion used by the Tribunal in placing condition of deposit of amount for grant of stay was perverse considering the order passed by the Tribunal in identical facts and circumstances in VAT Second Appeal granting complete stay without deposit? HELD THAT:- Normally, we would not interfere with the use of discretion by the Tribunal and the amount also does not prima facie appear to us as an unreasonable condition, however, the argument of the learned Counsel for the Appellant that in identical set of facts and arguments the discretion has been used differently will have to be taken note of - However, it appears that the Appellant had not placed the order dated 7 March 2017 passed in VAT Second Appeal Nos.43 to 46 of 2017 before the Tribunal when the impugned order in the present appeal was passed. Therefore, the Tribunal had no occasion to consider its earlier use of discretion in the alleged identical set of facts. The appropriate course of action would be set aside the impugned order passed by the Tribunal, restore the appeal filed by the Appellant, permit the Appellant to place on record the order dated 7 March 2017 passed in VAT Second Appeal Nos.43 to 46 of 2017 so that the Tribunal has the benefit of the said order, and a fresh decision can be taken. The appeal is allowed

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• 2021 (2) TMI 148
  Concessional benefit of tax - purchase of High Speed Diesel from suppliers in other States - difficulty in obtaining C-Form - respondent fairly submits that the issue involved in this Writ Petition is squarely covered by a decision of this Court in the case of M/s. Dhandapani Cement Private Limited Vs. The State of Tamil Nadu, [2019 (2) TMI 1850 - MADRAS HIGH COURT] wherein on identical issue it was held that Petitioner in these Writ Petitions has stated on affidavit that it is unable to download the C forms from the websites as the same stand blocked from use. Upon enquiry with the Assessing Authorities, they have been informed that the benefit of the decision in M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] Ltd can be extended only to those dealers in that are party to the decision. This stand is unacceptable in so far as the decision of this Court as well as other High Courts, one of which has been confirmed by the Supreme Court, are decisions in rem, applicable to all dealers that seek benefit thereunder, of course, in accordance with law. HELD THAT:- The State has, after the date of the above order, filed a Writ Appeal challenging the decision in the case of Ramco Cements that has been considered and dismissed by a Division Bench of this Court in THE COMMISSIONER OF COMMERCIAL TAXES, CHEPAUK, CHENNAI, THE ADDITIONAL COMMISSIONER (CT) VERSUS THE RAMCO CEMENTS LTD. AND THE STATE TAX OFFICER, THE JOINT COMMISSIONER (CS) (SYSTEMS) VERSUS SUNDARAM FASTENERS LIMITED [ 2020 (3) TMI 450 - MADRAS HIGH COURT ] and it was held that Appellant State and the Revenue Authorities are directed not to restrict the use of C Forms for the inter-State purchases of six commodities by the Respondent/Assessees and other registered Dealers at concessional rate of tax and they are further directed to permit Online downloading of such Declaration in C Forms to such Dealers. Petition allowed.

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• Indian Laws

• 2021 (2) TMI 151
  Dishonor of Cheque - Insufficiency of funds - payment was not received and a complaint was filed under Section 138 of the N.I. Act before the court of the Metropolitan Magistrate - offences punishable under section 138 of Negotiable Act, 1881 - Section 143(1) (Provisio) of N.I. Act read with Section 357(1)(3) of Cr.P.C. - HELD THAT:- Section 118 of the N.I. Act raises a presumption that a cheque is issued for consideration until the contrary is proved. It is well settled position that the initial burden in this regard lies on the accused to prove the non-existence of debt by bringing on record such facts and circumstances which would lead the court to believe the non-existence of debt either by direct evidence or by preponderance of probabilities - In the present case other than mere ipse dixit of the petitioner that there was no debt due and payable nothing is on record to show that the cheques were not issued for discharge of liability for the bus. The second bus bearing registration No. DL 1 PA 5798 stood in the name of the accused. There is nothing to show that the liability for the first bus bearing registration No. DL1 P 7279 has been discharged. The purpose of introducing Section 138 of the N.I. Act was to bring sanctity in commercial transactions. Two courts below have looked into the entire records of the case and have come to the conclusion that the cheques have been given in discharge of debt. The petitioner only seeks to take advantage of the fact that the respondent did not produce the books of accounts to rebut the initial presumption which was for the petitioner to show that the amount of loan taken by him and the amount that should be repaid in order to discharge the initial burden and the petitioner has failed to discharge the initial onus of proof. The learned counsel for the petitioner has not been able to demonstrate that the findings of the courts below are perverse. The fact that the respondent did not file the books of accounts is not fatal to the case of the respondent. It was open to the petitioner to produce his books of accounts to rebut the presumption and bring out a prima facie case that there was no debt due and payable on the date the cheques were dishonoured. The petitioner has not been able to discharge the initial burden on him to rebut the presumption under Section 118 of the N.I. Act. The fact that the petitioner took financial assistance from the respondent is admitted. The petitioner has not been able to show as to how there was no subsisting debt on the date when the cheques were dishonoured due to insufficiency of funds - No case has been made out which would warrant interference under Section 397/401 Cr.P.C. The revision petition is dismissed.

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• 2021 (2) TMI 150
  Smuggling - admissibility of the statement recorded under Section 67 of GST Act - offence punishable under Sections 22, 23, 25, 25A and 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - HELD THAT:- In the present case also, statement of the applicant is recorded. It is stated that his statement was under duress and without his consent. Annexure-D shows that he has reiterated his statement saying that it was not given voluntarily by him and he is forced to give the same before the Officer of the Department of Revenue Intelligence under duress and without free will. Further as admitted by Mr. Prashant Kumar in his affidavit in reply Page 43 of the petition that M/s. Ardor Drugs Private Limited got one time permission for manufacture and export of Tramadol Hydrochloride 225 Mg tablets to Cameroon (through M/s. Sanctuary Pharmaceuticals) for only 101000 Tramadol 225 mg tablets. However, applicant in the guise of above mentioned licence, manufactured more than permissible quantity of Tramadol 225 mg tablets and got it clandestinely removed from M/s. Ardor Drugs Private Limited. Therefore, under the facts and circumstances of this case, this Court feels that this is a fit case whether the applicant is entitled to bail because there is a possibility that he may not be convicted under the provisions as charged by the respondent no.2 after recording evidence of eye witnesses. This Court is satisfied having regard to the material available on record and there are sufficient grounds that if the applicant may not be convicted - Further, the applicant has no antecedent and trail would take long time. He is not likely to run away from the justice if he is released on bail, as he is a Director of different companies situated at Songadh District Tapi. If the probabilities are there, the applicant may not be convicted, court can grant bail subject to further conditions being satisfied that the applicant is not likely to commit any offence while on bail - After filing of the the chargesheet during the pendency of this application, no further evidence is placed on record involving the present applicant in the offence, and therefore, this court feels that some stringent conditions will have to be imposed upon the applicant by accepting the prayer. The present application is allowed and the applicant is ordered to be released on regular bail.

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