TMI Tax Updates - e-Newsletter
March 16, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. Classification of Aircraft Parts: Specific use or Generic use?

2. CONSUMER COMPLAINT BEFORE STATE COMMISSION

   By: DR.MARIAPPAN GOVINDARAJAN

3. Additional and new employmen: Incentive deduction u.s. 80JJAA- liberal and practical approach is required to achieve purpose - should be allowed to professionals in practice as they enter into adventure in nature of commerce by taking risks and also to small businesses and professionals having low turnover and no TAR requirement.

   By: DEVKUMAR KOTHARI

News

1. 100 percent of the estimated GST compensation shortfall of ₹ 1.10 Lakh crore released 20th Instalment of ₹ 4,104 crore released to the States on Monday, 15th March, 2021

2. INDIA’S FOREIGN TRADE: February 2021

3. Tariff Notification No. 29/2021-Customs (N.T.) in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silvera

4. 41.94 crore accounts opened under Pradhan Mantri Jan Dhan Yojana

5. 49.87 crore people had health insurance coverage (excluding Personal Accident & Travel Business) in FY 2019-20

6. Government encouraged investment for economic growth, including health sector

7. Tax relief for industries affected by Coronavirus

8. CSR expenditure by all companies in Aspirational Districts from 2017-20

9. Index Numbers of Wholesale Price in India for the month of February, 2021

Notifications

Income Tax

1. 16/2021 - dated 12-3-2021 - IT

Income-tax (4th Amendment) Rules, 2021 - Amends Rule 114E. - Furnishing of statement of financial transaction

Highlights / Catch Notes

GST

• Advance Ruling Denied: Application Rejected as Applicant Was Service Recipient, Not Supplier; Article 243W and Pure Services Discussed.

  Case-Laws - AAR : Scope of Advance Ruling application - functions entrusted to a municipality under article 243W of the Constitution - pure services or not - In the present case the applicant is recipient of the services and not supplier of such services. Accordingly, the application is not liable for admission and therefore rejected. - AAR
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Income Tax

• Transfer Pricing Officer's Order Exceeds Limitation Period: Issued After Deadline u/ss 92CA(3) and 153.

  Case-Laws - AT : Period of limitation for palling an order passed by the TPO u/s 92CA (3) read with section 153 - Computation of period of 60 days given by the taxpayer extracted in the preceding para no.20 cannot be faulted with on any ground because from 31.03.2013, the date of passing order of the AO, 60 days was to be computed by excluding the date of order i.e. 31.03.2013. So, while excluding the date 31.03.2013, the day of passing the order, the order was required to be passed by the TPO by 29.01.2013 whereas the impugned order has been passed on 31.01.2013 which is barred by limitation. - AT
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• Compensation Taxability Based on Entitlement Date, Not Receipt Date, Appeal Dismissed as Meritless.

  Case-Laws - AT : Determination of amount payable as compensation - the cut-off date for the purpose of determining its taxability is the date when the assessee was found to be entitled to receive the compensation and not the date when it was actually received by the assessee. In the light of the above we do not find any merit in appeal of the assessee. - AT
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• Court Upholds Penalty u/s 271(1)(c) Due to Non-Voluntary Income Disclosure During Tax Survey Proceedings.

  Case-Laws - AT : Penalty u/s. 271(1)(c) - surrender of income in survey proceedings - From the conduct of the assessee, it is clear that the surrender was lacking voluntariness. In our view the assessee was forced to disclose the income on account of survey and subsequent show cause notice issued by the assessing officer. In view of the above said we do not find any justification for the CIT(appeals) to delete the penalty - AT
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• Tribunal Rules Assessment Order Invalid Due to Jurisdictional Error; Officer Lacked Required Approval from Joint Commissioner.

  Case-Laws - AT : Validity of assessment - Jurisdiction - An irregularity in the assessment order may be rectified by remitting back the matter to the assessment. In the case on hand it is not an irregularity in the assessment order, it is a jurisdictional error. The A.O. has no jurisdiction to pass the assessment order unless the JCIT granted approval. This Tribunal is of the considered opinion that this is not a rectifiable error since it is a jurisdictional error and not an irregularity in the assessment proceeding. - AT
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• Interest from Fixed Deposits Classified as Business Income Due to Direct Link with Business Activities.

  Case-Laws - AT : Chargebility of interest income - In view of the terms of contract, the fixed deposit and earning of interest on such fixed deposit was intricately connected with the business of the assessee and there is a direct and clear nexus with the business of the assessee and the interest earned on fixed deposits, in our considered opinion, is required to be considered as business income. - AT
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• Interest expenses on term loans for capital assets can be revenue expenditure per Section 36(1)(iii), clarifies Explanation 8 to Section 43A.

  Case-Laws - AT : Disallowance towards interest expenses incurred on term loans - The loan having been utilized for acquisition of capital asset in the earlier years is thus not an obstacle for treating interest expenditure as revenue expenditure under s.36(1)(iii) of the Act r.w.s. Explanation 8 to s.43A of the Act. The CIT(A) has wrongly applied the tests laid down for applicability on Section 36(1)(iii) of the Act in its non-descript order. - AT
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• Gross Profit, Not Total Sales, Can Be Added to Income Without Proof of Investment in Suppressed Sales.

  Case-Laws - AT : Addition on account of suppression of sale - The entire amount of suppressed sale cannot be treated as income of the assessee. It is because there was no evidence available with the AO that the assessee has made any investment in such suppressed sale. In the absence of documentary evidence, we are of the view that the amount of gross profit will only be subject matter of addition with respect to such unaccounted transaction - AT
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Customs

• Customs broker avoids penalties for cosmetic misdeclaration; show-cause notice during de novo remand deemed unlawful under Customs Act.

  Case-Laws - AT : Customs Brloker - Penalty u/s 112(a) of the Customs Act, 1962 and Section 114AA of the Customs Act, 1962 - misdeclaration of imported consignment - clearance of cosmetic items in personal baggage in commercial quantities imported by the passenger - issuance of show-cause notice in de novo remand proceedings is not permitted under law - No penalty - AT
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Indian Laws

• Accused in Cheque Dishonor Cases Need Not Testify; Must Present Evidence to Challenge Debt Presumption. Burden of Proof is Lower.

  Case-Laws - HC : Dishonor of Cheque - rebuttal of presumption - Although it is not necessary for the accused to enter the witness box, the burden of proof is required to be discharged by adducing satisfactory evidence to prove that the cheque in question was not issued for discharge of any legally enforceable debt. Merely for the reason that he did not adduce any evidence to prove a negative fact, no adverse inference can be drawn against him. The degree of proof expected from the accused is not as rigorous as that of the complainant. - HC
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• Court Penalizes Bank Rs. 5 Lakhs Per Appeal for Frivolous Litigation Under SARFAESI Act to Deter Future Misconduct.

  Case-Laws - HC : Appeal of the Bank under the SARFAESI Act - The present case, is a classic example how the judicial system is getting clogged with frivolous litigation. The facts and the circumstances that have led to the filing of the present appeal, leave us with no choice but to impose exemplary costs on the appellant secured creditor. - This matter requires costs to be imposed upon the appellant-bank which we quantify at ₹ 5 lakhs per appeal. - HC
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IBC

• Authorities Cannot Deny Lease Renewal for Past Dues Unclaimed During CIRP; Delayed Claims Violate Code Provisions.

  Case-Laws - Tri : Approval of Resolution Plan - Renewal of lease of land - clearance of past dues - It is also not in doubt that required approvals have to be given by the concerned authorities under the relevant laws and rules framed thereunder. However, no authority can deny the renewal of licence or lease, on the ground that past dues are not paid, even without making a claim (water charges) during CIRP. In respect of Transfer and Renewal fees, we have adduced reasons how the belated claim made is not in consonance with the provisions of the Code. - Tri
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Service Tax

• Export Unit Wins Refund of Unutilized CENVAT Credit for Various Input Services Used in Output Production.

  Case-Laws - AT : 100% EOU - Refund of unutilized CENVAT credit of service tax availed on input services - The appellant is entitled to refund of CENVAT credit in relation to input services of Architect, Club & Association, Event Management, General Insurance and other taxable services which have been used for providing the output services - AT
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Case Laws:

• GST

• 2021 (3) TMI 578
  Maintainability of application - application has not been filed in the prescribed format required as per the provisions of Section 97(1) of the CGST Act, 2017 read with Rule 104 of the CGST Rules, 2017 - HELD THAT:- On a combined reading of the provisions of the Section 97 and Rule 104 of both the aforementioned Acts and Rules, we find that the application for obtaining an Advance Ruling under sub-section(1) of Section 97 is to be submitted in FORM-GST ARA-01 and shall be accompanied by a fee of Ten thousand rupees (Five thousand rupees as per Rule 104 of the CGST Rules, 2017 + Five thousand rupees as per Rule 104 of the GGST Rules, 2017). The applicant has neither filed the application in the prescribed format of GST-ARA-01 nor paid the required fees of Rs. 10,000/- as required as per the provisions of aforementioned Sections and Rules. Therefore, the instant application is liable for rejection under Section 98(2) of the CGST Act, 2017 for not filing the application in proper FORM GST-ARA-01 and not paying the total fees of Rs. 10,000/- i.e Rs. 5,000/- under each head CGST GGST as required under the provisions of CGST Act and Rules and respective GGST Act Rules. Instant application filed by M/s. Wiptech Peripheral pvt.ltd., 101, Dwarkadish, Virani Chowk, Tagore Road, Rajkot-360002 is hereby rejected under Section 98(2) of the CGST/GGST Act, 2017 being non-maintainable.

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• 2021 (3) TMI 577
  Maintainability of Advance ruling application - application not filed in proper format - Levy of GST - Supply of services or not - amount collected as membership subscription and admission fees from members - levy of GST on transactions between the Applicant and its members, on account of Principles of mutuality - classification of goods - rate of tax - input tax credit on on Catering services for holding members meetings and various events - HELD THAT:- On a combined reading of the provisions of the Section 97 and Rule 104 of both the aforementioned Acts and Rules, we find that the application for obtaining an Advance Ruling under sub-section (1) of Section 97 is to be submitted in FORM-GST ARA-01 and shall be accompanied by a fee of Ten thousand rupees (Five thousand rupees as per Rule 104 of the CGST Rules, 2017 + Five thousand rupees as per Rule 104 of the GGST Rules, 2017). Although the applicant has filed the application in the prescribed format of GST-ARA-01, they have not paid the required fees of Rs. 10,000/- as required under the provisions of aforementioned Sections and Rules. Therefore, the instant application is liable for rejection under Section 98(2) of the CGST Act, 2017 for not paying the total fees of Rs. 10,000/- i.e. Rs. 5,000/- under each head CGST GGST as required under the provisions of CGST Act and Rules and respective GGST Act Rules. Instant application filed by M/s. The maharaja Pratapsinh Coronation Gymkhana (Trade Name : Polo Club), Vadodara is hereby rejected under Section 98(2) of the CGST/GGST Act, 2017 being non-maintainable.

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• 2021 (3) TMI 576
  Scope of Advance Ruling application - functions entrusted to a municipality under article 243W of the Constitution - pure services or not - Exemption under Entry No. 3 of the Notification No. 12 / 2017 CT - HELD THAT:- The Advance Ruling sought by the applicant is the determination of the liability to pay tax on services. After examining the kind of activities and services the applicant is engaged in, it is made clear that the applicant do not make any of the supplies in question, but is in fact the recipient of the various supplies made to him by the contractors as stated in his application. Thus the questions raised are on the liability to pay tax on the services supplied to them and not on the supplies made by them. As per section Section 95(a) of CGST and GGST Act, it is evident that an applicant can seek an advance ruling in relation to supply of goods or services or both undertaken or proposed to be undertaken by the applicant. Further, as per Section 103(1) of the CGST Act such an Advance Ruling is binding only on the applicant and on the Officer Concerned or the jurisdictional Officer in respect of the applicant. In the present case the applicant is recipient of the services and not supplier of such services. Accordingly, the application is not liable for admission and therefore rejected.

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• 2021 (3) TMI 575
  Maintainability of Advance Ruling application - application not filed in proper format - Double Taxation relief - freight portion of imported goods - Goods imported and IGST levied on CIF Value (which includes freight) Plus Basic Custom duty plus Social Welfare Cess - IGST levied again on the freight component (Ocean Freight) on reverse charge basis. HELD THAT:- On a combined reading of the provisions of the aforementioned Section 97 and Rule 104 of both the aforementioned Acts and Rules, we find that the application for obtaining an Advance Ruling under sub-section(1) of Section 97 is to be submitted in FORM-GST ARA-01 and shall be accompanied by a fee of Ten thousand rupees (Five thousand rupees as per Rule 104 of the CGST Rules, 2017 + Five thousand rupees as per Rule 104 of the GGST Rules, 2017). The applicant has not paid the fees of Rs. 10,000/- under the proper head i.e. CGST and GGST as required under the provisions of aforementioned Sections and Rules where as paid fees of Rs. 10,000/- under IGST head. Therefore, the instant application is liable for rejection under Section 98(2) of the CGST Act, 2017 for not paying the total fees of Rs. 10000/- i.e. under each head CGST GGST as required under the provisions of CGST Act and Rules and respective GGST Act Rules. Instant application filed by M/s. Khaitan Chemicals and Fertilizers Ltd., Bharuch is hereby rejected under Section 98(2) of the CGST/GGST Act, 2017 being non-maintainable.

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• 2021 (3) TMI 574
  Maintainability of Advance Ruling application - application not filed in proper format - Service of construction and development of state highway roads provided by GSRDC - activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively of the Constitution of India - Government Entity or Governmental Authority - HELD THAT:- On a combined reading of the provisions of Section 97 and Rule 104 of both the aforementioned Acts and Rules, we find that the application for obtaining an Advance Ruling under sub-section(1) of Section 97 is to be submitted in FORM-GST ARA-01 and shall be accompanied by a fee of Ten thousand rupees (Five thousand rupees as per Rule 104 of the CGST Rules, 2017 + Five thousand rupees as per Rule 104 of the GGST Rules, 2017). Although the applicant has paid the required fees of Rs. 10,000/- as required, they have not filed the application in the prescribed format of GST-ARA-01 required as per the provisions of aforementioned Sections and Rules. Therefore, the instant application is liable for rejection under Section 98(2) of the CGST Act, 2017 for not filing the application in proper FORM GST-ARA-1 as required under the provisions of CGST Act and Rules and respective GGST Act Rules. Instant application filed by M/s. Gujarat State Road Development Corporation ltd., Ground floor, Nirman Bhavan, Sector-10A, Gandhinagar-382010 is hereby rejected under Section 98(2) of the CGST/GGST Act, 2017 being non-maintainable.

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• 2021 (3) TMI 573
  Maintainability of Advance Ruling application - requirement of deposit fees along with the application - Classification of goods - Zipper Roll - Zipper Roll with slider - Zip Fasteners, Zipper etc. - whether it is Slide fastener or parts of Slide fastener? - HELD THAT:- On a combined reading of the provisions of the aforementioned Section 97 and Rule 104 of both the aforementioned Acts and Rules, we find that the application for obtaining an Advance Ruling under sub-section(1) of Section 97 is to be submitted in FORM-GST ARA-01 and shall be accompanied by a fee of Ten thousand rupees (Five thousand rupees as per Rule 104 of the CGST Rules, 2017 + Five thousand rupees as per Rule 104 of the GGST Rules, 2017). Although the applicant has filed the application in the prescribed format of GST-ARA-01, they have not paid the required fees of Rs. 10,000/- as required as per the provisions of aforementioned Sections and Rules. Therefore, the instant application is liable for rejection under Section 98(2) of the CGST Act, 2017 for not paying the total fees of Rs. 10,000/- i.e Rs. 5,000/- under each head CGST GGST as required under the provisions of CGST Act and Rules and respective GGST Act Rules. Instant application filed by M/s. Ashokkumar Khimjibhai Patel, Shop No.7 Ajanta Diamond Society, Ground Floor, A.K.road, Varachcha road, Surat is hereby rejected under Section 98(2) of the CGST/GGST Act, 2017 being non-maintainable.

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• 2021 (3) TMI 572
  Maintainability of Advance Ruling application - scope of Advance Ruling - purchase of E-scrap under RCM - tax at 5% being trader - HELD THAT:- Although the applicant has filed the application in the prescribed format of GST-ARA-01, they have not paid the fees of Rs. 10,000/- as required under the provisions of aforementioned Sections and Rules. Therefore, the instant application is liable for rejection under Section 98(2) of the CGST Act, 2017 for not paying the total fees of Rs. 10,000/- i.e. Rs. 5,000/- under each head CGST GGST as required under the provisions of CGST Act and Rules and respective GGST Act Rules. Since the applicant has failed to comply even with the statutory requirements of the provisions of the relevant sections and rules of the CGST Act, 2017/GGST Act, 2017 as well as the CGST Rules, 2017/GGST Rules, 2017 with regard to filing the application of Advance Ruling before the Advance Ruling Authority, thus rendering it an invalid application for Advance Ruling under Section 97(1) of the CGST Act, 2017 read with Rule 104 of the CGST Rules, 2017. Instant application filed by M/s. Abdulwahid Shamsudin Malik (Legal Name), IQRA Traders (Trade Name), Ahmedabad is hereby rejected under Section 98(2) of the CGST/GGST Act, 2017 being non-maintainable.

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• 2021 (3) TMI 567
  Maintainability of Advance Ruling - application not submitted in proper format - Classification of goods - Water pump - to be classified under HSN 8413 or HSN 8421? - HELD THAT:- On going through the provisions of Section 97 of the CGST Act, 2017 and Rule 104 of the CGST Rules, 2017, it is found that the application for obtaining an Advance Ruling under sub-section(1) of Section 97 is to be submitted in FORM-GST ARA-01 (which is the prescribed format for the said application) and shall be accompanied by a fee of Five thousand rupees which is to be deposited in the manner specified in Section 49 of the CGST Act, 2017. Similarly, as per Section 97 of the GGST Act, 2017 and Rule 104 of the GGST Rules, 2017, the application for obtaining an Advance Ruling under sub-section(1) of Section 97 is to be submitted in FORM-GST ARA-01 and shall be accompanied by a fee of Five thousand rupees which is to be deposited in the manner specified in Section 49 of the GGST Act, 2017. The applicant has neither filed the application in the prescribed format of GST-ARA-01 nor paid the required fees of Rs. 10,000/- as required as per the provisions of aforementioned Sections and Rules. Therefore, the instant application is liable for rejection under Section 98(2) of the CGST Act, 2017 for not filing the application in proper FORM GST-ARA-01 and not paying the total fees of Rs. 10,000/- i.e Rs. 5,000/- under each head CGST GGST as required under the provisions of CGST Act and Rules and respective GGST Act Rules. Application is rejected under Section 98(2) of the CGST/GGST Act, 2017 being non-maintainable.

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• Income Tax

• 2021 (3) TMI 565
  TDS u/s 194C - Disallowance u/s.40(a)(ia) - Receipt of payment to Government exchequer was not furnished before the AO and ld CIT(A) - HELD THAT:- It is discernible that the assessee has already deposited the TDS alongwith interest before completion of assessment. We also note that a person is liable to pay interest under section 201(1A) for failure to deduct tax at source or delay in payment of tax deducted at source and interest under section 206C(7) is levied for failure to collect tax at source or delay in payment of tax collected at source. In this case, the assessee has already deposited the TDS alongwith interest to the Government exchequer, as is evident from the challan, placed before the Tribunal. Thus no loss is caused to the revenue. Hence, allow this ground of appeal of the assessee. Accrual of income - addition treating 15% of total advances received from customers as income of the appellant - HELD THAT:- As the advance from customers at the end of the relevant preceding financial period and the opening balance brought forward from the preceding financial year(F.Y. 2012-13) cannot be taken for estimating and taxing the profit element therein in the hands of the assessee in present assessment year 2014-15. Although as also concluded above that the profit element embedded in the amount during the financial period 2013-14 can be taxed by the AO in the hands of the assessee for assessment year 2014-15 but at the same time, I have no hesitation to hold the profit percentage of 15% of total advance amount from customers is very high, unreasonable and excessive and simultaneously also observe that the prayer of assessee that the profit may be estimated @ 5% is also very unreasonable and thus not acceptable. Considering the entire facts and circumstances of the case and to take care of all possible leakage of revenue, direct the AO to estimate 10% of amount of advance received from customers during the relevant financial year 2013-14 relevant to assessment year 2014-15 only. The AO is direct to recompute the profit as per the direction given above - Appeal of the assessee is partly allowed.

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• 2021 (3) TMI 564
  Estimation of income - Bogus purchases - HELD THAT:- We find that the assessee is engaged into manufacturing and cutting of polishing of diamonds also. Moreover, exhaustive information has been obtained by DGIT investigation, Mumbai that the assessee has taken huge accommodation entry which is running into ten of crores of rupees from Rajendra Jain Group Company. Hence, the aforesaid decision referred by assessee s counsel is not applicable here. In this case, we find that there is no enquiry by the AO relating to veracity of sales arising out of bogus purchases. Moreover, there is no examination of the production and other records of the assessee. AO has proceeded to allow relief to the assessee by adding only 12.5% and so the further relief granted by Revenue authorities are itself on hollow ground. But as noted above, Revenue s appeal is not maintainable on account of low tax effect. Be that as it may, since, the ITAT in assessee s own case [ 2018 (8) TMI 2019 - ITAT MUMBAI] has upheld the addition of 2% of the bogus purchases and no information has been furnished that the said order has been reversed by the Hon ble Jurisdictional High Court, following the said precedent, we uphold the order of the CIT(A).

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• 2021 (3) TMI 563
  Period of limitation for palling an order passed by the TPO u/s 92CA (3) read with section 153 - how the period of 60 days prior to the date of TP order i.e. 31.03.2013 is to be computed? - HELD THAT:- Hon ble Madras High Court in case of M/s. Pfizer Healthcare India Pvt. Ltd. 2021 (2) TMI 1152 - MADRAS HIGH COURT] while dealing with the issue held that for computing the period of 60 days, the last date as per section 153 should be excluded. Computation of period of 60 days given by the taxpayer extracted in the preceding para no.20 cannot be faulted with on any ground because from 31.03.2013, the date of passing order of the AO, 60 days was to be computed by excluding the date of order i.e. 31.03.2013. So, while excluding the date 31.03.2013, the day of passing the order, the order was required to be passed by the TPO by 29.01.2013 whereas the impugned order has been passed on 31.01.2013 which is barred by limitation. Following the order passed by the coordinate Bench of the Tribunal in cases of M/s. Pfizer Healthcare India Pvt. Ltd. and Honda Trading Corporation [ 2015 (9) TMI 846 - ITAT DELHI] respectively and mandate of section 92CA (3) read with section 153 of the Act, impugned order passed by the ld. TPO is barred by limitation which was required to be passed by 29.01.2013 and as such is hereby quashed. Consequent additions made on account of transfer pricing adjustment by way of determining the ALP transaction by the TPO are also not sustainable in the eyes of law, the order of the TPO being barred by limitation. Since vide assessment order dated 24.02.2014 AO has made addition on account of determination of ALP of international transaction, such addition stands deleted being order of ld. TPO barred by limitation, but the assessment order u/s 143 (3) passed by AO is in time, it stands except those additions proposed by ld. TPO. Thus, additions made by AO, based on order of ld. TPO, stand deleted without entering into grounds raised on merits by the taxpayer.

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• 2021 (3) TMI 562
  Revision u/s 263 - Payments made to parties in violation of provisions of section 40A(3) - HELD THAT:- On perusal of assessment order u/s.143(3) of the Act, we observe that the Assessing Officer has not discussed the issue in the assessment order or made any enquiry and simply accepted the returned income by the assessee and there is no deliberation. When the circumstances of the case are such so as to provoke an enquiry, it is his duty to make proper enquiry. Failure to make enquiry in such circumstances would make the assessment order erroneous. Hon ble Apex Court in the case of Smt. Tara Devi Aggarwal vs. CIT, [ 1972 (11) TMI 2 - SUPREME COURT ], has held that the CIT may consider an order of the AO to be erroneous not only it contains some apparent error of reasoning or of law or of fact on the face of it but also because it is a stereo typed order which simply accepts what the assessee has stated in his return and fails to make enquiries which are called for in the circumstances of the case. The Assessing Officer cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. By accepting the returned income without making any enquiry and deliberation on the points raised by the Lr. Pr. CIT, the assessment order is erroneous and prejudicial to the interest of the revenue. Hence, the Pr. CIT is justified in setting the assessment order and directing the AO to make fresh assessment after providing opportunity to the assessee. - Decided against assessee.

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• 2021 (3) TMI 561
  Determination of amount payable as compensation - Land in question was acquired by National Highway Authority of India on 05.02.2013 under the National Highway Authority Act, 1856 - When the award was passed acquiring the land, the Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act, 2013 (RFCTAAR Act) came into force with effect from 1st January, 2014 and the compensation as mentioned in Form 16A was given to the assessee on 01.01.2014 - HELD THAT:- Award was made in Section 3G of the National Highways Act on 05.02.2013 and compensation was given as per Form 16A on 01.01.2014. Hence, we do not find applicability of RFCTAAR Act to the transaction under consideration before us. We are of the opinion that even section 24 is not applicable as in the present case award was passed on 05.02.2013, which is a date prior to the date when RFCTAAR Act was made applicable. Therefore, its provisions are not applicable. Further as per section 5 of the IT Act, income of assessee (compensation received by assessee) is required to be taxed when the said compensation have accrued in favour of the assessee or deemed to have been accrued. Undisputedly, the assessee was entitled to receive the compensation when the award was passed quantifying the amount in favour of the assessee for acquisition of land. Therefore, in our opinion, the cut-off date for the purpose of determining its taxability is the date when the assessee was found to be entitled to receive the compensation and not the date when it was actually received by the assessee. In the light of the above we do not find any merit in appeal of the assessee. Accordingly, the same deserves to be dismissed.

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• 2021 (3) TMI 558
  Penalty u/s. 271(1)(c) - surrender of income in survey proceedings - assessee argued for non-specific notice initiating the penalty - As submitted amount of 1.5 crore was declared during the course of survey and was offered for taxation to avoid litigation and to buy peace - HELD THAT:- There was no ambiguity in the mind of the assessee either at the assessment stage or at the stage of imposition of penalty that the assessee had not disclosed the income of Rs. 1.5 crore in the return of income, despite surrendering Rs. 1,80,00,000/- during survey proceedings. The above said plea of non-specific notice was not raised by the assessee before the Commissioner (appeal). In our considered opinion the notice was issued to the assessee and the assessee had also filed the reply declaring the entire undisclosed amount in the return of income, as was surrendered on survey. The sum and substance of the submission was that the assessee was well aware of the charge against the assessee and the assessee was required to plead not only the plea of non-specific notice but is also required to raise the defense of prejudice caused to him on account of nonspecific notice. In our considered opinion the assessee has not raised the plea of non-specific notice before the lower authorities and have further not raised the plea of prejudice caused to him on account of non-specific notice. Nothing has been pleaded before us or before the lower authorities to prove the prejudice caused to the assessee on account of non-specific notice. In the light of the above we do not find any merit in the contention of the assessee and therefore the CO filed by the assessee is required to be dismissed as no prejudice had been caused to the assessee - charge against the assessee was known to the assessee and had filed the reply thereto setting up the plea of buying the peace and to curtail the litigation. However in the reply the assessee has not submitted that he was not aware of the charges for which the penalty notices were issued by the assessing officer. Surrendered income during the course of survey - Initial surrender made by the assessee on 25 July 2012 was on account of the recovery of loose papers, hard disk and other documents showing the undisclosed income and investment made by the assessee, his daughter and son. It was not voluntary but it was on account of the recovery of the said documents made during survey. Further, from the conduct of the assessee, it is clear that the surrender was lacking voluntariness. In our view the assessee was forced to disclose the income on account of survey and subsequent show cause notice issued by the assessing officer. In view of the above said we do not find any justification for the CIT(appeals) to delete the penalty . Hence the order passed by the CIT (appeals) is required to be annulled and the order of the assessing officer imposing the penalty is required to be confirmed. Accordingly we confirm the penalty imposed by the assessing officer. - Decided against assessee.

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• 2021 (3) TMI 555
  Validity of assessment - Jurisdiction - Approval by the JCIT as required under section 153D obtained or not? - HELD THAT:- Correspondence between the A.O. on one hand and the JCIT on the other hand and the letter addressed by the JCIT to the Commissioner clearly shows that it was at the stage of discussion and the JCIT could not able to make his mind. Ultimately he simply says that due to shortage of time as he was holding charges for six ranges, it is not possible for him to go into the material deep, therefore, he approved the proposal technically as required u/s 153D of the Act, immediately, after the AO brings to his notice that the assessment is getting time barred. From the communications, it is obvious that the JCIT has not applied his mind even though there was a discussion between the A.O. and JCIT, the JCIT could not make his mind. Hence, this kind of casual approval/technical approval without going to the matter and without applying his mind to the material available on record is not an approval at all. Therefore, A.O. has no jurisdiction to pass the assessment order. In other words, the assessment order passed by A.O. as confirmed by C.I.T.(A) is void, nullity, non-est, hence, cannot be stand in the eye of law. An irregularity in the assessment order may be rectified by remitting back the matter to the assessment. In the case on hand it is not an irregularity in the assessment order, it is a jurisdictional error. The A.O. has no jurisdiction to pass the assessment order unless the JCIT granted approval. This Tribunal is of the considered opinion that this is not a rectifiable error since it is a jurisdictional error and not an irregularity in the assessment proceeding. Moreover, even if the matter is remitted back, the AO cannot do anything better, since time limit provided under the Act has already expired. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of both the authorities below were set-aside and the entire assessment order as confirmed by C.I.T.(A) are quashed. Order of assessment or reassessment passed by the AO below the rank of Joint Commissioner - It is not in dispute that the AO is of the rank of the Assistant Commissioner, i.e., below the rank of the Joint Commissioner. Similarly, the year of search being f.y. 2009-10, the assessment year under reference, i.e., AY. 2007-08, is that specified in s. 153D. The assessment order under reference is, thus, not valid in law inasmuch as no order of assessment or reassessment could be passed by the AO below the rank of Joint Commissioner for any of the years specified in section 153D, except with the approval of the Jt. CIT.

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• 2021 (3) TMI 554
  Chargebility of interest income - investment on FDR - allowable business income OR income from other sources. - deposit of fixed deposit receipts with the government - HELD THAT:- Admittedly the assessee is a contractor working for the various government department and for the purpose of getting the contract from them it is essential for the assessee to give bank guarantee and the bank guarantee are issued by the banks on the deposit of like amount in the form of fixed deposit. The assessee in the submissions before the lower authority had categorically mentioned that due to shortage of funds, the assessee has to submit B/G in favour of various departments and as per norms of the bank, the assessee has to provide 25% cash margin in the shape of FDRS. FDRs have been prepared as per terms of contract and terms of bank guarantee and these are not investment, but are in the shape of security deposit as per terms and condition of the contract. The assessee accordingly credited investment on FDRs in their books of account as business income. The above receipts are part of contract receipt. Deposit of fixed deposit receipts with the government are essential for providing the contract in favour of the assessee. In the absence of fixed deposits, the assessee would not be able to fulfill the conditions of the contract and the contract could not be awarded to the assessee. In view of the terms of contract, the fixed deposit and earning of interest on such fixed deposit was intricately connected with the business of the assessee and there is a direct and clear nexus with the business of the assessee and the interest earned on fixed deposits, in our considered opinion, is required to be considered as business income. Income from insurance claim - amount as already included in profit and loss account and subjected to assessment u/s 143(3) already - HELD THAT:- On this aspect there was no argument before the ld. CIT(A) and as such there was no occasion for the Commissioner (Appeal) to examine the submission of the assessee. As recorded above none appeared on behalf of the assessee during the course of appellate proceedings before us, as the authorised representative had passed away. In view of the above we are of the opinion that the ground raised in the present appeal is required to be remanded back to the file of the Commissioner (appeals) for fresh adjudication. The Commissioner (appeals) is directed to decide the issue after issuing notice to the assessee and granting the opportunity of hearing to the assessee in accordance with law.

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• 2021 (3) TMI 553
  Disallowance towards interest expenses incurred on term loans availed by the assessee - HELD THAT:- Loan facility has been taken against the security of the capital asset. The diversion of loan funds for non-business purposes has not been alleged by the revenue authorities. Besides, the findings of the CIT(A) is quite vague indeed. Section 36(1)(iii) of the Act governs allowability of interest paid in respect of capital borrowed for the purposes of business or profession. As held in Dy. CIT v. Core Health Care Ltd. [ 2008 (2) TMI 8 - SUPREME COURT] there is no distinction in Section 36(1)(iii) of the Act capital borrowed for revenue purpose and capital borrowed for a capital purpose. The assessee is entitled to claim interest paid on borrowed capital after the asset is put to use for business purposes. The loan having been utilized for acquisition of capital asset in the earlier years is thus not an obstacle for treating interest expenditure as revenue expenditure under s.36(1)(iii) of the Act r.w.s. Explanation 8 to s.43A of the Act. The CIT(A) has wrongly applied the tests laid down for applicability on Section 36(1)(iii) of the Act in its non-descript order. We thus find merit in the plea of the assessee for allowability of interest claim in question. - Decided in favour of assessee.

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• 2021 (3) TMI 551
  Addition of expenses claimed under the head power and fuel - CIT-A deleted the addition observing that the AO was wrong in making addition merely on noticing some difference in the chart prepared by the assessee viz-a-viz details furnished by the assessee in the Annual report while ignoring the other facts that the power was also used in other units - Whether the information furnished in the annual report can be basis for making the disallowance? - HELD THAT:- In our considered view the answer stands in negative. It is because to make the disallowance of the expenses, the AO has to establish the fact that the expenses were bogus or were not incurred in connection with the business. But the AO has not brought anything on record suggesting that the expenses were bogus or these expenses were not incurred in the course of the business. Assessee has incurred more expenses under the head power and fuel as discussed above in comparison to the immediate preceding assessment year which resulted the high cost of production to the assessee but the same cannot be disallowed on the reasoning that the assessee has incurred more expenses than the immediate preceding assessment year. It is because the test which has been provided under 37 of the Act is that any expense which is not capital in nature/ personal in nature incurred in course of the business has to be allowed while computing income under the head business profession. Indeed, the cost incurred by the assessee under the head power and fuel is not capital in nature and there was no allegation by the AO that such expenditure was not incurred in the course of the business. As such, the AO cannot decide to allow or disallow the expenses on noticing difference between the annual report and the details submitted by the assessee during the assessment proceedings until and unless there are supporting evidences. Accordingly we do not find any infirmity in the order of the learned CIT (A). Hence the ground of appeal of the revenue is dismissed. Addition made on account of excess consumption of raw material - differences as pointed by the AO was due to the fact that at time of survey under section 131(1) of the Act the income tax inspector collected data with respect to 11 major item of raw material only whereas it is consuming 68 type raw material - CIT-A deleted the addition - HELD THAT:- Admittedly, the inspector of income tax Act, collected the details at the time of visit in the factory premises of the assessee with respect to the 11 items whereas the assessee has issued 68 items to its factory. Thus what is referred is that the entire basis of disallowance made by the AO is not sustainable for the simple reason that the AO should have made comparison of all the items which were issued to the factory. It is also pertinent to note that there was no doubt raised by the AO on the genuineness of the purchases claimed by the assessee as well as the stock statement maintained at the factory. In other words, there cannot be any addition merely on the basis of difference noticed by the AO in consumption of raw material between the details collected by the inspector and the information furnished by the assessee in its financial statement until and unless it is brought on record that the assessee has made bogus purchases. Accordingly we do not find any infirmity in order of learned CIT (A). Addition on account of suppression of sale at Bareilly and Nandesari plant - CIT (A) deleted the addition made by the AO by observing the AO has not pointed any mistakes in the books of accounts and in the bills vouchers and only relied upon the data collected by inspector in pursuance to section 131 - HELD THAT:- The primary onus lies upon the assessee to reconcile the difference in the amount of sales shown in the books of accounts viz a viz the sales amount obtained during the survey under section 131 of the Act. In fact the assessee has made submissions to match the figures of sales quantity as recorded by the inspector of income tax without bringing any material on record. Thus we are of the view that the assessee has failed to discharge the onus imposed upon it. The entire amount of suppressed sale cannot be treated as income of the assessee. It is because there was no evidence available with the AO that the assessee has made any investment in such suppressed sale. In the absence of documentary evidence, we are of the view that the amount of gross profit will only be subject matter of addition with respect to such unaccounted transaction. It is undoubtedly a business transaction. Addition of the gross profit to the total income of the assessee on account of such purchases will meet the end of justice. In view of the above, we direct the AO to make the addition to the extent of the amount of the gross profit embedded in such suppressed sale. Hence the ground of appeal of the revenue is partly allowed.

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• Customs

• 2021 (3) TMI 560
  Customs Brloker - Penalty u/s 112(a) of the Customs Act, 1962 and Section 114AA of the Customs Act, 1962 - misdeclaration of imported consignment - clearance of cosmetic items in personal baggage in commercial quantities imported by the passenger - suppression of facts - HELD THAT:- The Revenue has not been able to bring any evidence on record which shows that the appellant had prior knowledge regarding the violation of the provisions of the Customs Act - Further this Tribunal in SHAHIN TAJ BEGUM VERSUS COMMISSIONER OF CUSTOMS, MANGALORE [ 2020 (2) TMI 1132 - CESTAT BANGALORE ] reduced the penalties imposed on the passenger after holding that there was no suppression of facts by the passenger. Once the passenger has not suppressed any material fact then how it can be said that the appellant has abetted the passenger in the commission of certain violation of the Customs Act. In the present case, no proceedings were initiated against the appellant under the Customs Broker Licensing Regulations, 2013. Moreover, issuance of show-cause notice in de novo remand proceedings is not permitted under law. The imposition of penalty of Rs. 2,50,000/- on the appellant is not sustainable - Appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2021 (3) TMI 557
  Approval of Resolution Plan - Renewal of lease of land - clearance of past dues - section 60(5)(c) of IBC - HELD THAT:- Presently the R3 has made a claim of Rs. 3.50 crores approximately, after the approval of Resolution Plan without giving any details thereof. It should have claimed the same before the Resolution Professional as an operational debt if it related to the pre-CIRP or as CIRP costs if it was incurred during the CIRP. No explanation is forthcoming for not claiming the same as indicated. In any case, since no claim has been made at the appropriate stage, this cannot be fastened to the Applicant after the approval of Resolution Plan - The Resolution Plan has been approved by the Committee of Creditors under Section 30(4) of the Code. Upon its approval by this Authority under section 31(1) of the Code, the same becomes binding on all the stakeholders of the Corporate Debtor. R3 is also a stakeholder being the lessor of the Corporate Debtor and had also filed claim in the CIRP as an Operation Creditor. It is also not in doubt that required approvals have to be given by the concerned authorities under the relevant laws and rules framed thereunder. However, no authority can deny the renewal of licence or lease, on the ground that past dues are not paid, even without making a claim (water charges) during CIRP. In respect of Transfer and Renewal fees, we have adduced reasons how the belated claim made is not in consonance with the provisions of the Code. Prayer for issue of no objection certificate and no dues certificate for creation of mortgage by the Applicant - HELD THAT:- Snce R3 is the owner of the property, it is purely within its prerogative to decide on the issue. We are conscious that jurisdiction under 60(5) of the Code is not so elastic to grant this relief sought for by the Applicant. Application allowed in part.

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• 2021 (3) TMI 556
  Liquidator of Corporate Debtor - E-auction for the Sale of the assets of the Corporate Debtor as a going concern - HELD THAT:- While the Liquidation Process Regulations recognises going concern sale as one of the methods of sale, however, there is no definition as such for going concern either in the Code or in the Regulations. One advantage of the sale of the Corporate Debtor as a going concern is that the Corporate Debtor is retained, it will not be dissolved and the Corporate Debtor will be transferred along with the assets. So, the Corporate Debtor as a legal entity remains as such - The crux of the going concern sale is that the equity shareholding of the Corporate Debtor is extinguished and the acquirer takes over the undertaking with the assets, licenses, entitlements etc. The undertaking includes the business of the Corporate Debtor, assets, properties and rights etc. excluding the liabilities. However, in this case the assets that are included in the E-Auction Memorandum only have to be taken over by the Applicant. The decision to sell the Corporate Debtor as a going concern is taken by the Liquidator himself or in consultation with the Creditors / stakeholders and the proceeds from the sale of assets are going to be utilised for distribution to the Creditors in the manner specified under Section 53 of the Code. Hence all the Creditors of the Corporate Debtor get discharged and the assets are transferred free of any encumbrances. The legal entity of the Corporate Debtor however survives - In the case of sale as a going concern the Corporate Debtor will not be dissolved in terms of Section 54 of the Code. The assets with the attendant, claims, limitations, licenses, permits or business authorisations, remains in the Company. Only the ownership of the Company is acquired by the successful bidder from the Liquidator. The Applicant is permitted to bring in Rs. 40 crores as share capital and Rs. 150.90 crores as unsecured debt towards payment of sale consideration - The Applicant shall get all the rights, title and interest over whole and every part of the Corporate Debtor, including but not limited to contracts free from security interest, encumbrance, claim, counter claim or any demur. The sale consideration, when received, shall be distributed by the Liquidator in terms of the Section 53 of the Code. Application allowed.

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• 2021 (3) TMI 552
  CIRP - Preferential Transactions - undervalued transactions - fraudulent trading or wrongful trading - HELD THAT:- The specific material fact in relation to the transaction which is sought to be challenged by the resolution professional is required to be pleaded in the application. As to the present case, the applicant has sought to reverse the transactions purported to be done by the respondents under sub-section (2) of section 66 of the IBC, 2016. It is required to be noted that six transactions are alleged, in relation to which reliefs have been sought for. However, out of the six transactions alleged to be falling under the provisions of section 66, it is required to be seen that in relation to transactions alleged under clauses (a), (d), (e) and (f) in the reliefs portion of the applications prima facie it is seen that third parties are involved without which the transactions would not have been perpetrated and hence the impleadment of these parties becomes essential which the applicant has failed to do and in the absence of these parties we are unable to consider the said allegations and the attendant reliefs sought for. However, the transactions alleged in relation to these reliefs are of very serious nature as brought forth in the Forensic Audit Report, the audit of which had been commissioned only after the approval from the members of the CoC. When the Forensic Audit Report commissioned by the CoC itself returns with serious findings against the respondents, being the promoters, the same is required to be not ignored and is required to be taken in all seriousness. It is evident that based on an application filed under section 10 of the IBC, 2016 on March 4, 2019 by the corporate debtor through its promoters/directors who are the respondents herein, CIRP had been initiated by this Tribunal in relation to the corporate debtor vide its order dated April 15, 2019. By now its trite that whether it be under sections 7, 9 or section 10 of the IBC, 2016 the petitioner(s) under the concerned sections of the IBC, 2016 are required to approach this Tribunal with a bona fide and honest intent seeking for the resolution of the insolvency of the corporate debtor and the petition should not have been filed with a fraudulent or malicious intent, lest the person approaching this Tribunal should become liable to prosecution under section 65 of the IBC, 2016 - The disclosures in particular made under form 6 of the said Rules and the annexures filed thereunder are of significant importance for this Tribunal coming to a conclusion the existence of insolvency of the corporate debtor and for initiating the CIRP for its resolution. Thus, furnishing any misleading, wrongful or fraudulent information will in itself vitiate the petition and the proceedings if any initiated thereunder. Let the Registrar of Companies, Coimbatore under whose juris diction the corporate debtor is amenable to inspect the books and conduct inquiries as provided under sections 206 and 207 of the Companies Act, 2013 and also furnish a report to the appropriate Authority for necessary action under section 208, if any required - the resolution professional is directed to provide a copy of the Forensic Audit Report filed before this Tribunal along with this application for the purpose of reference.

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• 2021 (3) TMI 550
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its Financial Debt - existence of debt and dispute or not - HELD THAT:- It is observed that the applicant has failed to produce any document or agreement entered into between the parties regarding the debt which the applicant claim to have deposited in the account of the respondents. Further the applicant also has not filed any documents to prove as to what was agreed term of interest, which the applicant are entitled to get in case of default of payment. This Adjudicating Authority is of the view that as the applicants failed to produce any document to show that the applicant has given the money to the corporate debtor as it was contended that the amount was transferred to the personal account of the intermediary as well as the personal account of the directors and failed to establish that the amount was given to the corporate debtor. Therefore, the case of the applicant does not comes under any of the provision section 5(8)(a) to (i) of the I and B Code, thus cannot be considered as financial debt and neither the applicant comes under the definition of the financial creditor in view of section 5(7) of the IB Code. This Adjudicating Authority is of the considered view that in absence of any document or agreement, the contention of the applicant is not liable to be accepted and the applicants failed to prove that the amount deposited comes under the definition of financial debt under section 5(8) of the IBC - This Adjudicating Authority is of the opinion that the applicant failed to bring on record the default recorded with the information utility or such other record or evidence as may be specified which is necessary to proceed for admitting the petition under section 7 of the I and B Code. The prayer to initiate proceedings under section 7 of the IBC against the Tripathi Hospital P. Ltd. is hereby rejected and the application stands dismissed.

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• 2021 (3) TMI 549
  CIRP cost incurred as well as the liquidator s fees and the liquidation expenses had not been paid - Payment to be made to KMEWPL - verification of claim to be payable to the liquidator, in relation to the balance amounts - Fees payable to the liquidator - Agreement for the dredger as entered into between the KMEWPL and liquidator - Condonation of delay in filing the requisite form as prescribed - HELD THAT:- In relation to the amount which is being disputed namely the balance amount payable to the KMEWPL, this Tribunal is of the view that the chartered accountant, viz., statutory auditor of the corporate debtor should have afforded an opportunity, in fairness, to the scheme proponents to make objections, if any. In the absence of the same having been afforded by the statutory auditor, we direct the statutory auditor of the corporate debtor to afford an opportunity to the scheme proponents to put forth their objections, if any, in relation to the payments quantified as payable to KMEWPL as well as to the liquidator s claim under cost for claim verification . Thus, affording an opportunity to the scheme proponents and factoring their objections, if any, made by the scheme proponents, let the statutory auditor of the corporate debtor submit a report containing only in relation to the amounts in dispute as between the parties as noted above with proper reconciliation. For the above purpose, documents and records, if any, submitted by the liquidator to sustain the disputed claim the same shall also be made available to the scheme proponents for their perusal and record. Fees payable to the liquidator - HELD THAT:- As already dealt with vide order dated May 5, 2020 the fees will become payable only upon the occurrence of the events of respective receipts and disbursal at the specified percentage payable and not otherwise and in the circumstances we direct the liquidator to desist from claiming the amounts towards liquidator fees as immediately payable. Agreement for the dredger as entered into between the KMEWPL and liquidator - HELD THAT:- The board of the corporate debtor along with the liquidator who will act as an independent observer is directed to make a decision whether to extend the said agreement or to engage some other parties other than the said KMEWPL as per the terms and conditions as may be agreed between the corporate debtor and such other party. The liquidator, in this connection, will act only as an independent observer and will not have any vote in relation to the decision to be taken by the corporate debtor in this regard. The liquidator is ordered to make arrangements to hand over the reins of the management of the corporate debtor, including the possession of assets of the corporate debtor, if not already done within a period of 10 (ten) days from today. No fees shall be chargeable by the liquidator for the same and if not handed over as above, the risk and responsibility and costs shall be to the personal account of the liquidator without any recourse to the funds or assets available with that of the corporate debtor. Condonation of delay in filing the requisite form as prescribed - HELD THAT:- The liquidator is directed to avail the remedy as available to him under section 460 of the Companies Act, 2013 by following the proper procedure. Application disposed off.

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• Service Tax

• 2021 (3) TMI 559
  100% EOU - Refund of unutilized CENVAT credit of service tax availed on input services - Architect - Club or Association services - Event Management services - General Insurance service - HELD THAT:- The appellants have given detailed justification for each of these 5 services which have been used by the appellant for rendering the output services. Further, the reasoning given by the Commissioner (Appeals) in the impugned order is not correct in law. The correct position in law is that the true test for eligibility is whether input service is used by the provider of taxable service for providing output service and the input services should not be covered by the exclusion clause - further, all the services, of which refund has been rejected, has been consistently held to be input service in various decisions relied upon by the appellant. Department has not questioned the input service at the time when the CENVAT credit was taken and as per the decision of this Tribunal in the case of K Line Ship Management India Pvt. Ltd. Vs CGST, Mumbai West, [ 2018 (12) TMI 1481 - CESTAT MUMBAI ] wherein it has been held that the Department is not permitted to question the eligibility of CENVAT credit at the time of claiming refund. The appellant is entitled to refund of CENVAT credit in relation to input services of Architect, Club Association, Event Management, General Insurance and other taxable services which have been used for providing the output services - Appeal allowed in part.

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• Central Excise

• 2021 (3) TMI 568
  Rejection of restoration application - recall of order would amount to review - rejection on the ground that recall of the earlier order would result in review of its order and that the Tribunal is not vested with such power under the statute - HELD THAT:- It appears from the record that the appeal in question was listed for hearing for the first time before the learned Tribunal on 08.09.2017. The hearing was, thereafter, adjourned to 13.10.2017. In the meantime, the petitioner made an application before the learned Tribunal on 09.10.2017 requesting to postpone the hearing of the appeal to 03.11.2017 on the ground that the petitioner wanted to rely upon certain documents. However, it appears that no orders were passed by the learned Tribunal on the said application dated 09.10.2017 preferred by the petitioner, much less any reasons rejecting the said application. In other words, the application dated 09.10.2017 preferred by the petitioner has remained undecided. The petitioner had a sufficient cause for seeking postponement of the hearing from 13.10.2017. In our opinion, the said request for adjournment made by the petitioner was reasonable. But, the fact remains that the learned Tribunal has not passed any order either allowing or rejecting the application seeking adjournment and has also proceeded to decide the appeal ex-parte on merits while keeping its hand-off from the adjournment application. The Code of Civil Procedure does recognize the right of the appellant-petitioner to get his appeal decided on merits. In the present case, it is an admitted fact that the appeal preferred by the petitioner has been decided ex-parte and an application seeking adjournment of the hearing of appeal had been filed by the petitioner much prior to the next date of listing of the appeal, which has remained undecided. By filing the restoration application, the petitioner had sought for recall of the order passed in appeal by contending that all facts relevant for the proper adjudication of the case had not been placed on record of the appeal. However, the said application also came to be rejected by the learned Tribunal by holding that the issue involved has been decided on merits and that the recall of the order and its substitution with a different view, would result into review of its own order, which power is not vested with the Tribunal under the statute. In the present case, on the date so fixed for hearing, i.e. on 13.10.2017, the learned Tribunal ought not to have decided the appeal itself on merits in the absence of the petitioner or its representative, particularly, when the petitioner had already submitted an application seeking adjournment much prior to the date so fixed for hearing disclosing the cause for remaining absent - the impugned orders passed by the learned Tribunal could not be sustained in the eyes of law and they deserve to be quashed and set aside. Petition allowed.

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• Indian Laws

• 2021 (3) TMI 571
  Appointment as a Judicial Member, ITAT - Application filed before the Central Administrative Tribunal seeking a direction to expedite the process of her selection - it is submitted that the applicant is entitled to continue for a period of 5 years and seek re-appointment thereafter in accordance with Section 184 of the Finance Act, 2017 - HELD THAT:- As this application is taken up today in view of the retirement of the applicant on 18.03.2021 in accordance with the appointment order, it would be sufficient at this stage to direct the continuance of the applicant till 17.03.2023. This order is without prejudice to the contentions of the parties in MA 111/2021. The applicant is directed to continue as Member(Judicial), ITAT till 18.03.2023.

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• 2021 (3) TMI 570
  Seeking suspension of sentence under Section 389(1) of the Code of Criminal Procedure 1973 - Smuggling - Heroin - HELD THAT:- The offence of which the respondent has been convicted by the Special Judge arises out of the provisions of Sections 23(c) and 25A of the NDPS Act. The findings of the learned Special Judge which have been arrived at after a trial on the basis of evidence which has been adduced indicate that the respondent who was a proprietor of a courier agency was complicit with a foreign national in the booking of two parcels which were found to contain 325 grams of heroin and 390 grams of pseudoephedrine. Section 37 of the NDPS Act stipulates that no person accused of an offence punishable for offences under Section 19 or Section 24 or Section 27A and also for offences involving a commercial quantity shall be released on bail, where the public prosecutor opposes the application, unless the Court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail . The judgment and order of the High Court dated 28 July 2020 suspending the sentence of the respondent shall stand set aside and the respondent shall surrender forthwith to the sentence - Appeal allowed.

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• 2021 (3) TMI 569
  Dishonor of Cheque - rebuttal of presumption - offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- Once execution of the promissory note is admitted, or proved, the presumption under Section 118(a) of the Act would arise that it is supported by consideration. It is a rebuttable presumption. The accused can prove non-existence of consideration by raising a probable defence. If he proves to have discharged the initial onus of proof that the existence of consideration was improbable or doubtful, the onus shifts back to the complainant, who will be obliged to prove it as a matter of fact, and on his failure to discharge the burden, he will be disentitled to get a relief. The trial court is required to start with statutory presumption until the contrary is proved that the cheque was issued or drawn for consideration and that the complainant had received it for the discharge of existing debt or liability. Then the burden is on the accused, in view of the statutory presumption, to rebut the presumption by leading an adequate and satisfactory evidence to substantiate his contention in defence to the prosecution. Although it is not necessary for the accused to enter the witness box, the burden of proof is required to be discharged by adducing satisfactory evidence to prove that the cheque in question was not issued for discharge of any legally enforceable debt. Merely for the reason that he did not adduce any evidence to prove a negative fact, no adverse inference can be drawn against him. The degree of proof expected from the accused is not as rigorous as that of the complainant. He can discharge his onus by making dents in the case of the complainant. Here, it seems that that has been attempted by the 1st respondent. Even though the financial capacity of the appellant stands disputed by the 1st respondent, the appellant has not taken care in adducing evidence supporting his ability to pay so much money. The complainant is expected to prove his case to the hilt. He cannot take advantage of the failure on the part of the accused respondent. This Court is not persuaded to interfere with the finding of the trial court, which is liable to be confirmed - Appeal dismissed.

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• 2021 (3) TMI 566
  Interpretation of statute - details of the amount payable by the borrower and the secured assets intended to be enforced mentioned in sub-section (3) of section 13 of the SARFAESI Act - power of Debts Recovery Tribunal under section 17 of the SARFAESI Act to test the validity of notice under section 13(2) of the SARFAESI Act? - HELD THAT:- From a perusal of the material on record and as also discussed not only by the Tribunal but also the learned single judge there was an issue raised earlier and pending between the parties regarding the rate of interest at which the secured creditor was calculating. According to the borrower, the rate of interest was higher as was being applied by the secured creditor than what actually it could claim under the agreement. The learned single judge had referred to such facts in paragraphs 5.1 to 6.1 of the judgment. The learned single judge had also placed reliance upon the view taken by the Patna High Court as also the High Court of Calcutta while interpreting the provisions of sub-sections (2) and (3) of section 13 of the SARFAESI Act - Application dismissed. Scope of section 17 of the SARFAESI Act - HELD THAT:- In the present case, the borrower took an objection of non-compliance of sub-section (3), in his objection/representation given sub-section (3A), but despite the same the bank-secured creditor in the present case rejected the objection instead of ensuring the compliance of sub-section (3). A perusal of the notice under sub-section (2) which is already reproduced above does not spell out the details of the amount payable by the borrower, but only mentions a lump sum aggregate amount. The dispute with regard to rate of interest being charged by the bank was pre-existing the stage of section 13, and therefore, when the borrower called upon the secured creditor to provide the details, as a fair and reasonable secured creditor-the appellant-bank ought to have come out with such details, justification of such details would be a different aspect, but the bank could not withhold the details - Even the details of the secured assets had not been correctly provided as recorded by the Tribunal, which finding has not been altered or upset at any subsequent stage. If the bank withholds the details, as in the present case, then such action cannot be sustained. The present case, is a classic example how the judicial system is getting clogged with frivolous litigation. The facts and the circumstances that have led to the filing of the present appeal, leave us with no choice but to impose exemplary costs on the appellant secured creditor. This matter requires costs to be imposed upon the appellant-bank which we quantify at Rs. 5 lakhs per appeal. The amount of costs to be deposited within one month from today with the Registrar General of this court whereupon the same shall be transmitted to the Gujarat State Legal Service Authority. This amount is to be recovered from the officers found responsible for carrying on this frivolous litigation.

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