TMI Tax Updates - e-Newsletter
March 19, 2021

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise

Articles

1. LEVY OF GST ON PARTIALLY COMPLETED FLATS – APPEAL DISMISSED BY AAAR ON TIME LIMITATION

   By: Dr. Sanjiv Agarwal

News

1. Atal Innovation Mission, AWS collaborate to scale cloud skilling, and accelerate innovation with education technology startups in India

2. Govt Driving Transition from Linear to Circular Economy

3. APEDA signs MoUs with NSIC for harnessing the exports potentials of MSMEs

4. CCI issues order against three suppliers for rigging bids in tender floated by Pune Zilla Parishad for procurement of Picofall-cum-Sewing Machine

5. Shri Piyush Goyal says Private Equity & Venture Capitalist are our partners in the Journey of New India towards a New Horizon;

6. Clarification on continuation of concessional rate of tax on certain interest income of the FPIs

Notifications

Customs

1. 31/2021 - dated 18-3-2021 - Cus (NT)

Exchange rates Notification No.31/2021-Cus (NT) dated 18.03.2021

2. 30/2021 - dated 17-3-2021 - Cus (NT)

Amendment to the Notification No. 63/1994-Customs (N.T) dated 21st November, 1994 by notifying New Jalpaiguri Railway Station LCS.

Circulars / Instructions / Orders

IBC

1. IBBI/CIRP/41/2021 - dated 18-3-2021

Reporting of status of ongoing corporate insolvency resolution processes (CIRPs) through Form CIRP 7

DGFT

2. 43/2015-2020 - dated 17-3-2021

Amendment in Public Notice 25 dated 13.10.2020

3. 42/2015-2020 - dated 17-3-2021

Enlistment under Appendix 2E- Agency Authorized to issue Certificate of Origin (Non-Preferential)

4. Trade Notice No. 46/2020-2021 - dated 16-3-2021

Necessary documents to be submitted while applying for import authorization for import of Denatured Ethyl Alcohol (DEA)

Customs

5. Instruction No.04/2021 - dated 17-3-2021

Show Cause Notice (SCN) dated 19.03.2019 issued by DRI against Sh. Anil Aggarwal and 11 others – Directions to keep SCN pending

Highlights / Catch Notes

GST

• Project Development and Management Services to SUDA Classified as "Pure Services," Exempt from GST, Says AAR.

  Case-Laws - AAR : Classification of services - services provided by main contractors - pure services or not - Project Development Service and Project Management Consultancy services (PMCS) provided by the main contractors to SUDA’ - Project Management Consultancy Services for PMAY - Such services would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods)” and accordingly exempt from the payment of GST - AAR
  Visit to Get Source

  ---

• Subsidized Employee Transport via Third-Party Vendors Not a Business Service, Rules AAR.

  Case-Laws - AAR : Classification of supply - supply of services or not - subsidized shared transport facility provided to employees in terms of employment contract through third party vendors - The activity cannot be considered as supply of service in the course of furtherance of business. Providing transport facility to employees is no where connected with the business of the applicant - AAR
  Visit to Get Source

  ---

• Vocational Training Courses by NCVT Eligible for GST Exemption; JSS Courses Not Included in Exemption.

  Case-Laws - AAR : Benefit of exemption from GST - Services provided under vocational training courses recognized by National Council for Vocational Training (NCVT) or Jaan Shikshan Sansthan (JSS) - Educational institution or not - only the course affiliated by the National Council for Vocational Training are exempt from payment of GST - AAR
  Visit to Get Source

  ---

• Restaurant Found Guilty of Profiteering for Not Passing GST Reduction; Ordered to Pay Rs. 78.41 Lakh to Consumer Funds.

  Case-Laws - NAPA : Profiteering - restaurant service - reduction in the GST rate not passed - The profiteered amount is determined as ₹ 78,41,754/- as has been computed in Annexure-17 of the DGAP Report - Since the recipients of the benefit, as determined above are not identifiable, Respondent No. I is directed to deposit an amount of ₹ 78,41,754/- in two equal parts of ₹ 39,20,877/- each in the Central Consumer Welfare Fund and the Maharashtra State Consumer Welfare Fund - NAPA
  Visit to Get Source

  ---

Income Tax

• High Court Criticizes ITAT for Unnecessary Remand in Bogus LTCG Case, Stresses Accurate Fact-Finding Obligation.

  Case-Laws - HC : Validity of the order of ITAT - Matter remitted back to the file of the Assessing Officer for reconsideration by Tribunal - Bogus LTCG - There was no material, which necessitated the remand of the case to the Assessing Officer and it is a clear case where the Tribunal had failed to exercise its jurisdiction in the manner known to law.Tribunal, being a last fact finding Authority, is under the legal obligation to record a correct finding of fact. - HC
  Visit to Get Source

  ---

• Payments to Non-Resident Software Suppliers Not Taxable as Royalties in India u/s 195 of Income Tax Act.

  Case-Laws - AT : TDS u/s 195 - amounts paid by the assessee to the non-resident computer software manufacturers / suppliers as consideration for the resale / use of computer software, is not payment of royalty for use of copyright in the computer software. Hence, the consideration paid to non-resident software manufactures / suppliers does not give rise to income taxable in India and was not liable for deduction of tax at source u/s 195 - AT
  Visit to Get Source

  ---

• CUP Method Inapplicable for Transfer Pricing Between Different Geographical Markets; Overseas FIIs Must Be Compared with Overseas FIIs Only.

  Case-Laws - AT : TP Adjustment - selection of MAM - CUP cannot be applied on basis of comparable uncontrolled transactions- internal or external- that are undertaken in different geographical markets as compared to the market in which the controlled transactions is undertaken.t is crystal clear that the assessee's transactions are with overseas FIIs and hence comparison with other overseas FIIs would alone be appropriate. The fact remains that domestic third party transactions are not comparable with the overseas FIIs on account of geographic differences. - AT
  Visit to Get Source

  ---

• Depreciation Disallowance Contested: Assessee not penalized despite missing invoice; related car expenses already accepted.

  Case-Laws - AT : Disallowance of depreciation on Car - Although, the assessee could have made efforts to obtain a copy of the purchase invoice from the hypothecating bank and produced it before the Lower Authorities, all the same, it is our considered opinion that the assessee should not be penalized for his failure to produce the purchase invoice, specially, when the Department has in principle accepted the assessee’s claim of interest on car loan as well as claim of Car running expenditure. - AT
  Visit to Get Source

  ---

• Court Rules Against Revenue's Attempt to Change Assessee's Accounting Method; No Evidence of Tax Evasion Found.

  Case-Laws - AT : Method of accounting - taxation of an amount as income - It is not the case of the revenue that the income under these projects have not been offered to tax in subsequent years. No case of revenue leakage has been established before us. Therefore, the action of revenue in disturbing the consistent method of accounting being followed by the assessee could not be held to be justified. Hence, we delete the impugned additions and allow these grounds of appeal - AT
  Visit to Get Source

  ---

• Assessing Officer's Misjudgment: Wrongly Applied Section 68 Instead of Section 69 for Unexplained Investments, Lacks Evidence.

  Case-Laws - AT : Unexplained Investment u/s 68 instead of u/s 69 - there is total lack of application of mind, the Assessing Officer had not formed the opinion objectively with reference to any material on record and is merely based on the surmises and conjectures. We fail to understand as to why the Assessing Officer, having rightly taken note of the correct legal position governing the credits in the bank account i.e. he had chosen to bring the same to tax u/s 68 of the Act instead of section 69 of the Act. This itself goes to show the mala-fides on the part of the Assessing Officer, perhaps he intends to assess to tax in the hands of the appellant under more vigorous the provisions of section 68 of the Act than provisions of section 69 - AT
  Visit to Get Source

  ---

• Dispute over Deemed Dividends: Assessing Officer's Oversight of Prior Year Loans Raises Legitimacy Questions u/s 2(22)(e.

  Case-Laws - AT : Deemed dividend addition u/s 2(22)(e) - Provisions of Section 2(22)(e) relating to loan or advance can be deemed as dividend only to the extent of accumulated profit or so far as the loan is not reflected in the accounts, but in instance case the addition was made on the basis of the prior year amounts which was not at all discussed by the Assessing Officer as well as CIT(A) as to how the said amount was taken in respect of the current year account for making addition. - AT
  Visit to Get Source

  ---

• Appellate Authority's Decision Overturned Due to Misinterpretation of Boiler Depreciation Claim; Taxpayer Fails to Prove Installation.

  Case-Laws - AT : Excess claim of depreciation on boilers - The finding of the ld.CIT(A) is not based on correct appreciation of the material facts, rather the ld.CIT(A) has misconstrued partial and incomplete documents available on the record. We do not have any hesitation in setting aside this finding. - assessee failed to prove the installation of high efficiency boiler on which depreciation at the rate of 80% could be claimed. - AT
  Visit to Get Source

  ---

• Authorities Reject Assessee's Unjustified Change in Revenue Recognition Method, Citing Lack of Bona Fide Explanation.

  Case-Laws - AT : Change in method of revenue recognition - Non recognizing income by changing the method - There is no valid explanation for claiming expenses related to the CAS services rendered by the Assessee when recognition of income therefrom is postponed. The change in the method of accounting was therefore not bonafide and was rightly rejected by the revenue authorities.We find no merit in the claim of the Assessee in this regard - AT
  Visit to Get Source

  ---

Customs

• Customs Refund Claims: Unjust Enrichment Doctrine Inapplicable to Public Sector; Proof of Duty Incidence Required.

  Case-Laws - HC : Refund claim - Principles of unjust enrichment - the proof that, the incidence of duty has not been passed on - State represents the people of the country. - No one can speak of the people being unjustly enriched - The doctrine of unjust enrichment is not applicable to the case of public sector undertakings - HC
  Visit to Get Source

  ---

• Procedural Lapse in MEIS Scheme: Incorrect Shipping Bill Marking Leads to Unjust NOC Rejection.

  Case-Laws - AT : Benefit of MEIS-Scheme - It is not case of conversion of shipping bills from one export promotion scheme - it is only a correction by a procedural lapse putting “Y” instead of “N” for claiming the benefit of the scheme - The rejection of the request for issuing NOC is not sustainable in law - AT
  Visit to Get Source

  ---

IBC

• Corporate Debtor Meets Settlement Terms on Time, Avoids CIRP Reinstatement Despite Initial Non-Compliance.

  Case-Laws - AT : Reinstating CIRP - Failure of corporate debtor to replay as per the settlement agreement - essence of time in the Settlement Agreement - Appellant has not been able to make out a clear-cut case in his favor. The Settlement Agreement, as has been operated by both the parties, does not show that time was of essence in it. Moreover, the Corporate Debtor has paid the full and final settlement amount by January 2021 to the Operational Creditor. Therefore the term of the Settlement Agreement that provides for reinstatement or fresh filing of the application for initiating Corporate Insolvency Resolution Process for the Corporate Debtor is not triggered. - AT
  Visit to Get Source

  ---

• Resolution Plan Validity Affirmed: Only CIRP Participants Eligible, Per Section 31(1) of Insolvency and Bankruptcy Code.

  Case-Laws - Tri : Validity of Resolution Plan as approved - Expression fo Interest - application of a person who has not participated in CIRP - eligibility criteria for the prospective Resolution Applicants - Section 31(1) of the Code lays down in clear terms that for final approval of a Resolution Plan, the Adjudicating Authority has to be satisfied that the requirement of Sub-Section (2) of Section 30 of the Code has been complied with. The proviso to Section 31(1) of the Code stipulates the other point on which an Adjudicating Authority has to be satisfied. - This Tribunal finds no reason to entertain this Application - Tri
  Visit to Get Source

  ---

Service Tax

• House Construction Sales Not Taxable as Banking Services, Says Court; Classified as Construction of Complexes Instead.

  Case-Laws - AT : Classification of services - Banking and other Financial Services or not - Since the basic function of the appellant is to construct the houses and then to sell it either by way of allotment or by way of hire purchase against receiving certain amounts whether in form of ASC charges or hire purchase charges, but the activity is specifically the activity of construction of complexes and as such said amount cannot be made liable to tax for rendering service as that of ‘Banking and Financial Services’ - AT
  Visit to Get Source

  ---

• Appellant entitled to service tax refund for exempted construction services, following equitable principles applied to housing board.

  Case-Laws - AT : Refund of Service Tax - construction services provided by them to Haryana Housing Board - Haryana Housing Board has also filed refund claim which was entertained by the Revenue and the same has been granted and no appeal has been filed against the said order, therefore, on the principle of equity also requires that the appellant is entitled to claim the refund of the service which is exempt on which they have paid service tax. - AT
  Visit to Get Source

  ---

Central Excise

• Appellate Tribunal Order Criticized for Ignoring Appellant Submissions, Violates Natural Justice Principles, Lacks Explanation.

  Case-Laws - HC : Principles of natural Justice - the order of Appellate Tribunal passed without dealing with any of the submissions made by the appellant - It is evident that the Tribunal has merely relied on the judgment of the Hon'ble Supreme Court in the case of DOABA STEEL ROLLING MILLS and has not even assigned any reason as to how the decision applies to the fact situation of the case - Thus, it is found that the order passed by the Tribunal is cryptic and suffers from the vice of non-application of mind. - HC
  Visit to Get Source

  ---

• Criminal case paused for adjudicatory appeal; must resolve within a year or prosecution resumes.

  Case-Laws - HC : Continuation of Criminal Proceedings - matter is pending for adjudication - The proceedings initiated against these petitioners are kept in abeyance till the disposal of the adjudicatory proceedings for a period of one year - petitioners are directed to get it disposed off the appeal, which is pending before the adjudicatory authority, within a period of one year from the date of this order by taking steps immediately. If the same is not disposed of within the stipulated time of one year, the respondent is given liberty to proceed with the matter for criminal prosecution. - HC
  Visit to Get Source

  ---

• Allegations of Duty Evasion: Questioning Third-Party Document Validity in Clandestine Goods Case.

  Case-Laws - AT : Clandestine production and removal - shortage of goods - duty evasion - The reliance of third party documents while conforming demand against present appellant is observed to be unjustified and unreasonable. Since the sole challenge to the order is its reliance upon third party evidence, it is necessary to check the evidentiary value of the third party evidence. - AT
  Visit to Get Source

  ---

• Materials Eligible for CENVAT Credit: HR Coils, MS Plates, and More Qualify as Inputs u/r 2(k.

  Case-Laws - AT : CENVAT Credit - input - HR coils - MS plates - HT strappings - HRSS plates - GI flat - Grate Plate - CI Bend - MS Boiler Plates - SS Plates - these items are part and parcel of various goods and has rightly been classified as inputs for fabrication of various capital goods as per Rule 2(k) of CENVAT Credit Rules, 2004 which in turn are used in the manufacture of finished goods and therefore are eligible for cenvat credit. - AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2021 (3) TMI 708
  Classification of services - services provided by main contractors - pure services or not - Project Development Service and Project Management Consultancy services (PMCS) provided by the main contractors to SUDA - Project Management Consultancy Services for PMAY - activity in relation to functions entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively - service provided by the sub-contractor to the main contractor - exemption as per Sl. No 3 of Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017 (as amended from time to time). Project Development Service and Project Management Consultancy services (PMCS) provided by the main contractors to SUDA - Project Management Consultancy Services for PMAY - activity in relation to functions entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India or not - HELD THAT:- SUDA has been established as a state level nodal agency, under the department for Urban Employment and Poverty Alleviation by Uttar Pradesh Government. This agency is registered under the Registration of Societies Act since 20th November 1990 - Further, as per website of Pradhan Mantri Awas Yojana-Housing for All (Urban), Ministry of Housing and Urban Affairs, the PMAY is a Scheme to provide central assistance to Urban Local Bodies (ULBs) and other implementing agencies through States/UTs for Rehabilitation of existing slum dwellers using their land as a resource through private, participation, and affordable Housing in Partnership. Thus, the Consultancy services rendered under the contract with State Urban Development Agency, Uttar Pradesh (SUDA), and for PMAY are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India. Whether such services provided would qualify as Pure services (excluding works contract service or other composite supplies involving supply of any goods) as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017, as amended? - HELD THAT:- The services mentioned in the contract would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods) as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 issued under Central Goods and Services Tax Act, 2017 (CGST) and corresponding Notifications No. - KA.N.I.-2-843/X1- 9 (47) / 17 -UP. Act-1 2017 - Order - (10) - 2017 Lucknow, dated June 30, 2017 issued under Uttar Pradesh Goods and Service Tax Act, 2017 (UPGST Act), where the Project cost includes the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service, and, thus, be eligible for exemption from levy of CGST and UPGST, respectively. Whether the services provided by the applicant would be exempted or not, in terms of Notification No. 12/2017 -Central Tax (Rate) dated 28th June 2017, as amended? - HELD THAT:- The main contractors have entered into an agreement with SUDA for providing Preparation of Detailed Project Report and providing Project Management Consultancy Service under Pradhan Mantri Awas Yojna, the service which was further sublet to the applicant by the main contractors - From perusal of entry no. 03 of the Notification No. 12/2017, it is observed that service should be pure service, supplied to specific class of recipient and should be in relation to any function entrusted to panchayat or municipality under article 243G or 243W of the constitution - thus, the service of providing Preparation of Detailed Project Report (DPR) and providing Project Management Consultancy Service (PMC) under Pradhan Mantri Awas Yojna, by the applicant, in terms of contract entered between main-contractor and SUDA and sub letting of same contract by the main contractor to the applicant, is exempt from GST.

  ---

• 2021 (3) TMI 707
  Classification of supply - supply of services or not - subsidized shared transport facility provided to employees in terms of employment contract through third party vendors - valuation of subsidized shared transport facility provided to employees under employment contract - classification of activity of arranging transport facility for employees - person liable to pay GST - Rate of GST. HELD THAT:- The applicant is transferring the entire amount collected from their employees, to the third party vendor who is providing transport services to their employees. We also observe that the applicant, in his application, has informed that apart from subsidized amount collected from the employees, they are also adding up a considerable amount into it and then paying it to the third party vendor. The applicant is not retaining any amount collected from the employees towards said transportation charges. We further observe that the applicant is in the business of software development and staff augmentation services and not in the business of providing transport service. Rather, this is a facility provided to their employees under the obligation of Law of the Land. Moreover, this activity is not integrally connected to the functioning of their business. Also, the said activity is not a factor which will take their business activity forward. Thus, providing transport facility to its employees cannot said to be in furtherance of business. Thus, arranging the transport facility for the employees and recovery from employees towards such transport facility, under the terms of the employment contract, cannot be considered as supply of service in the course of furtherance of business. Providing transport facility to employees is no where connected with the business of the applicant - thus, we are in unison with the applicant that arranging the transport facility for the employees is definitely not an activity which is incidental or ancillary to the activity of software development, nor can it be called an activity done in the course of or in furtherance of development of software as it is not integrally connected to the business in such a way that without this the business will not function. Further, coming to the subsequent questions, it is observed that the subsequent questions in the application apply only when the answer of first question is in affirmative. As we are of the view that arranging transport facility to its employee is not a supply of service, accordingly the remaining questions become redundant and merit no discussion.

  ---

• 2021 (3) TMI 706
  Activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India or not - Project Development Service (i.e. Detailed Project Report Service) and Project Management Consultancy services (PMCS) provided by the applicant to recipient under the Contract for SUDA - Project Management Consultancy services (PMC) under the contract for PMAY - pure services or not - exemption as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 - HELD THAT:- The Consultancy services rendered by the applicant under the contract with State Urban Development Agency, Uttar Pradesh (SUDA), and for PMAY are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India. Pure services or not - exemption as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 - HELD THAT:- The services mentioned in the contract would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods) as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 issued under Central Goods and Services Tax Act, 2017 (CGST) and corresponding Notifications No.- KA.N.I.-2-843/X1- 9 (47) / 17-UP. Act-1 - 2017 - Order - (10) 2017 Lucknow, dated June 30, 2017 issued under Uttar Pradesh Goods and Service Tax Act, 2017 (UPGST Act), where the Project cost includes the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service, and, thus, be eligible for exemption from levy of CGST and UPGST, respectively.

  ---

• 2021 (3) TMI 705
  Activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India or not - Project Development Service (i.e. Detailed Project Report Service) and Project Management Consultancy services (PMCS) provided by the applicant to recipient under the Contract for SUDA - Project Management Consultancy services (PMC) under the contract for PMAY - pure services or not - exemption as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 - HELD THAT:- The Consultancy services rendered by the applicant under the contract with State Urban Development Agency, Uttar Pradesh (SUDA), and for PMAY are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India. Pure services or not - exemption as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 - HELD THAT:- The services mentioned in the contract would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods) as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 issued under Central Goods and Services Tax Act, 2017 (CGST) and corresponding Notifications No.- KA.N.I.-2-843/X1- 9 (47) / 17-UP. Act-1 - 2017 - Order - (10) 2017 Lucknow, dated June 30, 2017 issued under Uttar Pradesh Goods and Service Tax Act, 2017 (UPGST Act), where the Project cost includes the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service, and, thus, be eligible for exemption from levy of CGST and UPGST, respectively.

  ---

• 2021 (3) TMI 704
  Benefit of exemption from GST - Services provided under vocational training courses recognized by National Council for Vocational Training (NCVT) or Jaan Shikshan Sansthan (JSS) - Educational institution or not - To be exempt either under Entry No. 64 of exemption list of Goods and Service Tax Act, 2017 or under Educational Institution defined under Notification No. 22/ Central Tax (Rate)? - HELD THAT:- The applicant society is registered with the Income Tax department under Section 12A of the Income Tax Act. It is a Non-Governmental organization working for the people affected by leprosy, with the Government of India, State Governments, World Health Organisation etc. The applicant have many leprosy referral hospitals, Vocational Training Institute, Media Centre, Molecular Biology Research Laboratory, Mercy homes etc. spread over 9 states. Entry No. 64 of Notification No. 12/2017 CT (Rate) dated 28.06.2017 deals with Services provided by the Central Government, State Government, Union territory or local authority . The applicant does not fall under these categories, therefore, the said entry is not applicable to them, Educational institution or not - HELD THAT:- Diesel Mechanic, Computer Operator and programming Assistance (COPA), Welder and Cutting sewing trades are affiliated by National Council for Vocational Training under the Ministry of Skill Development and Entrepreneurship. Accordingly, we observe that these courses fall under the definition of approved vocational education courses - As regard to the Informal Trades as mentioned in the Annexure I of the application filed by the applicant, it is observed that as these courses are not approved by the National Council of Vocational Training/ State Council for Vocation Training, so they are not eligible to qualify as approved vocational education courses . Thus, only the course affiliated by the National Council for Vocational Training are exempt from payment of GST under Sr. No. 66 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

  ---

• 2021 (3) TMI 701
  Seeking grant of Regular Bail - wrong availment of Input Tax Credit - offence under Section 132 (1) (c) of the Central GST Act, 2017 and Punjab GST Act, 2017 - HELD THAT:- The order relied upon the counsel appearing for the State and Mr. Sourabh Singla wherein regular bail had been denied to the petitioner therein was primarily on the ground that the investigation was still incomplete. In the instant case that would not be so. The matter already stands investigated and the challan stands presented and therefore, custody of the petitioner herein would no longer be required. The instant petition is allowed and the petitioner is directed to be released on regular bail on execution of adequate personal/surety bond amounting to Rs. 10 lakhs to the satisfaction of concerned trial Court/Duty Magistrate.

  ---

• 2021 (3) TMI 689
  Seeking directions to respondents to allow the petitioner to file Form GST TRAN-2 - Input Tax Credit on goods held in its stock in relation to which invoices/duty paying documents are unavailable - HELD THAT:- The petitioner states that he may be permitted to file a representation before the correct officer. In such circumstances, the mandamus sought for in this writ petition cannot be granted. Petition dismissed.

  ---

• 2021 (3) TMI 648
  Profiteering - restaurant service - Allegation is that the benefit of reduction in the GST rate not passed on by way of commensurate reduction in prices - contravention of Section 171 of the CGST Act, 2017 - penalty - HELD THAT:- It is observed from the record that Respondent No. 1 is providing restaurant services as a franchisee of Respondent No. 2 and is supplying various food products to the customers. It is also revealed from the plain reading of Section 171 (1) of the CGST Act, 2017 that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second about the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the record that there has been a reduction in the rate of tax from 18% to 5% w.e.f. 15.11.2017, on the restaurant service being supplied by Respondent No. 1, vide Notification No. 46/2017-Centra Tax (Rate) dated 14.11.2017 without the benefit of ITC. Therefore, Respondent No. 1 is liable to pass on the benefit of tax reduction to his customers in terms of Section 171 (1) of the above Act. It is also apparent that the DGAP has carried out the present investigation w.e.f. 15.11.2017 to 31.03.2019. It is apparent that Respondent No. 1 has resorted to profiteering as the commensurate benefit of reduction in the rate of tax from 18% to 5% has not been passed on by him. However, there was no profiteering in respect of the remaining 09 items on which there was either no increase in the base prices or the increase in base prices was less or equal to the denial of ITC or these were new products launched post-GST rate reduction. The profiteered amount is determined as Rs. 78,41,754/- as has been computed in Annexure-17 of the DGAP Report dated 28.08.2019. Accordingly, we direct the Respondent No. 1 to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. Further, since the recipients of the benefit, as determined above are not identifiable, Respondent No. I is directed to deposit an amount of Rs. 78,41,754/- in two equal parts of Rs. 39,20,877/- each in the Central Consumer Welfare Fund and the Maharashtra State Consumer Welfare Fund as per the provisions of Section 171 read with Rule 133 (3) (c) of the CGST Rules 2017, along with interest payable @ 18% to be calculated from the dates on which the above amount was realized by the Respondent No. 1 from his recipients till the date of its deposit. The above amount of Rs. 78,41,754/- shall be deposited, as specified above, within a period of 3 months from the date of passing of this order failing which it shall be recovered by the concerned CGST/SGST Commissioner. Penalty - HELD THAT:- Respondent No. 1 has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section. However, since the provisions of Section 171 (3A) have come into force w.e.f. 01.01.2020 whereas the period during which violation has occurred is w.e.f. 01.07.2017 to 31.03.2019, hence the penalty prescribed under the above Section cannot be imposed on Respondent No. 1 retrospectively - Accordingly, Show Cause Notice directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him is not required to be issued.

  ---

• 2021 (3) TMI 645
  Levy of Interest on the gross liability - Respondent-State by way of supplementary counter affidavit has made a categorical statement that after issuance of the Administrative Instructions by CBIC, the State authorities are also imposing interest on Net Tax Liability - Section 50 of Goods and Services Tax Act, 2017 - HELD THAT:- There is no purpose in keeping the writ petitions pending for decision on the challenge to the appellate order made herein on the grounds urged. However, liberty is reserved with the petitioner to approach the Court in case the respondent State chooses to realize interest on the gross tax liability for the subject period covered under the appellate order. Petition disposed off.

  ---

• Income Tax

• 2021 (3) TMI 703
  Unexplained credit u/s 68 - inquiry of source of funds and other relevant factors in relation to the investment in question was carried out - HELD THAT:- SLP dismissed.

  ---

• 2021 (3) TMI 702
  Reopening of assessment - Reasons for reopening of the assessment u/s 147 - EDC paid to HUDA was subject to TDS under Section 194 - AO cannot now review its decision, having failed to perform its statutory duty and therefore the impugned action of reopening is nothing but a change of opinion - HELD THAT:- SLP dismissed.

  ---

• 2021 (3) TMI 699
  Addition u/s 68 - unexplained cash credit - HELD THAT:- The assessee produced a photostat copy of the return of income filed by it for all the assessment years i.e., from 2003-04 to 2010-11 along with computation of income for all the years in the form of annexure to the written submissions. The appellant also submitted Photostat copies of the bank statements starting from 01.04.2002 to 31.03.2010 as annexures along with the written submissions. These facts appear to have weighed in the mind of the CIT(A) for granting relief to the assessee. Revenue alleged sufficient reasons have not been recorded. But, the Revenue would not be right in contending that the assessee never offered an explanation in spite of this alleged cash credit. Probably, if the CIT(A) had recorded its opinion upon perusal of the records placed in the form of annexures, in all probabilities, the Revenue would have been on appeal before us and not the assessee. Considering the fact that the assessee is an individual and also taking note of the fact that there is an explanation offered by the assessee, this Court is of the view that the matter can be remanded back to the CIT(A) for fresh consideration of the explanation offered by the assessee in respect of the alleged cash credit and pass a speaking order on merits and in accordance with law.

  ---

• 2021 (3) TMI 694
  Claim not made before the AO but before the Appellate Authority - Eligibility of deduction under Section 80P - HELD THAT:- The facts of the case in hand may be examined. In the instant case, the claim for eligibility with regard to deduction under Section 80P of the Act was entertained by the CIT (Appeals) as the assessee did not have the opportunity to raise the contention before the AO as the order of assessment was passed by the CPC and therefore, the assessee had no opportunity to make a fresh claim by way of revised return before the CPC as the process is automated. The claim of the assessee was allowed by the Assessing Officer by placing reliance on the assessee s own case for the Assessment Year 2005 06. It is pertinent to note that in the instant case, we are not required to examine the validity of the claim of the assessee with regard to relief under Section 80P of the Act on merits as the substantial question of law only pertains to power of the Appellate Authority to entertain such a claim in the absence of such a claim being made in the original return or in the revised return. In view of the aforesaid well settled legal principles, which have been referred to in preceding paragraph, we answer the substantial question of law in the affirmative and against the revenue.

  ---

• 2021 (3) TMI 692
  Disallowance of bad debts u/s.36[1][vii] read with Section 36[2] - Expenditure under the head bad debts written off - loan given was interest free and unsecured loan - unrecovered and unsecured loan - loss suffered by the assessee is irrecoverable advances with respect to real estate business - HELD THAT:- As submission made by the assessee by way of a solemn affidavit sworn to its partner, the assessee is right in contending that the revenue cannot seek to sustain the order passed by the Assessing Officer and seek for disallowance of the loss claimed by the respondent in the assessment for the year 2012-2013 while taxing the recovery of the same in the assessment year 2020-2021 and 2021-2022. Thus, in the light of the subsequent development, the order passed by the CIT(A) requires to be sustained. Appeal filed by the revenue is dismissed.

  ---

• 2021 (3) TMI 691
  Disallowance made u/s 14A read with Rule 8D - no exempt income earned by assessee during the current financial year - HELD THAT:- Aforesaid substantial question of law has already been answered against the revenue by a Bench of this Court in Commissioner of Income-tax-III Vs. Subhash Kabini Power Corporation Ltd.,[ 2016 (5) TMI 793 - KARNATAKA HIGH COURT ] The aforesaid statement made by the learned counsel for the assessee could not be disputed by the learned counsel for the revenue. - Decided in favour of assessee.

  ---

• 2021 (3) TMI 688
  Validity of the order of ITAT - Matter remitted back to the file of the Assessing Officer for reconsideration by Tribunal - Bogus LTCG - Penny stock purchases - Claim made u/s 10(38) denied - whether Tribunal was right in remitting the issue back to the file of the Assessing Officer by quoting the decision in the case of Kanhaiyal and Sons (HUF) [ 2019 (2) TMI 1640 - ITAT CHENNAI] wherein the onus has been shifted to the revenue with a direction that the Assessing Officer is to bring on record the role of the Assessee in promoting the Company and the relation of the Assessee if any with that of the promoters and role of inflating of prices etc which exercise had already been done by the AO and the SEBI? - HELD THAT:- As decided in MRS. MANISH D. JAIN (HUF) [ 2020 (12) TMI 740 - MADRAS HIGH COURT] Not only the Assessing Officer, but also the CIT(A) examined the modus operandi of the assessee and held that the shares were purchased through off market and not through Stock Exchange and that the selling rates were artificially hiked later on. The above findings have not been set aside by the Tribunal and there is no reason for the Tribunal to remand the matter to the Assessing Officer for a fresh consideration. There was no material, which necessitated the remand of the case to the Assessing Officer and it is a clear case where the Tribunal had failed to exercise its jurisdiction in the manner known to law.Tribunal, being a last fact finding Authority, is under the legal obligation to record a correct finding of fact. Where all the evidence had been produced and the CIT(A), after full investigation of the evidence and examination of the accounts, had given a definite finding on the question in issue, the Tribunal s order of remand was held to be invalid. Substantial questions of law framed are answered in favour of the Revenue

  ---

• 2021 (3) TMI 687
  TDS u/s 195 - Addition u/s 40(a)(ia) - disallowance of software expenses paid to non-residents - HELD THAT:- It is clear from the order of the Assessing Officer passed u/s 201(1A) of the I.T.Act and the order of the CIT(A) confirming the same that assessee had only purchased software, which is copyrighted article and there is no transfer of copyright, and therefore, in such cases, the same cannot be treated as royalty under the respective tax treaty. The Hon ble Apex Court in the case of Engineering Analysis Centre of Excellence Private Limited [ 2021 (3) TMI 138 - SUPREME COURT ] has noted that the end user can only use the computer programme by installing it in the computer hardware and cannot reproduce the same for sale or transfer and the licence granted vide the End-User License Agreements is not a license in terms of section 30 of the Indian Copyright Act, 1957 (CA) but is a licence which imposes restrictions or conditions for the use of the computer software. Hon ble Apex Court has held that the provisions of the Act [section 9(1)(vi), along with Explanations 2 and 4 thereof), are not more beneficial to the assessee and hence, the same have no application. Thus we hold that amounts paid by the assessee to the non-resident computer software manufacturers / suppliers as consideration for the resale / use of computer software, is not payment of royalty for use of copyright in the computer software. Hence, the consideration paid to non-resident software manufactures / suppliers does not give rise to income taxable in India and was not liable for deduction of tax at source u/s 195 of the I.T.Act. - Decided in favour of assessee.

  ---

• 2021 (3) TMI 683
  Depreciation on goodwill - HELD THAT:- The issue is identical to that of earlier years and no distinguishing facts pointed out by the Revenue. DRP has not at all considered the aspect of depreciation on goodwill in correct context as there is a finding identical to that of earlier years, assessee entered into a world-wide multi-year outsourcing agreement with IBM India Pvt. Ltd., Network Solutions Pvt. Ltd. and IBM Daksh Business Process Services Pvt. Ltd. as well as Acquisition Agreement and this is not an initial year of claim of depreciation on goodwill. Hence, in light of the decision of the earlier years by the Tribunal the appeal of the assessee is allowed.

  ---

• 2021 (3) TMI 682
  Reassessment of proceedings u/s 147 - as argued reassessment proceedings and consequential reassessment order on the ground that impugned reassessment order has been passed without providing copy of reasons recorded along with satisfaction note of approving authority u/s 151 - Whether AO has supplied copy of the reasons recorded u/s 148 of the I.T. Act? - HELD THAT:- AO merely mentioned in the remand report that assessee attended the assessment proceedings on various dates but never mentioned anything that he was not provided the copy of the reasons. AO therefore, of the view that it is apparent that copy of the reasons were provided by the earlier AO. AO did not bring any evidence on record or to refer any evidence in the remand report as to when copy of the reasons for reopening of the assessment and satisfaction have been provided to the assessee.CIT(A) also in his findings on going through the remand report merely mention that since assessee was in possession of the information received from the Investigation Wing would mean that reasons were disclosed to the assessee during reassessment proceedings. CIT(A) in his findings did not mention anything specifically whether copy of the reason and satisfaction has been provided to the assessee by any of the Assessing Officer. Thus, the impugned order is silent as to when copy of the reasons and satisfaction were supplied to the assessee on making a demand by the assessee in writing. In order to verify this fact, Ld. DR was directed to file copy of the order sheet or any other document from record to show that actually copy of the reasons recorded for reassessment and satisfaction u/s 151 have been supplied to the assessee at reassessment proceedings. However, till date Ld. DR did not produce any evidence in this regard. Therefore, considering the totality of the facts and circumstances, it is clear that assessee was not provided copy of the reasons recorded for reopening of the assessment and satisfaction u/s 151 of the Act despite demand is made by the assessee in writing before AO. The assessee is thus, precluded from raising objection against reopening of the assessment at assessment proceedings. The valuable right of the assessee has been denied by the authorities below in this regard. The entire reassessment proceedings are nullity, invalid and bad in law. The entire reassessment proceedings are vitiated and, as such, liable to be quashed. Whether AO recorded wrong, incorrect and non-existing reasons in the reasons recorded for reopening of the assessment and, as such, did not apply his mind? - It is well settled law that if wrong facts and wrong reasons are recorded for reopening of the assessment, such assessment is bad in law. In the present case, the AO recorded wrong facts on many count in the reasons recorded for reopening of the assessment i.e. AO recorded incorrect amount of Rs. 58,40,171/- credited in HSBC account, Noida despite he has admitted in the assessment order that it was Rs. 30,74,006/-. AO in the reasons also recorded incorrect fact that no assessment has been completed in this case u/s 143(3) but in the reason itself AO recorded that earlier reassessment has been done u/s 147/148 read with section 143(3). AO also incorrectly recorded that sanction for reopening of assessment is required under proviso to section 151(1) of the Act despite such proviso does not exist in the statute as it was amended in 2015. The AO, therefore, recorded wrong, incorrect and non-existing reasons for reopening of the assessment. It makes clear that there is a total non-application of mind on the part of the AO while recording the reasons for reopening of the assessment. AO has recorded incorrect amount which escaped assessment. The reasons failed to demonstrate the live link between the alleged tangible material and the formation of belief that income chargeable to tax has escaped assessment. We are of the view that reopening of the assessment is invalid and bad in law and that sanction/approval granted is also without any application of mind. Therefore, the reopening of the assessment cannot be sustained in law. We, accordingly, set aside the orders of the authorities below and quash the reopening of the assessment. Resultantly all the additions stand deleted. - Decided in favour of assessee.

  ---

• 2021 (3) TMI 680
  TP Adjustment - selection of MAM - CIT-A upholding the application of the CUP Method to determine the ALP of the brokerage charged - CIT(A) held that the assessee is entitled to 5% benefit for the impugned assessment year in respect of adjustment made on clearing house trades - average of rates charged to third party FIIs and domestic clients - HELD THAT:- Comparable uncontrolled transactions which involve a transaction between one of the enterprises and an uncontrolled party, are referred to as internal comparables. Comparable uncontrolled transactions which involve a transaction between two parties, neither of which is an associated enterprise, are called external comparables. CUP cannot be applied on basis of comparable uncontrolled transactions- internal or external- that are undertaken in different geographical markets as compared to the market in which the controlled transactions is undertaken.t is crystal clear that the assessee s transactions are with overseas FIIs and hence comparison with other overseas FIIs would alone be appropriate. The fact remains that domestic third party transactions are not comparable with the overseas FIIs on account of geographic differences. Thus the 1(a) of cross-objection is rejected. Volume adjustments - A perusal of the documents filed before us clearly indicates that the assessee, while determining the rate charged individually in respect of the various third party FIIs has considered the weighted average rate, which takes into account the volumes. Further, as per the information collected by the TPO, which was also provided to the assessee, ABN Amro Asia Equity (India) Ltd. has charged an average brokerage rate of 0.40% in respect of clearing house trades of Rs. 2831 crores with overseas FIIs. DSP Merrill Lynch Ltd. has charged a brokerage rate of 0.44% for clearing house trade of Rs. 2103 crores with overseas FIIs. Thus significant volume of transactions were being undertaken at these rates in India between unrelated parties. In view of the above facts, the Ld. CIT(A) has rightly confirmed the negation of volume discount raised by the assessee. Thus the 1(b) of cross-objection is rejected. Salary costs - TPO concluded that no portion of the salary costs can be considered as being incurred for marketing for third parties - Salary cost of research personnel need to be re-examined. Therefore, we set aside the order of the Ld. CIT(A) on the above issue and restore the matter to the file of the AO/TPO for making a fresh order after giving reasonable opportunity of being heard to the assessee. We direct the assessee to file the relevant documents/evidence before the AO/TPO. Thus the ground of cross objections raised by the assessee in respect of salary cost of research personnel i.e 1(c) is allowed for statistical purposes. Similarly, the 1st ground of appeal filed by the revenue is allowed for statistical purposes, on the reasons that the tax authorities have proceeded to examine the actual rate charged by the assessee to its AE in Mauritius and compare the same with the rates charged by it to third parties. CIT(A) held that the applicant will be entitled to 5% benefit for the impugned assessment year in respect of adjustment made on clearing house trades - Where the variation between ALP as determined with reference to transfer pricing rules and the transaction price is less than 5%, no attempt can be made to substitute ALP for the transaction price in view of section 92C(2). But this rule can have no application, where it exceeds 5%, so as to reduce excess by 5% as claimed by the assessee. In other words, where the difference exceeds 5%, there can be no application of tolerance limit of 5% as decided by the Tribunal in Global Vantage P. Ltd. v. DCIT [ 2009 (12) TMI 668 - ITAT DELHI ] Thus for the impugned assessment year, tolerance limit of 5% u/s 92C is not a standard deduction to be reduced from the additions made on account of ALP. After the insertion of sub section 2A to section 92C, with retrospective effect from 1-4-2002, +/- 5 % will not be a standard deduction.In view of the above provisions in the Act, the additional ground filed by the revenue is allowed. Disallowance of trading loss on share transaction - AO in his order has stated that the trading of shares by the assessee-company comes within the ambit of the Explanation to section 73 and accordingly disallowed the trading loss - HELD THAT:- In the instant case, Explanation to section 73 referred by the AO is not applicable as the assessee is not engaged in business of purchase/sale of shares of other companies - loss was incurred on account of error trades in respect of dealings of clients and not on own account and the loss incurred in course of carrying on share broking business is in line with accepted market practices. Further, we find that no expenditure has been incurred by the assessee in respect of error trades. In such a situation, disallowance on account of loss on share trading and ad-hoc disallowance of Rs. 5,00,000/-, not supported by any reasonable basis has been rightly deleted by the Ld. CIT(A). Thus the 2nd and 3rd ground of appeal filed by the revenue are dismissed.

  ---

• 2021 (3) TMI 679
  Capital gains on sale of Flat - LTCG v/s STCG - Date on getting title of property - purpose of holding an asset - whether the sale of impugned flat has resulted in LTCG or STCG? - Entitlement to deduction u/s 54 - HELD THAT:- Assessee gets a right to the impugned property on the date of allotment letter, i.e., on 22.02.2006 and payment of instalment as per the terms is only a follow up action and taking delivery of possession is only a formality. Therefore, reckoning the period from 22.02.2006, i.e. the date of allotment, we hold that the sale of impugned flat give raise to long term capital gains and not short term capital gains as held by the authorities below. Claim of deduction u/s 54 - The assessee has furnished the details of payments on reinvestment filed by the assessee on 18.03.2021. On perusal of same, prima facie, we are of the view that reinvestment has made within the period specified u/s 54 of the I.T.Act. However, since the Assessing Officer and the CIT(A) had held that income arising on sale of impugned flat is short term capital gains, they did not have an occasion to consider / examine the claim of deduction u/s 54 of the I.T.Act on reinvestment. Therefore, we restore the case to the A.O. for the limited purpose for examining whether the assessee is entitled to deduction u/s 54 of the I.T.Act.

  ---

• 2021 (3) TMI 675
  Estimation of income - bogus purchases - AO estimated the profit @ 12.5% of the disputed purchases - HELD THAT:- As relying on N.K. INDUSTRIES LTD. VERSUS DY. C.I.T [ 2016 (6) TMI 1139 - GUJARAT HIGH COURT] we set aside the order of the Ld. CIT(A) and direct the AO to restrict the additions limited to the extent of bringing the G.P. rate on disputed purchases at the same rate of other genuine purchases. Facts being identical, our decision for the AY 2009-10 applies mutatis mutandis to AY 2011-12.

  ---

• 2021 (3) TMI 674
  Rectification of mistake u/s 254 - deduction allowed u/s 10A - Tribunal has incorrectly understood the facts relating to unrealized export proceeds within the prescribed time limit and also considered the facts relating to AY 2009-10 for deciding the issue in AY 2008-09 - HELD THAT:- Admittedly, the Tribunal has considered the facts relating to AY 2009-10 for deciding the issue urged in AY 2008-09. As submitted that there is no observation in the orders of the tax authorities about non-realisation of export proceeds altogether, as observed by the Tribunal, i.e., it is nobody s case that the assessee did not realize export proceeds at all. According to Ld A.R, Ld CIT(A) observations also meant that the assessee did not realize the amount mentioned above within the prescribed time. Thus, we notice that it is a case of incorrect understanding of facts. In the instant case, it is a case of incorrect understanding of facts. Accordingly, we find merit in the contentions of Ld A.R that incorrect appreciation of facts and consideration of facts relating to AY 2009-10 for deciding the issue in AY 2008-09 has resulted in a mistake apparent from record in respect of this issue in AY 2008- 09. Identical type of mistake has been pointed out by the assessee in AY 2009-10 also. What was pointed out by the AO was that the export proceeds were not realized within the time prescribed in sec.10A of the Act. Accordingly, following our decision rendered in AY 2008-09, we hold that there is mistake apparent from record in AY 2009-10 also on this issue, as there is incorrect appreciation of facts. As noticed earlier that the jurisdictional Hon ble Karnataka High Court has held in the case of Mcdowell Co. Ltd [ 2008 (3) TMI 301 - KARNATAKA HIGH COURT] that the case of erroneous application of law/provisions will fall outside the scope of sec.254(2) of the Act. The assessee has contended that there is erroneous application of law/provisions of the Act. Hence this plea raised by the assessee in both the years would fall outside the scope of sec.254(2) of the Act. Accordingly, we reject this plea of the assessee in both the years. We recall the orders passed by Tribunal in AY 2008-09 and 2009-10 for the limited purpose of adjudicating the Ground No.1 in both assessment year 2008-09 and AY 2009-10.

  ---

• 2021 (3) TMI 673
  Disallowance of depreciation on Car - Invoice of Car purchase was not produced for verification - HELD THAT:- It is undisputed that the Department has allowed interest on vehicle loan as well as has also allowed the expenditure towards car running. Thus, in fact, it is accepted by the Department that the assessee has a vehicle which is used for the business purposes. Although, the assessee could have made efforts to obtain a copy of the purchase invoice from the hypothecating bank and produced it before the Lower Authorities, all the same, it is our considered opinion that the assessee should not be penalized for his failure to produce the purchase invoice, specially, when the Department has in principle accepted the assessee s claim of interest on car loan as well as claim of Car running expenditure. Therefore, in view of the facts of the case, we delete this disallowance. Addition on account of notional interest added to the income of the assessee in respect of an amount advanced to M/s Chander Rani Enterprises Pvt. Ltd. - HELD THAT- We have gone through the audited financial statements of the assessee and it is seen that the share holders funds (Share Capital and Reserves Surplus) as on 31st March, 2012 stood at Rs. 4,88,60,427/- whereas the long term borrowing stood only at Rs. 11,84,274/- and the short term borrowing stood at Rs. 4,05,944/-. Thus, it can be safely concluded that the advance of Rs. 10,00,000/- given by the assessee was given from interest free funds/reserves of the assessee. In such a situation, we are unable to uphold the addition on account of notional interest to the income of the assessee and we direct the deletion of the same. Liability of unpaid creditors from the opening written down value of block of license - addition u/s 50 - HELD THAT:- Assessee has finally paid an amount which is much less than the agreed/ invoiced amount towards the purchase of fixed assets. The amount less paid is Rs. 4,37,38,637/-. Thus, in fact, the actual cost of the fixed assets to the assessee has been reduced by Rs. 4,37,38,637/- and to this extent the stand of the Department is correct that the assessee should have reduced the cost of assets by the amount of Rs. 4,37,38,637/-. Further, we are in agreement with the contention of the Ld. Authorized Representative that provisions of Section 50 (1) (2) of the Act are not attracted in this case. As there has been no transfer of assets in the present case, short term capital gains cannot be computed in this case. Accordingly, this issue will have to be re-examined by the Assessing Officer after duly taking into account our directions that provisions of Section 41(1) and Section 50(1) 50(2) are not attracted in this case. However, the amount of sundry creditors written back will have to be reduced from the cost of fixed assets and Written Down Value would have to be adjusted accordingly. Thus, Ground have to be reconsidered and re-examined by the Assessing officer. We direct that the same be done after giving adequate opportunity to the assessee to present its case.

  ---

• 2021 (3) TMI 672
  Accrual of Income - Method of accounting - taxation of an amount as income, in respect of contracts accounted under Percentage of Completion (POC) Method - appellant was following a regular method of accounting sanctified by Accounting Standards - HELD THAT:- As decided in own case [ 2019 (4) TMI 873 - ITAT MUMBAI] the undisputed position that emerges is that the assessee is following consistent method of accounting to recognize the revenue under these contracts. The percentage of completion of the project has been worked out as per total cost incurred on the project to date vis- -vis total budgeted cost and that fraction is applied to the contract value for the purpose of revenue recognition. Similar formulae have been adopted by the assessee in preceding two years which has been accepted by the revenue. No case of revenue leakage has been established before us. Nothing on record suggest that remaining income under the project has not been offered by the assessee in subsequent years, following the same method of accounting. Simply because progress billing was more than the stage of percentage of completion, the same, in itself, could not be the basis to usurp the consistent method of accounting being followed by the assessee. Therefore, the additions made by the revenue, under the circumstances, could not be sustained. Addition on account of under-statement of profits - AO rejected the completed contract method of accounts followed by the assessee - HELD THAT:- As decided in own case [ 2019 (4) TMI 873 - ITAT MUMBAI] we find that the assessee has accumulated cost as well as revenue under these projects in the Balance Sheet by following completed contract method. The revenue has accepted such accumulation during AYs 2004-05 2005-06 and this is the third year of accumulation under the projects. It is not the case of the revenue that the income under these projects have not been offered to tax in subsequent years. No case of revenue leakage has been established before us. Therefore, the action of revenue in disturbing the consistent method of accounting being followed by the assessee could not be held to be justified. Hence, we delete the impugned additions and allow these grounds of appeal. Disallowance of expenditure towards Repair and Maintenance - addition holding that the repairs and renovation carried out by the appellant led to major renovation, and was capital in nature - whether repair is in the nature of revenue expenditure or capital expenditure? - HELD THAT:- In the instant case, the said expenditure has been incurred by the assessee for maintaining its business, for increasing its efficiency and for preserving its already existing asset. Thus the expenditure hereinabove is revenue in nature and therefore allowable. Disallowance u/s 40(a)(ia) ability incurred on account of Education Cess and Higher and Secondary Education Cess - HELD THAT:- The above additional ground is squarely covered in favour of the assessee by the decision of the Hon ble Bombay High Court in the case of Sesa Goa Ltd. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] and Chambal Fertilizers Chemicals Ltd.[ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] . As per the above decisions, the amount of education cess and higher secondary education cess is not tax as covered u/s 40(a)(ii) and accordingly allowable as deduction in computing the income from business or profession. Following the above decisions, we admit and allow the additional ground of appeal filed by the assessee.

  ---

• 2021 (3) TMI 670
  Reopening of assessment u/s 147 - Assessee argued that PR. CIT had given a mechanical approval for reopening the assessment, he simply stated that he was satisfied, however no reasons were recorded for his satisfaction - HELD THAT:- From the reading of approval, it is clear that the Ld. Pr. CIT recorded satisfaction in the mechanical manner, without application of mind to accord sanction for issuing notice under section 148 of the Act. As relying on M/S. S. GOYANKA LIME AND CHEMICAL LTD. [ 2015 (12) TMI 1334 - SC ORDER] reopening under section 148 of the Act on the basis of mechanical approval without applying the mind by the Ld. Pr.CIT was not valid. Therefore, in the present case, the reopening of the assessment on the basis of notice under section 148 of the Act is quashed. Decided in favour of the assessee

  ---

• 2021 (3) TMI 669
  TDS on payments to VISA/Master Card - assessee submitted that as per the terms of respective agreement, the assessee had to bear all tax liability on payment made to Visa / Master Card and therefore, the expenditure was business expenditure allowable u/s 37(1) - HELD THAT:- As decided in own case [ 2020 (2) TMI 1466 - ITAT MUMBAI] whether the said expenditure was reimbursable by VISA or not, was not brought on record. The answer to the same would be vital to clinch the issue in proper perspective. Obviously, if the expenditure was non reimbursable in nature and it was borne by the assessee himself, the same would certainly become assessee s liability and hence an allowable expenditure as held in earlier years. On the contrary, if the expenditure was reimbursable in nature, it would materially alter the assessee s claim of deduction. The submissions made by Ld. AR also do not throw much light on this fact and the observation made by Ld. CIT(A) has remained unaddressed. Therefore, with a view to bring on record clear facts and to dispel the concerns raised by Ld. DR, we restore the matter back to the file of Ld. CIT(A) with a direction to ascertain the correct facts. The assessee is directed to provide the requisite details / information. MAT computation u/s 115JB - Write-back of provision for Card NPA - While computing Book Profits u/s. 115JB, the assessee reduced provision of card receivables written-back - as provision for card receivable, in earlier years, was not added back to compute Book Profits for AYs 2007-08 to 2010-11 therefore, Ld.AO opined that reduction in Book Profits would not be available to the assessee in this year - HELD THAT:- As decided in own case [ 2019 (7) TMI 790 - ITAT MUMBAI] we hold that the assessee was entitled for deduction of write-back while computing Book Profits u/s 115JB. The Ld. AO is directed to re-compute Book Profits u/s 115JB. The ground thus raised stand allowed.

  ---

• 2021 (3) TMI 668
  Addition on account of proportionate interest in respect of investment in shares - assessee has made investment in shares from which tax free dividend income was earned - AO noted that the assessee s total investment in shares is 12% of the borrowed funds, therefore he disallowed proportionate interest @ 12% of the total interest paid and disallowed - HELD THAT:- CIT(A) has noted after perusal of the balance sheet of the assessee for AY 2004-05 that the assessee had own funds of Rs. 101.25 crores whereas investment in shares is only to the tune of Rs. 11.35 crores which is only 11% of the own funds and therefore we note that no disallowance based on the reasoning of AO is correct. The Hon ble Bombay High Court in the case of Reliance Utility and Powers Ltd. vs. CIT held that when the assessee possesses mixed funds which include its own funds in sufficient quantity, a presumption that its own funds were utilized for the advances is to be drawn. Relying on the ratio of decision of Hon ble Bombay High Court in Reliance Utility and Powers Ltd.[ 2009 (1) TMI 4 - BOMBAY HIGH COURT] we are of the opinion that in the facts of this case, no proportionate disallowance based on the AO s reasoning cannot be accepted and therefore we confirm the order of Ld. CIT(A) and dismiss the ground No. 3 raised by the Revenue. Addition on account of an advance to subsidiaries from borrowed funds - HELD THAT:- As decided in own case [ 2008 (1) TMI 426 - ITAT CALCUTTA-D] from the annual accounts of the sister concern, it is evident that no loan was given to any of the directors or to any firm/company in which such director was interested. In fact, it was reported by the auditors of that the recipient company that it did not advance any sum to any -of its director or any other firm /company in which such director if interested. Having said this and, relying on the decision of S.A. Builders Ltd [ 2006 (12) TMI 82 - SUPREME COURT] we are agree with the AR that the advance in question was towards equity and given from time to time out of pure commercial expediency and to protect its own financial interest. Even otherwise, we note that the advances given by the assessee company from time to time was against the issue of share capital. It has been placed on record that the assessee was actually allotted shares in a subsequent year out of the advances paid. Hence it is not the case that the funding was for a temporary adjustment and hence should not be equated with a normal loan. If that be so, there should not be any question of interest payable on a permanent fund introduced by the assessee company forming part of the capital of the sister concern. In the balance Sheet of the .sister concern also, the amount has been shown as forming part of the shareholders fund. Addition on account of advertisement expenses - HELD THAT:- Tribunal in assessee s own case for AY 2002-03 has restricted the disallowance at 2% of the estimate.Respectfully following the Tribunal s decision in assessee s own case we restrict the disallowance at 2% of the advertising expenses thus, revenue s ground no. 3 is partly allowed. Addition on account of staff welfare expenses - HELD THAT:- As staff recruitment expenses were incurred only exclusive for the purpose of business and hence allowable expenditure. We note that the expenses on account of employees relation expenses was incurred for efficient functioning of the business which pertains to employees meals on duties, medical expenses, medical insurance, uniform expenses etc. and these expenses are incidental to carrying on the business which is crucial in the hotel industry. Therefore, it satisfies the condition that it was expended wholly and exclusively for the purpose of business and thus allowable u/s 37(1) of the Act. Therefore, we confirm the order of Ld. CIT(A) and this ground of appeal raised by the revenue is dismissed.

  ---

• 2021 (3) TMI 664
  Unexplained Investment u/s 68 / 69 - investment in residential properties by NRI - income received or deemed to be received or accrues or arises or is deemed to be accrued or arise in India - scope of tax liability of Non- Resident in India - treating funds transferred through banking channel earned by a Non-resident outside India as unexplained cash credit or unexplained investment - HELD THAT:- The position that emerges from the CBDT Circular No.5 in [F.No.73A/2(69)-IT (A-II)], dated 20.02.1969 as well as decision in the case of Keshav Mills Ltd. [ 1953 (1) TMI 5 - SUPREME COURT] is that the money brought in India by Non-Resident for investment or for other purpose is not liable to tax under the provisions of the Income Tax Act. The question of assessment to income tax arises only when there is no evidence to show that amount is question in fact represents remittance from abroad. Admittedly, in the present case, there is ample evidence on record demonstrating that the amounts in question represents remittance from abroad by the appellant himself. The rational behind this legal proposition is that the word receipt implies two persons viz. the person who receives and the person from whom he receives; a person cannot receive a thing from himself. Appellant herein is Non-Resident for the last 30 years for income tax purpose and citizen of USA. The scope of tax liability of Non- Resident is required to be considered in the light of section 4 and 5 of the Income Tax Act. In the present case remittance received from the appellant s account Bank of Baroda, Dubai to appellant s account to SBI NRE SB Account, Mapusa, Goa or remittance to the vendors of the properties is neither income received or deemed to received in India or nor was accrued or arisen or deemed to be accrued or arisen in India, therefore, the question of chargeability to income tax in India does not arise. The impugned addition does not represent either income received or deemed to be received in India or income accrued or arisen or deemed to be accrued or arisen in India. The remittance brought to India which are subject matter of impugned additions are obviously income received at first instance outside taxable territories of India or accrued or arisen outside taxable territories of India. Therefore, it is beyond the scope of jurisdiction of the Assessing Officer to go into the source of income earned outside taxable territories of India, once the Assessing Officer is satisfied that the source of money for acquisition of property represent remittance from the abroad from the appellant himself. Rejection and acceptance of explanation given as to the source of credits in the bank account of Bank of Baroda, Dubai is totally immaterial and had no relevance at all, as the Assessing Officer was not concerned about the taxability or otherwise of income received or accrued and arisen outside the taxable territories of India to Non- Resident. Therefore, the fact that the lower authorities had rejected the explanation as to the sources of credits in the Bank of Baroda, Dubai account does not come in the way of deleting the impugned additions. Lower authorities not accepting the explanation offered by the assessee is not based on proper appreciation of material on record and other attending circumstances available on record. It is needless to say that the opinion of the Assessing Officer is required to be formed with reference to the material on record and application of mind in sin qua non for forming the opinion as held in the case of CIT vs. P. Mohanakala, [ 2007 (5) TMI 192 - SUPREME COURT] ). In the present case, there is total lack of application of mind, the Assessing Officer had not formed the opinion objectively with reference to any material on record and is merely based on the surmises and conjectures. We fail to understand as to why the Assessing Officer, having rightly taken note of the correct legal position governing the credits in the bank account i.e. he had chosen to bring the same to tax u/s 68 of the Act instead of section 69 of the Act. This itself goes to show the mala-fides on the part of the Assessing Officer, perhaps he intends to assess to tax in the hands of the appellant under more vigorous the provisions of section 68 of the Act than provisions of section 69 - Decided in favour of assessee.

  ---

• 2021 (3) TMI 663
  Disallowance u/s 14A r.w.r. 8D - assessee filed detailed submissions and contested that no objective satisfaction were recorded by the Assessing Officer for invoking Rule 8D of the Rules - assessee also contested that the investment was made in the sister concern for holding/controlling stake and not for earning any income from out of the investment - HELD THAT:- We find that the issue of the strategic investment in group concern has already been adjudicated by the Hon ble Supreme Court in the case of Maxopp Investment Ltd. Ors. Vs. CIT, [ 2018 (3) TMI 805 - SUPREME COURT] . The Hon ble High Court held that such strategic investment is also subject to the disallowance under Section 14A of the Act . We find that the objection of the assessee on the absence of dissatisfaction for invoking Rule 8D of the Rules, have already been dealt with by the learned CIT(A). The learned CIT(A) has referred the decision of India Bulls Financial Services Ltd. [ 2016 (11) TMI 1369 - DELHI HIGH COURT] wherein it has held that if the Assessing Officer has carried out elaborated analysis out of the facts and the issue but did not expressly record his dissatisfaction, would not per se justify that he has not recorded cogent reason for his dissatisfaction . In our opinion, the learned CIT(A) has dealt with all the objections of the assessee, therefore, we do not find any infirmity in the same. Accordingly, we uphold the findings of the learned CIT(A) on the issue in dispute. The grounds of appeal of the assessee are accordingly dismissed.

  ---

• 2021 (3) TMI 662
  Deduction u/s. 80P(2)(d) - AO disallowed the deduction u/s. 80P(2d) by holding that the assessee was a Cooperative bank as per section 80P(4) - assessee s appeal learned CIT(A) deleted the disallowance holding that the was not a cooperative bank - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by the decision of Hon ble Supreme Court in the case of Citizen Cooperative Society Ltd. [ 2017 (8) TMI 536 - SUPREME COURT] and The Mavilayi Service Cooperative Bank Ltd. Ors. Vs. CIT, Calicut Ors. [ 2021 (1) TMI 488 - SUPREME COURT] . We find that the Assessing Officer has completely erred in treating the assessee as cooperative bank and invoking the provisions of section 80P(4). Honourable Supreme Court in the case of Citizen Cooperative Society Ltd. has settled the law that for being considered as a cooperative bank licence from RBI in this regard is a sine qua non. In absence of the RBI licence as such the assessee cannot be treated as cooperative bank. Hence disallowing the deduction by referring to the provisions of section 80P(4) is completely unsustainable. Moreover section 80P(2)(d) provides exemption to interest earned on fixed deposit in cooperative societies. It is nobody s case that cooperative bank are not cooperative societies. - Decided in favour of assessee.

  ---

• 2021 (3) TMI 659
  Penalty levied u/s. 271(1)(c) - Estimation of income on bogus purchases - HELD THAT:- It is a settled position of law that penalty cannot be levied when an ad hoc estimation is made. In this case an ad hoc estimation was made by the Assessing Officer restricting the profit element in the purchases @ 12.5%. Assessing Officer has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. Ld. CIT(A) following various judicial pronouncements including the decision of Hon ble Punjab Haryana High Court in the case of Harigopal Singh v. CIT [ 2002 (8) TMI 65 - PUNJAB AND HARYANA HIGH COURT ] deleted the penalty levied by the Assessing Officer. Thus, we do not observe any infirmity in the order passed by the Ld. CIT(A) in deleting the penalty u/s. 271(1)(c) - Decided in favour of assessee.

  ---

• 2021 (3) TMI 658
  Unexplained cash deposited by the assessee in the Bank account - claim of the assessee of having no relation whatsoever with M/s. Finwise Services was not supported by any evidence in the form of an FIR filed by the assessee with the Police Department regarding forgery committed by unknown persons, who had allegedly opened the concerned Bank account by misusing the PAN Card of the assessee - As submitted that the AO may make further inquiry in the matter including getting the forensic report, if required, to verify the claim of the assessee that he was not the proprietor of M/s. Finwise Services and the Bank account in the name of the said concern was opened with ICICI Bank by someone else by forging the PAN Card and signature of the assessee - HELD THAT:- We are inclined to accept the contention of the ld. Counsel for the assessee and since the ld. D.R. has also not raised any objection for sending the matter back to the Assessing Officer for proper verification, set aside the impugned order of the ld. CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer for fresh consideration with a direction to verify the claim of the assessee in the light of the evidence brought on record in the form of complaints filed with the concerned Police Station as well as RBI. The Assessing Officer shall cause any further inquiry as he may deem fit in the facts and circumstances of the case - Appeal filed by the assessee is treated as allowed for statistical purposes.

  ---

• 2021 (3) TMI 657
  Estimation of income - Bogus purchases - receipt of certain information from Sales Tax Department that the assessee procured accommodation purchase bills - HELD THAT:- Assessee had made certain purchases from concerns run by a tainted group. It was admitted by key persons of those concerns that they did not carry out any genuine business activities. During survey proceedings also, the assessee could not satisfactorily explain the purchases made during the year. The assessee could not produce any of the suppliers to prove the genuineness of the purchases. Hence the assessee was unable to discharge the primary onus of proving impugned purchases. On the facts of the case, it was a fit case for estimation of income earned on these tainted purchases. We find the estimation of 12.5% to be fair and reasonable. No new material is before us to deviate from the adjudication of Ld. CIT(A) in the impugned order. Validity of reassessment proceedings - HELD THAT:- We find that original return was processed u/s. 143(1) and the case was reopened upon receipt of specific information from Sales Tax Authorities which indicated possible escapement of income in the hands of the assessee. Nothing more was required at this stage. Therefore, no infirmity could be found in the jurisdiction acquired by Ld. AO. Resultantly, the legal grounds as well as appeal stand dismissed. AY 2013-14 - We find that the discrepancies found during the course of survey proceedings remained to be explained by the assessee to the satisfaction of lower authorities. The unaccounted purchases/sales, shortage of stock and cash were noted during the course of survey. The onus to explain the discrepancies remained un-discharged. Therefore, the estimations as made by lower authorities, in our considered opinion, are quite fair and reasonable and no interference is called for. Resultantly, the appeal stand dismissed.

  ---

• 2021 (3) TMI 656
  Understatement of sales - assessee s only case is that it deserves to be assessed only qua the profit element of the impugned understatement of sales as a consequence to disallowance of handling loss claim of the fuel stock - HELD THAT:- We find no merit in assessee s instant grievance in entirety; more so in view of the fact that the CIT(A) has made it clear that the very sum represents gross profit on account of sale of diesel and petrol only. The fact, however, also remains that such a loss to fuel stock and minor variations therein cannot be completely ruled out on account of various miscellaneous factors. We therefore hold that a lumpsum profit addition of Rs. 2,19,551/- on wholesome basis out of the impugned sum would meet the ends of justice with a rider that the same shall not be treated as a precedent in any other assessment year; whatsoever. The Addition u/s 69 - assessee s failure in placing the advances paying customers list in the lower proceedings - HELD THAT:- The very factual position continues before the tribunal as well. The fact also remains that such advances in fuel retail business cannot be altogether ruled out as well. We make it clear that the assessee is merely selling its fuel stock on approved rates only hardly living behind any scope of misrepresentation in the books of accounts or stock; per se. We therefore hold that a lumpsum addition of Rs. 2,47,844/- under this last head will meet the ends of justice with a rider that the same shall not be taken as a precedent in any other assessment year.

  ---

• 2021 (3) TMI 655
  Disallowance u/s 14A - CIT(A) deleted the addition made by the AO u/s. 14A on the grounds that the assessee has earned tax free dividend income only and the company had sufficient own funds to invest - revenue filed appeal on the grounds that the disallowance u/s. 14A is not dependent on the exempt income - HELD THAT:- There must be actual incurring of expenditure and the expenditure must have clear relationship with exempt income. Section 14A cannot be invoked to disallow expenditure on the basis of assumption. Where the assessee claims that no part of expenditure was incurred or points out and certain expenditure on having been incurred in relation to income which does not form part of total income, the Assessing Officer has to, before making any disallowance u/s. 14A of the Act, record his satisfaction giving reason for not agreeing the claim of the assessee. The reasons, satisfaction recorded must justify the ground on which the claim of the appellant is not accepted. Reliance is placed on the decision of Delhi High Court in the case of Maxopp Investments.[ 2011 (11) TMI 267 - DELHI HIGH COURT] .Without prejudice to the above the disallowance u/s. 14A cannot exceed the exempt income - we are unable to agree with the inference of the Assessing Officer and decline to interfere with the order of the ld. CIT(A). Correct head of income - Lease Rentals - AO held that the income of the hire charges are to be chargeable under the head income from other sources but not under the head business and profession - CIT(A) deleted the addition holding that the revenue having accepted all along that the lease rental income earned as business income cannot suddenly change the tract and consider the business income as income from other sources - HELD THAT:- CIT(A) held that it becomes all the more relevant when the exercise to changes the heads business or other sources is purely academic having no impact on the revenue. The Assessing Officer has not brought out any new facts or circumstantial to justify the change in opinion regarding head of income. Therefore, disallowance made by the AO in the impugned order is deleted. Having gone through the rationale given by the Assessing Officer which is not the correct position of the law, the order of the ld. CIT(A) giving relief based on the stand of the revenue for the earlier years and on going through the provisions of Section 71, we hold that such change of head of income is an infructuous academic exercise and accordingly the appeal filed by the revenue is hereby dismissed.

  ---

• 2021 (3) TMI 654
  Assessment u/s 153A - Deemed dividend addition u/s 2(22)(e) - AY 2007-08 - HELD THAT: From the perusal of the assessment order, it can be seen that no incriminating material has been found during the search and seizure operation and the Assessing Officer has not made any additions in respect of search and seizure operation. This assessment is non-abated assessment. There is no loan or advance as envisaged u/s. 2(22)(e) which should be treated as deemed dividend in present assessee s case. The issue is, therefore, squarely covered by the decision of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] particularly when original assessment had been framed u/s. 143(3) prior to the search in the case of the assessee. Hence, appeal of the assessee for Assessment Year 2007-08 is allowed. For Assessment Year 2012-13, closing balance as on 31/3/2012 was Rs. 9,21,582/- as against opening balance of Rs. 32,70,774/- which categorically states that during the year, the assessee has repaid the advance taken in earlier years. From perusal of the assessment order, he Assessing Officer has over looked these aspects and also taken into account the earlier Assessment Year amounting without giving any detailed reasoning while the same is added to the income of the assessee. From the perusal of the submissions before the CIT(A) we can see that the amount raised by the assessee is credited to the account with the company and its repayment is regularly debited to the said account. Provisions of Section 2(22)(e) relating to loan or advance can be deemed as dividend only to the extent of accumulated profit or so far as the loan is not reflected in the accounts, but in instance case the addition was made on the basis of the prior year amounts which was not at all discussed by the Assessing Officer as well as CIT(A) as to how the said amount was taken in respect of the current year account for making addition. Hence, the appeal of the assessee for Assessment Year 2012-13 is allowed.

  ---

• 2021 (3) TMI 653
  Disallowance u/s 14A r.w Rule 8D(2)(ii) - HELD THAT:- When the disallowance under Sec. 14A r.w Rule 8D(2)(iii), as claimed by the assessee, is found to be lower than the amount of the exempt income that was received by it during the year in question, the disallowance under the aforesaid statutory provision was liable to be restricted only to the extent the same was computed under Sec. 14A r.w Rule 8D(2)(iii). In our considered view, the intent of the first appellate authority to restrict the disallowance under Sec.14A to the extent the same is worked out u/rule 8D(2)(iii), subject to an upper limit i.e the amount of the exempt dividend income that was earned by the assessee during the year in question can safely be gathered from a conjoint perusal of his observations recorded in the appellate order. Be that as it may, in order to dispel any doubts, we herein direct the A.O to restrict the disallowance under Sec. 14A r.w Rule 8D to the extent the same is worked out u/rule 8D(2)(iii) i.e after excluding the investments that had not yielded any exempt income during the year in question, as directed by the CIT(A), subject to an upper limit as that of the exempt dividend income that was earned by the assessee during the year in question. Disallowance computed under Sec. 14A r.w Rule 8D to be added to the book profit under Sec. 115JB - HELD THAT:- As observed by the CIT(A), the Special bench of the ITAT Dehli in the case of ACIT Anr. Vs. Vireet Investments Pvt. Limited Anr [ 2017 (6) TMI 1124 - ITAT DELHI ] had clearly observed that for the purpose of computing the average value of investments within the meaning of Rule 8D(2)(iii) the investments which had not yielded any exempt income during the year are liable to be excluded. Also, the Special bench of the Tribunal had observed, that computation under clause (f) of Explanation 1 to Sec.115JB(2) is to be made without resorting to the computation contemplated under Sec. 14A r.w Rule 8D of the Income Tax Rules,1962. Accordingly, finding no infirmity in the view taken by the CIT(A) w.r.t the aforesaid two issues on the basis of which his order has been assailed by the revenue before us, we, thus uphold the same.

  ---

• 2021 (3) TMI 652
  Penalty u/s 271(1)(c) - additions made on account of disallowance of rent and disallowance of alleged bogus expenditure - HELD THAT:- Sub-clause (iii) of section 271(1)(c) provides mechanism for quantification of penalty. It contemplates that the assessee would be directed to pay a sum in addition to taxes, if any, payable him, which shall not be less than but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income and furnishing of inaccurate particulars of income. The quantification of the penalty is depended upon addition made to the income of the assessee. Since in the present case, basis for visiting the assessee with penalty has been extinguished by deleting addition by the Tribunal the impugned penalty does not survive. In other words, there is no room for the Revenue to impose penalty under section 271(1)(c) in this case. Therefore, we cancel the orders of the Revenue authorities on this issue, and allowed grounds of appeal of the assessee.

  ---

• 2021 (3) TMI 651
  Excess claim of depreciation on boilers - CIT(A) allowed the claim - whether the assessee has installed energy saving device being a specialized boiler and furnace on which it can claim depreciation at the rate of 80%? - HELD THAT:- A perusal of the certificate would indicate that it is dated 24.1.2017 issued after the assessment order. This chartered engineer has no where specified that such BFBC boiler was installed under his supervision or he has inspected the boiler. He simply stated that this concern has installed a boiler but no mention on what basis he observed so; had he ever visited the premises of the assessee ? Therefore, it was necessary for the AO to examine such type of person, but he was not produced before the AO even in the remand proceedings. Other evidences submitted by the assessee are copies of invoices vide which parts of the boilers have been purchased. AO has issued notice under section 133(6) of the Income Tax Act and directed this person to furnish information, but these were not responded. Similarly in other bills, there are supplies of parts viz. air ducting, supporting structure, bed coil etc. All these items have been purchased on different dates, namely, first invoice on page no.41 is dated 17.8.2004, but another invoice on page no.47 is dated 23.2.2005. It is not discernible actually how these components have been used, and when they were installed. These are details, which have been furnished in a very casual manner, and have been accepted by the ld.CIT(A) without any proper verification. Therefore, we are of the view that in spite of second round of litigation, the assessee could not produce complete details in support of its claim. The finding of the ld.CIT(A) is not based on correct appreciation of the material facts, rather the ld.CIT(A) has misconstrued partial and incomplete documents available on the record. We do not have any hesitation in setting aside this finding. On analysis of the record, we are of the firm view that assessee failed to prove the installation of high efficiency boiler on which depreciation at the rate of 80% could be claimed. - Decided against assessee.

  ---

• 2021 (3) TMI 650
  Undisclosed income - admission of additional income during the course of survey but did not offer the same in the return of income - CIT (A) deleted the addition - HELD THAT:- We find that during the survey proceedings, in answer at question No.18, the assessee had agreed to admit a sum of Rs. 500/- sq. ft prospectively over and above what has been admitted in the return of income by the assessee for the A.Y 2012-13 -Since the learned DR has not been able to rebut these findings of the learned CIT (A) with any facts to the contrary, we do not see any reason to take any other view.Revenue s appeal is dismissed.

  ---

• 2021 (3) TMI 649
  Revision u/s 263 - case of the assessee was picked up for scrutiny under the category of limited scrutiny - HELD THAT:- As per CBDT Instruction No. 7/2014, CBDT Instruction No. 20/2015 and CBDT Instruction No. 5/2016 and CBDT Letter dated 30.11.2017 - It s not open for the learned Assessing Officer to travellers beyond the reason for selection of the matter for limited scrutiny and on that aspect the assessment order in this case is in accordance with the instructions governing the field. See THE DECCAN PAPER MILLS CO. LTD. [ 2017 (10) TMI 1495 - ITAT PUNE] and M/S R. AND H. PROPERTY DEVELOPER, PVT. LTD [ 2019 (7) TMI 1534 - ITAT MUMBAI] When the assessing officer is bound to follow the CBDT instructions and while following such instructions and after verification of the material furnished by the assessee on the aspect covered by the limited scrutiny, is not open for the Ld. PCIT to say that not adverting to the other aspects of the competition would render the assessment order erroneous and prejudicial to the interest of the Revenue. With this view of the matter we find that the impugned order cannot be sustained and, therefore, the same is liable to be quashed. We accordingly quash the same.

  ---

• 2021 (3) TMI 644
  Change in method of revenue recognition - Non recognizing income by changing the method - Accounting standard - change from proportionate completion method to completed contract method - bonafide change - HELD THAT:- As decided in own case of Assessee, he is at liberty to change the method of accounting provided the change in the method of accounting is bonafide and is being consistently followed subsequently. But the method followed by the Assessee in the present case of postponing revenue recognition without postponing the cost incurred for earning the revenue cannot be said to be proper. There is no valid explanation for claiming expenses related to the CAS services rendered by the Assessee when recognition of income therefrom is postponed. The change in the method of accounting was therefore not bonafide and was rightly rejected by the revenue authorities.We find no merit in the claim of the Assessee in this regard. - Decided against assessee. Denial of TDS Credit on advances received - whether credit for TDS has to be provided to the Appellant irrespective of the year to which the income relates? - HELD THAT:- We deem it appropriate to direct the Assessing Officer to give credit as per reconciliation statement submitted by the assessee after due verification. This ground is remitted to the file of Assessing Officer for consideration afresh. Non-grant of depreciation on Foreign Exchange Loss disallowed as Capital Expenses - HELD THAT:- We remit this issue to the file of Assessing Officer for verification with records and decide accordingly as per law. Levy of interest u/s.234B of the Act, is consequential in nature.

  ---

• Benami Property

• 2021 (3) TMI 700
  Order of injunction in respect of Schedule A property - eviction suit pending before the learned Civil Judge (Junior Division) - HELD THAT:- There cannot be any doubt that if the decree dated 15th February, 2018 is taken into consideration, there is a clear finding that deed in the name of the defendant No.1 meaning thereby Smt. Durga Mudi, marked as Exhibit-1 belongs to the mother. We feel that the plaintiff has been able to make out a strong case in so far as the appellants are concerned to exclude A Schedule property from the partition suit in respect whereof the learned Civil Judge (Senior Division), 2nd Court, Howrah has granted status quo. We are not sure as to what materials were exactly made available to the learned Trial Judge at the time of disposal of the injunction application dated 22nd July, 2019. Accordingly, we direct the learned Civil Judge (Senior Division), 2nd Court, Howrah to rehear the injunction application after taking into consideration the decree passed without being influenced by our observation. The appellants shall be entitled to bring all necessary documents in support of their claim over A Schedule Property by way of an affidavit filed within 10 days from date upon prior service to the respondents and the respondents shall be at liberty to file any rejoinder to the said affidavit within 10 days thereafter.

  ---

• 2021 (3) TMI 697
  Benami Transactions - right to recover property held benami - real owners over the suit property - Plaintiffs case is that their predecessor-in-interest namely Padma Charan Bahinipati and one Lingaraj Bahinipati i.e. the Defendant are two brothers being son of Raghunath Bahinipati. Upon the death of their father when the Defendant was 9 years old boy, Padma Charan is said to have taken all his care in every front who having obtained MBBS degree ultimately went to United Kingdom for higher study. Plaintiffs that in the year 1971, Padma Charan purchased the suit property on his own by spending his earning without the help from any quarter and constructed a house over there for his living with family and reason for the same as given is that since Padma Charan was then a Govt. employee in the Forest Department by spending his own funds instead of purchasing the property in his name standing as the vendee under said transaction; he preferred to purchase the property in the name of his brother i.e. the Defendant. aAter purchase, Padma Charan Bahinipati possessed the property as its owner and on his death, the Plaintiffs as the legal heirs and successors are in possession of the same. Having got some information that the Defendant is attempting to alienate the suit property, the Plaintiffs with the apprehension of losing their property have filed the suit for declaration of title, possession and injunction. HELD THAT:- Even without giving any precise definition of the expression fiduciary capacity , it springs out of the relationship which is analogous to the relationship between a trustee and beneficiaries of the trust founded on confidence and trust on the one part and good faith on the other. Adverting to the case in hand, it is seen that it has been pleaded that Padma Charan being a Govt. servant in his anxiety was desirous of avoiding to purchase the property in suit in his name and so he, wished to purchase the property in the name of the brother i.e. Defendant and he did so. Mere mention of the relationship that the Defendant is the brother of Padma Charan would however not suffice the purpose and basing upon that it is not permissible to record the finding that the transaction in question would not come within the prohibition contained in section 4 (1) of the Act being so excepted under clause (b) of sub-section 3 of the Act as it stood on the date of institution of the suit. The legislative intent behind the insertion of that clause (b) to sub-section 3 of the Act which was there till 31.10.2016 is clear that normal relationship through blood or akin relationship as such have no play therein and the party in order to have his case within that saving fold has to plead all those facts and circumstances including their inter se dealings stretching over a period and also prove those by leading clear, cogent and acceptable evidence of such nature that the court would record the finding that the person in whose name the property is held stood in a fiduciary capacity. In the absence of any foundation in the pleadings as to all such facts and circumstances and their proof by clear, cogent and acceptable evidence so as to bring the transaction within the fold of the exception as it was there in clause (b) of sub-section 3 of section 4 of the Act; the courts below in my considered view found to have committed no error in recording the concurrent finding that the Plaintiffs have failed to establish their case so as to be entitled to the reliefs claimed in the suit. The very case of the Plaintiffs that the suit property had then been purchased by Padma Charan in the name of the Defendant is in order to show that he had nothing to do with said purchase sine it is said to be for the reason of avoidance of any such problem in his service career. This even taken as such and accepted; the case that the property held in the name of the Defendant standing in fiduciary capacity and that the property was held not for the benefit of Defendant but for that of Padma Charan towards whom the Defendant stands in such capacity falls flat. No substantial question of law

  ---

• Customs

• 2021 (3) TMI 696
  Seeking direction upon the appellants herein to forthwith release of 136 units of old and used multifunction print, copying and scanning machines - classification of printers - covered under CTH and ITC [HS] Code No.8443 32 10 to 8443 32 50 and 8471 60 24 or not - HELD THAT:- The non-compliance of the CRO may lead to serious consequences. However, we do not wish to express anything in this regard because the learned Single Bench was not inclined to touch upon the merits of the matter but proceeded to grant release based on various orders passed by the High Courts and Hon ble Supreme Court - the orders of provisional release cannot be pressed into service by the respondent/writ petitioner, more particularly, after the issuance of the notification dated 01.04.2020 and this is of utmost relevance because the bills of entry in almost all the cases have been filed post 01.04.2020. Even if certain bills of entry have been filed prior to notification, the law prevailing on the date of examination for considering the release of goods would have to be made applicable and if so, the notification S.O.1236(E) dated 01.04.2020 needs to be applied. In the light of the above reasoning, we are of the considered view that the stand taken by the Department was fully justified. On perusal of the application filed by the respondent/writ petitioner dated 09.06.2020, it is found that the application is not a simple application for provisional release but in fact it covers most of the grounds which have been raised in the writ petition. It is rather surprising that an application for provisional release would contain such details without even the Department calling upon the respondent importer to furnish details or to give explanation. The orders of provisional release passed pursuant to the directions issued by the Writ Court being interlocutory in nature cannot be considered as a precedent - Merely by stating that identical imports were allowed to be provisionally cleared can be no reason to permit the respondent to clear the goods by way of issuance of a writ of Mandamus. This is more so in the instant case, because the matter is being considered after the notification in CRO dated 01.04.2020 which has made the items as prohibited items. Admittedly, none of the statutory notifications or amendments are put to challenge before this Court and we do not accede to the argument that the respondent need not challenge the provisions of the statutory notification as according to them, MFDs are not printers. The appellant, Customs Department is directed to consider the applications filed by the respondent/writ petitioners for provisional release and pass orders on merits and in accordance with law within a period of four weeks from the date of receipt of a copy of this judgment - petition dismissed.

  ---

• 2021 (3) TMI 690
  Refund claim - Principles of unjust enrichment - Certificate of Chartered Accountant - sufficient and conclusive proof or not, that the incidence of duty has not been passed on - provisional assessment for the period prior to 14.07.2006 - scope of unjust enrichment on Public Sector Undertakings - applicability of Section 27 of Customs Act, 1962 are not applicable to the Public Sector Undertakings. HELD THAT:- Admittedly, the claim for refund which was made by the assessee arises out of the order of provisional assessment for the period prior to 14.07.2006. The issue whether the public sector undertakings are outside the purview of unjust enrichment is concerned, the same is no more res integra and has already been adjudicated in Mafatlal Industries Limited Vs. Union of India, [ 1996 (12) TMI 50 - SUPREME COURT ], wherein the Supreme Court has held that The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched. Thus, the doctrine of unjust enrichment is not applicable to the case of public sector undertakings - In view of this answer, it is not necessary to deal with the other substantial question of law regarding certificate of Chartered Accountant. Appeal dismissed.

  ---

• 2021 (3) TMI 665
  Benefit of MEIS-Scheme - denial of benefit of MEIS Scheme with respect to 94 shipping bills during the period from April 2015 to November 2015 - in the shipping bills in the column where they are claiming benefit of this scheme instead of putting Y CHA has put N - procedural lapse or not - HELD THAT:- The appellant is a three-star export house and once the largest exporters of tyres in India. Further, I find that the MEIS-Scheme was introduced in 2015 and the appellant filed the shipping bills but by a procedural lapse in the shipping bills in the column for claiming the benefit of the scheme instead of putting Y CHA inadvertently put N which is purely a procedural mistake. Further, in the shipping bills, the appellant has stated that they want to avail the benefit of MEIS-Scheme - the request of the appellant to issue NOC by the Customs was denied vide impugned order by relying on the Circular dated 23.09.2010 of the CBEC which is not applicable in the present case because that Circular relates to conversion of shipping bills from one export promotion scheme to another which is not the case in the present case. In the present case, it is only a correction by a procedural lapse putting Y instead of N for claiming the benefit of the scheme. The rejection of the request for issuing NOC is not sustainable in law - appeal allowed - decided in favor of appellant.

  ---

• Corporate Laws

• 2021 (3) TMI 661
  Reduction of shares - seeking rectification of the register of members of the 1st Respondent Company by cancelling the allotment of shares - to appoint an Independent Auditor directing to audit the accounts - seeking to direct the 1st Respondent Company to conduct a valuation of shares of the Company before further allotment of Securities. HELD THAT:- The Companies Act, 2013 came into effect w.e.f. 01.04.2014. Hence, further issue of share capital will be done by complying the Companies Act, 2013. Section 62 of the Companies Act, 2013 deals with issue of Share Capital, which is applicable to all companies. It does not make any distinction whether it is a public or private company. This Tribunal also note that Section 62(1)(a) of the Companies Act, 2013 deals with issuance of shares on the principle of Rights basis. Section 62(1)(b) of the Companies Act, 2013 deal with issuance of shares to employees under a scheme of employees stock option, subject to special resolution passed by company and subject to such conditions as may be prescribed. Section 62(1)(c) deals with issue of shares to any person. Since the shares have been allotted to Applicants/Petitioners and their nominees as per the Interim Order dated 12.01.2017, the shares so issued must have the compliance of Section 62(1)(c) of the Companies Act, 2013. A reading of the Section 62(1)(c) shows that (a) special resolution has to be passed by the company; and (b) that the price of share as will be determined by valuation report of registered valuer - It is again noticed that the special resolution can be passed only in the AGM or EOGM where all the shareholders will have a say. No such material has been produced or pleaded before this Tribunal that the special resolution has been passed in the AGM or EOGM. Neither any material has been placed before the Tribunal that the fair price has been determined with the approval of the registered valuer. It is noted that the allotment has been done at the face value of Rs. 10/-. In the absence of fair value, it cannot be determined that the Rs. 10/- is the fair value of the equity share. Compliance of Section 62(1)(c) ensures that the allotment is done to any person at a price which is not prejudicial to the interest of other shareholder or to the interest of the company. Though enough has been pleaded to justify allotment of shares to 2nd Respondent, not a single evidence could be placed or pleaded to show that the compliance of Section 62(1)(c) has been done. In view of the above position, allotment of shares to 2nd Respondent cannot be held to be validly done - the exercise carried out is not only illegal but oppressive to the Shareholders. Petition is disposed of with a direction to the Respondent No. 1 to cancel the allotment of 1,10,00,000 equity shares in favour of Respondent No.2 and thereby rectify the Register accordingly.

  ---

• Insolvency & Bankruptcy

• 2021 (3) TMI 686
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The Application under Section 7 of the I B Code for initiation CIRP against the debtor is maintainable only when a default has occurred. Hon ble Supreme Court in the Case of B.K. Education Services Pvt. Ltd. Vs. Parag Gupta Associates [ 2018 (10) TMI 777 - SUPREME COURT] held that the right to sue accrues when a default occurs. If the default has occurred over three years prior to date of filing of the application under Section 7 of the I B Code; the application would be barred under Article 137 of the Limitation Act. The date of right to sue can be extended only when the debt is acknowledged by the Corporate Debtor within limitation of three years - Admittedly, in this case, the Appellant has committed default and the loan account declared as NPA before 2001 and thereafter - Respondent No. 1 has not placed on record any document of acknowledgement of debt within limitation of three years. The Corporate Debtor committed default and the loan account declared as NPA before 2001 and thereafter, there is no acknowledgement of debt within limitation of three years and it is clear that the Judgment/decree passed by the DRT-II on 29.04.2019 cannot shift forward the date of default for the purpose of computing the period for filing an Application under Section 7 of the I B Code. Thus, the Application under Section 7 of the I B Code filed by the Respondent No. 1 on 23.01.2019 against the M/s L.S.P. Agro Ltd. (Corporate Debtor) is barred by limitation and was not maintainable. The matter is remitted back to the Ld. Adjudicating Authority to decide fees and costs of CIRP payable to IRP/RP, which shall be borne by the Respondent No. 2 (Corporate Debtor).

  ---

• 2021 (3) TMI 685
  Seeking Release of of salaries and amount due and payable to RP by the corporate debtor - Whether the Adjudicating Authority can issue the directions to erstwhile Resolution Professional once the Resolution Plan under Section 31 of the I B Code 2016 has been approved, and the Resolution Professional has been discharged of his duties? HELD THAT:- It is essential to mention that the claim of Respondent No. 1 is highly belated. The ultimate result of the impugned Order is effectively considering the claim filed by Respondent No. 1 during the CIR process period. Although CIRP process period claims have been considered and decided upon by the Resolution Professional, further such determination has been upheld by the Adjudicating Authority. It has been over two years since the Corporate Debtor s CIR process concluded by approving the Resolution Plan of Respondent No.2, which has subsequently been given full effect by Respondent No. 2 - The timelines prescribed under the Code aim at speedy and time-bound resolution. Thus, the impugned Order of the present nature, which allows a highly belated claim, mainly when the Claimant displays an overtly callous attitude, should be nibbed in the bud. Adjudicating such delayed claims could defeat the Code s purpose and cause unnecessary hurdle in the effective implementation of any Resolution Plan. Respondent No. 1 contended that erstwhile Directors are willing to cooperate with the Petitioner to sign the annual accounts if the Petitioner is ready to pay the legitimate claims of Respondent No. 1, such as salary dues to be paid to him and also to be other incidental expenses such as transport charges etc., as per law. Respondent No. 1 is not in Corporate Debtor s management. Only the Resolution Professional is competent to take any steps per law and cannot blame the erstwhile Directors for not signing the annual accounts. The erstwhile Directors, including Respondent No. 1, are not in the Corporate Debtor company s management since the financial statements are in the Resolution Professional s custody. The Respondent claims erstwhile directors cannot be blamed for not signing the annual accounts - It is further stated that Respondent No. 1 is not the company s executive director as on date and not legally fit to sign the annual accounts as an Executive Director under the Companies Act 2013. If the Hon ble Tribunal found that the Respondent No.1 is legally fit to sign the annual accounts the Respondent No.1 is ready to sign the financial statements provided his outstanding salary with full and final account and necessary incidental expenses to be paid to him to attend the meeting to sign the annual accounts and related reports. The Adjudicating Authority has erred in issuing directions to the erstwhile Resolution Professional to make payment of the salary to the Appellant - Appeal allowed - decided in favor of appellant.

  ---

• 2021 (3) TMI 684
  Reinstating CIRP - Failure of corporate debtor to replay as per the settlement agreement - essence of time in the Settlement Agreement - Section 9 of IBC - debt due and payable by Operational Creditor - allegation is that Adjudicating Authority has gone beyond the mandate of Section 9 of the IBC in passing the Impugned Order - Appellant has claimed that the timeline of payment of instalments that was agreed by both the parties was the essence of the contract , as mentioned in Clause 8 of the Settlement with further stipulation that the Corporate Debtor would not seek any extension in these timelines - HELD THAT:- The time was not of essence in the Settlement Agreement. Hence any consequence upon default due to delay in payments cannot fall on the Respondent. From the observation of facts presented above, we come to this inference that a fresh application under Section 9 of IBC cannot be triggered in accordance with Clause 11 of the Settlement Agreement. Since the Appellant accepted delayed payments of certain instalments without raising a demur or objection, his conduct led the Respondent to believe that some delay in payment was acceptable to the Appellant which would prima facie imply that time was not of essence in the Settlement Agreement. Thus, time was not of essence in the Settlement. Whether any compensation should accrue to the Appellant or not is not a matter for adjudication in this appeal. Also whether Section 62 of the Contract Act, 1872 will apply in the present case, which would change the contract to a new one is not relevant in the present appeal. If the Appellant has any grievance on this account, he could certainly approach the appropriate forum for redressal on this issue which relates to the enforcement of the Settlement Agreement and whether it will be substituted by a new one, if it so wishes. The Settlement Agreement, as has been operated by both the parties, does not show that time was of essence in it - appeal dismissed.

  ---

• 2021 (3) TMI 667
  Validity of Resolution Plan as approved - Expression fo Interest - application of a person who has not participated in CIRP - eligibility criteria for the prospective Resolution Applicants - Section 60(5) of I B Code and Regulation 35(2) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - this application has been filed by the applicants at the 12th hour of approval of Resolution Plan by this Adjudicating Authority - HELD THAT:- The Resolution Plan has been approved by this Tribunal on 22.02.2021 and as such this Tribunal cannot declare that the order passed by this Tribunal is in violation of Section 60(5) of the I B Code and the Regulation 35(2) of IBBI (Insolvency Resolution Process for Corporate persons) Regulations, 2016. Regarding the other prayer to set aside the Resolution Plan submitted by the 3rd respondent and direct the respondents to consider the Resolution Plan of the applicant, it may be noted that the Committee of Creditors is the sole authority to accept or reject a Resolution Plan and after their approval only the Adjudicating Authority can interfere in the matter, either approve or return the Plan to them for any modification as suggested by this Tribunal. This Tribunal cannot exercise the power of appellate authority to set aside a Resolution Plan approved by this Tribunal under Section 31 of IBC, 2016. Section 31(1) of the Code lays down in clear terms that for final approval of a Resolution Plan, the Adjudicating Authority has to be satisfied that the requirement of Sub-Section (2) of Section 30 of the Code has been complied with. The proviso to Section 31(1) of the Code stipulates the other point on which an Adjudicating Authority has to be satisfied. This Tribunal finds no reason to entertain this Application - Application dismissed.

  ---

• 2021 (3) TMI 647
  Validity of accepting the assignment as Resolution Professional (RP) in Corporate Insolvency Resolution Process (CIRP) of Reliable Paper (India) Limited (CD) after 31st December, 2019 without holding a valid Authorisation for Assignment (AFA) issued to him by his IPA - contravention of section 208(2)(a) and 208(2)(e) of the Insolvency and Bankruptcy Code, 2016 (Code), regulations 7(2)(a), 7(2)(h) and 7A of the IBBI (Insolvency Professionals) Regulations, 2016 (IP Regulations) read with clauses 1, 2, 11, 12 and 14 of the Code of Conduct for Insolvency Professionals contained in the First Schedule of the IP Regulations - HELD THAT:- It is clear from Regulation 7A of IP regulations that one of the essential conditions for undertaking any assignment by an IP is that he should have a valid AFA which is issued by the IPA with which he is enrolled as a professional member. In other words, without AFA, an IP is not eligible to undertake assignments or conduct various processes thereof. Regulation 7A was inserted in the IP Regulations vide notification dated 23rd July, 2019, much before 31st December, 2019. Adequate time was given to the professionals to obtain AFA from respective IPAs - The bye-laws of Indian Institute of Insolvency Professional of ICAI defines in para 4(1)(aa) the expression Authorisation for Assignment as an authorisation to undertake an assignment, issued by an insolvency professional agency to an insolvency professional, who is its professional member, in accordance with its bye-laws regulation. An application for grant of AFA can be made to the IPA under para 12A of said bye-laws. The credibility of the processes under the Code depends upon the observance of the Code of conduct by the IRP/RP during the process. Section 208(2) of the Code provides that every IP shall take reasonable care and diligence while performing his duties and to perform his functions in such manner and subject to such conditions as may be specified. Further, the Code of Conduct specified in the First Schedule of the IP regulations enumerates a list of code of conduct for insolvency professionals including maintaining of integrity and professional competence for rendering professional service, representation of correct facts and correcting misapprehension, not to conceal material information and not to act with mala fide or with negligence. In the present matter, Mr. Juneja had given consent to accept the assignment as IRP in Form-2 on 12th April, 2019 in the CIRP of the CD and the date of commencement of the CIRP is 3rd December, 2019. However, it is also observed that Mr. Juneja was ratified as RP in the CIRP of the CD in the 1st meeting of the CoC held on 6th January, 2020, i.e., after the threshold date of 31st December, 2019 without having a valid AFA. The DC finds that though acceptance of assignment was prior to cut-off date, i.e., 31st December, 2019, however, notification for the same was notified on 23rd July, 2019. Mr. Juneja should have applied for AFA especially in view of ratification of his name to act as RP by the CoC. The DC finds that an order has been passed against Mr. Juneja on 1st December, 2020 by the Disciplinary Committee of IPA for accepting assignment as RP after 31st December, 2019 without holding a valid AFA in the CIRP of the CD and it has been decided that Mr. Juneja is guilty of professional misconduct and a penalty of Rs. 10,000/- has been imposed.

  ---

• 2021 (3) TMI 646
  Validity of accepting the assignment as Resolution Professional (RP) in corporate insolvency resolution process (CIRP) of Torus India Limited (CD) without holding a valid Authorisation for Assignment (AFA) issued to him by his IPA - contravention of sections 208(2)(a) and 208(2)(e) of the Insolvency and Bankruptcy Code, 2016 (Code), regulations 7(2)(a), 7(2)(h) and 7A of the IBBI (Insolvency Professionals) Regulations, 2016 (IP Regulations) read with clauses 1, 2, 11, 12 and 14 of the Code of Conduct for Insolvency Professionals contained in the First Schedule of the IP Regulations - HELD THAT:- As per Regulation 7A of IP regulations, it is clear that one of the essential conditions for undertaking any assignment by an IP is that he should have a valid AFA which is issued by the IPA with which he is enrolled as a professional member. In other words, without AFA, an IP is not eligible to undertake assignments or conduct various processes thereof. Regulation 7A was inserted in the IP Regulations vide notification dated 23rd July, 2019, much before 31st December, 2019. Adequate time was given to the professionals to obtain AFA from respective IPAs - The bye laws of Indian Institute of Insolvency Professional of ICAI defines in para 4(1)(aa) the expression Authorisation for Assignment as an authorisation to undertake an assignment, issued by an insolvency professional agency to an insolvency professional, who is its professional member, in accordance with its bye-laws regulation. An application for grant of AFA can be made to the IPA under para 12A of said bye laws. In the present matter, Mr. Bhat had given consent to accept the assignment as IRP in Form-2 on 5th June, 2018 in the CIRP of the CD and the date of commencement of the CIRP is 20th December, 2019. However, it is also observed that Mr. Bhat was ratified as RP in the CIRP of the CD in the 1st meeting of the CoC held on 17th January, 2020, i.e., after the threshold date of 31st December, 2019 without having a valid AFA. Mr. Bhat has submitted that since the provision relating to AFA was newly inserted and made effective on 1st January, 2020, he was under the impression that it was not applicable for the ratification to act as RP. The DC finds that though acceptance of assignment was given prior to cut off date, i.e., 31st December, 2019, however, notification for the same was notified on 23rd July, 2019. Mr. Bhat should have applied for AFA especially in view of acceptance given for the assignment and at least after coming into force of the provision of regulation 7A of the IP Regulations. He applied for AFA on 4th August, 2020, approximately after 8 months of the admission of the application on 20th December, 2019. In view of the fact that the Disciplinary Committee of the Indian Institute of Insolvency Professional of ICAI has already passed order in this matter, the DC, in exercise of the powers conferred under Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, disposes of the SCN without any direction.

  ---

• Service Tax

• 2021 (3) TMI 681
  Refund of service tax paid - specified services received by a unit located in a SEZ or the developer of SEZ and used for the authorized operations - service tax paid under Reverse charge mechanism - HELD THAT:- The foremost argument put forward by the Ld. Counsel is that appellant unit being a SEZ unit is exempted from payment of taxes / duties under Section 26 of the SEZ Act. The issue whether conditions imposed as per Notification issued under Section 93 of the Finance Act would prevail over Section 26 of SEZ Act so as to deny the exemption from tax was considered by the Hon ble High Court in the case of GMR AEROSPACE ENGINEERING LIMITED AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [ 2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT ] where it was held that rejection of refund claim stating that refund is time-barred as well as the classification of services is different or that the services are not specified services cannot sustain and requires to be set aside. Rejection of amount of Rs. 9,841/- - Rejection of refund of SBC and KKC - HELD THAT:- On perusal of the records, it is seen that all these invoices are prior to 2016. The amendments introduced in Notification No.12/2013-ST so as to exempt SBC KKC have come into effect only on 3.2.2016 and 1.6.2016 . For this reason, the authorities below have rightly rejected the refund claim with regard to SBC KKC - Rejection of Rs. 9,841/- with regard to SBC and KKC respectively is therefore upheld. Appeal allowed in part.

  ---

• 2021 (3) TMI 676
  Classification of services - Banking and other Financial Services or not - construction of residential houses from loan sanctioned by HUDCO and other financial institutes and allotting these houses on hire purchase sale and outside sale basis to the consumers against collection of the amounts - interest income - extended period of limitation - penalty - suppression of facts or not? - HELD THAT:- Para h to clause (7) of section (2) of the Companies Act, 1956 clarifies that the body corporate, which fall in the exclusion clause of the above definition are not relevant for the purpose of Section 65 (12), which defines Banking and other Financial Services. Clause (c) of the above definition excludes such body corporate from the scope of Section 65 (12) of the Finance Act which cannot be defined as company and which are the creature of Government. The appellant is, apparently, constituted under Rajasthan Housing Board Act, 1970. No doubt, Section 4 (2) of the said Act describes RHB as a body corporate but this body corporate is definitely not constituted under the Companies Act but by Rajasthan Government to have perpetual succession and a common seal with power to acquire hold and dispose of property both moveable and immovable and to enter into contracts and may by its corporate name sue and be sued and do all things and acts necessary for the purpose of Rajasthan Housing Board Act (RHB). RHB , otherwise also, cannot be called as Banking Company. The definition of Banking company as per Section 65 (11) of Finance Act, 1994. Section 5 (c) of Banking Regulation Act, 1949 clarifies that any company, which is engaged in manufacture of goods or carries own any trade and which accepts deposits of money from the public merely for the purpose of financing its business, as such manufacturer or trader shall not be deem to transit the business of banking. Once that is true even for a banking company, the appellant, who is not even the body corporate as defined under Section 16 (12) cannot be burdened with the tax liability for rendering Banking and other Financial Services , when it accepts deposits of money from the public merely for the purpose of financing the sale of houses being constructed by it. Since the basic function of the appellant is to construct the houses and then to sell it either by way of allotment or by way of hire purchase against receiving certain amounts whether in form of ASC charges or hire purchase charges, but the activity is specifically the activity of construction of complexes and as such said amount cannot be made liable to tax for rendering service as that of Banking and Financial Services - the appellant is neither such a body corporate as is required for Section 65 (12) of Finance Act, 1994 nor the funds as that of ASC charges and hire purchase charges are the income of the appellant, who is held to be engaged in rendering construction services as contrary to Banking and Financial Services. Interest income - HELD THAT:- Service Tax (Determination of Value) Rules, 2006, though applicable for the period w.e.f. 18.04.2006 to 01.07.2012., it is observed that as per Rule 6 (2) thereof the value of taxable service has not to include interest on loans and on delayed payments of any consideration for provision of services or sale of property whether movable or immovable. The hire purchase deposits for the property which cannot be defined as goods are also out of the scope of taxable value as far as the interest thereupon is concern - whatever interest amount received by the appellant is confined to the activity with respect to the own products of the appellant i.e. the construction raised by them for being sold, that too, in welfare of economically weaker sections. Extended period of limitation - penalty - suppression of facts or not? - HELD THAT:- No question of suppression otherwise is possible. Department has failed to reflect any wilful misstatement. Appellant, admittedly, is an instrumentality of State Government. There cannot be an intent to evade the payment of tax - the Department is not allowed to invoke the extended period of limitation and the adjudication imposing penalties upon the appellant is also held to be apparently wrong. Appeal allowed - decided in favor of appellant.

  ---

• 2021 (3) TMI 671
  Refund of Service Tax - construction services provided by them to Haryana Housing Board - government/local authority or not - Revenue has sanctioned the refund claim for the period 2014-15 which was filed too late in 2018 holding that Haryana Housing Board is a government or local authority and the service provided to them are exempt from service tax - HELD THAT:- As the Revenue during the earlier period has entertained the refund claim filed by the appellant, therefore, balance of convince lies in favour of the appellant that when the issue whether the activity provide by the appellant to Haryana Housing Board is exempt being a government or local authority was pending before the Hon ble High Court of Punjab and Haryana in the case of M/S BHARAT BHUSHAN GUPTA AND COMPANY VERSUS STATE OF HARYANA AND OTHERS [ 2016 (8) TMI 722 - PUNJAB AND HARYANA HIGH COURT] and the same was settled by the Hon ble High Court holding that the services provided to Haryana Housing Board are exempt from payment of service tax being a local/government authority. Thereafter, the appellant was eligible to file the refund claim. In these circumstances, the time limit prescribed under Section 11B of the Act is not applicable to the facts of this case and under Notification No. 09/2016 dt. 01.03.2016 as the course of action arose after the decision of the Hon ble High Court in the case of M/s Bharat Bhushan Gupta Company. Further, Haryana Housing Board has also filed refund claim which was entertained by the Revenue and the same has been granted and no appeal has been filed against the said order, therefore, on the principle of equity also requires that the appellant is entitled to claim the refund of the service which is exempt on which they have paid service tax. Appeal allowed - decided in favor of appellant.

  ---

• 2021 (3) TMI 666
  Principles of Natural Justice - refund claim - time limitation - HELD THAT:- The refund claim of the appellant was sanctioned initially. Para 5 thereof specifically records that the submissions made by the claimant have been considered by the original adjudicating authority thereby proving that the appellant was given the due opportunity of hearing and the said order is not an ex-party order. The perusal of order dated 30.01.2018 in furtherance of the review proceeding also is observed to not to be an ex-party order, as contrary to the submissions of the appellant. The arguments of appellant that the notice is shown to have been received by Manoj Srivastava whereas the owner of appellant is Mr. Aslam has no further relevance to extend any benefit to the appellant. Condonation of delay in filing appeal - HELD THAT:- Keeping in view that there is a statutory mandate upon Commissioner (Appeals) to not to hear the appeal, which is filed beyond the period of 60 days extendable to another 30 days if sufficient cause for delay is shown. There are no infirmity in the order when the impugned delay of one month and 20 days is denied to be condoned for no sufficient cause - reliance correctly placed in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] . Appeal dismissed.

  ---

• 2021 (2) TMI 1395
  Levy of penalty - Section 73 of the Finance Act of 1994 - service of Practicing Chartered Accountant provided - appellant had paid the arrears of tax and interest prior to the issuance of show cause notice - suppression of facts or not - Whether the proceedings under Section 73(3) of the Finance Act, 1994 in this matter could be said to be justified by any of the reasons stated in sub-section(4) of Section 73 of the Act? HELD THAT:- It is true that in various cases like COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS M/S ADECCO FLEXIONE WORKFORCE SOLUTIONS LTD [ 2011 (9) TMI 114 - KARNATAKA HIGH COURT ] , that the levy of penalty imposed on the ground of delayed payment of Service Tax was set aside as the tax was paid prior to issuance of show cause notice. However, the present case has a distinguishable feature. In the present case, the undisputed fact reveals as reflected from the Order of the Assessing Officer that the assessee came up with a plea before the Assessing Officer that he has rendered services to Karnataka State Financial Corporation (KSFC) and it is the KSFC which has not cleared the bills of the assessee and in those circumstances, the assesee was not able to pay service tax - it is also established that non-payment of Service Tax was not due to delay but on the contrary it was willful non payment of service tax with an intention to evade payment of Service tax. Thus, the assessee suppressed the facts and made willful mis-statement before the Assessing Officer and in those circumstances, the benefit of Section 74, 78 was not extended to him. In the light of the categorical finding of fact arrived at by the Assessing Officer keeping in view Section 73(4) of the Finance Act of 1994, merely because tax was paid before the issuance of show cause notice, it can never be said that the penalty cannot be imposed upon the appellant - appeal dismissed.

  ---

• Central Excise

• 2021 (3) TMI 698
  Principles of natural Justice - the order of Appellate Tribunal passed without dealing with any of the submissions made by the appellant - overriding effect of Rule 96ZP of Central Excise Act, 1944 on the provisions of Section 3A of the Central Excise Act, 1944 - validity of relying on the decision in the case of CCE Chandigarh Vs. Doaba Steel Rolling Mills [ 2011 (7) TMI 10 - SUPREME COURT ] - HELD THAT:- It is well settled in law that even quasi-judicial authority, while exercising its statutory powers, has to assign reasons and based on the reasons assigned by it, has to record the findings. In other words, the Tribunal exercising the statutory power under the Act is required to apply its mind and record the findings. In any case, if the Tribunal relies on a particular decision, it is duty bound to examine, by assigning reasons, as to how the ratio of the aforesaid decision applies to the fact situation of the case. It is evident that the Tribunal has merely relied on the judgment of the Hon ble Supreme Court in the case of DOABA STEEL ROLLING MILLS and has not even assigned any reason as to how the decision applies to the fact situation of the case - Thus, it is found that the order passed by the Tribunal is cryptic and suffers from the vice of non-application of mind. Matter remanded to the Tribunal for fresh adjudication after considering the submissions made at the Bar and to decide the matter by a speaking order - appeal allowed by way of remand.

  ---

• 2021 (3) TMI 695
  Maintainability of petition - Territorial Jurisdiction - it is contended that appellant/assessee, being an assessee in the State of Karnataka, have to avail the remedy before the High Court of Karnataka - HELD THAT:- Identical issue was considered by the Division Bench of this Court, in M/S. MULBERRY SILKS LTD. (FORMERLY KNOWN AS M/S. SHAKASHAMBANA SILKS EXPORTS (P) LTD.) VERSUS THE SETTLEMENT COMMISSION (IT WT) , THE COMMISSIONER OF INCOME TAX BANGALORE-III, THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE 4 (1) (INV.) [ 2020 (9) TMI 771 - MADRAS HIGH COURT] and it was held that though the seat of the Settlement Commission is at Chennai, the writ petition could not be maintained before this Court as the assessee was registered with the Department in another State. Appeal dismissed.

  ---

• 2021 (3) TMI 693
  Continuation of Criminal Proceedings - matter is pending for adjudication - evasion of Central Excise duty - service tax has been paid - offence punishable under Sections 9(1)(b),9(1)(bbbb), 9(1)(d), 9AA(1) and 9AA(2) of the Central Excise Act, 1944 - HELD THAT:- The service tax is paid but the excise duty has not been paid and the same has been disputed, for which, the matter has also been before the Tribunal for adjudication. The main contention of the learned counsel for the petitioners is that if the excise duty payable is less than the minimum limit, there cannot be any criminal proceedings but actually the claim by the respondent is for Rs. 3,02,87,970/- and whether the same is reduced to less than the minimum limit or more than the minimum limit has to be adjudicated by the Tribunal. If the criminal prosecution is continued and the accused persons are convicted and if, subsequently, the adjudicatory proceeding has been concluded exonerating the petitioner or comes to the conclusion of minimum limit, then it amounts to an abuse of process and the same would be unjust permitting the Enforcement Directorate to continue with the criminal prosecution. Hence, it is appropriate for the present the proceedings can be kept in abeyance till the disposal of the matter which is pending before the adjudicatory authority. This Court direct the petitioners herein to move an application before the adjudicatory authority to get the matter disposed of as early as possible within one year since the matter involved is with regard to payment of excise duty due for a period of more than 3 years and odd, which affects the economy of the country as held by the Apex Court as well as other High Courts. The proceedings initiated against these petitioners are kept in abeyance till the disposal of the adjudicatory proceedings for a period of one year - petitioners are directed to get it disposed off the appeal, which is pending before the adjudicatory authority, within a period of one year from the date of this order by taking steps immediately. If the same is not disposed of within the stipulated time of one year, the respondent is given liberty to proceed with the matter for criminal prosecution.

  ---

• 2021 (3) TMI 678
  Refund of unutilized balance of PLA accumulated - applicability of of section 11B of CEA - refund has been claimed on 30 July, 2018 for the cash balance of 30 June 2016 the same appears to be hit by limitation of period of one year - Appellant claimed non-applicability of section 11B as the amount sought to be refunded is deposit and not the duty - HELD THAT:- The amount as was prayed to be refunded is admittedly an amount other than the duty or interest which is the subject matter of refund under Section 11 B. Section 11B should not have been made applicable upon the impugned refund. Simultaneously, it is observed that other than Section 11B, there is no provision under which the Department can refund the impugned amount or which permits the withdrawal of deposits as the one in the present case. Also, the impugned Show Cause Notice was issued objecting the application of refund to be barred by limitation. In the given circumstances, there was no other option with the Adjudicating Authority below to follow the mandate of Section 11B (1) of Central Excise Act, 1944. Appeal dismissed - decided against appellant.

  ---

• 2021 (3) TMI 677
  Clandestine production and removal - shortage of goods - duty evasion - demand against the main Noticee has been dropped, and the appellant being co-noticee also seeks relief - Subsequent filing of appeal against the said order, by Revenue - case of Revenue is that appeals of remaining 12 Notices are still pending consideration before this Tribunal - Reliability on third party documents - HELD THAT:- In the present appeal, there is no additional document except the documents/evidences as have been discussed by the Division Bench of this Tribunal in SMART STEELS, HARYANA ROLLING MILL, EURO PRATIK ISPAT PRIVATE LIMITED, PRAGATI INGOTS POWER PRIVATE LIMITED VERSUS PR. COMMISSIONER OF CENTRAL TAX [ 2019 (8) TMI 1022 - CESTAT NEW DELHI] with respect to the same Show Cause Notice as has been adjudicated vide the impugned order under challenge. The present appeal is before Single Bench because quantum of demand against the impugned appellant falls within the jurisdiction of Single Bench. Reliability on third party documents - HELD THAT:- The reliance of third party documents while conforming demand against present appellant is also observed to be unjustified and unreasonable. Since the sole challenge to the order is its reliance upon third party evidence, it is necessary to check the evidentiary value of the third party evidence. Department has failed to prove the allegations against the present appellant - Demand do not sustain - appeal allowed - decided in favor of appellant.

  ---

• 2021 (3) TMI 660
  CENVAT Credit - input - HR coils - MS plates - HT strappings - HRSS plates - GI flat - Grate Plate - CI Bend - MS Boiler Plates - SS Plates - HELD THAT:- The appellant vide their reply dt. 10/06/2016 for each item/part, has given the details for consideration by the adjudicating authority vide description of the item/part typical diagram of the image, detailed write up of the items used and amount of cenvat credit of such item/part, date of availment of credit, serial number of the item/part etc. From all these descriptions given by the appellant in the reply to the show-cause notice, it is clear that these items are part and parcel of various goods and has rightly been classified as inputs for fabrication of various capital goods as per Rule 2(k) of CENVAT Credit Rules, 2004 which in turn are used in the manufacture of finished goods and therefore are eligible for cenvat credit. At the appellate stage also, in order to satisfy the Commissioner(Appeals) regarding the actual usage of these items, the appellant furnished the certificate of Chartered Engineer as required by the appellant authority but unfortunately the Commissioner(Appeals) has not given due weightage to the certificate of the Chartered Engineer where the Chartered Engineer has given usage of each and every item involved in the present case. This issue is no more res integra and has been settled by various decisions of the Tribunal relied upon by the appellant. The various decisions relied upon by the appellant have held the eligibility of the assessee for cenvat credit on various goods which have been used for manufacture of the final product - reliance can be placed in the case of M/S. SINGHAL ENTERPRISES PRIVATE LIMITED VERSUS THE COMMISSIONER CUSTOMS CENTRAL EXCISE, RAIPUR [ 2016 (9) TMI 682 - CESTAT NEW DELHI] . Credit allowed - appeal allowed - decided in favor of appellant.

  ---