TMI Tax Updates - e-Newsletter
March 25, 2021

Case Laws in this Newsletter:

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

Articles

1. DELAYED INTEREST LIABILITY ONLY ON NET GST PAYMENT

   By: Dr. Sanjiv Agarwal

2. OIDAR – The lesser known devil

   By: Jigar Doshi

News

1. APEDA organizes virtual buyer-seller-meet with Nepal for harnessing and strengthening agri-exports potential

2. Exchange Rate Notification No. 32/2021 - Customs (N.T.)

3. Equitable Access to Medicines

4. Quality Standards of Products

5. Core Infrastructure Sectors

6. Make in India

Notifications

GST - States

1. 09/GST-2. - dated 22-3-2021 - Haryana SGST

Notification from rescinding the Haryana Government, Excise and Taxation Department, notification no. 30/ST-2 dated 30.06.2017 under the HGST Act, 2017

2. 08/GST-2 - dated 22-3-2021 - Haryana SGST

Notification under section 25(D) to notify persons to whom provisions of sub-section (6B) or sub-section (6C) of section 25 of HGST Act will not apply under the HGST Act, 2017

3. FD 04 CSL 202 - dated 15-3-2021 - Karnataka SGST

Issue Of Notification as per Sec 174 (2) of KGST Act 2017.

SEBI

4. SEBI/LAD-NRO/GN/2021/12 - dated 23-3-2021 - SEBI

Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Amendment) Regulations, 2021

Circulars / Instructions / Orders

Income Tax

1. 04/2021 - dated 23-3-2021

Clarifications on provisions of the Direct Tax Vivad se Vishwas Act, 2020

Highlights / Catch Notes

GST

• GST Registration to be Unblocked; Petitioners Can File Returns from July 1, 2017, Without Late Fees.

  Case-Laws - HC : Seeking to activate registration of the petitioners - The respondents are directed to unblock / activate the registration of the writ applicants under the GST Act and grant the final registration certificate under the GST Act with effect from 1st July 2017 at the earliest. The respondents shall permit the writ applicants to upload the returns and pay tax under the GST Act from 1st July 2017 onwards without charging any late fee for the belated filing of the returns. - HC
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• Court Extends Deadline for Filing TRAN-1 Forms for Input Tax Credit to March 31, 2021; Validity to be Verified.

  Case-Laws - HC : Transitional credit - Carry forward of Input Tax Credit - Non filing or their TRAN-1 or revised TRAN-1 within the stipulated period - the reasoning of the learned single Judge and the relief granted would not call for any interference except to the extent of extending the time within which they would now have to file TRAN-1. The said time-frame has now expired even after successive extensions on 30.08.2020. Therefore, the respondents-assessees are permitted to file/revise TRAN-1 either electronically or manually on or before 31.03.2021. The revenue is at liberty to verify the genuineness or the merits of the claim in accordance with law. - HC
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• Registered dealer entitled to transitional credit u/s 140, despite website glitches or improper functioning.

  Case-Laws - HC : Transitional credit - Merely because there was a glitch in the website and or that the website is not working properly, a registered dealer cannot be denied the benefit of credit available under the provisions of Act. More particularly Section 140 of the Act. - HC
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Income Tax

• Income from Partnership Firm Exemption u/s 10(2A) Deemed Erroneous; Revision Jurisdiction Invoked u/s 263.

  Case-Laws - AT : Revision u/s 263 - Income derived from the partnership firm and claimed as exemption under s. 10(2A) - Non-examination of such crucial aspects which has direct bearing on the correct assessment of income has ostensibly rendered the assessment order to be erroneous as well as prejudicial to the interest of the Revenue. We thus hold that the assessment order passed in such gross lack of application of mind causing prejudice is thus amenable to jurisdiction under s.263- AT
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• Holding Company's Free Steam Supply to Subsidiary Not Taxable Under Income Tax Act, No Presumptive Income Accrued.

  Case-Laws - AT : Accrual of income - production and sale of steam without any consideration - The transaction is between the holding and subsidiary company. Therefore in my opinion the action of the appellant company in not charging for steam supplied to SSL is quite justified on fact and cannot be said to be deliberate or motivated. Moreover even if an assessee gives (sells) his goods free of cost to other, there is no provision in the IT Act to tax its sale value as income on presumptive basis. Legally Speaking since no income has accrued & neither any payment has actually been received by the appellant company, making addition - AT
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• CNG Delivery to Cars Qualifies for Additional Depreciation Under IT Act Section 32(1)(iia) Due to Distinct Identity.

  Case-Laws - AT : Additional depredation u/s 32 (1)(iia) - process of delivery of CNG to automobiles at the CNG filling centres - Fulfilment of mandate of manufacture or production - Compressed natural gas in its compressed form has a distinct identity and character and use - when a commodity acquires a distinct name, use and commercial identity, it would acquire the trait of 'manufacture' - AT
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• Books of Accounts Rejected Due to Incomplete Records and Discrepancies in Inventory and Accounting Standards.

  Case-Laws - AT : Rejection of books of accounts - GP addition/estimation - Non maintenance of records of quantitative details renders the accounts of assessee incomplete. Preparation of the Inventory at the end of year but not keeping it on record and not producing such Inventory for scrutiny can only lead to the inference that accounts are not correct. Quantitative tally of items traded and manufactured by assessee is not only possible but also the requirement of proper accounting system.Adoption of different standards for receipts and production in stock, accounts can justify rejection of accounts. - AT
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• CIT's Section 263 Revision Challenged: AO's Assessment Found Accurate, No Error in Preliminary Project Evaluation.

  Case-Laws - AT : Revision u/s 263 by CIT - scope and ambit of the expression "erroneous" - Since the submissions/explanations were found to be satisfactory, no further information was called from the assessee which is also evident from the fact that the returned loss has been accepted by taking note of the fact that the project was in preliminary stage and the assessee has not sold any flat during the year under consideration but received mere advances. In view of the foregoing, it could be concluded that the view of Ld. AO, could not be said to be contrary to law, in any manner, on both the issues as alleged by Ld. Pr. CIT. There was proper application of mind by Ld. AO on both the issues. - AT
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• Goodwill Assets Eligible for Depreciation u/s 32 if Qualify as Business Rights in Slump Sale Agreement.

  Case-Laws - AT : Deprecation u/s 32 on goodwill - Depreciation could not be denied to the Taxpayer merely for the reason that the assets were classified as ‘goodwill’ in the books of account without appreciating the true nature of the assets if they can fall under the scope of ‘any other business or commercial rights of similar nature’. We are of the view that the specified intangible assets acquired under slump sale agreement were in the nature of “business or commercial rights of similar nature” specified in section 32(1)(ii) of the Act and were accordingly eligible for depreciation under that section. - AT
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• Addition u/s 68 for Bogus Gains Contested; No Incriminating Evidence Found During Section 153A Assessment.

  Case-Laws - AT : Assessment u/s 153A - Addition u/s 68 - bogus LTCG - Except the statement of the assessee u/s. 132(4) agreeing for the addition there is no seized incriminating material found in the premises of the assessee in the course of assessment proceedings. When there is no incriminating material found in the course of search in assessee’s premises the addition/disallowance cannot be made merely on the statements recorded in the course of the search proceedings. - AT
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Customs

• Deputy Commissioner of Customs at ICD Whitefield to review and decide on IGST refund claim within eight weeks.

  Case-Laws - HC : Seeking refund of IGST - rejection of refund, filed before Assistant Commissioner of Central Tax, observing that the claim for refund is to be processed by the Customs Department - Deputy Commissioner of Customs, ICD Whitefield, directed to consider the representation at Annexure-A and pass necessary orders within a period not later than eight weeks - HC
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IBC

• Corporate Insolvency Resolution Process: Debt Default Date Confirmed as September 22, 2016; Application Filed Timely in October 2018.

  Case-Laws - AT : Initiation of CIRP - Period of limitation - In the instant case part or instalment of the amount of debt has become ‘due and payable’ as on 22.09.2016. It being a running account, considering the manner in which such businesses are conducted and accounts are kept, it would be material to see when the parties concerned treat the debt to be in ‘default’. It is pertinent to mention that the date of default mentioned in Form V of the Application is 22.09.2016 and the Application was filed in October, 2018 - the Application was filed well within the period of limitation. - AT
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Service Tax

• High Court Upholds Commissioner's Order Despite Pending Advance Ruling Application; Highlights ARA Delays Impact on Tax Investigations.

  Case-Laws - HC : Validity of order passed by the commissioner when the application for Advance Ruling is pending - A vibrant system of advance ruling can go a long way in reducing the taxation litigations. However, in the matters of the present type, sometimes the delay at the end of the ARA may frustrate the investigation which may not be in the interest of the Revenue. - The impugned order passed by the Commissioner need not be interfered with, only on the ground that he should have waited for the ruling of the ARA - HC
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Central Excise

• Refund Denied: Appellant's Claim Rejected Due to Unjust Enrichment; Lacked Required Documentation for Pre-Deposit Status.

  Case-Laws - AT : Rejection of refund - Pre-deposit or receivable - principles of unjust enrichment - On the one hand, the appellant claims that the amount paid is to be treated as pre-deposit for which unjust enrichment would not apply, but, on the other hand, fails to furnish the necessary documents requested by the authorities who are empowered to look into all aspects before passing an order. - AT
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VAT

• Compounding Notice Deemed Non-Speaking Due to Lack of Explanation, Violating Natural Justice Principles; Procedural Deficiencies Noted.

  Case-Laws - HC : Levy of Compounding Fee - detention of goods - The first respondent has not recorded as to why the documents produced by the appellant cannot be accepted. If any clarification is required, the same could have been called for. Therefore, it is clear that the compounding notice dated 13.3.2016 is not only a non-speaking notice, but a notice in violation of the principles of natural justice, as the grounds raised by the appellant have not been considered by the first respondent - HC
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• Reassessment Under VAT Act Section 34 (8A) Challenged Due to Lack of Pending Proceedings After Seven Years.

  Case-Laws - HC : Initiation of proceedings of reassessment - pendency of proceedings under the Act do not exist - after more than 7 years, on the basis of objection of audit para, the authority concerned had initiated the proceedings of reassessment by invoking the provision of Section 34 (8A) of the VAT Act. The pre-condition for invoking the provision of Section 34 (8A) of the Act is that, there must be a pendency of proceedings under the Act, which does not fulfill in the present case. - HC
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• Dealers can claim additional input tax credit without time limits; Section 35 doesn't restrict late filings for statutory benefits.

  Case-Laws - HC : Claim for additional input tax credit at the rate - No time limit has been prescribed under the provisions of the Act for making a claim for additional input tax credit. Therefore, the claim for eligible input tax credit is an indefeasible right which is available to the dealer under the Act without any limitation of time for claiming such credit - In the instant case, the government has prescribed the lower rate of 3% by Notification dated 30.03.2007 and therefore the aforesaid rate was applicable for the tax period from 01.04.2007 to 31.03.2008. Therefore, the petitioner cannot be deprived of the aforesaid statutory benefit and Section 35 of the Act does not curtail the entitlement of the dealer to such statutory benefit to it if such return is not filed within the time prescribed therein. - HC
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Case Laws:

• GST

• 2021 (3) TMI 975
  Seeking to activate registration of the petitioners - seeking grant of final certificate of registration to the petitioners from 1.7.2017 - permission to file returns and pay tax under the GST Acts from 1.7.2017 - permission to allow the petitioners to claim input tax credit of IGST paid on imports made during the period when the registration certificate of the petitioners was blocked - seeking restraint from imposing any late fee or penalty under the GST Acts for non filing / late filing of returns by the petitioners under the GST Acts because of blockage of registration certificate of the petitioners - HELD THAT:- The writ applicants represented before the authorities on number of occasions requesting for activation of the registration certificate under the GST Act and grant of final registration certificate since the very basis for inactivation / blocking of such certificate had been removed by the first appellate authority under the VAT Act - Because of inactivation of registration certificate, the writ applicants were unable to file the returns and pay tax under the GST Act nor they were able to claim the Input Tax Credit of IGST paid on the imports made during the interregnum period. Since no response was received from the authorities despite number of representations, the present writ application had to come before this Court. The respondents are directed to unblock / activate the registration of the writ applicants under the GST Act and grant the final registration certificate under the GST Act with effect from 1st July 2017 at the earliest. The respondents shall permit the writ applicants to upload the returns and pay tax under the GST Act from 1st July 2017 onwards without charging any late fee for the belated filing of the returns. The respondents are also directed to allow the writ applicants to claim the Input Tax Credit in respect of the imports / purchases made during the period in which the registration under the GST Act was blocked / inactivated and no dispute of time limit under Section 16(4) of the GST Act shall be raised as the Input Tax Credit was not allowed to be claimed on account of blocking / inactivation of the registration by the respondents - Application allowed.

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• 2021 (3) TMI 965
  Principles of natural justice - assessment order - personal hearing has not been granted to the petitioner prior to passing of the impugned orders - Section 74(5) of the TNGST Act - HELD THAT:- The impugned orders are set aside on the ground of violation of principles of natural justice. Let the petitioner appear before the Assessing Authority on Wednesday, the 24th of March, 2021 along with materials, if any, in support of its stand without expecting any further notice in this regard. The Assessing Officer shall, after hearing the petitioner and considering the materials, if any circulated, pass orders of assessment de novo within a period of six (6) weeks thereafter.

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• 2021 (3) TMI 953
  Transitional credit - Carry forward of Input Tax Credit - allowing any balance in their credit account under the earlier regime by filing or revising the GST who had already filed - respondents-assessees herein not filing their TRAN-1 or revised TRAN-1 within the period prescribed under Rule 117 of the Rules - HELD THAT:- Co-ordinate Bench of the Delhi High Court in SKH Sheet Metals [ 2020 (6) TMI 385 - DELHI HIGH COURT ] held, despite the judgment in Brand Equity Treaties Limited [ 2020 (6) TMI 517 - SC ORDER ] being stayed by the Supreme Court, the aforesaid reasoning still holds good. In addition, it was also observed that Rule 117(1A) suffers from the vice of vagueness as the expression technical difficulties on the common portal and its applicability had not been adequately defined nor its parameters asserted. As a result, there was no certainty or predictability about the application of this Rule for the class of cases to which it would apply. Further, in the absence of there being defined criteria, the application of the said provision would suffer from arbitrariness. It was also noted that the GST Council itself had found that there can be certain errors apparent on the face of the record and that could be non-technical in nature which would predicate leniency in the matter. The entire country was in a transitional mode insofar as the new regime of GST being implemented with effect from 01.07.2017. It would be relevant to note that in each State earlier, there were independent and separate Sales Tax Regime in the form of VAT (Value Added Tax) Act. Although, there were different enactments in various States of the country, there was an over-all pattern, which emerged inasmuch as there were several similarities that could be found under various VAT enactments of the respective States. But, the Parliament thought it fit that the entire country must be covered under a single tax regime and by amendment made to the Constitution by insertion of Article 246-A and by exercising power under Article 249, brought under one umbrella in the form of the Goods and Service Tax Act, not only the indirect taxation regime under the various State VAT Acts but also the Central Sales Tax, Central Excise and Service Tax in the form of a single Code. There should be certainty and a time-prescription within which the transition could be made. But, it is also noted that the initial time-frame prescribed, being 27.12.2017, had to be extended from time to time by virtue of the amendments made and ultimately, sub-rule (1A) to Rule 117 was inserted. The said Rule incorporates the expression technical difficulties on the common portal . The Rule does not define as to what is a technical difficulty on the common portal. The reason for not defining the same is because the rule making authority was conscious of the fact that there could be a variety of technical difficulties on the common portal which could not be explained under the Rule or envisaged by the Rule making Authority - In the absence of such a definition being given under the Rule, question is, whether, the same would have to be viewed in a myopic or narrow, pedantic way or to give a liberal interpretation to the said expression so that all reasons which would come in the way of uploading Form TRAN-1 or Revised Form TRAN-1, could be considered within the scope and ambit of the expression technical difficulty of common portal . No doubt, it is the policy of the Central Government that there should be digitalization, as far as possible, even with regard to simple transactions, such as buying of household articles and including other complex transactions, such as entering into various types of agreements concerning infrastructure development projects. But, the reality is that the Indian society is not yet so well-versed and adept at utilising online methods, whether it is a simple transaction, or for the purpose of filings, etc., under the taxation enactments. Ultimately, insertion of sub-rule (1A) to Rule 117 with effect from 10.09.2018 was effected. Even thereafter, the sub-rule was amended not once, but thrice so as to extend the time from 31.03.2019 to 31.03.2020 and ultimately, it was extended to 31.08.2020. The last extension upto 31.08.2020 was in exercise of the powers conferred under Section 168A of the Act by insertion of Section 117(1A) of the Act by way of an amendment. This was on the recommendation of the GST Council whereby, earlier Notification No.35/2020-CT dated 03.04.2020 was amended. This was done by extending the time period granted upto 30.06.2020 by the Notification dated 03.04.2020 issued in the interregnum - the assessees herein must be granted relief by giving them another opportunity to file/revise TRAN-1 either electronically or manually on or before 31.12.2020. We find that the reasoning of the learned single Judge and the relief granted would not call for any interference except to the extent of extending the time within which they would now have to file TRAN-1. The said time-frame has now expired even after successive extensions on 30.08.2020. Therefore, the respondents-assessees are permitted to file/revise TRAN-1 either electronically or manually on or before 31.03.2021. There are no reason to interfere with the order of the learned single Judge - appeal dismissed.

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• 2021 (3) TMI 951
  Transitional credit - Seeking direction to respondents to make arrangements for reflecting their electronic credit ledger relating to the petitioner - HELD THAT:- It is not in dispute that on coming into force of GST regime, the CENVAT regime came to an end. It also cannot be disputed that assessee registered as dealer under the CENVAT resume can claim credit in the GST resume. It is but required for the respondent to make available necessary provision resulted on the website of the portal of the respondent to enable the petitioner to claim such credit. Merely because there was a glitch in the website and or that the website is not working properly, a registered dealer cannot be denied the benefit of credit available under the provisions of Act. More particularly Section 140 of the Act. The respondents are directed to make necessary arrangement by updating the data available with the respondent as regards the electronic credit ledger of the petitioner and reflect the correct amount so as to enable the petitioner to claim said credit - Petition allowed.

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• Income Tax

• 2021 (3) TMI 972
  Additional depreciation on windmill u/s 32(1)(ii)(a) - AO denied the benefit on the ground that the primary business of the assessee does not include generation of wind energy, generation of sale of energy is not the primary business of the assessee company - ITAT allowed the deduction - As per revenue amended provision under Section 32(1)(ii)(a) permits for additional depreciation of actual cost of any new machinery or plant (other than ships and aircraft) acquired and installed only after 31st day of March 2012 to an assessee engaged in the business of generation and distribution of power? - HELD THAT:- Though the term Capital Consumption is used by the assessee, it does not mean that whatever electricity energy generated by the assessee with their wind mills is directly fed into their system for being used for manufacture of Pet Bottles. If this is to be the opinion, then it will fall fowl of the regulations under which wind energy is being regulated in the State. The assessee, who owns the wind mill, if engaged in the generation of power, is mandated to feed the same into the grid of the Tamilnadu Electricity Board and pursuant to the agreement between the assessee and the Board, a grid is given to the generator. Therefore, going with scheme of things, it is undoubtedly clear that the assessee is into the generation of power, which is being fed into the grid of the Tamilnadu Electricity Board to be distributed. Identical issues was considered by this Court in M/S. VTM LIMITED [ 2009 (9) TMI 35 - MADRAS HIGH COURT] wherein held what is required to be satisfied in order to claim the additional depreciation is that the setting up of a new machinery or plaint should have been acquired and installed after 31st March 2002 by an assessee, who was already engaged in the business of manufacture or production of any article or thing. The said provision does not state that the setting up of a new machinery or plant, which was acquired and installed upto 31.03.2002 should have any operational connectivity to the article or thing that was already being manufactured by the assessee. Therefore, the contention that the setting up of a wind mill has nothing to do with the power industry, namely, manufacture of oil seeds etc. is totally not germane to the specific provision contained in Section 32(1)(iia) . Also see TEXMO PRECISION CASTINGS [ 2009 (10) TMI 140 - MADRAS HIGH COURT] and M/S. HI TECH ARAI LIMITED [ 2009 (9) TMI 60 - MADRAS HIGH COURT] - Decided against revenue.

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• 2021 (3) TMI 969
  Exemption u/s 11 - Charitable activity or not - Trust has dropped its demand for registration with retrospective effect - Tribunal set aside the order of the CIT u/s.12AA rejecting the application for registration u/s 12 AA on the ground that all the objects were of the charitable nature and at the time of registration, the Commissioner of Income Tax could only look into the genuineness of the Trust and did not examine the activities of the Trust, relying on the decisions rendered under the old provisions of Section 12A of the Income Tax Act and without considering the new provision of Section 12AA of the Act - HELD THAT:- As far as the question raised relating to the genuineness of the Trust claiming exemption and registration under Section 12AA of the Income Tax Act is concerned, the Hon ble Division Bench earlier rejected the plea of the Revenue and agreed with the conclusion of the Tribunal stating that it is purely a question of fact. The Hon ble Division Bench has rightly decided the said question of law against the Revenue. Hence, we are not inclined to give any finding with regard to the 1st question of law. Whether Tribunal was right in holding that there were sufficient reasons for the delay in filing the application for registration even though the assessee had not explained the delay from January 2003 to 2006 and the assessee Trust itself had by its letter dated 09.10.2009 foregone its claim for registration with retrospective effect? - Tribunal, while setting aside the order passed by the Commissioner of Income Tax with direction to grant registration to the Trust, further directed the Commissioner to decide the issue with regard to condonation of delay by taking a lenient view and in accordance with the observation made by the Tribunal. The application for registration was made by the assessee Trust on 27.02.2006 for getting the registration done retrospectively from 01.04.2002. As per Section 12A (1) proviso (2) of the Income Tax Act, the registration of the Trust or Institution shall be made from the first day of the Financial Year in which the application is made. So far as the present application is concerned, admittedly, the Trust had submitted their application on 27.02.2006. Therefore, as per Section 12A(1) proviso (2) of the Act, registration can be done only from 01.04.2005. Therefore, as per the said provision, registration cannot be done retrospectively from 01.04.2002, which the respondent is seeking for. The respondent Trust itself, by its letter dated 09.10.2009, had foregone its claim for registration with retrospective effect. Therefore, the question of condonation of delay in registering retrospectively, does not arise. Hence, we are of the considered view that the registration can be done from 01.04.2005 based on the assessee s application dated 27.02.2006.

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• 2021 (3) TMI 957
  Whether or not the petitioner should be called to Pay 125% of the disputed tax under the revised certificate issued by the designated authority, under Form 3, in exercise of the powers under Section 5(1) of the Direct Tax Vivad Se Vishwas Act, 2020 - HELD THAT:- It is the case of the petitioners that the said question and the answer provided in response to it is beyond the provisions of the Act and the rules framed thereunder. To our minds, the issue needs examination. Accordingly, issue notice in the captioned matters and the accompanying interlocutory applications.Revenue, whose names are given hereinabove, accept service. The counter-affidavit(s) will be filed within four weeks from today. Rejoinder(s) thereto, if any, will be filed before the next date of hearing. Given the fact that the scheme under the Act, insofar as the petitioners are concerned, will expire on 31.03.2021, for the moment, the Revenue will accept the tax, as determined by the designated authority, as per the original certificate issued in Form 3. Petitioners are not successful in persuading us to take a view in their favour in the instant matters, they will pay the tax, as per the revised certificate issued by the designated authority, along with suitable interest, if any, which this Court may impose, at the time of the disposal of the writ petition.

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• 2021 (3) TMI 954
  Reopening of assessment u/s 147 - reopening done beyond the period of four years - whether there is any allegation against the respondent-assessee having failed to fully and truly disclose all the details before the Assessing Officer when the assessment was initially completed under Section 143(3) of the Act on 31.12.2010? - HELD THAT:- Admittedly, there is no allegation against the assessee and the Tribunal was right in holding that there was no negligence on the part of the assessee in furnishing necessary materials in completing the assessment. If such is the admitted factual position, the reason for reopening, stating that expenditure in relation to income not includable in total income under Section 14A of the Act should be calculated as per Clause (ii) of Rule 8D(2), would clearly amount to change of opinion. The stand taken by the Revenue before us by placing reliance on the decision in the case of P.V.S. Beedies P. Ltd.[ 1997 (10) TMI 5 - SUPREME COURT ] is not substantiating their case on account of the factual position in the case of P.V.S. Beedies P. Ltd. In the said case, the audit department noted that the trust under the name of P.V.S. Memorial Charitable Trust had been initially granted recognition, which had expired on 22.09.1972 and therefore for the relevant years under consideration in the said case, namely AY 1974-75 and 1975-76, the trust was not a recognized charitable trust. Therefore, the audit department having pointed out the same, the assessment was reopened. The factual position in P.V.S. Beedies P. Ltd is quite distinct and different from the case before us. Therefore, the said decision would not render assistance to the case of the Revenue.

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• 2021 (3) TMI 949
  Penalty levied u/s 271(1)(c) - Defective notice - non specification of charge - loss on account of forfeiture of advance for land disallowed on the ground that the loss was in the nature of capital loss and not an item of revenue expenditure - HELD THAT:- The notice has not given the specific limb under which penalty has been imposed. Thus, the decision of the Hon ble Supreme Court in case of SSA s Emerald [ 2016 (8) TMI 1145 - SC ORDER] is applicable in assessee s case. Further, on merit also the contention of the assessee that the claims of the assessee were genuine and there are two opinions about the allowability of those claims found some force. The decision of the Hon ble Supreme Court in Price Waterhouse Coopers Pvt. Ltd[ 2012 (9) TMI 775 - SUPREME COURT] is as the bonafide mistake is always allowable mistake and the absence of due care, in a case such as the present, does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income. Thus, invoking penalty u/s 271(1)(c) of the Act is not just and proper. Therefore, the assessee succeeds in his legal plea as well as on merit and penalty does not sustain. Appeal of the assessee is allowed.

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• 2021 (3) TMI 948
  Revision u/s 263 - disallowance of remuneration to working partners - HELD THAT:- When Revenue has not disputed the fact that partners are working partners as per partnership deed and as per clause 5, they are entitled for payment of remuneration which are to be determined as per provisions contained u/s 40(b)(v) of the Act, then Revenue has no business to disallow the same. In these circumstances, we are of the considered view that assessment order framed by the AO is not erroneous. Question of fulfilling the second condition that, assessment framed is prejudicial to the interest of the Revenue is concerned , again we are of the considered view that when it is undisputed fact that remuneration paid to the individual partners has been taxed @ 30%, the same rate to which income of the assessee firm was to be taxed, the assessment order is not prejudicial to the interest of the Revenue. Apart from non-fulfilling twin conditions to invoke the provisions contained u/s 263 of the Act by ld. Pr.CIT, it is a matter of record that in the preceding years i.e. AYs 2013-14 2014-15, the same remuneration as per clause 5 of the partnership deed and in consonance with section 40(b)(v) of the Act has been paid to the working partners by the assessee firm and has been accepted by the Revenue. No distinguishing facts have been brought on record by the Revenue to take a divergent view. So, in the ordinary course of circumstances, Revenue is required to follow the rule of consistency though every assessment year is to be assessed separately and independently. Question framed is answered in affirmative and the ld. Pr.CIT is held to have erred in invoking the provisions contained u/s 263 of the Act directing the AO to disallow the remuneration to the working partners. - Decided in favour of assessee.

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• 2021 (3) TMI 947
  Disallowance of remuneration to the partners on the ground that the partnership deed does not specify the quantification of remuneration to the partners - AO disallowed the salary to working partners which has been upheld by the Ld. CIT(A) - HELD THAT:- In the instant case, the partnership deed does not specify the manner of computation of quantum of remuneration to partners and the same has been left undetermined, undecided and left to the discretion of partners, therefore, I do not find any infirmity in the order of the Ld. CIT(A) in confirming the addition made by the AO. In the instant case there is no clause at all regarding the methodology and the manner of computing the remuneration of partners. Therefore, this decision also is of no help to the assessee . In this view of the matter and respectfully following the decision of Hon ble Jurisdictional High Court in the case of Sood Brij Associates vs CIT[ 2011 (11) TMI 3 - DELHI HIGH COURT ] relied on by the AO, thus find no infirmity in the order of the Ld. CIT(A) in confirming the disallowance of salary to the working partners - Grounds raised by the assessee are dismissed.

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• 2021 (3) TMI 946
  Rectification of mistake - assessee contends that the Capital Gain only should be considered as part of total income instead of gross receipt as done by the CPC - rectification being mistake apparent from record therefore, the claim made in the return should be allowed - HELD THAT:- It is a fact on record that the assessee has applied for rectification and filed revised return thereby changing the head of this particular transaction from capital gain to income from other sources but the amount and the actual net gain remains the same. The rectification might not be correct under the statute as there is a change of head but when we go by the original return it clearly set outs that the net gain of Rs. 99,125/- has to be taken into account by the CPC. In the present case, the assessee Trust has accumulated and set apart an amount of Rs. 5,96,00,000/- for financial year ended on 31/03/2016 and furnished the said information to Assessing Officer by filing Form 10 on 29/09/2014 i.e. before the time specified u/s 139(1) of the income Tax Act and invested the said amount into fixed deposits. The assessee has also claimed accumulation u/s 11(2) of Rs. 5,96,00,000/-/in the return of income. Thus, the assessee satisfied all the conditions as specified in section 11(2) and the accumulation should be allowed - the assessee reported the gain on sale of Birla Sun life mutual fund of Rs. 99,125 as income in return of income which should be considered as declared by the assessee instead of Rs. 2,06,00,000/. Therefore, the demand raised of Rs. 2,58,88,130/- and interest u/s 234B and 234C are hereby rejected and the benefit u/s 11 should be allowed to the assessee. Therefore, we are allowing the appeal of the assessee to this extent and the claim made in the return which was originally filed should be taken into account. Hence, the appeal of the assessee is allowed.

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• 2021 (3) TMI 944
  Disallowing the claim of deduction u/s 80P(2)(a)(i) - HELD THAT:- The Hon ble Apex Court in the case of The Mavilayi Service Co-operative Bank Ltd. Ors. v. CIT [ 2021 (1) TMI 488 - SUPREME COURT] had held that the expression members is not defined under the Income-tax Act. Hence, it is necessary to construe the expression members in section 80P(2)(a)(i) of the I.T.Act as it is contained in the respective State Co-operative Act. A.O. has merely denied the benefit of deduction u/s 80P(2)(a)(i) of the I.T.Act for the reason that the assessee was also dealing with associate / nominal members, which is against the dictum laid down by the Hon ble Apex Court in case of Mavilayi Service Cooperative Bank Ltd. Ors. (supra). The Hon ble Apex Court has settled many issues. The instant case needs to be examined by the A.O. in light of the principles enunciated by the Hon ble Apex Court in case of Mavilayi Service Co-operative Bank Ltd. Ors. (supra). Accordingly, the CIT(A) order on this issue is set aside and the same is restored to the files of the A.O. for examination of the case in the light of the principles laid down by the Hon ble Apex Court in the case of The Mavilayi Service Co-operative Bank Ltd. Ors. v. CIT (supra). It is ordered accordingly. Claim of deduction u/s 80P(2)(a)(i) of the I.T.Act with regard to interest income earned from fixed deposit kept with Co-operative Banks - In view of the above co-ordinate Bench order in the case of M/s.Raithara Seva Sahakara Sangh [ 2019 (1) TMI 282 - ITAT BANGALORE] we restore the issue of claim of interest income received from other cooperative banks to the files of the A.O. for de novo consideration. A.O. shall follow the directions of the Tribunal contained (supra). Appeal filed by the assessee is allowed for statistical purposes.

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• 2021 (3) TMI 942
  Revision u/s 263 - Income derived from the partnership firm and claimed as exemption under s.10(2A) - non-application of mind to the pattern of transaction which smacks of a device to transfer the land in favour of new partners without paying due taxes. The impact of omission of s.47(ii) has also not found to be weighed - HELD THAT:- No document had been placed before us on behalf of the assessee to show that the AO, at any point of time, applied his mind to the apparent mis-match in the amount of exemption income claimed under s.10(2A) of the Act qua the corresponding income declared by the partnership firm. The issue apparently did not weigh in the mind of the AO, which has resulted in serious prejudice to the Revenue. The plea of all pervasive scrutiny conducted by AO thus does not resonate with apparent gaffes shown. We find that the AO has passed a very cryptic and nondescript order without any discussion on any of the point raised in the revisional order. Alongside, it also could not be shown that the AO was alive to such pertinent concerns and reason thereof at the time of assessment. A plain reading of Explanation to Section 10(2A) of the Act does not summarily rule out an embedded plausibility in the concern of excess deduction claimed as expressed by the Revisional Commissioner. Non-examination of such crucial aspects which has direct bearing on the correct assessment of income has ostensibly rendered the assessment order to be erroneous as well as prejudicial to the interest of the Revenue. We thus hold that the assessment order passed in such gross lack of application of mind causing prejudice is thus amenable to jurisdiction under s.263 - Decided against assessee.

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• 2021 (3) TMI 936
  Accrual of income - production and sale of steam without any consideration - transaction between holding and subsidiary company - estimating notional receipt by the AO towards the supply of power as against the real income Nil. - HELD THAT:- As decided in M/S SBEC BIOENERGY LTD., DELHI [ 2012 (3) TMI 665 - ITAT DELHI] Sale price is the income of seller liability being purchase price to the purchaser. It can be treated as income accrued in the hands of the seller (and liability crystallized in the hands of the purchaser) only if the relevant contract is accepted by both the parties to contract. There is no doubt that the steam was supplied by the SSL as it was done in earlier years. Earlier the income (being sale value of steam) was credited in the accounts at the rate agreed and confirmed by the SSL. In fact the rate was retrospectively rendered such reduction was agreed to by both the parties. On this basis itself the ITAT in A Y 00-01 allowed reduction of income from sale of steam. The point to be noted is that the income from any contract (sale) can be said to accrue as per agreed terms of such contract. If there is any dispute by ether party the accrual of income (of expenditure in the hands of other party) will be subject to the outcome of such dispute accordingly contingent. Normally the income in such cases can be said to accrue in the year in which the dispute is resolved other party acknowledges the debt. Even in such cases some party may choose to recognize its income or liability as accrued accordingly to facts circumstances whereby it is certain to be able to enforce the terms of the contract. However, the appellant did not recognize any revenue from sale of steam in current year according to AS-9, since SSL had categorically refused to make any payment for supply of steam. Therefore, non-recognition of any accrual of income from supply of steam does not appear to be, unjustified. As the income of one company will be a deductible expenditure for the other and between the two there is no tax gain from this transaction. The income in the case of appellant is eligible to 100% deduction u/ s80 lA also. Hence no allegation of tax planning can be attributed in this transaction, which appears to be wholly for business considerations. The transaction is between the holding and subsidiary company. Therefore in my opinion the action of the appellant company in not charging for steam supplied to SSL is quite justified on fact and cannot be said to be deliberate or motivated. Moreover even if an assessee gives (sells) his goods free of cost to other, there is no provision in the IT Act to tax its sale value as income on presumptive basis. Legally Speaking since no income has accrued neither any payment has actually been received by the appellant company, making addition in respect of estimated price of steam amounts to taxing of notional income which is not permissible. In view of this addition is deleted. - Decided against revenue.

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• 2021 (3) TMI 935
  Additional depredation u/s 32 (1)(iia) - process of delivery of CNG to automobiles at the CNG filling centres - Fulfilment of mandate of manufacture or production or an article or thing which is mandatory requirement for claiming additional depredation u/s 32 (1)(iia) - CIT (A) confirmed the addition holding that the company is not into manufacturing or production of CNG - HELD THAT:- As decided in the case Central UP Gas Ltd. [ 2016 (12) TMI 814 - ALLAHABAD HIGH COURT ] Compressed natural gas in its compressed form has a distinct identity and character and use. It is settled law of the Apex Court in the case of Income Tax Officer Vs.Arihant Tiles and Marbles P. LTD. reported in [ 2009 (12) TMI 1 - SUPREME COURT] that when a commodity acquires a distinct name, use and commercial identity, it would acquire the trait of manufacture . The question is answered in favour of the assessee

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• 2021 (3) TMI 933
  Deduction u/s 80P(2)(a)(i) - credit facilities to associate or nominal members - HELD THAT:- Hon ble Apex Court in the case of The Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] had held that the expression members is not defined under the Income-tax Act. Hence, it is necessary to construe the expression members in section 80P(2)(a)(i) of the I.T.Act as it is contained in the respective State Co-operative Act. Hon ble Apex Court had held that providing credit facilities to associate or nominal members would be entitled to deduction u/s 80P(2)(a)(i) unless they are not considered as members of co-operative under the respective State Act. Hon ble Apex Court has also considered the judgment in case of Citizen Co-operative Society Ltd. [ 2017 (8) TMI 536 - SUPREME COURT] . A.O. has merely denied the benefit of deduction u/s 80P(2)(a)(i) of the I.T.Act for the reason that the assessee was also dealing with associate / nominal members, which is against the dictum laid down by the Hon ble Apex Court in case of Mavilayi Service Co-operative Bank Ltd. Ors. (supra). The Hon ble Apex Court has settled many issues. In the instant case needs to be examined by the A.O. in light of the principles enunciated by the Hon ble Apex Court in case of Mavilayi Service Co-operative Bank Ltd. Ors. (supra). Accordingly, the CIT(A) order on this issue is set aside and the same is restored to the files of the A.O. for examination of the case in the light of the principles laid down by the Hon ble Apex Court in the case of The Mavilayi Service Co-operative Bank Ltd. Ors. v. CIT (supra). Claim of deduction u/s 80P(2)(a)(i) of the I.T.Act with regard to interest income earned from fixed deposit kept with Co-operative Banks - In view of the above co-ordinate Bench order in the case of M/s.Raithara Seva Sahakara Sangh [ 2019 (1) TMI 282 - ITAT BANGALORE] restore the issue of claim of interest income received from other cooperative banks to the files of the A.O. for de novo consideration. The A.O. shall follow the directions of the Tribunal contained (supra). It is ordered accordingly.

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• 2021 (3) TMI 932
  Reopening of assessment u/s 147 - disallowance of purchases wrongly claimed by the assessee - HELD THAT:- As manifest from the record that the assessee has not produced the supporting invoices for the claim of purchases as recorded in the books of account. AO also issued notices u/s. 133 (6) to M/s. Sharda Steel Industries, M/s. P.D. Enterprises and M/s. Sahib Brick Field requiring confirmation of transactions entered with the assessee during the year under consideration. It is clear from the assessment order that there is a failure on the part of the assessee to substantiate the claim of the purchases. The assessee challenged the order of the Assessing Officer before the Ld. CIT(A) including the validity of reopening of the assessment for want of service of notice u/s. 148 - CIT(A) stated in the impugned order that several notices was given to the assessee, however the assessee has neither attended the proceedings nor submitted any written submissions or supporting documents. CIT(A) has confirmed the addition made by the AO. It is pertinent to note that once the assessee has raised a legal issue challenging the validity of the notice u/s. 148 irrespective of non-appearance of the assessee, the CIT(A) ought to have decided the said issue on merits. Since, the Ld. CIT(A) has not decided the appeal of the assessee by speaking order and the legal issue raised by the assessee has not been adjudicated, therefore, the impugned order of the Ld. CIT(A) suffers from error and illegality. Accordingly, the impugned order is set aside and the matter is remanded record of the Ld. CIT(A) for re-adjudication of the appeal of the assessee on merits by a speaking order after granting one more opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes.

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• 2021 (3) TMI 931
  Disallowance under section 14A - whether the disallowance under section 14A can exceed the exempt income? - Suo moto disallowance made by assessee - HELD THAT:- Assessee, during the impugned assessment year, has indeed earned dividend income to the extent of Rs. 8,550. We find that now it is a well settled principles of law that the disallowance computed under section 14A of the Act r/w rule 8D of the Rules shall not exceed the exempt income earned by the assessee. This principle of law is in conformity with the decision of Cheminvest Ltd.[ 2015 (9) TMI 238 - DELHI HIGH COURT ] wherein it has been held that disallowance of expenditure under section 14A of the Act shall not exceed exempt income earned for the year under consideration. However, in the given case, the assessee has disallowed suo-motu by following the provisions of Rule 8D(2)((iii) i.e., 0.5% on average investment. It is settled law that the administrative expenses of 0.5% under Rule-8D(2)(iii) should be on the investment which earned the exempt income. We direct the AO to calculate the disallowance under rule 8D(2)(iii) as per the above direction and restrict the disallowance to the above amount or exempt income whichever is less. Accordingly, we set aside the impugned order of the learned Commissioner (Appeals) and direct the Assessing Officer to restrict the disallowance computed under section 14A r/w Rule 8D of Rules, as per the above direction. Consequently, the grounds of appeal raised by the assessee are allowed.

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• 2021 (3) TMI 930
  Eligibility of exemption u/s 11 - activities carried out by the society during the instant Assessment Year were not found to be covered by any limb of charitable purpose as defined in section 2(15) - HELD THAT:- In assessee s own case on identical facts and circumstances for assessment years 2009-10 and 2011-12 the co-ordinate bench [ 2018 (3) TMI 1903 - ITAT DELHI] . The co-ordinate bench in para Nos. 8 to 15 decided the issue holding that assessee Society is eligible for exemption under Section 11 of the Act. Thus, the orders of the ld. CIT (Appeals) were upheld. DR could not show us any reason that why we should differ from the issue already decided by the co-ordinate bench when same facts and circumstances prevailed. In view of this, respectfully following the decision of the co-ordinate bench in assessee s own case for assessment years 2009- 10 and 2011-12 we dismiss the appeal of the ld. Assessing Officer. Thus, appeal of the Assessing Officer is dismissed.

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• 2021 (3) TMI 929
  Rejection of books of accounts - GP addition/estimation - order of the ld. CIT(A) in estimating G.P. rate @ 12.86% on the basis of five years average assessed gross profit rate and sustained GP addition - HELD THAT:- The assessee deals in purchase/manufacture and sale of furniture handicraft items. Clause 28 of the form No. 3CD of the audit report requires quantitative details of items traded and also of items manufactured. Shortage in the manufacturing process and percentage of yield in the manufacturing process are required to be given. Quantitative tally of traded items and finished products is also required to be given. However no such details are given. Auditor s remarks against these clauses not maintained.- assessee could not file the required details during the course of assessment proceedings. As during the course of assessment proceedings, it transpired that stock register was not maintained, main raw material i.e. wood is purchased in cft (cubic feet) and finished goods are sold in units (i.e. nos.) and record of shortage is not maintained, physical record of raw material at different stages of production was also not maintained. Non maintenance of records of quantitative details renders the accounts of assessee incomplete. Preparation of the Inventory at the end of year but not keeping it on record and not producing such Inventory for scrutiny can only lead to the inference that accounts are not correct. Quantitative tally of items traded and manufactured by assessee is not only possible but also the requirement of proper accounting system.Adoption of different standards for receipts and production in stock, accounts can justify rejection of accounts. If the stock received are shown in the books by one standard and goods produced from those stocks are shown by another standard it is quite clear that profits cannot be correctly deduced. In such cases the A.O. would be justified in rejecting the method and in estimating the income. The assessee failed to file any evidence against the defect pointed out by the A.O. By following the order of the Coordinate Bench, the ld. CIT(A) has adopt the average Gross profit rate of 5 year which comes to 12.86% (17.2% + 12.03% + 8.52% + 12.96% + 13.58%). Hence the ld. CIT(A) restricted the Gross profit rate @1 2.86% instead the Assessing officer applied 17.02%. CIT(A) has given his finding on the basis of five year average G.P. declared by the assessee as well as on the basis of following the decision of the Coordinate Bench passed in assessee s own case [ 2017 (7) TMI 1380 - ITAT JAIPUR ] The case laws relied upon the ld. AR are not applicable on the facts of the present case, therefore, we do not find any reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) and we uphold the same qua the issue under consideration. Appeal of the assessee is dismissed.

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• 2021 (3) TMI 928
  TP Adjustment - comparability of R Systems International Limited - HELD THAT:- R Systems International Ltd. is following the calendar year i.e. 1st Jan. to 31st Dec for maintaining their accounts, whereas the assessee follows 1st Apr. to 31st March, still it could be a comparable to the assessee s case and be included as a comparable in the list of comparables as decided by the Tribunal in the case of Indecomm Global Services India Pvt. Ltd.[ 2019 (12) TMI 78 - ITAT BANGALORE] . Accordingly, we remit the matter of comparability of this company to the file of AO/TPO to examine and decide it afresh in the light of the directions contained in the order of Tribunal in Indecomm Global Services India Pvt. Ltd. (supra). This ground of assessee is allowed for statistical purposes. As in the case of Tesco Hindustan Service Centre (P.) Ltd., [ 2017 (1) TMI 1673 - ITAT BANGALORE] we hold and direct that Accentia Technologies Ltd., be excluded from the list of comparable companies on grounds of functional dissimilarity. Fortune Infotech Ltd has been excluded as a comparable by the coordinate Bench of the Tribunal in the case of Outsource Partners International P. Ltd [ 2017 (2) TMI 1410 - ITAT BENGALURU] . Jeevan Scientific Technology Ltd is to be excluded from final list. Disallowance under section 40(a)(i) for software expenses - HELD THAT:- We find that that this issue came up for consideration before in the case of Engineering Analysis Centre of Excellence (P.) Ltd. v. CIT, . [ 2021 (3) TMI 138 - SUPREME COURT] wherein it was held that transaction relating to software are in the nature of sale and not license, no copyright or part of any copyright is licensed to the assessee. The non-resident owner continues to have proprietary rights in the software and use of software by the Indian company is limited to making back-up copy and redistribution. So payment received for sale of computer software is business income. As such, software purchased is in the nature of purchase and sale of product and no TDS is deductible. Being so, it is allowable as expenditure and there is no question of deduction of any TDS. Short credit or Tax Deducted at Source ( TDS ) - HELD THAT:- We remit the issue to the AO and direct to give correct TDS credit after examination. MAT credit to be carried forward which is consequential to additions made in the assessment order. Comparability - Companies functionally dissimilar with that of assessee need to be deselected from final list. Compute the mean of working capital adjustment in respect of comparables retained after giving effect to this order of the Tribunal. Deduction u/s 10A computation - HELD THAT:- As decided in Yokogawa India Ltd. [ 2016 (12) TMI 881 - SUPREME COURT] incomes under other heads and the provisions for set off and carry forward contained in sections 70, 72 and 74 would be premature for application. The deductions under section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI for arriving at the total income of the assessee from the gross total income. The somewhat discordant use of the expression total income of the assessee in section 10A has already been dealt with earlier and in the overall scenario unfolded by the provisions of section 10A the aforesaid discord can be reconciled by understanding the expression total income of the assessee in section 10A as total income of the undertaking. Though section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV and not at the stage of computation of the total income under Chapter VI. Exclude telecommunication expenses from the export turnover while computing the deduction u/s 10A - HELD THAT:- This issue is decided in favour of assessee in view of the DRP following the judgment of the Hon ble High Court of Karnataka in CIT v. Tata Elxsi Ltd.[ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] which is confirmed by the Hon ble Supreme Court in the case of CIT v. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT]

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• 2021 (3) TMI 927
  Gain on sale of long term asset (shares) - year of assessment - Denial of exemption u/s. 10(38) - contention of the assessee is that it purchased the impugned shares in the year 1999-2000 and converted it into Demat account during the year 2006-07, as such no adverse inference could be drawn against the assessee - HELD THAT:- In this case, the assessee has not produced the requisite evidence to show that he has purchased the shares in the year 1999-2000. Being so, in our opinion, it is proper to remit the issue in dispute to the file of AO with a direction to the assessee to substantiate its claim that he purchased the shares in 1999-2000 by producing the copies of certificates in physical form and also members register with Shilpa Medicare Ltd. at the relevant point of time supported by requisite statutory forms filed by Shilpa Medicare Ltd. before the concerned Registrar of Companies. With these observations, the issue is restored to the AO for fresh consideration, after affording opportunity of being heard to the assessee. Appeal of the assessee is treated as allowed for statistical purposes.

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• 2021 (3) TMI 924
  Disallowance of deduction of debit note - debit note was stated to have been issued on 18.11.2015 after the end of the financial year, and after the return was filed, and the assessee had not made any provision towards this expenditure, and had failed to demonstrate that the liability crystallized during the year under consideration - CIT-A deleted the addition - HELD THAT:- We find no error in the process of reasoning adopted by the CIT(A) as noted above. It was inter alia noted by the CIT(A) that debit note issued by supplier (GAIL) for purchase relates to F.Y. 2014-15 on account of difference in gas price. Thus, without taking into account, the extra price payable to the gas supplier, the true and fair state of affairs of the assessee society cannot be deduced. Hence, we see no reason to interfere with the tax neutral claim made by the assessee. It is not the case of the Revenue that expenditure is not bona fide and not allowable at all. The expenditure, in view of the AO, is probably allowable in the next assessment year i.e. AY 2016-17 with which we do not concur. The action of the CIT(A) is completely rational and thus endorsed. Decided against revenue.

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• 2021 (3) TMI 923
  Revision u/s 263 by CIT - scope and ambit of the expression erroneous - assessee following percentage of completion method, did not recognize any revenue and not offered income from the project and though it paid interest on borrowed loans and claimed interest expenditure under work-in-progress (WIP) but it did not charge any interest on capital withdrawn by the partners during the year - HELD THAT:- AO was clinched with the specific issues of percentage of completion achieved by the assessee during the year as well as clinched with the issue of interest expenditure. The requisite details as well as documentary evidences were furnished by the assessee as called for by Ld. AO during the course of assessment proceedings. Since the submissions/explanations were found to be satisfactory, no further information was called from the assessee which is also evident from the fact that the returned loss has been accepted by taking note of the fact that the project was in preliminary stage and the assessee has not sold any flat during the year under consideration but received mere advances. In view of the foregoing, it could be concluded that the view of Ld. AO, could not be said to be contrary to law, in any manner, on both the issues as alleged by Ld. Pr. CIT. There was proper application of mind by Ld. AO on both the issues. Another pertinent fact to be noted is that notional interest on overdrawn capital for A.Ys. 2014-15 to 2017-18 has already been reduced by the assessee from financial expenses in A.Y. 2017-18 which have ultimately reduced the closing WIP held by the assessee for that year. The case for A.Y. 2017-18 has already been assessed u/s. 143(3) on 29/12/2019 and the assessee s closing WIP has not been disturbed in that year. This being the case, even otherwise there would be no loss to the revenue. As decided in GABRIEL INDIA LIMITED [ 1993 (4) TMI 55 - BOMBAY HIGH COURT] Order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written differently or more elaborately. The Section does not visualize the substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is not in accordance with law. Therefore the revisional jurisdiction could not be held to be valid under law. We allow assessee s appeal.

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• 2021 (3) TMI 921
  Income from house property - determination of the ALV of the property owned by the assessee lying vacant during the year in question - CIT(A) directing the AO to re-compute Annual Letting Value (ALV) of the premises owned by the appellant at Central Garden Complex Chunabhatti, Mumbai by increasing the municipal rateable value by 5 % every year instead as offered by the appellant based on the municipal rateable value of the said premises - second round of appeal - HELD THAT:- On a perusal of the order of the CIT(A), we find that the appellate authority observing that as the A.O in the course of the set aside proceedings had despite specific directions by the Tribunal not carried out any inquiries thus, did not find favour with the mere endorsement by the A.O of the ALV that was earlier determined by his predecessor in the course of the original assessment that was framed under Sec. 143(3), dated 29.09.2010. But then, the CIT(A) relying on the view that was taken by him while disposing off the appeal in the assessee s own case for A.Y. 2013-14 and A.Y. 2014-15 directed the A.O to adopt the municipal rateable value for A.Y. 2010-11 i.e Rs. 17,03,369/- as a basis, and therein determine the ALV after making an addition of 5% year after year and also a further increase of 1/9th to the said value to arrive at the ALV for the year in question. Tribunal while disposing off the appeal in the assessee s own case for A.Y. 2010-11 which also was restored by the Tribunal for fresh adjudication had not found favour with the same view that was therein taken by the CIT(A), who had on similar lines directed the A.O to recompute the ALV by taking the municipal rateable value as the base and increase it by 5% every year, and had vacated the same. At the same time, the Tribunal while disposing off the aforesaid appeal for A.Y. 2010-11[ 2020 (2) TMI 1477 - ITAT MUMBAI] , relying on its earlier order for A.Y. 2011-12, A.Y. 2012-13, A.Y. 2013-14 and A.Y. 2014-15, had therein directed the A.O to determine the ALV of the vacant flats as per the municipal rateable value. In fact, it was observed by the Tribunal that in case if the ALV determined by the assessee was as per the municipal rateable value then, the same should be accepted. As the facts and the issue involved in the assessee s present appeal for A.Y. 2009-10 remains the same as were there before the Tribunal in A.Y. 2010-11, we, thus, respectfully follow the same. Accordingly, we herein direct the A.O to determine the ALV of the property in question as per municipal rateable value. As per the same terms, in case if the ALV of the property in question determined by the assessee is as per the municipal rateable value, the same shall be accepted.

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• 2021 (3) TMI 919
  Deprecation u/s 32 on goodwill - intangible assets acquired by Appellant under Business Transfer Agreement ( BTA ) and their apparent financial benefits to Appellant in early years of its operations - HELD THAT:- Assessee company acquired the micro finance business from the society Swayamkrishisangam and has paid towards customer costs, one time reimbursement of Rs. 82 lakh towards cost of Internal control systems, computer software and towards corporate, services including strategic planning, market survey, introduction of new products, impact assessment etc. AO therein took the view that the client acquisition cost of Rs. 3 .97 crores would not be eligible for depreciation as it is not in the nature of intangible asset or in the nature of commercial business rights. CIT(A) in that case took the view that the customer base acquired by the assessee cannot be termed as know-how, patent, copyright or trademark or franchise; and it cannot be considered as license. or business or commercial, right of similar nature and relied on the decision of the Hon ble Bombay High Court in the case of CIT Vs. Techno Shares Stocks Ltd [ 2009 (9) TMI 18 - BOMBAY HIGH COURT ] The Hon ble Tribunal following the decision of the Hon ble Delhi High Court in the case of Areva T D India Ltd. Others [ 2012 (4) TMI 79 - DELHI HIGH COURT ] and the Apex Court decision in the case of Smifs Securities Ltd [ 2012 (8) TMI 713 - SUPREME COURT ] held that the client acquisition cost would fall within the category of business or commercial rights referred in clause (ii) of Sec. 32 (1) and would be eligible for depreciation. Depreciation could not be denied to the Taxpayer merely for the reason that the assets were classified as goodwill in the books of account without appreciating the true nature of the assets if they can fall under the scope of any other business or commercial rights of similar nature . We are of the view that the specified intangible assets acquired under slump sale agreement were in the nature of business or commercial rights of similar nature specified in section 32(1)(ii) of the Act and were accordingly eligible for depreciation under that section. Owing to the entire facts and circumstances of the case Viz., the value paid by the assessee, the valuation report, , the profits earned by the assessee, the tax payment by the recipient, the right and process of the assessee to raise the goodwill and the accounting thereof, the provisions relating to depreciation on intangibles, the judgments relating to treating of intangibles as goodwill, it can be concluded that the difference between the cost of the asset and the consideration paid would constitute goodwill and that goodwill is an asset eligible for depreciation under section 32 (1)(ii) of the I.T. Act. Appeal of the assessee is allowed.

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• 2021 (3) TMI 918
  Unexplained cash credit u/s 68 - HELD THAT:- DR before us has not brought any iota of evidence suggesting that money received by the assessee does not represent the money which was advanced by it on the earlier occasion. Thus it can be safely inferred that the amount received by the assessee represents its own money which was advanced in the earlier year and this fact was also accepted by the Revenue. Accordingly, we are of the view that there cannot be any question for attracting the provisions of section 68 of the Act in the hands of the assessee for receiving its own money as discussed above. Assessee has discharged its onus as provided under section 68 of the Act namely the identity, genuineness and creditworthiness of the parties. For the identity, the assessee has furnished the PAN/address/bank details/confirmation of Shri Kanjibhai Desai. Admittedly, the entire transaction for receiving the money from the impugned party was carried out through the banking channel and therefore there cannot be any doubt on the genuineness of the transactions. The copy of the bank statement is also placed. Creditworthiness of Shri Kanjibhai Desai is also not in doubt as the amount received by the assessee represents its own money which was advanced in the earlier year as elaborated somewhere in the preceding paragraph. - Decided against revenue.

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• 2021 (3) TMI 917
  Assessment u/s 153A - Addition u/s 68 - bogus LTCG - HELD THAT:- There was no reference to any of the incriminating material found and seized in the premises of the assessee in the course of the search proceedings. The Assessing Officer in the Assessment Order refers to the seized incriminating material in the case of one Shri Shirish C. shah and the post search enquiries made in his case to make an addition in the hands of the assessee denying the long term capital gain claimed by the assessee. Except the statement of the assessee u/s. 132(4) agreeing for the addition there is no seized incriminating material found in the premises of the assessee in the course of assessment proceedings. When there is no incriminating material found in the course of search in assessee s premises the addition/disallowance cannot be made merely on the statements recorded in the course of the search proceedings. As relying on SH. BRIJ BHUSHAN SINGAL [ 2018 (10) TMI 1635 - ITAT DELHI] and various circulars of CBDT held that the assessments made pursuant to search operation are required to be based on incriminating material discovered as a result of search operation in assessee s case but not on the recorded statements. Thus since no incriminating material found in the course of search in the premises of assessee, assessment made making addition by the Assessing Officer in respect of long term capital gain is bad in law. Thus,direct the Assessing Officer to delete the addition made in respect of long term capital gain - Decided in favour of assessee.

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• Customs

• 2021 (3) TMI 973
  Refund of the Special Additional Duty of customs - rejection on the ground of time limitation - seizure of documents by the Directorate of Revenue Intelligence for which delay occurred - N/N.102/2007-Cus dated 14.09.2007 as amended by Notification No.93/2008-Cus dated 01.08.2008 - HELD THAT:- The petitioners plead Lex non-cogit ad impossibilia in filing of refund claims in time. According to the petitioners, they had to liaison with the Directorate of Revenue Intelligence to get copies of the Bills of Entries and since the Bills of Entries were not given to the petitioners in time, there was a delay in filing the refund claims. It is therefore submitted that seizure of documents by the Directorate of Revenue Intelligence cannot be against the petitioners. Denial of benefit of Notification No.102/2007-Cus dated 14.09.2007 as amended by Notification No.93/2008-Cus dated 01.08.2008 to the petitioners on the ground of limitation is not justified if the specified documents were seized by the officers of Directorate of Revenue Intelligence - in the present case, denial of refund claims based on the limitation prescribed under the Notification cannot be justified and imposed against the petitioner M/s.Kaamda Impex as all the documents of the said petitioner were admittedly seized as per the Mahazer dated 02.07.2013. The said writ petitioner could not have filed the refund claims in absence of the vital documents. The cases are remitted back to the second respondent to pass a fresh order of refund of the amounts paid by the petitioner at the time of import, if the said writ petitioner has otherwise satisfied the other requirements of Notification No.102/2007- Cus dated 14.09.2007 as amended by Notification No.93/2008-Cus dated 01.08.2008 - petition allowed by way of remand.

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• 2021 (3) TMI 967
  Maintainability of petition - petition has been dismissed on the ground that there is absolutely no trigger for the writ petitioner to approach this Court and there is no cause of action for filing the writ petition - recovery of drawback amount - HELD THAT:- The reply along with enclosures said to have been given, have been received in the office of the respondent on 23.08.2010, as could be seen from the date seal. The appellant did nothing thereafter and in the year 2020, filed the writ petition. As observed by us earlier, the learned Writ Court was fully satisfied in one way or the other that there was no cause of action to file a Writ of Certiorari to quash the show cause notice especially when the appellant submitted to jurisdiction of the respondent and said to have fulfilled what was called for from them in the show cause notice. Since the matter is now pending before the respondent, we do not propose to make any observation or render any finding with regard to the compliance said to have been done by the appellant as it is for the respondent to proceed in accordance with law. While confirming the finding rendered by the learned Single Bench, the writ appeal stands disposed of with a direction to the respondent to pass orders on merits and in accordance with law, taking note of the reply submitted by the appellant dated 23.08.2010 - Appeal disposed off.

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• 2021 (3) TMI 964
  Refund of Special Additional Duty (SAD) - rejection on the ground that the refund claim was filed beyond the time limit of one year from the date of payment of duty and also on the ground that the sales invoice submitted by the appellant along with refund claim did not indicate charging of sales tax - opportunity of hearing not provided - violation of principles of natural justice - HELD THAT:- The issue relating to limitation is a question of law to be considered and it is found that the assessee did not have an opportunity to place their submissions before the respondent before ever the order impugned in the said petition was passed. Not providing an opportunity of personal hearing would result in violation of the principles of natural justice, which would be one of the grounds to entertain a writ petition. Therefore, the matter remitted back to the respondent to reconsider the claim of refund only with regard to the aspect of limitation, as the legal position with regard to entitlement of refund - appeal allowed by way of remand.

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• 2021 (3) TMI 955
  Seeking refund of IGST - rejection of refund, filed before Assistant Commissioner of Central Tax, observing that the claim for refund is to be processed by the Customs Department - HELD THAT:- Afresh representation has been made to the Deputy Commissioner of Customs, ICD Whitefield on 30.09.2019 and it is stated that the said representation at Annexure-A remains to be considered till date. The respondent No.4 - Deputy Commissioner of Customs, ICD Whitefield, is to consider the representation at Annexure-A and pass necessary orders within a period not later than eight weeks from the date of release of this order - petition disposed off.

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• 2021 (3) TMI 945
  Condonation of delay in filing appeal - whether the appeal was filed within time limitation? - HELD THAT:- The Revenue has not placed on record the acknowledgement due after having served/communicated the Order-in-Original to the appellant and hence, I am of the prima facie view that the date of communication, as claimed by the appellant, has to be accepted. The Hon ble Madras High Court in the case of JAI ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS (APPEALS), CHENNAI [ 2006 (5) TMI 99 - HIGH COURT OF JUDICATURE AT MADRAS] has observed that apparently the notice was sent to the proper address while the Postal Authorities made an endorsement left and in the case of M/s. Jai Enterprises (supra), the endorsement given by the Postal Authorities was absent and intimation delivered , for which reason it was observed that the petitioner therein was avoiding service. Any order normally would be sent by Registered Post with Acknowledgement Due (RPAD), which would have been the case here also followed by the Adjudicating Authority. So, when the Order-in-Original was dispatched by RPAD in terms of Section 153 of the Customs Act, 1962, the acknowledgement must have come back, which is not placed on record. In any case, the service of the same on the very same day can also not be accepted since the location of the assessee is in a different State. There was no delay in filing the first appeal and therefore, the Commissioner (Appeals) was in error in rejecting the appeal as time-barred - the matter is remanded to the file of the Commissioner (Appeals) to hear the appellant and pass an order on merits in accordance with law - Appeal allowed by way of remand.

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• 2021 (3) TMI 940
  Maintainability of appeal - time limitation - appeal filed within a period of three months computed from the date of receipt of the Order in Original or not - HELD THAT:- The ld. Counsel has explained that the appellant has not been served with the Order in Original and has received the copy only after making a request. The letter issued in February 2020 by the Revenue Recovery Unit shows that the Order in Original was served upon the appellant only in February 2020. The contention of the department that since the Order in Original is issued by speed post, the appellant has been served with the Order in Original cannot be accepted unless there is sufficient proof to establish that the same has been served and communicated to the respondent / appellant. The word used in section 128 as well as 153 is communication of the decision, summons and notices. By merely sending a copy of the Order in Original by speed post, the department cannot wash of their hands when they are duty bound to serve the same on the appellant. The dismissal of the appeal on the ground of time-bar is unjustified - matter is remanded to the Commissioner (Appeals) who is directed to consider the appeal on merits - Appeal allowed by way of remand.

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• 2021 (3) TMI 937
  Smuggling - Areca Nuts - sample did not conform to the standards laid down under Regulation 2.3.55 of the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 - HELD THAT:- An identical issue came up for consideration before the Tribunal in the case of M/S. O.M.S. SIVAJOTHI MILLS VERSUS THE COMMISSIONER OF CUSTOMS [ 2019 (8) TMI 1039 - CESTAT CHENNAI] where it was held that When the order as to the confiscation remains unchallenged, the importer accepts the order of confiscation and even the exporter offers willingness to accept back (re-export) the consignment, there cannot be any question of redemption fine. Therefore, the redemption fine imposed and upheld by the First Appellate Authority cannot sustain and is accordingly set aside - the redemption fine charged under Section 125 of the Customs Act, 1962 is unsustainable and the same is required to be deleted. Levy of penalty under Section 112 (a) of the Customs Act, 1962 - HELD THAT:- A reading of the said Section makes it clear that the penalty under Section 112 (a) would be imposed in the case of improper importation of goods which has rendered the imported goods liable to confiscation under Section 111 and for this, it can be concluded that abetment is not a criterion. Apparently, Clause (a) of Section 112 has two limbs the first being improper importation of goods by any person who, in relation to any goods would render such goods liable to confiscation ; and the second limb starts with or abets the doing or omission or such an act. Hence, a mere importation that would render such goods liable to confiscation, is sufficient to attract penalty. Therefore, the case on hand gets covered under the mischief of Section 112 (a) ibid. The impugned order as regards the redemption fine is set aside - impugned order as regards the penalty under Section 112 (a) is modified - appeal is partly allowed.

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• 2021 (3) TMI 925
  Levy of Anti-Dumping Duty - citric acid monohydrate - term of notification on 23rd November 2003 expired, by which the duty was levied on the subject item - section 9B of Customs Tariff Act, 1975 - HELD THAT:- The appellant is correct in pointing out that the cited provisions of the Export Import Policy are intended to protect importers from detriments arising from restrictive impositions under the policy mechanism after effecting shipment from port of export. Levy of duties is governed by section 15 of Customs Act, 1962 in accordance with which duties existing on the date of filing of bill of entry imposes liability. As notification no. 78/2000-Customs dated 26th May 2000 had ceased to have effect from 23rd November 2003, imports against bill of entry no. 933758/15.12.2003 could not, irrespective of origin, be subjected to duty thereon. Accordingly, liability to anti-dumping duty is limited to the import of 66 metric tons against bill of entry no. 700/19.11.2003; while upholding the demand of Rs. 29,35,142.43 the rest is held to be not sustainable. Appeal allowed in part.

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• Corporate Laws

• 2021 (3) TMI 943
  Sanction of scheme of Merger - Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and does not violate any provisions of law and is not contrary to public policy or public interest. The clarifications provided by the Companies are justified and are accepted. Since all the requisite statutory compliances have been fulfilled, the scheme is approved. The scheme is sanctioned - application allowed.

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• Insolvency & Bankruptcy

• 2021 (3) TMI 941
  Seeking restraining the Respondents from holding Annual General Meeting (AGM) of the Company scheduled to be held on 01.12.2020 wherein the Appellants removal from the Board of Directors has been proposed - HELD THAT:- Learned NCLT directed the parties to complete pleadings by filing Replies/Rejoinders. Further, the leaned NCLT ordered to maintain status quo till the next date of hearing. The status quo order need to be adhered to by the respective parties with respect to the decision taken in the Board Meeting dated 07.11.2020 and any decision taken in the AGM which was held on 01.12.2020. Further, the learned NCLT observed that all the actions taken therein are subject to the outcome of the Company Petitions. The learned NCLT protected the interest of the parties including the Appellants. The learned NCLT rightly observed that when the allegations made by the parties in their Company Petitions are serious in nature and without completing the pleadings, it cannot examine the same in detail. Hence the learned NCLT decided to hear the Company Petitions and Company Applications after completing the pleadings. Therefore, the reliefs sought by the Appellants in CAs as well as in CP are pending for consideration by the leaned NCLT. The Appeal is premature for the reason that the leaned NCLT is seized of the matter. Further, it is on the record that the Appellants filed the Contempt Application under Section 425 of the Companies Act, 2013 which is also pending for consideration and the copy of the Company Application is filed before this Tribunal. Appeal dismissed.

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• 2021 (3) TMI 939
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - service of demand notice - time limitation - existence of debt and dispute or not. Notice mandated under Section 8 of the IBC, 2016 was served or not? - HELD THAT:- The Respondent had got issued a Legal Notice dated 20.08.2018 prior to the issuance of the Demand Notice in September 2018, addressed to the Corporate Debtor at the Registered Address. The same has not been denied by the Corporate Debtor. Additionally, a notarized Affidavit of service has been filed with respect to handing over a copy of the Petition to the Office of the Corporate Debtor - Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 and Sections 8 9 of the IBC, the letter issued by the Department of Posts, Government of India alongwith the fact that admittedly the Registered Office of the Corporate Debtor in the Master Data, Ministry of Corporate Affairs is 604, Kaushal Point, 4th Floor, Behind Uday Cinema, Ghatkopar (W), Mumbai - 400086 and the same is further reflected in the Annual Report, it is concluded that service of Demand Notice mandated under Section 8 of the IBC to the aforesaid address of the Corporate Debtor is satisfactory and is therefore held sufficient. Whether Application arises out of time barred claims ? - HELD THAT:- The amount became due and payable on 22.09.2016 when only a part payment was made. Section 3(11) defines debt as a liability or Application in respect of a claim which is due from any person and includes Financial Debt and Operational Debt. Section 3(12) defines default as non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the Debtor or the Corporate Debtor as the case may be. In the instant case part or instalment of the amount of debt has become due and payable as on 22.09.2016. It being a running account, considering the manner in which such businesses are conducted and accounts are kept, it would be material to see when the parties concerned treat the debt to be in default . It is pertinent to mention that the date of default mentioned in Form V of the Application is 22.09.2016 and the Application was filed in October, 2018 - the Application was filed well within the period of limitation. Whether there is a Pre-Existing Dispute prior to the filing of the Application under Section 9 of the IBC? - HELD THAT:- The contention of the Learned Counsel for the Appellant regarding false and fabricated invoices is unsustainable having regard to the fact that the invoices on record bear the stamp of the Corporate Debtor by way of an acknowledgement - going by the test of the existence of dispute it is clear that the Appellant has not raised any plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence. There are no illegality or infirmity in the Impugned Order passed by the Ld. Adjudicating Authority - appeal dismissed.

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• 2021 (3) TMI 934
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - HELD THAT:- The present Appeal is against an Interim Order and the statement made by the Operational Creditor is already recorded. It goes without saying that it would be expected from the Respondent Operational Creditor to stand by statement made and not to create any difficulties in the day to day business of the Corporate Debtor. We expect and request the Adjudicating Authority to decide the Application under Section 9 itself at the earliest, one way or the other - Application disposed off.

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• 2021 (3) TMI 926
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor or not - Operational debt or not - pre-existing debt and dispute or not - HELD THAT:- The petitioner has supplied goods to the respondent and the aforesaid chain of events clearly establish that the petitioner is operational creditor. Therefore, in the instant case, the petitioner very well falls within the definition of operational creditor and the amount outstanding is operational debt. Pre-existing default and dispute or not - HELD THAT:- The Adjudicating Authority is only required to consider whether there is any default and the debt is due and payable. In the instant case, the applicant has placed on record enough documents evidencing the default and hence, the present application deserves to be admitted - In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the operational debt due and payable to the Applicant - The documents produced by the operational creditor clearly establish the debt and there is default on the part of the Corporate Debtor in payment of the operational debt . Thus, the corporate debtor has committed default in payment of operational debt and, therefore, it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9 (5) (1) of the Code - application admitted - moratorium declared.

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• 2021 (3) TMI 922
  Liquidation Order of Corporate Debtor - requirement of contribution towards liquidation expenses - Section 33 of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- The CoC and the Resolution Professional have formed a view that there will be no situation of contribution towards CIRP /liquidation cost, as there exist sufficient assets to meet such costs. Hence, necessary resolution as per Regulation 2A of Insolvency and Bankruptcy Board of India (Liquidation Process) has not been passed. As a special instance the requirement of passing of such resolution, before filing an application for liquidation, is waived - Corporate Debtor needs to be liquidated. Application allowed.

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• 2021 (3) TMI 920
  Liquidation of Corporate Debtor - Section 33 of IBC, 2016 - Prescribed period for filing application - Appointment of Liquidator and fee to be paid - liquidation Cost (Regulation 39B of CIRP Regulations, 2016) - Assessment of Sale as a going concern (Regulation 39C of CIRP Regulations, 2016) - Fees of the Liquidator (Regulation 39D of CIRP Regulations, 2016) - HELD THAT:- In the present case, the application under Section 7 of the Code was admitted on 20.09.2019 and the present application was filed by the RP on 19.05.2020. Accordingly, the date for completion of CIRP was 18.03.2020. It is noted that the CoC with 100% voting resolved to liquidate the Corporate Debtor in the 5th meeting of CoC dated 17.03.2020 - As per Notification No. IBBI/2020-21/GN/REG059 dated 20.04.2020, the period of Lockdown is excluded for the purpose of calculating the timelines in CIR Process. Hence, after considering exclusion of lockdown period till 31.05.2020, the present application is filed within the prescribed period. In view thereof the Application under consideration is taken up under Section 33 (2). Appointment of Liquidator and fee to be paid - HELD THAT:- Section 34(1) of the Code provides that where the Adjudicating Authority passes an order for liquidation of the Corporate Debtor under Section 33, the resolution professional appointed for the corporate insolvency resolution process shall, subject to submission of written consent, act as the Liquidator for the purpose of liquidation - The present RP Mr. Satyendra Prasad Khorania is eligible to be appointed as Liquidator. The CoC had also resolved to appoint the RP as Liquidator in the 5th meeting of CoC - Mr. Satyendra Prasad Khorania is appointed as Liquidator. Liquidation Cost (Regulation 39B of CIRP Regulations, 2016) - HELD THAT:- It is noted that the CoC in its 5th meeting has not decided the estimated liquidation cost and discussed that the liquidation cost will be taken on actual basis which will be approved by the Stakeholders committee formed during the liquidation of the Corporate Debtor. The Liquidator is, therefore, directed to take necessary action under Regulation 2A of the IBBI (Liquidation Process) Regulations, 2016 regarding contributions to liquidation costs. Assessment of Sale as a going concern (Regulation 39C of CIRP Regulations, 2016) - HELD THAT:- The CoC in its 5th meeting has unanimously resolved to sell the Corporate Debtor as a going concern, as first option, or sell the business(s) of the Corporate Debtor as a going concern, as second option, before exploring other options as per Regulations 32 32A of IBBI (Liquidation Process) Regulations, 2016 and Regulation 39C of CIRP Regulations, if an order of liquidation is passed by the Adjudicating Authority. Fees of the Liquidator (Regulation 39D of CIRP Regulations, 2016) - HELD THAT:- The remuneration of the Liquidator would be fixed to be Rs. 50,000 per month until winding up of the Corporate Debtor. In view of the satisfaction of the conditions provided under Section 33(2) of the Code, the Corporate Debtor, Atlas Alloy (India) Pvt. Ltd. is directed to be liquidated in the manner as laid down in Chapter III of the Code - Application allowed.

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• PMLA

• 2021 (3) TMI 962
  Seeking grant of Anticipatory Bail - transit bail - fake and fraudulent transactions - breach of conditions of agreements entered into for sale of land to poor people or employees - Economic Offences - HELD THAT:- Reliance placed in the case of P. CHIDAMBARAM [ 2019 (9) TMI 286 - SUPREME COURT ] where it was held that in a case like a Economic Offences, the Court should not grant anticipatory bail and if the anticipatory bail is granted, the investigation may be frustrated. In view of the judgment of the Hon ble Supreme Court, the alleged offence though non-bailable, the same is punishable with 7 years of imprisonment and even under PML Act, the punishment is 7 years, but the alleged offences committed amounts to cheating and fraudulent transaction from initial stage. They planned and prepared documents dealing with sale and M/s. SDL acted as seller and buyer of the properties and almost more than Rs. 200 Crores of fake transactions said to have been created by the petitioner and therefore, the alleged offence is nothing but an economic offence which obstructs the development of the State and the Country. The petitioner is not entitled for any anticipatory bail from this Court - Criminal petition dismissed.

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• Service Tax

• 2021 (3) TMI 970
  Compliance with the requirement of pre-deposit - Section 35F of the Central Excise Act, 1944 read with the provisions of Section 86 of the Act - HELD THAT:- The impugned order passed by the Commissioner is appealable before the Tribunal, however, a coordinate Bench of this Court was prima facie persuaded to accept the argument that the appellate remedy provided under Section 35F of the Central Excise Act, 1944 read with the provisions of Section 86 of the Act mandates a pre-deposit of an amount equivalent to 7. 50 % of the service tax demand subject to a maximum of Rs. 10 crore and therefore, not an efficacious remedy. The learned standing counsel appearing for the revenue is of the view that, as such there is no urgency in the matter and the matter can wait for some more time before it is taken up for hearing. Today also, a request is made on behalf of the respondents to adjourn this matter. Let Rule be issued to the respondents, returnable on 10.06.2021.

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• 2021 (3) TMI 966
  Maintainability of petition - availability of alternative remedy of appeal - doctrine of mutuality - Levy of service tax on incorporated clubs or associations - HELD THAT:- The issue is pending before the Court since 2016 onwards and the present writ petition was filed in the year 2018 and it is also informed that the appellant has also filed another writ petition in W.P.No.18838 of 2020, which is also pending and in the two cases, interim orders are still in force. The writ petition could be heard and disposed of on merits leaving it open to the respondent to raise all contentions as was canvassed before this Court both on merits as well on the question of maintainability of the writ petition - the writ petition is restored to the file of this Court to be heard.

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• 2021 (3) TMI 950
  Validity of order passed by the commissioner when the application for Advance Ruling is pending - Search and seizure - evasion of service tax - levy of service tax on the transaction of SDB with its members based on the concept of mutuality - levy of interest and penalty as claimed by the department, when there was no liability to pay service tax, given that the amount collected was in the nature of refundable deposit - HELD THAT:- The issues raised by the writ-applicants before the ARA have been gone into by the Commissioner in the Order in Original. In other words, the Authority, in its order dated 16th July 2020, has adjudicated upon both the issues. In such circumstances, for all purposes, the application before the ARA has become academic and we should ask the Appellate Tribunal to hear the appeal preferred by the writ-applicants herein and decide the same expeditiously in accordance with law. A vibrant system of advance ruling can go a long way in reducing the taxation litigations. However, in the matters of the present type, sometimes the delay at the end of the ARA may frustrate the investigation which may not be in the interest of the Revenue. The impugned order passed by the Commissioner need not be interfered with, only on the ground that he should have waited for the ruling of the ARA. Thus, in the peculiar facts and circumstances of the case, no relief to be granted to the writ-applicants and relegate them to pursue the appeal preferred by them, before the Tribunal - application disposed off.

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• Central Excise

• 2021 (3) TMI 938
  Rejection of refund - Pre-deposit or receivable - principles of unjust enrichment - appellant had only furnished a Chartered Accountant certificate which is not a conclusive proof - HELD THAT:- There remains no doubt that any payment made during investigation would partake the character of pre-deposit, for which unjust enrichment would not apply. But a perusal of the impugned order i.e., the Order of the Commissioner (Appeals) dated 14.10.2019 makes it clear that the rejection of refund is upheld for want of verification from the appellant s books as to the treatment given in subsequent years, as pointed out by the Learned Representative for the Revenue. On the one hand, the appellant claims that the amount paid is to be treated as pre-deposit for which unjust enrichment would not apply, but, on the other hand, fails to furnish the necessary documents requested by the authorities who are empowered to look into all aspects before passing an order. This is because the lower authorities have to be primarily satisfied, who thereupon would record a positive finding after considering such necessary documents. This factual verification has to be done and only thereafter can we apply judicial precedents. The matter has to be set aside and remanded back to the file of the Original Authority, before whom the appellant shall furnish all necessary documents that may be required by the said authority, who thereafter shall pass a speaking order - Appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2021 (3) TMI 971
  Revision of assessment - allegation against the appellant was that they had transported kerosene from Mangalore to Namakkal with bogus records, prepared false documents and corrected certain entries in the triplicate - TNGST Act - HELD THAT:- Though the petitioner was able to show before the Tribunal that the very basis of initiating action against them had been found to be not sustainable by the Deputy Commissioner of Commercial Taxes, Salem in the order dated 13.9.2002 and that the revised assessment was not sustainable, unfortunately, the Tribunal went by the proposal given by the Enforcement Wing Officials and dismissed the appeal. The problem has arisen on account of the fact that there were two proceedings, which were conducted parallelly. One with regard to detention of goods, levy of compounding fee and collection of advance tax against which, the petitioner had a revisional remedy. The proposal given by the Enforcement Wing Officials was also the basis for revising the assessment by issuing the revision notice dated 15.3.2000, which culminated against the petitioner by an order passed by the Appellate Assistant Commissioner dated 21.11.2000. Therefore, the petitioner has to necessarily challenge the said order before the Tribunal. The allegation of evasion of tax made against the petitioner stood effaced on and after the order was passed by the Deputy Commissioner of Commercial Taxes, Salem Division, Salem in R.P.No. 22/99 dated 13.9.2002. However, the Tribunal erroneously confirmed the proposal and declined to interfere with the order of assessment - There is absolutely no basis for the Tribunal to come to the conclusion that the assessment should be revised, as the entire pre-revsion itself was founded on the basis of the allegations made by the Enforcement Wing Officials, which allegations were found to be not tenable by the Revisional Authority. The impugned order passed by the first respondent Tribunal is set aside and there will be a direction to the appropriate Authority to refund the excess tax collected from the petitioner within a period of four months from the date of receipt of a copy of this order - Petition allowed.

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• 2021 (3) TMI 968
  Reopening of assessments - Classification of sale - consignment sales or not - HELD THAT:- The learned counsel appearing for the first respondent has produced before us the documents, which were placed before the Authorities below as well as the Tribunal namely way bills for transport of 480 bags of 40 s cotton yarn transported by the first respondent to one M/s.M.L.Trading Co.(P) Ltd., Malegaon during the period from 23.12.1995 to 25.1.1996. The learned counsel has also placed before us the proof of payment of tax for the period from 01.2.1996 to 29.2.1996 with supporting documents issued by the said M/s.M.L. Trading Co.(P) Ltd. A copy of the Form F Declaration is also produced; so also the affidavit of the Director of the said M/s.M.L.Trading Co.(P) Ltd., and the challans for payment of tax, etc. The legal issue has been settled by the Hon ble Supreme Court in the case of Ashok Leyland Ltd. Vs. State of Tamil Nadu [ 2004 (1) TMI 365 - SUPREME COURT ] where it was held that an order passed under Sub-Section (2) of Section 6A can be subject matter of reopening of a proceeding under Section 16 of the State Act was not correct. Petition dismissed.

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• 2021 (3) TMI 963
  Levy of Compounding Fee - detention of goods - Section 72(1)(a) of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- The perversity writs large on the face of the order dated 06.2.2017. The second respondent has virtually abdicated his power as a Revisional Authority and all that he has done was extracting the entire objections filed by the appellant and held that the Roving Squad Officer collected one time compounding fee under Section 72(1)(a) of the Act and that therefore, the correct compounding fee had to be fixed and accordingly remitted the matter back to the first respondent. There is absolutely no discussion as to how the grounds raised by the appellant were not tenable and as to how the documents, which were filed by the appellant, were not admissible or sustainable. We have also seen the order of detention passed by the first respondent, in which, one of the grounds of detention was that the goods were transported from Mumbai to Chennai in the name of stock transfer with defective documents . The first respondent did not state as to why, in his opinion, the documents produced by the appellant were defective. The first respondent has not recorded as to why the documents produced by the appellant cannot be accepted. If any clarification is required, the same could have been called for. Therefore, it is clear that the compounding notice dated 13.3.2016 is not only a non-speaking notice, but a notice in violation of the principles of natural justice, as the grounds raised by the appellant have not been considered by the first respondent - The same mistake was committed by the second respondent the Revisional Authority, who is in the cadre of Joint Commissioner. A revisional power cannot be akin to appellate power and at best, the Revisional Authority can consider as to whether there was any procedural error committed by the Lower Authority, but would not be justified in re-appreciating the entire facts - This issue can never be set right by the Second Revisional Authority, who appears to be an officer in the cadre of Additional Commissioner. Having been satisfied with the facts and circumstances of the case, the order passed by the second respondent dated 06.2.2017 and the demand notice dated 03.3.2017 issued by the first respondent are unsustainable - petition allowed.

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• 2021 (3) TMI 961
  Principles of natural justice - Revision of proceeding - recovery of tax arrears - proceedings are challenged by the petitioners on the ground that before issuing the impugned notice dated 26.12.2005, no show cause notice was issued to them and no personal hearing was held - HELD THAT:- There is no dispute that there was a transfer of ownership of business of the proprietary concern of Mr.K.Y.Gaitonde to the newly constituted partnership firm. The proprietary concern also which also took over the name M/s.Gomukhi Charma Kendra of the proprietary concern of Mr.K.Y.Gaitonde. Thus, all the assets including good will of the erstwhile proprietary concern of Mr.K.Y.Gaitonde was taken over by the partnership firm, which consisted of three partners namely Mr.K.Y.Gaitonde and the 2 petitioners. The respective petitioners held 50% and 41.67% of the shares in the profit and loss of the business of the partnership firm based on the credit standing in their name in the books of accounts with the proprietary concern of Mr.K.Y.Gaitonde of the erstwhile proprietary concerned by name M/s.Gomukhi Charma Kendra - It clearly shows that there was a transfer of business in favour of the partnership concerned. Therefore, there can be no question that the petitioners not being made liable to pay for arrears of tax of the proprietary concern of Mr.K.Y.Gaitonde. However, they are liable only to the extent of the assets that were transferred on the date of execution of the partnership deed dated 29.03.2002 as it is evident from a reading of Section 27 of the TNGST Act, 1959 - it was incumbent on the part of the respondents to particularize the extent of liability to which they can be exposed while issuing notice under Section 27 of the TNGST Act, 1959. These writ petitions stand allowed with liberty to the respondents to initiate appropriate proceedings against the petitioners to the extent of assets that were transferred to the partnership firm on 29.03.2002.

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• 2021 (3) TMI 960
  Initiation of proceedings of reassessment - pendency of proceedings under the Act do not exist - applicability of Section 34 (8A) of the VAT Act - HELD THAT:- The issue involved in the present petition is squarely covered by the decision of this Court rendered in the case of DHANANI IMP. EXP. PVT. LTD. AND 1 VERSUS STATE OF GUJARAT AND 1 [ 2016 (7) TMI 1150 - GUJARAT HIGH COURT ] , wherein, the identical question of law similar to the facts of the present case was dealt with and finally the impugned order passed under Section 34 (8A) of the Act was quashed and set aside. The assessment for the year 2011-12 became final by passing the order dated 30.03.2015 in Form 304 of the VAT Act. It is an undisputed fact that, no any proceedings either under Section 35 or Section 75 of the VAT Act were pending at the time of issuing the show-cause notice dated 11.10.2019. Thus, after more than 7 years, on the basis of objection of audit para, the authority concerned had initiated the proceedings of reassessment by invoking the provision of Section 34 (8A) of the VAT Act. The pre-condition for invoking the provision of Section 34 (8A) of the Act is that, there must be a pendency of proceedings under the Act, which does not fulfill in the present case. The case of the writ applicants does not fall under Section 34 (8A) of the Act and the action of the authority is in excess of jurisdiction - Application allowed.

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• 2021 (3) TMI 959
  Validity of SCN - Revision of assessment - Section 16(2) of the TNGST Act, 1959 - SCN challenged primarily on the ground that the Show Cause Notice is contrary to Section 4(2) of the CST Act, 1956 and the definition of sale under Section 2(n) of the TNGST Act, 1959 read with explanation 3(a)(i) of the TNGST Act, 1959 as it stood during the material period - HELD THAT:- The revision notice extracts the content of the petitioner s reply dated 13.05.2005, and has assumed the facts given in the representation of the petitioner in reply dated 13.05.2005 to be correct and has yet proposed to revise the assessment on the ground that the invoices was raised at Chennai and that movement of the ship to South Korea and Dubai ports were in the course of their voyage and movements of the ships were not as a resulted of contract of export between the foreign buyer and the dealer and that there is neither foreign destination nor foreign seller or other state purchaser or seller. The impugned revision notice is beyond the scope of limitation under Article 286(2) of the Constitution of India read with Section 4(2) of the CST Act, 1956 and the definition of sale in Section 2(n) read with explanation 3(a) (i) of the TNGST Act, 1959. The impugned revision notice therefore has to go. However, this would without prejudice to the rights of the respondent to articulate a fresh notice to the 2nd petitioner who has taken over the 1st petitioner in accordance with the provisions of the TNGST Act, 1959 after factoring Section 4(2) CST Act, 1956 and Article 286(2) of the Constitution of India. Therefore, the respondent may either issue a fresh notice or a corrigendum to the impugned notice to the 2nd petitioner. The case remitted back to the respondent to issue a fresh notice or a corrigendum to the impugned notice within a period of 60 days from the date of receipt of a copy of this order clearly specifying as to the basis on which it propose to revise the order of assessment completed on 31.03.2005 - petition allowed by way of remand.

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• 2021 (3) TMI 958
  Principles of Natural Justice - the respondent has not at all considered the materials from an independent perspective - petitioner s stand was rejected and the proposals set out in the show cause notices were confirmed - HELD THAT:- The petitioner has projected his defence in the replies. Along with the notices, documents have also been enclosed. The petitioner s counsel would further claim that when the personal hearing took place, the documents were produced. But his core argument is that the respondent did not independently apply his mind. The petitioner s counsel would strongly contend that the respondent though a quasi judicial officer chose to go-by the stand of the Enforcement Wing Officials - The assessing authority chose to overrule all the objections of the petitioner as untenable in a single line. It is obvious that the respondent has not at all considered the materials from an independent perspective. The respondent has merely reproduced the stand of the Enforcement Wing Officials and has not dealt with the issue independently. A learned Judge of this Court in AMUTHA METALS VERSUS COMMERCIAL TAX OFFICER, MANNADY (EAST) ASSESSMENT CIRCLE, CHENNAI [ 2007 (3) TMI 677 - MADRAS HIGH COURT] held that if the reasoning stated by the Enforcement Officials is taken as correct reason, there is no need for the assessing officer to be there to frame the assessment. The Enforcement Wing Officials themselves would have framed the assessment - Under the statutory provisions, it is expected from the assessing officer to consider the objections and either accept or reject the same by giving valid reasons by applying his mind. This approach has not at all been adopted in the case on hand. The matter is remitted to the file of the respondent to pass orders afresh in accordance with law - Petition allowed by way of remand.

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• 2021 (3) TMI 956
  Levy of interest under sub Section 2 of Section 7 of the KTEG Act - insertion of sub-section 3 of Section 7 of the KTEG Act - Section 15A of the Karnataka Tax on Entry of Goods, 1979 - HELD THAT:- From perusal of Section 7(1) of the Act, it is evident that under the aforesaid provision, the registered dealer is required to send every month to the Assessing Authority the statement containing such particulars as may be prescribed and shall pay in advance the full amount of tax payable by him. A conjoint reading of Sections 7(1) and 7(2) of the Act discloses that the provisions of Section 7(2) apply to non payment of tax which is declared under Section 7(1) of the Act. In other words, where the dealer admits the liability under Section 7(1) of the Act and in case commits a default, the provisions of Section 7(2) of the Act are applicable whereas Section 8(2) of the Act applies to the dealer in whose case an assessment has been made and the default is made in payment of tax so assessed. The subject matter pertains to Assessment Years 2001-02 to 2008-09. The dealer admittedly paid the taxes and the amount of penalty between the period from 03.03.2010 to 31.03.2011 i.e. prior to passing of the order dated 07.07.2012 and much prior to issuance of clarification by the Commissioner with regard to tax liability on 07.07.2014. Therefore, the provisions of Section 7(2) of the Act could not be invoked in the case of the assessee. The substantial questions of law involved in this petition are answered against the appellant and in favour of the dealer - petition dismissed.

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• 2021 (3) TMI 952
  Re-assessment order - claim for additional input tax credit at the rate of 4% as specified in Section 14 of the Act instead of 3% as specified in the notification dated 30.03.2007 - rejection of claim on the ground that the petitioner had not made such claim either in the original returns or revised returns - period from 01.04.2007 to 31.03.2008 - HELD THAT:- The Act has been enacted with an object to replace the then existing sales tax system in line with national consensus for bringing in reforms in commodity taxation. One of the objects of the Act is to provide for set off of all tax paid at the earlier points in respect of goods sold against tax payable defined as output tax, at any point, the set off scheme being called as input rebating. In the instant case, the assessee had claimed the benefit of input tax credit at the rate of 4%. However, subsequently, a claim was made for additional input tax credit at the rate of 1% on account of an error in disallowing input tax credit at the rate of 4% as specified in Section 14 of the Act instead of 3% as specified in Notification dated 30.03.2007. No time limit has been prescribed under the provisions of the Act for making a claim for additional input tax credit. Therefore, the claim for eligible input tax credit is an indefeasible right which is available to the dealer under the Act without any limitation of time for claiming such credit - In the instant case, the government has prescribed the lower rate of 3% by Notification dated 30.03.2007 and therefore the aforesaid rate was applicable for the tax period from 01.04.2007 to 31.03.2008. Therefore, the petitioner cannot be deprived of the aforesaid statutory benefit and Section 35 of the Act does not curtail the entitlement of the dealer to such statutory benefit to it if such return is not filed within the time prescribed therein. From the communication dated 19.02.2020, it is evident that the tax has not been collected by the petitioner from Toyota Kirloskar Motors Ltd. It is also not in dispute that the petitioner by mistake paid the tax at a higher rate and when Toyota Kirloskar Motors Ltd. has confirmed that such a tax has not been collected by the petitioner, Section 43(1) of the Act has no application to the fact situation of the case and the order of forfeiture is illegal. The substantial questions of law are answered in favour of the petitioner and against the respondent - Petition allowed.

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• Indian Laws

• 2021 (3) TMI 974
  Search and seizure proceedings in the presence of independent witness - Smuggling - reasons to believe that offence is committed - foremost plea taken by petitioner is that at the first available opportunity he had retracted from the confessional statement recorded under Section 67 of NDPS Act - HELD THAT:- Recently, the Hon ble Supreme Court, by majority view while answering to a reference with regard to the evidentiary value of Section 67 of NDPS Act in Tofan Singh [ 2020 (11) TMI 55 - SUPREME COURT ] held that a statement recorded under section 67 of the NDPS Act cannot be used as a confessional statement in the trial of an offence under the NDPS Act . Reciting a dissenting view in Tofan Singh (Supra), Hon ble Ms. Justice Indira Banerjee observed that she was unable to agree that a statement recorded under Section 67 of the NDPS Act cannot be used against an accused offender in the trial of an offence under the NDPS Act . Pertinently, besides confessional statement recorded under Section 67 of NDPS Act, no other evidence is available on record to show petitioner s involvement in the offence in question. No recovery has been made at the instance of petitioner. Since petitioner has retracted from his confessional statement so recorded, its worth has be proved at trial by the prosecution. Fulfillment of conditions stipulated under Section 37 of NDPS Act or not - HELD THAT:- In the present case, no recovery has been made from petitioner. Admittedly, on the day his ID was used, he was on leave and no other similar case is pending against him. No material such as call detail record etc. has been placed by the prosecution to establish that petitioner was in contact with the main accused, namely, Monte Alexander. Accordingly, this Court has a reason to believe that petitioner is not likely to commit the offence if released on bail. Charge under Section 29 NDPS Act has already been framed by the trial court against the petitioner and thereby, prosecution has an opportunity to prove its case during trial. Hence, requirements under Section 37 of NDPS Act are fulfilled. Presumption under Section 35 of NDPS Act - HELD THAT:- The Hon ble Supreme Court in Noor Aga [ 2008 (7) TMI 853 - SUPREME COURT ] held that the provisions of Sections 35 54 of the Act are not ultra vires the Constitution of India, however, procedural requirements laid down therein are required to be strictly complied with. Applying the dictum of Noor Aga to the facts of this case, It is found that the burden is on the prosecution to prove that accused is guilt and also on the accused to prove his innocence and this recourse can only be taken during trial. The petitioner is directed to be released forthwith, subject to conditions imposed.

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