TMI Tax Updates - e-Newsletter
March 26, 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. INTEREST RECEIVED FROM BANK DEPOSIT BY A TRUST – BUSINESS INCOME?

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Opting-in for Composition Scheme for Financial year 2021-22

2. Finance Bill as passed by Lok SABHA 23-03-2021

3. THE FINANCE BILL, 2021 - NOTICE OF AMENDMENTS

4. Finance Minister Smt. Nirmala Sitharaman launches Central Scrutiny Centre and IEPFA’s Mobile App to leverage digital solutions to achieve Prime Minister’s vision of ‘Digitally empowered India’

Notifications

Companies Law

1. S.O. 1303 (E) - dated 24-3-2021 - Co. Law

Seeks to bring in force sections 23 and 45 of the Companies (Amendment) Act, 2020

2. G.S.R. 207 (E) - dated 24-3-2021 - Co. Law

Amendment to Schedule III to the Companies Act, 2013

3. G.S.R. 206 (E) - dated 24-3-2021 - Co. Law

Companies (Audit and Auditors) Amendment Rules, 2021

4. G.S.R. 205 (E) - dated 24-3-2021 - Co. Law

Companies (Accounts) Amendment Rules, 2021

Customs

5. 32/2021 - dated 24-3-2021 - Cus (NT)

Amendment in Notification No. 31/2021-CUSTOMS (N.T.), dated 18th March, 2021

GST - States

6. 92/2020– State Tax - dated 24-3-2021 - Delhi SGST

Appoints the 1st day of January, 2021, as the date on which the provisions of Various section of Delhi Goods and Services Tax (Amendment) Act, 2020 shall come into force

7. 73/2020– State Tax - dated 24-3-2021 - Delhi SGST

Notify a special procedure for taxpayers for issuance of e-Invoices in the period 01.10.2020 - 31.10.2020

8. 35/2020– State Tax - dated 24-3-2021 - Delhi SGST

Extension of validity of e-way bills

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/DOP/CIR/P/2021/36 - dated 25-3-2021

Combating Financing of Terrorism (CFT) under Unlawful Activities (Prevention) Act, 1967 – Directions to Stock Exchanges, Depositories and all registered intermediaries

FEMA

2. 13 - dated 25-3-2021

FETERS – Cards: Monthly Reporting

DGFT

3. Trade Notice No. 48/2020-2021 - dated 25-3-2021

Electronic filing of Non-Preferential Certificate of Origin (CoO) through the Common Digital Platform for India’s Exports w.e.f. 15th April 2021

Customs

4. Instruction No.05/2021 - dated 24-3-2021

Urgent measures to sensitise trade in light of proposed changes to Section 46 of the Customs Act, 1962

Highlights / Catch Notes

GST

• Court Issues Non-Bailable Warrants for Effective Custodial Interrogation in Tax Recovery u/s 438; Interim Protection Denied.

  Case-Laws - HC : Non-bailable warrants - Apprehension for taking into custody - Recovery of taxes - It is well settled that custodial interrogation is qualitatively more elicitation oriented than questioning a suspect who is well ensconded with a favourable order under Section 438 of the code. In such cases effective interrogation of suspected person(s) is of tremendous advantage in disintering many useful informations and also materials which would have been concealed. - The prayer for interim protection to the petitioner during the pendency of the investigation, cannot be accepted - HC
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• Duty-Free Shops Exempt from GST Pre-Feb 2021; Refund Due for Jan-Mar 2018 Payments; Post-Mar 2021 Refundable Under CGST Act Sec 54.

  Case-Laws - HC : Levy of CGST, IGST and TNGST - duty free shops in the various airports - no purpose will be served by asking the petitioner to pay GST and thereafter claim refund. Therefore, for the period prior to 28.02.2021, the petitioner need not pay any GST to the fourth respondent - Since the fourth has paid GST for the period from 01.01.2018 to 31.03.2018, even though the petitioner has not paid, the first respondent has to refund to the fourth respondent - The petitioner has to pay GST on the concession fee to the fourth respondent and thereafter claim refund as per Section 54 of the CGST Act with effect from 01.03.2021. - HC
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Income Tax

• High Court Allows Revised Form 10 Submission During Assessment; AO Can Permit Income Accumulation u/s 11.

  Case-Laws - HC : Exemption u/s 11- Power of AO to consider revised Form 10 - revised Form 10 for accumulation of income can be furnished in the course of assessment proceedings before the Assessing Officer and there is no bar prohibiting the appellant from modifying the figure in the application and the Assessing Officer can consider the revised Form 10 and allow the accumulation of income - HC
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• High Court Criticizes Tribunal for Lack of Reasoning on Classifying 'Pharmacy' Income Under Charitable Trust, Citing Section 11(4A).

  Case-Laws - HC : Assessment of trust - 'Pharmacy' income as income of charitable trust - it is evident that the Tribunal has not recorded any reasons whether or not the assessee has complied with the twin conditions mentioned in sub-section 4A of Section 11. The order passed by the Tribunal is cryptic and suffers from the vice of non-application of mind. Therefore, the finding of the Tribunal insofar as it pertains to the first substantial question of law cannot be sustained. - HC
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• ITAT Remand Order Clarified: Inquiry Limited to Assessment Years 2011-12 and 2012-13, No Extended Revenue Probes Allowed.

  Case-Laws - HC : Validity and scope of remand order of ITAT - At this stage, the learned counsel for the assessee contended that the Tribunal did not specify the years for which the inquiry should be carried out and the Revenue may take advantage of such an observation and inquire into all years. In our opinion, such an apprehension is uncalled for in view of the fact that the dispute is only with regard to the assessment years 2011-12 and 2012-13. However, we make it clear that the inquiry as ordered by the Tribunal shall be restricted for the years 2011-12 and 2012-13. - HC
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• Court Rules Tax Refund Adjustments Need Prior Notice to Taxpayers u/s 245 of Income Tax Act.

  Case-Laws - HC : Unjust adjustment of excess refunds - intimation ought to be given to the assessee before making an adjustment of refund towards pending tax dues u/s 245 - The respondents defence for not issuing Section 245 Intimation before making adjustment was that subsequently on 13.05.2020 such intimation was issued under Section 143(1) of the Act, but the said Intimation is not valid in law - HC
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• Income Tax Officer can reopen assessments u/s 147 if new information reveals a bogus transaction.

  Case-Laws - HC : Reopening of assessment u/s 147 - The two situations are distinct and different. Thus, where the transaction itself on the basis of the subsequent information, is found to be a bogus transaction, the mere disclosure of that transaction at the time of original assessment proceedings, cannot be said to be disclosure of the “true” and “full” facts in the case and the I.T.O. would have the jurisdiction to reopen the concluded assessment in such a case. - HC
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• Singapore Office's Cost Recovery from Indian Branch Exempt from TDS u/s 195, No Disallowance per Section 40(a)(i.

  Case-Laws - AT : TDS u/s 195 - Since the Singapore HO recovered the same amount from the Indian BO as was incurred by it to third parties without any profit element, the receipt cannot be construed as “other sum chargeable under the provisions of this Act” so as to warrant deduction of tax at source u/s.195 of the Act by the Indian BO. Once it is held that TDS was not necessary, there can be no question of disallowance u/s.40(a)(i). - AT
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• Trusts Can Deduct Normal Depreciation from Gross Income u/s 11, Not Section 32 of Income-tax Act.

  Case-Laws - AT : Assessment of trust - claim of depreciation - Exemption u/s 11 - section 32 of the Income-tax Act providing for depreciation for computation of income derived from business or profession is not applicable. However, the income of the Trust is required to be computed under section 11 on commercial principles after providing for allowance for normal depreciation and deduction thereof from gross income of the Trust. - AT
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• Section 206AA TDS Rate Doesn't Override DTAA: Favorable Tax Rates Apply for Non-Residents Without PAN.

  Case-Laws - AT : TDS @ 20% on the foreign remittance u/s 206AA - absence of furnishing of Permanent Account Number (PAN) - Section 206AA of the Act does not override the provision of Section 92 of the Act and in that view of the matter in the case in hand the TDS has been deducted to the non-resident rightly applying the tax rate prescribed under the DTAAs and not as per Section 206AA of the Act, having regard to the more beneficial provision in the rate of tax made in the DTAA. Hence, we find no justification in making the assessee liable to pay TDS @ 20% on the foreign remittance - AT
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• Penalty Not Justified If Assessee's Genuine Explanation Rejected by Assessing Officer: Section 271(1)(c) Income Tax Act.

  Case-Laws - AT : Penalty u/s 271(1)(c) - No doubt, the Assessing Officer may not accept the explanation furnished by the assessee with regard to source and nature of credit, but that by itself would not be a ground to reject explanation furnished by the assesse, when the assessee genuinely explains the credits found in books of account disclosing all necessary facts. - AT
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• Negative Working Capital Adjustment Unnecessary if No Risk Assumed; Align Comparable Profits Instead, Says Transfer Pricing Case.

  Case-Laws - AT : TP Adjustment - Working capital adjustment - there is no need for making any negative working capital adjustment, when assessee does not carry on with any working capital risk. All the Ld.TPO was supposed to do was to carry out necessary working capital adjustment to the profits of the selected comparables so as to make them comparable to assessee, rather than making negative working capital adjustment. - AT
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• Company Reassesses Stale Cheques; Audit Finds Additions Shouldn't Have Been Made This Year.

  Case-Laws - AT : Disallowance of Stale Cheque - As perused the assessment order. The assessee is a public sector company, audited by C&AG. The assessee has been following regular system of crediting stale cheques back to the accounts as and when it thinks that the liability has ceased to exist. - the additions could not have been made in the current year. - AT
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• Tax Authority's TP Analysis Based on "Rule of Consistency" Challenged; Each Year Requires Independent ALP Evaluation for Transactions.

  Case-Laws - AT : TP Adjustment - CIT(A) under the garb of "rule of consistency" adopted the TP analysis made by the TPO - This method of TP analysis is unheard of as every assessment year is required to be examined independently to reach the logical conclusion to determine the ALP of international transactions. Merely because of the fact that during the year under consideration, there is no change in the business model of the taxpayer and the services rendered are identical, there is no statutory mandate to adopt the TP analysis made by the Revenue Department in the earlier years in order to make the adjustment in the subsequent years. - AT
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Customs

• High Court Quashes Order: DRI's Additional Director General Not a "Proper Officer" per Supreme Court, Lacks Jurisdiction.

  Case-Laws - HC : Jurisdiction - proper officer to issue SCN - The show cause notice was issued by the Additional Director General of DRI. The Hon'ble Supreme Court had held that he cannot be termed as “the proper officer”. Since the entire proceedings were initiated by an authority who lacked the jurisdiction, applying the aforesaid decision of the Hon'ble Supreme Court the order impugned in these writ petitions is quashed. - HC
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• Court Rules Denial of Reasons for DEL Listing Violates Natural Justice u/r 7 of Foreign Trade Rules.

  Case-Laws - HC : Violation of principles of natural justice - petitioner has been put under the "Denied Entity List" (DEL) - Rule 7 of the Foreign Trade (Regulation) Rules, 1993 makes it clear that reasons will have to be given for putting the petitioner under the "Denied Entity List" (DEL) - Since, no reasons have been given, this Court is of the considered view that principles of natural justice has been violated by the respondents. - HC
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Service Tax

• Revision Required for SVLDRS-3: Include Pre-Deposits, Decide on Additional Claims for Appropriation under 2019 Scheme.

  Case-Laws - HC : Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Deduction of amount of pre-deposit made at any stage of appellate proceedings - The first respondent to re-work the statement in SVLDRS-3 after taking into credit of the admitted deposit as already indicated in the SVLDRS-3 enclosed at Annexure-G and also to take a decision as regards the other two pre-deposits of the petitioner stated to be available for appropriation - HC
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• Chit Fund Foreman Wins Appeal: Service Tax Refund Granted for Pre-March 31, 2015 Period Under Finance Act 2015.

  Case-Laws - AT : Refund of service tax - business of chit funds - foreman commission was introduced in the Finance Act, 2015 - The appellant has proved that the incidence of service tax has not been passed on to anyone - the denial of refund for the period prior to 31/03/2015 is not sustainable in law - AT
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• Refund of Unutilized CENVAT Credit for Input Services Granted to Export Unit, Except for Four Specific Services.

  Case-Laws - AT : 100% EOU - Refund of unutilized CENVAT Credit - scope of input services - Since all the input services involved in the present cases except those four services viz., Business Support Service, Management, Maintenance and Repair Service, Recovery for Gym and supply of tangible goods have been held to be input services by various decisions, the appellant is entitled to refund of CENVAT credit on all these input services. - AT
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• High Court Remands Case on Service Classification for Educational Trust Due to Procedural Defect and Non-Impleading Issue.

  Case-Laws - HC : Classification of services - commercial/industrial service or not - services provided to educational trust - contract works - non-impleading of the second respondent in the adjudicating proceedings is really a serious defect. That vitiates the entire proceedings. That apart, it is evident from the record that the petitioner had also paid the service tax for the period from 01.07.2012 onwards. - Matter remanded back - HC
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• Charitable Institution Challenges Service Tax on Rented Property; Cites Exemption Under Notification No. 25/2012-ST.

  Case-Laws - HC : Levy of service tax - renting of immovable property Service - charitable institution - If the petitioner felt that it was not liable to pay tax for renting of its immovable property based on the above Notification No. 25/2012-ST dated 20.6.2012, it should have ignored the persuasion of the officers of the Service Tax Department - petitioner shall thereafter give its reply explaining the reasons as to why it is not liable to pay service tax for renting of immovable property to the banks - HC
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VAT

• Petitioners' ITC Liability Questioned: Need to Verify Goods Receipt by Examining Supplier in Alleged Fake Invoice Case.

  Case-Laws - HC : Input Tax Credit (ITC) - Liability of tax on petitioners - the Person who supplied / sold the goods, ought to have been examined. They should have been confronted. - This is all the more necessary, because the respondent has taken a stand that the petitioners have not even received the goods and had availed input tax credits on the strength of generated invoices. - HC
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• Penalty Under KVAT Act Section 53(12)(a)(i) Requires Discretionary Review; Case Remitted for Reevaluation and Reasoned Decision.

  Case-Laws - HC : Levy of penalty under Section 53(12)(a)(i) of the KVAT Act - The levy of penalty is not automatic, but is discretionary in nature. Therefore, the matters which have a material bearing on the issue of levy of penalty have not been considered either by the Commercial Tax Officer or by the First Appellate Authority and the Tribunal. Therefore, in the facts of the case, it is deemed appropriate to remit the matter for consideration afresh and to take a decision on the stand taken by the petitioner, supra, by a reasoned order. - HC
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• Penalty u/s 43(2) of Orissa VAT Act 2004 Requires AO's Discretion; Not Automatic for Tax Issues.

  Case-Laws - HC : Levy of penalty - Whether imposition of penalty under Section 43(2) of the Orissa Value Added Tax Act, 2004 (OVAT Act) can only be levied if the escapement is “without any reasonable cause”? - the imposition of penalty under Section 43 (2) of the OVAT Act, was not automatic and that there is a discretion in the AO in this regard upon finding that there has been an escapement or under assessment of tax. - HC
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• Assessing Authority Finds Discrepancies in Refund Claim; Petitioner's Counsel Fails to Prove Illegalities or Violations of the Act.

  Case-Laws - HC : Re-assessment order - discrepancies found during the verification of refund claimed - the AA did verify the books of accounts of revision petitioner to verify the refund claimed. It is in that process, the irregularities have been noticed by the AA and Secondly, learned counsel is unable to point out what is the illegality committed by the AA when he has noticed the irregularities committed by the revision petitioner while claiming refund. Nor, the learned counsel for the revision petitioner is in a position to point out which of the provisions of the Act is violated by the AA while carrying out such an exercise. - HC
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Case Laws:

• GST

• 2021 (3) TMI 1038
  Provisional attachment of the petitioner s bank accounts - Section 83 of the Central Goods and Services Tax, 2017 - HELD THAT:- The pre-requisite for exercise of powers of provisional attachment under Section 83 of the Act is the pendency of the proceedings under the aforementioned provisions, i.e., Sections 62, 63, 64, 67, 73 or 74 of the Act - the record shows that proceedings under Section 74 were initiated only after 10.11.2020. Furthermore, a perusal of order dated 18.01.2021 would show that only Rs. 40,000/- was available in the petitioner s bank account. Petition disposed off.

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• 2021 (3) TMI 1036
  Constitutional validity of the Sub-rule (10) of Rule-96 of the C.G.S.T. Rules, 2017 - HELD THAT:- The Union of India is directed to file appropriate reply at the earliest. One last chance is given to the Union of India to file the reply, otherwise, on the next date of hearing, the Court shall proceed to hear the matter finally - Post all the matters for final disposal on 6th April, 2021 on top of the board.

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• 2021 (3) TMI 1031
  Non-bailable warrants - Apprehension for taking into custody - Recovery of taxes - Constitutional Validity of of Sections 69 and 132 of Central Goods and Services Tax Act 2017 - HELD THAT:- A special enactment has been enacted for recovery of taxes, under enabling provisions contained in Section 4 of the Cr.P.C. This Court is of prima facie view that the Parliament is empowered under Article 246-A of the Constitution to enact special laws with regard to Goods and Services Tax. The legislation enacted, is for levy and collection of taxes on supply of Goods and Services having special provisions for recovery of revenue. It being a fiscal matter, a distinct procedure appears to have been evolved by the Parliament by virtue of a special enactment which is permissible under Section 4 of Cr.P.C. It is well settled that custodial interrogation is qualitatively more elicitation oriented than questioning a suspect who is well ensconded with a favourable order under Section 438 of the code. In such cases effective interrogation of suspected person(s) is of tremendous advantage in disintering many useful informations and also materials which would have been concealed. The prayer for interim protection to the petitioner during the pendency of the investigation, cannot be accepted - petition dismissed.

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• 2021 (3) TMI 1028
  Levy of CGST, IGST and TNGST - duty free shops in the various airports - concession fees paid by the petitioner to the airport authority under the petition mentioned agreement - HELD THAT:- The Hon ble Bombay High Court in SANDEEP PATIL, FLEMINGO TRAVEL RETAIL LIMITED ANR., VERSUS UNION OF INDIA AND OTHERS. [ 2019 (10) TMI 360 - BOMBAY HIGH COURT ] held that since the duty free shop is located outside the customs frontier of India, it would be entitled to refund of ITC on the GST first paid by them. The department originally wanted to question the said decision before the apex court. But then, the central government declined to grant permission - The said decision was followed by the Hon ble Kerala High Court in Flemingo Dutyfree Shop Private Limited vs. Union of India [ 2020 (9) TMI 981 - KERALA HIGH COURT ] . The very same approach can be adopted in the case on hand also. Of course, a slight tweaking will be required. This is because the fourth respondent had paid GST to the first respondent for the period from 01.01.2018 to 31.03.2018 - In as much as the petitioner would be entitled to refund of ITC on the GST paid by them, I am of the view that no purpose will be served by asking the petitioner to pay GST and thereafter claim refund. Therefore, for the period prior to 28.02.2021, the petitioner need not pay any GST to the fourth respondent - Since the fourth has paid GST for the period from 01.01.2018 to 31.03.2018, even though the petitioner has not paid, the first respondent has to refund to the fourth respondent - The petitioner has to pay GST on the concession fee to the fourth respondent and thereafter claim refund as per Section 54 of the CGST Act with effect from 01.03.2021. Petition disposed off.

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• 2021 (3) TMI 1020
  Input Tax Credit (ITC) - Liability of tax on petitioners - petitioners believes that the tax had already been remitted to the Government by their sellers - petitioners could not furnish any proof for the payment of tax - HELD THAT:- The assessee must have received the goods and the tax charged in respect of its supply, must have been actually paid to the Government either in cash or through utilization of input tax credit, admissible in respect of the said supply - if the tax had not reached the kitty of the Government, then the liability may have to be eventually borne by one party, either the seller or the buyer. In the case on hand, the respondent does not appear to have taken any recovery action against the seller / Charles and his wife Shanthi, on the present transactions. When it has come out that the seller has collected tax from the purchasing dealers, the omission on the part of the seller to remit the tax in question must have been viewed very seriously and strict action ought to have been initiated against him. That apart in the enquiry in question, the Person who supplied / sold the goods, ought to have been examined. They should have been confronted. - This is all the more necessary, because the respondent has taken a stand that the petitioners have not even received the goods and had availed input tax credits on the strength of generated invoices. The matters are remitted back to the file of the respondent - petition allowed by way of remand.

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• Income Tax

• 2021 (3) TMI 1037
  TP adjustment - Addition of advertising, marketing and promotion expenditure ( AMP expenditure ) - Tribunal deleted the addition - HELD THAT:- As per tribunal ALP of an international transaction involving AMP expenses, the adjustment made by the TPO/DRP/ AO is not sustainable in the eyes of law. At the same time, we cannot ignore the submission of the learned DR that the matter is pending before Hon ble Apex Court and the decision of Hon ble Apex Court would be binding upon all the authorities. We set aside the orders of authorities below and restore the matter to the file of the Assessing Officer. We hold that as per the facts of the case and the legal position as of now and discussed above in this order, the adjustment made by the TPO/DRP/AO in respect of AMP expenses is not sustainable. Revenue, says that the impugned order has been passed to protect the interest of the respondent/revenue in the event it were to succeed in the civil appeals pending adjudication before the Supreme Court. Senior Advocate, on the other hand, says that TPO was only required to give effect to the order passed by the tribunal and therefore ought not to have passed the impugned order. Does not deny that if the respondent/revenue were to succeed before the Supreme Court, then, consequences would follow and, perhaps, the adjustment made by the TPO in the transfer pricing qua AMP would have to be factored in. Having regard to the aforesaid facts and contentions of the learned counsel for the parties, in our view, the best way forward would be to stay the operation of the impugned order and give liberty to TPO to take next steps in the matter, albeit, in accordance with the law once a decision is rendered by the Supreme Court in the pending civil appeals.

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• 2021 (3) TMI 1035
  Exemption u/s 11- Power of AO to consider revised Form 10 - accumulation of income - AO did not consider the revised Form 10 as the jurisdiction vests only with the Commissioner of Income Tax and not with the Assessing Office - Tribunal held that revised Form 10 for accumulation of income can be furnished in the course of assessment proceedings before the Assessing Officer and there is no bar prohibiting the appellant from modifying the figure in the application and the Assessing Officer can consider the revised Form 10 and allow the accumulation of income ? - HELD THAT:- As relying on ratio laid down in the Judgment Simla Chandigarh Diocese Society [ 2009 (8) TMI 103 - PUNJAB AND HARYANA HIGH COURT ] it is clear that if Form 10 is filed within the stipulated time and during the course of assessment proceedings before the Assessing Officer, there is no bar prohibiting the assessee from modifying the figure in the application. Only in the case of revised Form 10 being filed after the assessment proceedings, the same cannot be accepted. The said ratio laid down by the Hon ble Supreme Court supports the case of the assessee. Nagpur Hotel Owners Association [ 2000 (12) TMI 99 - SUPREME COURT ] It is not in dispute that the assessee filed Form 10 within the stipulated time. Since the Assessing Officer disallowed the claim of application in respect of the depreciation, it filed a revised Form 10 enhancing the claim. The very intention of the assessee is to accumulate the surplus for the subsequent years. As per the ratio laid down in the Judgment reported in [ 2009 (8) TMI 103 - PUNJAB AND HARYANA HIGH COURT ] modified Form 10 may be furnished in the course of assessment proceedings and there is no specific bar prohibiting the assessee from modifying the figure of application.

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• 2021 (3) TMI 1030
  Disallowance of interest on borrowed capital - addition at the rate of 6% as being attributable to investments made by the appellant in its foreign subsidiary - as argued investments had been made to further sales in foreign markets, which is wholly for the purposes of its business and no part of the borrowed capital was utilized for such investment in any event - HELD THAT:- The assessee held its own funds which were far in excess of the investment made in A.N.Coffeeday. Therefore, the presumption in law arises that the investments were made out of non interest bearing funds and burden was on revenue to show that investments were made out of borrowed funds. The revenue has not discharged the aforesaid burden. Therefore, it has to be presumed that the investments were made from interest free funds which were available with the assessee. It is also noteworthy that for Assessment Year 2008-09, the Commissioner of Income Tax (Appeals) had recorded a finding that investments made during the aforesaid Assessment Year including investments in A.N.Coffeeday as on 31.03.2009 were made out of the funds of the assessee, with reference to claim of disallowance under Section 14A read with Rule 8D(ii)of the Rules and therefore, the same conclusion ought to have been applied to Section 36(1)(iii) as well. Therefore, in the fact situation of the case, the remand by the tribunal to the Assessing Officer to examine whether the investments were made out of the funds of the assessee or from borrowed funds, is not warranted as the Assessing Officer for the Assessment Year 2009 10, the Assessing Officer on examination of the details furnished by the assessee had accepted the contention that investment was made by the assessee out of the funds owned by it. The Supreme Court in RADHASOAMI SATSANG Vs. COMMISSIONER OF INCOME-TAX [ 1991 (11) TMI 2 - SUPREME COURT] has held that even though principles of res judicata do not apply to income tax proceedings, but where a fundamental aspect permeating through the different Assessment Years has been found as the fact one way or the other and the parties have allowed the position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in subsequent year. For the aforementioned reasons, the substantial question of law No.1 is answered in the negative and in favour of the assessee. Disallowance of interest under Section 36 and disallowance of interest under Section 36(1)(iii) - interest on capital attributable to capital work in progress - HELD THAT:- In the instant case, the assessee has set up new coffee shops, which amounts to expansion of business and therefore, the bar under the proviso Section 36(1)(iii) is not applicable. It is only after the amendment of Section 36(1)(iii) with effect from 01.04.2016 the proviso can be attracted to the case of expansion of business which is not applicable to the facts of the case as the case of the assessee pertains to Assessment Year 2010-11. 14. For the subsequent Assessment Years i.e., 2011-12, 2012-13 and 2013-14, the Commissioner of Income Tax (Appeals) had granted relief to the assessee and had accepted the stand of the assessee that the setting up of new shops is a case of expansion of existing business and not extension of the same. On an appeal being preferred by the revenue, the tribunal though noted that a similar issue was decided in favour of the assessee in another assessee s case allowed the appeal preferred by the revenue following the order passed in case of the assessee for Assessment Year 2010-11. The assessee had funds of Rs. 386.91 Crores as against the capital work in progress of Rs. 59.41 Crores, which leads to a presumption that assessee had used its funds towards the expansion and not for borrowed capital. Therefore, interest on borrowed capital could not have been disallowed. From perusal of the order passed by the tribunal on an application filed by the assessee for rectification of the order, it is evident that tribunal has recorded a finding that there has been no adjudication of the claim for disallowance of processing charges and capitalization of Rs. 9,77,23,650/-. The tribunal has therefore decided the claim of the assessee on merits. Since, the omission on the part of the tribunal was an error apparent on the face of the record, and therefore, the tribunal rightly invoked provisions of Section 254(2) of the Act - On close scrutiny of the order dated 06.12.2017 passed by the tribunal, we find that the tribunal has invoked the jurisdiction to rectify the error apparent on the face of the record. - Decided in favour of assessee.

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• 2021 (3) TMI 1025
  Assessment of trust - Pharmacy income as income of charitable trust - pharmacy income treated as business income by the Assessing Officer as well as the Commissioner as the assessee does not maintain separate books of accounts - HELD THAT:- From perusal of the provision of Section 11(4A) Sub-section (1) or sub-section (2) or sub-section (3) or sub-section (3A), it is evident that in order to claim benefit of the aforesaid provision, the assessee is required to comply with the twin conditions namely any Institution or Trust being profits and gains of business, unless such income is incidental to the attainment of the objective of the trust and maintenance of separate books of accounts by such Trust or Institution in respect of such business. From perusal of the order passed by the Tribunal, it is evident that the Tribunal has not recorded any reasons whether or not the assessee has complied with the twin conditions mentioned in sub-section 4A of Section 11. The order passed by the Tribunal is cryptic and suffers from the vice of non-application of mind. Therefore, the finding of the Tribunal insofar as it pertains to the first substantial question of law cannot be sustained. Accordingly, the order of the Tribunal dated 13.07.2016 insofar as it records the finding with regard to the first substantial question of law is hereby quashed. Therefore, it is not necessary to answer the same. The matter is remitted to the Tribunal for recording the finding on the aforesaid substantial question of law bearing in mind the mandate contained in Section 11(4A) of the Act. 15% for accumulation on gross receipts instead of net receipts - nature of receipts in the case of assessee - HELD THAT:- Assessee submitted that the second substantial question of law is no longer res integra and has already been answered against the revenue in COMMISSIONER OF INCOME-TAX Vs. RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION [ 2017 (12) TMI 1067 - SUPREME COURT] and another decision of Supreme Court in COMMISSIONER OF INCOME-TAX Vs. PROGRAMME FOR COMMUNITY ORGANISATION [ 2000 (11) TMI 4 - SUPREME COURT] . The aforesaid submission could not be disputed by the learned counsel for the revenue. Substantial question of law No.2 decided in favour of the assessee.

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• 2021 (3) TMI 1019
  Validity and scope of remand order of ITAT - Assessment of trust - depreciation claim of trust - whether the assets in question were used by the assessee or not? - Tribunal held that order of the Commissioner of Income Tax (Appeals) is correct and if no income is earned from the use of the assets during the relevant year for the regular business activity, then depreciation is allowable - HELD THAT:- Tribunal agreed with the contentions urged on behalf of the assessee that if no income is earned from the use of assets during the relevant year for regular business activity of the assessee, then claiming of depreciation is justified. Therefore, the order of the Commissioner of Income Tax to that extent is upheld by the Tribunal also. Tribunal in impugned order remitted the matter back to the Commissioner of Income Tax (Appeals) to inquire into the question of whether the assets were put to use in the relevant year before adding the block of assets, or not is a relevant factor to be established by the assessee and thereafter the Commissioner of Income Tax (Appeals) is required to pass a speaking order. There is sufficient force in the arguments of the Revenue in regard to such a finding recorded especially in view of the order passed in I.C.D.S. Ltd..[ 2013 (1) TMI 344 - SUPREME COURT] . At this stage, the learned counsel for the assessee contended that the Tribunal did not specify the years for which the inquiry should be carried out and the Revenue may take advantage of such an observation and inquire into all years. In our opinion, such an apprehension is uncalled for in view of the fact that the dispute is only with regard to the assessment years 2011-12 and 2012-13. However, we make it clear that the inquiry as ordered by the Tribunal shall be restricted for the years 2011-12 and 2012-13. Substantial questions of law raised in the appeal are answered against the assessee and in favour of the Revenue

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• 2021 (3) TMI 1016
  Computation of taxable income - interest accrued on non performing assets - addition made under Section 40(a)(ia) - assessee maintaining mercantile system of accounting - Tribunal held that the provision for non performing assets made by assessee is proper as it is done as per RBI guidelines - whether RBI guidelines cannot override the mandatory provision of Section 145 of the I.T. Act? - HELD THAT:- As decided in M/S. DAVANGERE DISTRICT CENTRAL CO-OPERATIVE BANK LIMITED [ 2020 (11) TMI 654 - KARNATAKA HIGH COURT] relying on Canfin Homes Ltd. [ 2011 (8) TMI 178 - KARNATAKA HIGH COURT] after taking note of Section 145 of the Act has held that once a particular asset is shown as non performing asset then the assumption that it is not yielding any revenue. When an asset is not yielding any revenue, the question of showing that revenue and paying tax would not arise. The contentions, which are sought to be raised by learned counsel for the revenue do not arise for consideration in the context of substantial question of law, which has been framed by this court. The concurrent findings have been recorded by the Commissioner of Income Tax (Appeals) as well as tribunal in this regard, which cannot be termed as perverse. - Decided in favour of assessee.

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• 2021 (3) TMI 1014
  Unjust adjustment of excess refunds - intimation ought to be given to the assessee before making an adjustment of refund towards pending tax dues under Section 245 - Petitioner filed Annexure with the 1st respondent online contesting the said adjustment and informing the latter that the demand for Assessment Year 2017-18 had already been stayed post the deposit of the requisite 20% as required by the 2nd respondent - HELD THAT:- We are of the opinion that the adjustment made on 15.04.2020 by the 1st respondent of the entire refund due to the petitioner for the assessment year 2018-19 towards the outstanding tax demands for the Assessment Years 2017-18 and 2008-09 is per se illegal, as it was done without issuing a prior intimation under Sec.245 of the Act; more so, when the demand for tax for the Assessment Year 2017-18 vide the Assessment Order dt.23.12.2019 is under challenge before the C.I.T. (Appeals) and the 1st respondent through an order dt.29.01.2020 granted stay subject to deposit of 20% of the outstanding demand, and the petitioner deposited on 31.01.2020 Rs. 80,00,000/- and requested the 1st respondent to adjust the remainder of Rs. 80,31,593/- against the determined refund for Assessment Year 2018-19 vide letter dt.10.02.2020 (Annexure A.5). As per Office memorandum F.No.404/72/93-ITCC dt.29.2.2016 issued by the CBDT clarifying it s Instruction No.1914 dt.21.3.1996, the Assessing Officer can, while granting stay of the demand, reserve the right to adjust refunds arising, if any, against the demand, to the extent of amount required for granting stay subject to provisions of Sec.245. There is no dispute that the Office Memorandum is binding on both the respondents. We reject the plea of the respondents that demands for Assessment Year 2017-18 were collectible on 23.01.2020 and for Assessment Year 2008-09 was collectible on 29.01.2020, that the stay of collection of the demand for Assessment Year 2017 - 18 was granted only on 23.07.2020, and therefore, the adjustment made against the demands for Assessment Year 2008-09 and Assessment Year 2017-18 on 18.03.2020 and 22.07.2020 was prior to the order of grant of stay and so the adjustment was valid. The dates of adjustments mentioned above i.e. 18.03.2020 and 22.07.2020 are factually incorrect and no documentary evidence in support thereof has been filed by the respondents. Admittedly, the respondents have adjusted an amount of Rs. 55.92 lakhs towards demand for Assessment Year 2008-09 out of the refund determined for Assessment Year 2018-19 without issuing any Section 245 Intimation. They also admit that they have realized the error and have issued a refund of only Rs. 54.78 lakhs which is short by Rs. 1.13 lakhs of the actual adjustment amount of Rs. 55.92 lakhs. The respondents have to therefore release the balance refund of Rs. 1.13 lakhs also because there is no valid reason why a short refund was granted. The respondents defence for not issuing Section 245 Intimation before making adjustment was that subsequently on 13.05.2020 such intimation was issued under Section 143(1) of the Act, but the said Intimation is not valid in law as held in Japson Estates Private Limited (1 supra). Letter dt.29.01.2020 issued by the 1st respondent stated that in respect of Assessment Year 2017-18 petitioner was required to deposit 20% of the disputed demand in terms of CBDT instructions. In para-6 of the counter, the respondents state that this is only a communication and the actual stay was granted on 23.07.2020. We do not agree with the said plea because the said communication specifically states that the stay will be granted on payment of 20%, and on 30.01.2020 itself part payment was made of Rs. 80.00 lakhs with a request letter dt.10.2.2020 to adjust the balance of Rs. 80.31 lakhs from the determined refunds of Assessment Year 2018-19. 1st respondent ought to have held that the petitioner complied with the 20% deposit as directed in the order dt.29.01.2020 on 10.02.2020 itself and ought to have refrained from proceeding with the adjustment on 22.07.2020 for the demand for Assessment Year 2017-18. Also admittedly, there was no tax payable for Assessment Year 2008-09. No occasion for making any such adjustment of the refund determined for Assessment Year 2018-19 and consequently we are of the opinion that out of the sum of Rs. 1,86,38,333/- which is the refund determined for that Assessment Year, after deducting Rs. 80,31,593/- (the 20% of Rs. 8,01,57,967 = Rs. 1,60,31,593/- less Rs. 80,00,000/-), a sum of Rs. 1,06,06,740/- is refundable to the petitioner with interest at 15% per annum from the date on which it was determined, i.e., 02.10.2019 till the date of payment of the same to the petitioner.

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• 2021 (3) TMI 1013
  Reopening of assessment u/s 147 - return was accepted without scrutiny under Section 143(1) - assessee has entered into a bogus / accommodation entry transaction - HELD THAT:- Since there was no scrutiny assessment, the Assessing Officer had no occasion to form any opinion on any of the issues arising out of the return filed by assessee. The concept of change of opinion would, therefore, have no application. It is equally well settled that at the stage of re-opening of the assessment, the court would not minutely examine the possible additions which the Assessing Officer wishes to make. The scrutiny at that stage would be limited to examine whether the Assessing Officer had formed a valid belief on the basis of the material available with him that the income chargeable to tax had escaped assessment. In the present case, the Assessing Officer has considered the material on record which would prima facie suggest that the assessee had sold number of shares of a company which was found to be indulging in providing bogus claim of long term and short term capital gain. The company was prima facie found to be a shell company. The assessee had claimed exempt of long term capital gain by way of sale of shares of such company. Acquiring fresh information, specific in nature and reliable in character, relating to the concluded assessment, which goes to expose the falsity of the statement made by the assessee at the time of original assessment is different from drawing a fresh inference from the same facts and material which was available with the I.T.O. at the time of the original assessment proceedings. The two situations are distinct and different. Thus, where the transaction itself on the basis of the subsequent information, is found to be a bogus transaction, the mere disclosure of that transaction at the time of original assessment proceedings, cannot be said to be disclosure of the true and full facts in the case and the I.T.O. would have the jurisdiction to reopen the concluded assessment in such a case. It is correct that the assessing authority could have deferred the completion of the original assessment proceedings for further enquiry and investigation into the genuineness to the transaction, but, in our opinion, his failure to do so and complete the original assessment proceedings would not take away his jurisdiction to act under Section 147 of the Act, on receipt of the information subsequently. The subsequent information on the basis of which the I.T.O. acquired reasons to believe that the income chargeable to tax had escaped assessment on account of the omission of the assessee to make a full and true disclosure of the primary facts was relevant, reliable and specific. It was not at all vague or non-specific. Validity of the sanction - Entire proposal along with the necessary details and the reasons recorded by the Income Tax Officer were placed before the Joint CIT and Principal CIT, who, upon perusal of the same, in their own hands, recored their satisfaction that it was a fit case for issuance of notice under Section 148 of the Act. - Decide against assessee.

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• 2021 (3) TMI 1012
  Addition u/s 68 - CIT(A) sustained the addition on the ground that the assessee could not substantiate with evidence of sales and cash deposits made at Jam Nagar, Delhi and Jaipur and, therefore, cash deposits at Jaipur and Jam Nagar and at Delhi were sustained by the CIT(A) - HELD THAT:- Once the total turnover of the assessee is much more than the total cash deposit in the bank account (in this case sales is 227% of the cash deposit), no addition is called for on account of unexplained cash deposit in the bank account. The explanation of the assessee appears to be reasonable. Under these circumstances, I hold that the ld.CIT(A) is not justified in sustaining the addition of Rs. 3,67,000/-. I, therefore, set aside the order of the CIT(A) and direct the AO to delete the addition. The grounds raised by the assessee on this issue is accordingly allowed.

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• 2021 (3) TMI 1011
  TDS u/s 195 - certain expenses paid to the Singapore HO without deducting tax at source - disallowance u/s. 40(a)(i) on account of non-deduction of tax - case of the assessee before the AO that expenses were in the nature of `reimbursement of expenses in the hands of the Singapore HO and hence, no deduction of tax at source was called for in its hands - HELD THAT:- Seminar expenses, Training expenses, Printing expenses and Staff welfare expenses are amounts paid by the Indian BO to the Singapore HO, which satisfy the twin conditions of `reimbursement viz ., one-to-one direct correlation between the outgo and inflow of the Singapore HO; and the inflow of the identical amount without any profit element. Since the Singapore HO recovered the same amount from the Indian BO as was incurred by it to third parties without any profit element, the receipt cannot be construed as other sum chargeable under the provisions of this Act so as to warrant deduction of tax at source u/s.195 of the Act by the Indian BO. Once it is held that TDS was not necessary, there can be no question of disallowance u/s.40(a)(i). IT expenses paid are for availing IT services to be utilized in its activity of rendering technical services to the customers in Asia Pacific region, then the matter would come to stage two requiring further analysis for examining if the payment falls in the category of `fees for technical services . On the other hand, if the IT services are utilised by the Indian BO towards business process outsourcing, payment for the same cannot be treated as fees for technical services. Again, it is relevant to note that deduction of tax at source u/s 195 is warranted not only if the payment is towards fees for technical services. In case the amount is chargeable to tax in the hands of non-resident in any other manner, deduction of tax at source is warranted and non-deduction would lead to the consequential effect of disallowance. In the given circumstances, when we do not have the benefit of the relevant Agreement and other attending details, we consider it expedient to set aside the impugned order pro tanto and send this issue back to the file of AO for examining the true nature of transaction under which the assessee paid IT expenses on monthly basis and thereafter determine whether or not tax is deductible at source u/s. 195 of the Act and consequential disallowance u/s.40(a)(i) - Decided partly in favour of assessee.

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• 2021 (3) TMI 1010
  Eligibility for deduction u/s. 80IA(4) - According to AO assessee is a works contractor - HELD THAT:- We note that there was no dispute by the ld. DR the facts involving the issue on hand are identical to A.Ys. 2004-05 to 2010-11, 2011-12 to 2012-13 and 2013-14 and no order placed on record by the Revenue contrary to the findings of this Tribunal or reversing or modifying order of ITAT by the Hon ble High Court of Bombay. Therefore, we hold that the assessee is entitled for claiming deduction u/s. 80IA(4) of the Act and we do not find any infirmity in the order CIT(A) and it is justified. Accordingly, the grounds raised by the Revenue are dismissed.

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• 2021 (3) TMI 1008
  Revision u/s 263 - Assessment u/s 153A - HELD THAT:- Additions made u/s 143(3) of the Act were repeated in the assessment order framed/s 153A r.w.s 153C of the Act. This means that no additions had any link with any incriminating material found at the time of search as assessed income u/s 143(3) of the Act is the assessed income u/s 153C of the Act. Hon ble High Court of Delhi in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] has held that if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment under Section 153A and 153C of the Act. The Hon ble Supreme Court in the case of Singhad Technical Educational Society [ 2017 (8) TMI 1298 - SUPREME COURT] has also held that in the absence of any incriminating material, no jurisdiction can be assumed by the Assessing Officer u/s 153C of the Act. Assessment framed u/s 153C of the Act in A.Ys 2008-09 and 2010-11 are without jurisdiction and, therefore, bad in law and deserve to be quashed as null and void. Assumption of jurisdiction u/s 263 of the Act in respect of an assessment which is non-est is also bad in law as a non-est order cannot be erroneous and prejudicial to the interest of the Revenue. An order framed u/s 263 of the Act for both the A.Ys 2008-09 and 2010-11 are accordingly quashed on the principle of Sublato Fundamento Cadit Opus, meaning thereby, that in case the foundation is removed, the super structure falls. Since the foundation, i.e. the order u/s 153C has been removed, the super structure i.e. the order u/s 263 must fall. - Decided in favour of assessee.

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• 2021 (3) TMI 1004
  MAT computation - exclusion of profit realized from sale of carbon credit to form the book profit - HELD THAT:- As decided in own case [ 2018 (4) TMI 1776 - ITAT DELHI] held that income from sale of the carbon credit is capital in nature. Further in para No. 14 it has held that since the income from the sale of carbon credit is essentially in the nature of capital receipt, by no stretch of imagination can be brought to tax under the provisions of minimum alternate tax and thus the ground of appeal of the assessee for Assessment Years 2010-11 and 2011-12 were allowed. In view of the above facts, as the co-ordinate bench has already decided the issue in favour of the assessee, respectfully following the same, we allow first ground of appeal of the assessee. Deduction under Section 80IA - Claim of interest income earned on bank deposit claimed as interest income eligible for deduction under Section 80IA - HELD THAT:- Assessee has earned interest income from the fixed deposit receipts. Assessee has submitted that the interest income from short term FDR is only a temporary arrangement for making timely re-payment of loan installments on respective due dates out of the proceeds of the FDR. The interest income has direct link with the industrial undertaking. As assessee has borrowed from banks and financial institutions a sum of Rs. 329 crores and, therefore, the assessee is required to keep funds in fixed deposit receipts for short term for honouring the installments of the loan. Therefore, it is an eligible income derived from industrial undertaking for the purpose of deduction under Section 80IA of the Act. Coming to the decision in CIT Vs. Chambal Fertilizers Chemicals Ltd. [ 2017 (5) TMI 1595 - RAJASTHAN HIGH COURT] it was held that placing of fixed deposit receipts was a mandatory condition on the assessee. Where in the interest was received from trade debtors and Overdue payment from debtors. That is not the fact here. In our opinion the issue is squarely covered in favour of revenue by decision of Honorable Supreme court in case of Liberty India v. CIT[ 2009 (8) TMI 63 - SUPREME COURT] with respect to interest on FDR as it is not derived from the industrial undertaking. Thus, Ground no 2 of appeal is dismissed. Disallowance u/s 14A - HELD THAT:- As assessee has not on any exempt income during the year from the above investment and therefore there cannot be any disallowance u/s 14 A of the income tax act. This is an accepted position in the case of the assessee as per the order of the coordinate bench in assessee s own case for assessment year 2008 09. Such is also the mandate of the honourable Delhi High Court in case of Cheminvest Ltd [ 2015 (9) TMI 238 - DELHI HIGH COURT] wherein it has been held that if there is no exempt income received or receivable during the year there cannot be any disallowance u/s 14 A of the income tax act. Therefore respectfully following the decision of the coordinate bench as well as the decision of the honourable Delhi High Court we do not find any merit in the ground number 1 4 of the appeal hence, those grounds are dismissed. Deduction u/s 80IA which is a rental income - HELD THAT:- No merit in the appeal of the learned assessing officer on this ground because the refund received from Power Finance Corporation for the excess charges made in the earlier years which has now been returned back of Rs. 3.81 lakhs, liability which were arising out of the business which are now no longer required have been written back by the assessee of Rs. 18,000 and the rent is recovered from the plant site used by the other parties on which the rent is recovered of Rs. 108,000 are necessarily the income derived from the industrial undertaking and therefore they go on to reduce the respective expenditure and hence the deduction u/s 80 IA of the income tax act on them has rightly been allowed by the learned CIT- A. Accordingly the ground number five of the appeal of the learned assessing officer is dismissed. Carbon credit earned by the assessee - Whether is a capital receipt and not subject to tax? - HELD THAT:- We find that the above issue is squarely covered in the favour of the assessee by the decision of the honourable Andhra Pradesh High Court in case of CIT versus My home power Ltd [ 2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT]

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• 2021 (3) TMI 1003
  Assessment of trust - claim of depreciation - Exemption u/s 11 - assessee herein is a trust duly registered under the Bombay Public Trust Act, 1950 as formed for the purpose of pursuing the educational objects. It was also duly registered u/s 12A - AO disallowed depreciation as application of income of the trust - HELD THAT:- The issue in the present appeal is no more res integra as the issue is already settled in favour of the assessee trust in the case of CIT vs. Rajasthan And Gujarat Charitable Foundation, [ 2017 (12) TMI 1067 - SUPREME COURT] wherein had followed the judgement of the Hon ble Jurisdictional High Court in the case of CIT vs. Institute of Banking Personnel Selection [ 2003 (7) TMI 52 - BOMBAY HIGH COURT] wherein rejected the argument on behalf of the revenue that section 32 of the Income-tax Act was the only section granting benefit of deduction on account of depreciation. It was held that income of a Charitable Trust derived from building, plant and machinery and furniture was liable to be computed in normal commercial manner although the Trust may not be carrying on any business and the assets in respect whereof depreciation is claimed may not be business assets. In all such cases, section 32 of the Income-tax Act providing for depreciation for computation of income derived from business or profession is not applicable. However, the income of the Trust is required to be computed under section 11 on commercial principles after providing for allowance for normal depreciation and deduction thereof from gross income of the Trust. Further, it is settled position of law that the amendment brought by the Finance Act by insertion of sub-section (6) of section 11 of the I.T. Act providing that no double deduction shall be allowed in respect of the fixed assets is held to be prospective. Further, in the case of Director of Income-tax, Exemptions vs. Al- Ameen Charitable Fund Trust [ 2016 (3) TMI 462 - KARNATAKA HIGH COURT] and in the case of Commissioner of Income-tax (Exemptions), Bangalore vs. Karnataka Reddy Janasangha [ 2016 (6) TMI 1181 - KARNATAKA HIGH COURT] took the similar view. - Decided in favour of assessee.

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• 2021 (3) TMI 1001
  TDS @ 20% on the foreign remittance u/s 206AA - absence of furnishing of Permanent Account Number (PAN) by the recipient non-residents, having regard to the Section 206AA - provisions of DTAAs - HELD THAT:- Entire aspect of the matter the provisions of Art 12 of DTAA entered into by and between two Sovereign States - India and Czech Republic, the Circular No. 333 dated 02.04.1982 issued by CBDT, the specific recommendation made by the Justice Easwar s Committee, the ratio laid down in the judgment of Azadi Bachao Andolan [ 2003 (10) TMI 5 - SUPREME COURT] , in our considered opinion the provision of Section 206AA of the Act cannot be invoked by the Revenue to insist the tax deduction @ 20% having regard to the overriding nature of the provision of Section 92 of the Act in the present facts and circumstances of the case. In fact, Section 206AA of the Act does not override the provision of Section 92 of the Act and in that view of the matter in the case in hand the TDS has been deducted to the non-resident rightly applying the tax rate prescribed under the DTAAs and not as per Section 206AA of the Act, having regard to the more beneficial provision in the rate of tax made in the DTAA. Hence, we find no justification in making the assessee liable to pay TDS @ 20% on the foreign remittance as held by the Revenue by the order impugned. Such decision, in our considered opinion, is of no merit and thus, rejected. The appeal preferred by the assessee is, therefore, allowed.

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• 2021 (3) TMI 1000
  Under valuation of property - Addition is based on the difference between the value declared by the assessee in their Books of Accounts as compared to DVO s Report - HELD THAT:- The Valuation Report was made after the long gap of period after the purchase made by the assessee. In other words, the Valuation Report was made in F.Y. 2016-17 contrary to the purchase of property in the F.Y. 2013-14 and F.Y. 2015-16. During these periods, there is a steep rise in the value of the immovable property and we cannot consider the Valuation Report of the DVO is foolproof in which the inflation cost also has to take into account. Immovable property registered with the State Authorities wherein they accepted the valuation declared by the assessee with regard to various properties and not disputed by the Sub-Registrar of the concerned State Govt. Office. In such circumstances, the Assessing Officer only on the basis of valuation mentioned in the DVO Report cannot make addition when such difference is less than 15% as compared to the valuation declared in the Books of Accounts. On this count, we are inclined to delete the addition in all these assessment years. This ground of appeal of the assesses is allowed. Estimation of income on undisclosed turnover at 5% - HELD THAT:- As gone through the order of the Tribunal in the case of M.A. Siddique Vs. DCIT [ 2020 (8) TMI 835 - ITAT BANGALORE] wherein the Tribunal considered the business of Supari and observed that in the case of unaccounted sales no bill is issued and therefore no customer will pay taxes and levies which will result into higher profit to the seller. The Tribunal adopted the profit rate of 2% in the case of Supari business. Following the above decision of co-ordinate bench of this Tribunal, we are inclined to hold that the Assessing Officer shall adopt the net profit of 2% on undisclosed turnover of the assessee in all these assessment years. Non-giving of set off of income declared by the assessee in the statement recorded u/s. 132(4) - HELD THAT:- Assessing Officer assessed the undisclosed income in addition to the income voluntarily declared by these assesses in the statement recorded u/s. 132(4) - Assessing Officer made independent addition based on the seized material found during the course of survey action, there cannot be income addition on account of voluntary disclosure made by the assesses. Hence, in our opinion, it is appropriate to set off of income declared by the assessee in the statement recorded u/s. 132(4) of the Act out of undisclosed income computed by the Assessing Officer. Accordingly, we direct the Assessing Officer to recompute the income after overlooking the income declared by the assessee in the statement recorded u/s.132(4) of the Act. Otherwise it amounts to double addition for the same lapse found in the Books of Accounts of the assesses. It is pertinent to mention t he CBDT Circular No. 14(XL-35) of 1955, dated 11.4.1955 as per which the lower authorities should have guided the assessee as to the correct proposition of the law regarding taxability of capital gain. As the addition shall be confined to the incriminating material found during the course of search action. Accordingly, we direct the Assessing Officer not to consider the additions made on the basis of statement recorded u/s. 132(4) of the Act. This ground of appeals by the assesses is allowed. Unexplained income - CIT(Appeals) sustained the addition at 5% of this amount - HELD THAT:- Any unexplained deposits in the Bank accounts, it should be considered as business receipts and income at 2% has to be assessed as undisclosed income of the assessee by placing reliance on the judgement of M.A. Siddique Vs. DCIT [ 2020 (8) TMI 835 - ITAT BANGALORE] . Accordingly, we direct the Assessing Officer to consider only 2% of this cash deposit of Rs. 2,61,00,100 as undisclosed income of the assessee. Levy of interest u/s. 234A, 234B 234C - HELD THAT:- Once a recomputation in the assessment order u/s. 153A of the Act is done, the interest chargeable u/s. 234A would have to be reckoned from the date of determination of income u/s. 143(1) r.w.s. 153A of the Act to the date of recomputation of income u/s.153A r.w.s.143(3) of the Act. This position is in accordance with the provisions s stated in Section 234A(3) of the Act. Therefore interest u/s. 234A is chargeable from the date of expiry of the Notice period given u/s. 153A of the Act to the date of completing the assessment u/s. 153A r.w.s. 143(3) of the Act.Accordingly, we direct the Assessing Officer to recomputed the interest u/s. 234A of the Act. The interest u/s. 234B is to be leviable from the date of determination of income u/s. 143(1) r.w.s. ;139, r.w.s. 153A(1)(a) to the date of assessment order u/s. 153A, r.w.s. 143(3) of the Act. The interest u/s. 234B is to be levied only on the additional tax levied on the enhanced income determined u/s. 153A, r.w.s.143 of the Act and therefore the period of charge should be from the date of determination of income u/s. 143(3) r.w.s. 153A to the determination of increased total income u/s. 153A, r.w.s. 143(3) of the Act. We direct accordingly to the Assessing Officer to recompute the interest u/s. 234B of the Act. Levy of interest u/s. 234C of the Act, no serious argument has been made by the ld. AR on this issue. Addition made towards rental receipt - seized material suggests that the assessee is jointly owning property with his sister and there was a receipt of rent of Rs. 9,500 per month which is assessee s share after deduction u/s. 24 - HELD THAT:- Admittedly in this case the Assessing Officer has not examined the tenants. It is also brought to our notice that it was unoccupied in the Assessment Year under consideration and no income derived. Hence in our opinion, the CIT(Appeals) justified in deleting the additions made by the Assessing Officer. The order of the CIT(Appeals) on this issue is confirmed. This ground of appeal of Revenue on this issue is dismissed. Addition on drawings - assessee has claimed foreign education expenses incurred by his son and pleaded that it has made sufficient drawings and also submitted letter from one Mr. Abdul Farveez who is an NRI stating that he has met the education expenses of assessee s son - deletion by CIT(Appeals) on account of drawings without calling for Remand Report from the Assessing Officer - HELD THAT:- DR is not able to counter the findings of the CIT(Appeals) that the assessee has furnished confirmation letter from NRI sponsored the education expenses of Mr. Abdul Farvez, the assessee s son. In such circumstances, the CIT(Appeals) justified in deleting the addition made by the Assessing Officer on account of low drawings. The order of the CIT(Appeals) on this issue is confirmed. This ground of appeal of the Revenue is dismissed.

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• 2021 (3) TMI 999
  Penalty u/s 271(1)(c) - additions towards unproved liabilities / cessation of liability and unexplained cash credit u/s. 68 of the Act for the reason that the assessee has failed to prove liability shown under the head map drawing charges and has also failed to prove unsecured loan taken - HELD THAT:- On examining the reasons given by the AO for levy of penalty u/s.271(1)(c) of the Act, we find that the reasons given for levy of penalty is not on sound footing, because the sole basis for making addition is report of Inspector of income tax, which was taken during the course of assessment proceedings, which was in the year 2015, whereas, payment against services has been made in the year 2011 and 2012. It is very difficult for the recipient of payment to confirm exact date of receipt of money. Therefore, for that reason alone, it cannot be inferred that liability shown in the books of account is unexplained. Assessing Officer has not disputed the fact that the assessee has furnished all evidences in respect of unproved liability. In fact, recipient of payment has confirmed rendering of services as well as receipt of money. Therefore, at best, the case can be considered as claim of expenditure with necessary evidence, but unsubstantiated to the satisfaction of the Assessing Officer. It is a well settled principle of law by the decision in the case of CIT Vs.Reliance Petro Products Pvt.Ltd [ 2010 (3) TMI 80 - SUPREME COURT] that mere making of claim which is not sustainable in law by itself would not amount to furnishing inaccurate particulars regarding income of the assessee. Therefore, we are of the considered view that on this addition, penalty u/s.271(1)(c) cannot be levied. Additions made towards unexplained cash credit being unsecured loan taken from Mr. Karur Ramasamy - as the explanation of the assessee before the Assessing Officer that party has confirmed loan given to the assessee. Once the assessee has furnished confirmation letters to prove identity of the parties, then initial burden cast upon the assessee was successfully discharged. No doubt, the Assessing Officer may not accept the explanation furnished by the assessee with regard to source and nature of credit, but that by itself would not be a ground to reject explanation furnished by the assesse, when the assessee genuinely explains the credits found in books of account disclosing all necessary facts. Therefore, merely for the reason that the Assessing Officer has not satisfied with the explanation furnished by the assessee, it cannot be said that the assessee has furnished inaccurate particulars of income. Therefore, on this count also, penalty levied by the Assessing Officer u/s.271(1)(c) of the Act is incorrect. Therefore, considering the facts and circumstances of the case, we are of the considered view that the Assessing Officer has erred in levying penalty u/s.271(1)(c) of the Act in respect of the two additions. The learned CIT(A), without appreciating the facts has simply confirmed penalty levied by the Assessing Officer, hence, we set aside the order passed by the learned CIT(A) and direct the Assessing Officer to delete penalty levied u/s.271(1)(c) - Appeal filed by the assessee is allowed.

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• 2021 (3) TMI 998
  Addition u/s 68 - unexplained credit - assessee claims that Accountant, who prepared financial statement has inadvertently passed wrong journal entries in respect of provision for depreciation account which resulted in overstatement of capital account for the assessment year 2016-17 - HELD THAT:- Before us, the assessee is unable to explain as to how difference in capital account was reconciled with reference to amount outstanding in provision for depreciation account. If at all, the assessee has explained difference and filed necessary journal entries to explain the fact that wrong journal entries has been passed to capital account, then there is no reason for authorities below to observe that no evidence has been filed to explain the difference. Even before us, the said difference is unreconciled. Considering the fact that assessee has requested for one more opportunity to go back to the Assessing Officer to explain difference in capital account, we are of the considered view that the issue needs to go back to the file of the Assessing Officer. Hence, we set aside the appeal to the file of the Assessing Officer and direct him to reconsider the difference in capital account in light of various averments including reconciliation if any, filed to explain difference in capital account. The assessee shall file necessary evidences to explain the difference in capital account. Appeal filed by the assessee is allowed for statistical purposes.

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• 2021 (3) TMI 997
  Revision u/s 263 - AO has not examined whether the parcel of land sold as well as parcel of land subsequently purchased were being used for agricultural purposes for claiming deduction u/s 54B of the Act and secondly, the expenditure incurred on improvement of the land sold was not verified - HELD THAT:- The precondition for invoking the jurisdiction under section 263 is that the ld. PCIT must come to the conclusion that the order of the AO is erroneous and is unsustainable in law. When the order passed by the AO is not erroneous for want of an enquiry, then it is incumbent upon the ld. PCIT to give a concluding finding and reasons that the order is not sustainable in law. An identical issue was considered in case of GANPAT RAM BISHNOI. [ 2005 (8) TMI 106 - RAJASTHAN HIGH COURT] held that the ld. CIT can cancel the order of the AO and require the concerned AO to pass a fresh order in accordance with the law after holding a detailed enquiry. But when the enquiry in fact has been conducted and the AO has reached a particular conclusion, though reference to such enquiries has not been made in the order of assessment, but the same is apparent from the record of the proceedings, the invocation of jurisdiction by the ld. CIT was unsustainable. Where the AO has made an enquiry and taken a possible/permissible view, then the said order cannot be treated as erroneous and prejudicial to the interests of the Revenue unless the view taken by the AO is unsustainable in law. Hon ble Supreme Court in case of Malabar Industrial Co. Ltd. vs. CIT [ 2000 (2) TMI 10 - SUPREME COURT] has held that an order of ITO cannot be treated as prejudicial to the interests of the Revenue if the ITO adopted one of the courses permissible in law and it has resulted in loss of revenue or two views are possible and the ITO has taken one view with which the ld. CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law. Once the AO has taken a possible view on the issue of allowability of deduction under section 54B and 54F, then the ld. PCIT is not permitted to invoke the provisions of section 263 merely because he does not agree with the view of the AO. Hence in the facts and circumstances of the case as well as the foregoing discussion about the settled principles of law laid down by the Courts, we hold that the impugned order passed by the ld. PCIT is not sustainable and the same is liable to be set aside. - Decided in favour of assessee.

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• 2021 (3) TMI 992
  Disallowance towards sundry creditors made u/s 41(1) - HELD THAT:- Since the assessee has filed various details as stated above in the form of paper book, we direct the Assessing Officer to re-examine the disallowance of sundry credits and decide the issue afresh in accordance with law after affording an opportunity of being heard to the assessee. Disallowance of repairs and maintenance expenditure - HELD THAT:- As assessee has submitted that the assessee has obtained the bills and vouchers for the amount of Rs. 7,72,039/- and prayed for deleting the addition. Since the assessee has filed copy of vouchers and bills as stated above in the form of paper book, we direct the Assessing Officer to re-examine the disallowance of expenses under the head repairs and maintenance and decide the issue afresh in accordance with law after affording an opportunity of being heard to the assessee. Disallowance of business promotion expenses - HELD THAT:- Admittedly, the assessee has not filed any vouchers for the claim of business promotion expenses. Since the ld. Counsel has prayed that the assessee has incurred the petty expenses towards business promotion, the assessee is directed to produce any piece of evidence of the activity carried out for promotion of its business before the Assessing Officer and after considering the submissions, if satisfied, the Assessing Officer shall decide the issue afresh.

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• 2021 (3) TMI 991
  Disallowance of Misc. activities and depreciation - DR contended that the Assessing Officer had rightly disallowed the assessee s foregoing twin claims for the reason that it had not started any commercial activity - HELD THAT:- The above contention carries no substance in our considered opinion. It has come on record in the CIT(A) order that the assessee s business activity had duly commenced as per the costs of the material consumed, employees benefit expenses, initial costs, administrative expenses and depreciation; respectively. The same have gone very much unrebutted from the Revenue side in its pleadings in Ground Nos. 1 2 as well as during the course of hearing. We thus quote hon ble apex court s larger bench decision in CIT Vs. K.Y. Pillaiah Sons [ 1966 (10) TMI 35 - SUPREME COURT] to express our completion agreement with the CIT(A) detailed discussion extracted in the preceding paragraph. The Revenue fails in its sole grievance therefore.

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• 2021 (3) TMI 990
  Reopening of assessment u/s 147 - As argued AO not issued any notice u/s 143(2) - HELD THAT:- There is no dispute that as per these case records, no notice had been issued and also the Assessing officer s corresponding assessments do not reveal that he had taken recourse to sec. 143(2) process at all. All these facts corroborate and support the assessees stand that the impugned assessments have been framed without issue of sec.143(2) notices ad therefore not sustainable in law as settled in Hotel Blue Moon caseN [ 2010 (2) TMI 1 - SUPREME COURT] Assesses have not filed any return in response to Assessing officer s sec.148 notice(s) issued to them in all these assessment years - It goes against the records since the assessment order(s) in all these cases take note of the assessee s letter(s) dated 4.1.2010 that the original returns be treated as those filed in response to re-opening mechanism. Assessee s letter seeking to treat the original returns as in furtherance to sec.148 notice(s) culminates in filing of a valid return requiring issue of sec.143(2) notices thereafter and failure on Assessing Officer s part in such a situation leads to the assessment in question be declared a nullity. See M/S. MEHTA EMPORIUM JEWELLERS [ 2018 (6) TMI 898 - ITAT MUMBAI] , SHRI JAI SHIV SHANKAR TRADERS PVT. LTD. [ 2015 (10) TMI 1765 - DELHI HIGH COURT] , M/S SAPTHAGIRI FINANCE INVESTMENTS [ 2012 (8) TMI 523 - MADRAS HIGH COURT] We take into account all these facts and circumstances and hold that these eleven assessments framed on 30.12.2011 are invalid ones. The same stand quashed therefore. - Decided in favour of assessee.

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• 2021 (3) TMI 989
  TP Adjustment - comparable selection - Functional dissimilarity - HELD THAT:- Assessee is a company engaged in the business of software development , IT enabled services, technical marketing and support services - It is a captive service provider rendering services only to its AE as per the directions and requirement of AE. As relying on M/s.Indicom Global Services (India) Pvt. [ 2019 (8) TMI 1664 - ITAT BANGALORE ] we direct Ld.AO/TPO to exclude Infosys BPO Ltd., TCS e-Serve Ltd., Excel Infoways Ltd., from the final list of comparables. And remand the Universal Print Systems Ltd. and BNR Udyog Ltd. to the Ld.TPO for considering it afresh. Inclusion of comparable being Crystal Voxx Ltd. - Admittedly, this comparable has been filed by assessee before the Transfer Pricing officer for consideration. However the same was ignored by the Ld.TPO. It has been submitted that this comparable is functionally similar with that of assessee however as the same has not been verified and looked into by the Ld.TPO be deem it fit and proper to remand this comparable to the Ld.TPO to consider it in the light of the functions performed, assets owned and risk assumed by it vis-a-vis that of assessee. In the event the FAR analysis is found to be similar with that of assessee the same may be included in the final list of comparables. This ground raised by assessee stands allowed for statistical purposes. Inclusion of Accentia Technologies Ltd., and Informed Technologies Ltd. - DRP rejected these comparables suo moto for the reason that, M/s Accentia Technologies were functionally different and the data of M/s.Informed Technologies India Ltd., was not reliable in view of the fact that segmental data was not available - From the transfer pricing order, we note that, the Ld.TPO has not raised any objection regarding the functional profile of these comparables. However since the DRP raised certain objections which needs to be verified, the same is remanded to the Ld.TPO for due verification. We are therefore of the opinion that the comparables needs to be verified by the Ld.TPO afresh. Needless to say that assessee shall furnish all relevant details in respect of these comparables available with it in support of its inclusion. The Ld.TPO shall verify these details/documents filed by assssee and consider these comparables for inclusion, if found functionally similar with that of assessee. Working capital adjustment - HELD THAT:- We note from the directions of the DRP that the Ld.TPO was asked to verify the correctness of the figures adopted by him. The DRP had directed the Ld.TPO to verify the calculations of working capital adjustment and rectify the mistakes if any. It has been submitted that assessee was granted negative working capital adjustment, which is not in accordance with procedure laid down in the statute. In fact, there is no need for making any negative working capital adjustment, when assessee does not carry on with any working capital risk. All the Ld.TPO was supposed to do was to carry out necessary working capital adjustment to the profits of the selected comparables so as to make them comparable to assessee, rather than making negative working capital adjustment. We accordingly, remand this issue back to the Ld.AO/TPO to recompute the working capital adjustment necessary to bring the comparables on par with that of assessee. Considering the income reported in revised return filed by assessee which has not been followed by the Ld. AO as directed by DRP - HELD THAT:- DRP had directed the Ld.AO to consider the income reported in the revised return of income however the same has not been followed. We thus direct the Ld.AO AO to follow the directions of the DRP, which is in accordance with law for computing income in the hands of assessee.Accordingly this ground raised by assessee stands allowed for statistical purposes.

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• 2021 (3) TMI 987
  Cash deposits as unexplained investments u/s. 69A - HELD THAT:- No finding was given on such documentary evidence. No adverse evidence was acquired by the Assessing Officer except assuming and presuming the deposit in the bank account has unexplained cash credit. The assessee has admitted the ownership of the credit and that outgoes have gone to her son for his study in Australia. The lower authorities were of the view that the assessee has not explained the sources. Before us, the assessee has also filed the copies of ownership of land holdings of about fifty bigha of land. Considering the entire facts and circumstances of the case, we are of the view, it is a fit case for granting benefit of peak credit to the assessee, as no adverse material is brought on record except taking view that keeping of such cash at home is abnormal. Therefore, we deem it appropriate to restore the appeal to the file of assessing officer to consider the plea of assessee to grant her the benefit of peak credit and grant appropriate relief to the assessee. Ground No. 1 of the appeal is allowed for statistical purposes.

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• 2021 (3) TMI 986
  Non adjudication of the additional ground raised by the assessee - Allowability of depreciation on non-compete fees - additional ground in assessee s appeal which the ITAT has not adjudicated - HELD THAT:- Miscellaneous Application there is no whisper of additional ground remaining un-adjudicated. We note that additional ground was not adjudicated by the ITAT as there was no discussion on the subject. However, since the assessee has submitted photocopy of the ITAT receipt for filing additional ground in the interest of justice, we deem it appropriate that appeal [ 2020 (3) TMI 416 - ITAT MUMBAI] be recalled only to consider the veracity and adjudication of the said additional ground raised by the assessee.

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• 2021 (3) TMI 984
  Disallowance of claim of deduction u/s. 80P(2)(a)(i) - CIT(A) held that the assessee is a co-operative society, eligible for claim of deduction u/s. 80P(2)(a)(i) with regard to income derived from business of providing credit facilities to its members but income earned from persons other than regular members of the assessee was not eligible for deduction u/s. 80P(2)(a)(i) - HELD THAT:- Referring to Section 18 of the Karnataka Co-operative Societies Act, 1959 as amended with effect from 01.06.2014, the Co-operative Societies registered under the Karnataka Cooperative Societies Act, 1959 is allowed to do have nominal/associate members up to 15% for its total membership. In the instant case, the assessee has not provided the details sought by the CIT(A), namely, copies of bye-laws, details of investments, details of income derived from non-members, etc. The Hon ble Apex Court in the case of The Mavilayi Service Cooperative Bank Ltd. Ors. [ 2021 (1) TMI 488 - SUPREME COURT] had clearly stated that when assessee is accepting deposits and providing credit facilities to non-members, the respective State Coo-operative Act will have application. Since the assessee has not provided the details, in the interest of justice and equity one more opportunity should be granted to the assessee to provide the same. Issues raised in this appeal are restored to the files of the CIT(A). Appeal filed by the assessee is allowed for statistical purposes.

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• 2021 (3) TMI 983
  Validity of penalty levied under section 271C - order passed by ITO-TDS under section 201(1)/201(1A) - assessee vehemently argued that for service of notice, assessee has given the address of his Counsel for the purpose of service of notice, no notice at the address mentioned in Form-3 was served upon the counsel of assessee - HELD THAT:- CIT(A) allegedly fixed the hearing on 22.08.2014 and the order was passed on 27.08.2014. In our view, no sufficient and fair opportunity was given to the assessee either by ITO-TDS or by Ld. CIT(A). Therefore, we deem it appropriate to restore the matter to the fire of AO to pass the order afresh after considering the submissions of the assessee, including the pattern of shareholding of the directors of the assessee. Needless to direct that before passing the order, the ITO, TDS shall grant fair and proper opportunity to the assessee and pass the order in accordance with law. So far as, objection of the DR for the Revenue that holding pattern shareholding should not be examined afresh, we are afraid to hear such a submission from ld. DR of the Revenue. The submission of learned DR for the revenue is not acceptable to us, which will be amounting to close the door of audi alterum pattern.

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• 2021 (3) TMI 982
  Addition u/s 68 - HELD THAT:- As gone into the details of the amount deposited by the assessee in his bank account and came to a conclusion as it can be seen from the record that the assessee had discharged his onus qua identity, creditworthiness and genuineness of the credit. CIT(A) further held that the assessee has already repaid Rs. 5.00 lakhs against the loan of Rs. 7.00 lakhs, however, failed to explain the transaction of Rs. 2.00 lakhs and therefore in the peculiar facts and circumstances affirmed the partly addition of Rs. 2.00 lakhs only. We could not find any material and/or circumstances contrary to the conclusion/observation of the ld. CIT(A), hence, are inclined to dismiss the appeal of the assessee. Appeal filed by the assessee stands dismissed.

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• 2021 (3) TMI 981
  Unascertained Liabilities u/s 41(1) - CIT(A) has surprisingly restricted the disallowance to 50% of the outstanding balance on an ad hoc basis - HELD THAT: - This is not permitted in law. CIT(A) rejected the books of accounts. When the Assessing Officer has not rejected the books of accounts of the assessee, we find no proper reason recorded by the ld. CIT(A) for rejecting the books of accounts. No defects have been pointed out in the books of accounts. The company is a Government company and its accounts are audited both by the statutory auditors as well as C AG. Such audited books cannot be rejected in such a casual manner. Ad hoc disallowances are arbitrary and cannot be upheld. Under the circumstances, we are of the considered opinion that the entire disallowance made by the Assessing Officer on the ground of cessation of unascertained liability is hereby deleted. The ground of the revenue is dismissed and the ground no.1 to 6 of the assessee s appeal are allowed. Disallowance of Stale Cheque - AR has submitted that the assessee from time to time transfers the stale cheque money back to its accounts if the amount has not been claimed - also that if at all the addition was to be made it cannot be made in the current year but should be made in the year in which these liabilities have arisen - HELD THAT:- As perused the assessment order. The assessee is a public sector company, audited by C AG. The assessee has been following regular system of crediting stale cheques back to the accounts as and when it thinks that the liability has ceased to exist. Therefore, in view of the consistent accounting system followed by the assessee and also due to judgment cited GOODRICKE GROUP LIMITED [ 2011 (5) TMI 127 - CALCUTTA HIGH COURT] and M/S. DLF LIMITED [ 2016 (3) TMI 679 - ITAT DELHI] the additions could not have been made in the current year. In view of the above, I agree with the contention of the A/R. Addition made in the assessment order of interest on income-tax refund - assessee s case is that the interest of income tax refund is reflected as income during the assessment year 2017-18 i.e. when the interest was received and hence an addition of the same amount in the assessment year 2014-15 would tantamount to double addition - HELD THAT:- We restore this issue to the file of the Assessing Officer for verification. In case the interest to income tax refund has been considered as income of the assessee for the assessment year 2017-18, then no separate addition can be made in this year.

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• 2021 (3) TMI 980
  TP Adjustment - Assessee applied Transactional Net Margin Method (TNMM) with Operating Profit/Operating Cost (OP/OC) as Profit Level Indicator (PLI) as the Most Appropriate Method (MAM) - adoption of TP analysis made by the Revenue Department in the earlier years - comparability - HELD THAT:- CIT(A) under the garb of rule of consistency adopted the TP analysis made by the TPO and accepted by the ld. CIT(A) in taxpayer s own case for AY 2010-11 without examining the legality of the TP study conducted by the taxpayer finding its international transactions at arm s length and TP analysis of the TPO vide which he has adopted the internal comparables and proposed an adjustment of Rs. 1,39,87,736/-. This method of TP analysis is unheard of as every assessment year is required to be examined independently to reach the logical conclusion to determine the ALP of international transactions. Merely because of the fact that during the year under consideration, there is no change in the business model of the taxpayer and the services rendered are identical, there is no statutory mandate to adopt the TP analysis made by the Revenue Department in the earlier years in order to make the adjustment in the subsequent years. In these circumstances, we are of the considered view that passing such an order on the basis of conjectures and surmises is in contravention of the provisions contained in Rule 10B (2) of the Income-tax Rules, 1962. Consequently, impugned order passed by the ld. CIT(A) is set aside and file is remitted back to the ld. CIT(A) to decide afresh after providing an opportunity of being heard to the taxpayer. The appeal filed by the taxpayer is hereby allowed for statistical purposes.

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• 2021 (3) TMI 977
  Deduction u/s 10A - Whether Tribunal was right in holding that Internet expenses incurred in foreign exchange should be reduced from the total turnover for the purpose of computing deduction? - HELD THAT:- Question of Law no.1 is covered by the decision of the Hon ble Supreme Court reported in Commissioner of Income-tax, Central III Vs. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] . Entitled to deduction under Section 10A in respect of the alleged new unit even though the said unit had been substantially made up using the assets of the old units and thus not fulfilling the conditions laid down in clauses (ii) and (iii) of Section 10A(2) - HELD THAT:- This issue covered by the decision of this Bench in Commissioner of Income Tax, Chennai Vs. M/s.S.R.A. Systems Ltd., No.100, Valluvar Kottam High Road, Nungambakkam, Chennai [ 2021 (1) TMI 843 - MADRAS HIGH COURT] Claim for deduction under Section 10A was to be allowed before adjusting brought forward losses and unabsorbed depreciation - HELD THAT:- Question of law no.3 is covered by the decision of the Division Bench of this Court in M/s.Comstar Automative Technologies Private Ltd.[ 2020 (3) TMI 814 - MADRAS HIGH COURT] . We are convinced that the Questions of Law involved in the present appeal are covered by the decisions relied upon by the learned counsel for the respondent, cited supra. Following the decisions of the Hon ble Supreme Court and the decisions of this Court, the Questions of Law are decided against the Revenue and in favour of the assessee

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• Customs

• 2021 (3) TMI 1034
  Jurisdiction - proper officer to issue SCN - Additional Director General, Directorate of Revenue Intelligence - HELD THAT:- The issue is no longer res integra and that the Hon ble Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] had held that the expression the proper officer occurring in Section 28 of the Customs Act will only refer to the assessing officer who passes the original order making assessment. In the case also, the show cause notice was issued by the Additional Director General of DRI. The Hon ble Supreme Court had held that he cannot be termed as the proper officer . Since the entire proceedings were initiated by an authority who lacked the jurisdiction, applying the aforesaid decision of the Hon ble Supreme Court the order impugned in these writ petitions is quashed. Petition allowed - decided in favor of petitioner.

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• 2021 (3) TMI 1015
  Violation of principles of natural justice - petitioner has been put under the Denied Entity List (DEL) - despite sending a detailed objection to the show cause notice issued by the respondents, the same has not been considered and without affording a fair hearing, the impugned order has been passed - HELD THAT:- In the case on hand, the petitioner has been put under the Denied Entity List (DEL) by the respondents by exercising the power under Rule 7 of Foreign Trade (Regulation) Rules, 1993. However, as seen from the impugned order, no reasons have been given for putting the petitioner under the Denied Entity List (DEL). The petitioner has admittedly given a reply to the show cause notice, dated 20.07.2020 issued by the respondents on 05.02.2020. The same has been admitted by the respondents. In the reply to the show cause notice dated 05.02.2020, the petitioner has contended that they have not violated the provisions of Foreign Trade (Regulations) Rules, 1993 in view of the fact that the imports were made by them, pursuant to interim stay order granted by this Court in respect of the notifications issued by the respondents. As seen from the reply dated 20.07.2020, the petitioner has raised several contentions. Under the impugned Communication, dated 05.10.2020, none of the objections raised by the petitioner has been considered by the 1st respondent. The impugned communication is a non speaking order. Rule 7 of the Foreign Trade (Regulation) Rules, 1993 makes it clear that reasons will have to be given for putting the petitioner under the Denied Entity List (DEL) - Since, no reasons have been given, this Court is of the considered view that principles of natural justice has been violated by the respondents. The petitioner ought to have been afforded a fair hearing before such an order could have been passed. The matter remanded back to the respondents for fresh consideration on merits and in accordance with law after affording a fair hearing to the petitioner - Petition allowed by way of remand.

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• Corporate Laws

• 2021 (3) TMI 1009
  Sanction of scheme of amalgamation - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- It is clear that the Appellant Company has fulfilled all the requisite statutory compliances. However, Ld. NCLT modified the Appointed date considering the valuation report which is subsequent to the Appointed date. While modifying the Appointed date Ld. NCLT has not considered that the Appointed date 07.10.2017 is approved by the NCLT, Delhi vide order dated 22.10.2019 passed in CP No. CAA/144/ND/2018 in respect of Transferee Company. The alteration of the Appointed date would render all calculations awry, none of the shareholder opposed the Appointed date proposed in the scheme of amalgamation. The exercising jurisdiction by the NCLT Mumbai to modify the Appointed date from 07.10.2017 to 01.04.2018 in the facts of this case was unwarranted. Thus, the impugned order so far as the modification of Appointed date is concerned is set aside and the Appointed date as per the scheme is fixed 07.10.2017, which is approved by the shareholder of the Appellant Company. Appeal allowed.

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• 2021 (3) TMI 995
  Reduction of Equity and Preference Share Capital and approving minutes - HELD THAT:- The petitioner has undertaken to publish Notice of Registration of Order confirming reduction of share capital and Minutes thereof in two local newspapers in which notice of hearing of Petition is published, within 14 days of its registration - Since the requisite statutory procedure has been fulfilled, the Company Petition is made absolute in terms of the prayer clause of the Petition. The form of minutes set forth herewith be and is hereby approved. The issued, subscribed and paid-up equity share capital of BBM Heavy Machinery Private Limited (post-capital reduction) shall be Rs. 6,35,33,800/- divided into 63,53,380 equity shares of Rs. 10 each.

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• Insolvency & Bankruptcy

• 2021 (3) TMI 996
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor or not - privity of contract - High Seas Sales - HELD THAT:- It is noticed that the High Sea Sale Contract dated 31.05.2017 is entered between the Corporate Debtor and M/s. Thankam Cashew Factory on 31.05.2017 but not with the Operational Creditor. Since Thankam Cashew Factory was not having the required funds, in order to pay an advance amount for the purchase of goods the Operational Creditor paid an amount of Rs. 1,15,00,000/- to the Corporate Debtor. There is no privity of contract between the Operational Creditor and the Corporate Debtor. A stranger to a contract cannot come before a court of Law as held in the matter Dunlop Pneumatic [ 1915 (4) TMI 2 - HOUSE OF LORDS ] and that the Applicant Operational Creditor does not come under the definition of Operational Creditor as defined under Section 5(20) of the I B Code, 2016 - It is evident that the cheques issued on the earlier dates were cancelled by the Corporate Debtor and issued another 4 cheques bearing Nos. 10055508, 10055509, 10055510 in favour of M/s. Thankam Cashew Factory and cheque bearing No. 10055511 in favour of the Applicant herein for an amount of Rs. 1,16,96,603/-. Whether the debt falls within the purview of Operational Debt under Section 5 (21) of the I B Code,2016? - HELD THAT:- Any amount claimed as due by a person representing as Operational Creditor should demonstrate firstly that the said amount in default falls within the definition of claim as defined in Section 3(6). Such a claim, secondly should be capable of being treated as a debt as defined under Section 3(11) of I B Code, 2016 and finally the debt should fall within the confines of Section 5(21) of I B Code, 2016 (i.e.) it should be capable of being treated as an Operational Debt and such an operational debt must be owed by the Corporate Debtor to a creditor who can then be considered as an Operational Creditor as defined under Section 5(20) of IBC, 2016 - The claim of the Operational Creditor is not based on an operational debt, because no goods/services were to be rendered by the Corporate Debtor. The Operational Creditor is not relating to the goods/services including employment or the debt in respect of the repayment of the dues, but it is related to non-payment of the advance money paid to the Corporate Debtor on behalf of M/s. Thankam Cashew Factory. Therefore, the same is not covered under the definition of the Operational Debt as provided under Section 5(21) of the Code. This is not a fit case for admission and order Corporate Insolvency Resolution Process against the Corporate Debtor - application dismissed.

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• 2021 (3) TMI 994
  Liquidation of the Corporate Debtor Company - Section 33 and 34 of the Insolvency Bankruptcy Code - HELD THAT:- This Adjudicating Authority is of the view that the liquidation order can be passed in respect of Corporate Debtor i.e. Varanasi Auto Sales Limited, as no resolution plan has been received by any of the Resolution applicant and the Members of the COC with 89.18% are also in favour for liquidation of the Company and further RP has complied with the provision laid down under Insolvency and Bankruptcy Code. The COC has also resolved the present RP to act as a liquidator in the matter and also the fee and expenses of the liquidation has been fixed in the COC meeting held on 17.01.2020. Liquidation order is passed - application allowed.

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• 2021 (3) TMI 993
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditor - existence of debt and dispute or not - HELD THAT:- As stated by the Petitioner, it has paid advance amount of Rs. 5 lakhs each for 10 apartments. However, the Petitioner has not furnished any details of construction, payment of remaining consideration, except enclosing copies of Agreements of Sale. The Petitioner alone has entered into agreements of sale for purchase of 10 apartments. Therefore, the Petitioner, at the most, can claim refund of advance money rather than to hand over completed apartments without paying major portion of consideration. Mere Agreement of sale by paying paltry advance amount cannot create substantial right to the Petitioner to invoke provisions of Code. There is an alternative remedy of Arbitration available in the Agreements of Sale, if there is any dispute arises between the Parties. The Petitioner has not stated whether any steps have been taken to offer the balance amount of consideration to the Respondent. The Petitioner has not furnished any details in respect of Corporate Debtor with regard to its insolvency. The Petitioner has failed to make out any case so as to initiate CIRP in respect of the Corporate Debtor. The Petition is filed on misconceived facts and Law. Petition dismissed.

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• 2021 (3) TMI 988
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - pre-existing dispute or not - HELD THAT:- The deficiency in services was raised by the Corporate Debtor in the Email Trail communication vide dated 01.02.2018, 21.05.2018, 28.05.2018 and 14.06.2018 between the Operational creditor and Corporate Debtor. Secondly, the Termination Letter dated 18.07.2018, wherein the Corporate Debtor terminated the 5 Purchase orders owing to Non-performance of contract and finally the Legal Notice delivered dated 30.05.2019 clearly establishes the fact that there was pre-existence of Dispute between both the parties prior to the issuance of demand notice. Since there is a pre-existing dispute between the parties, there are no option but to reject the prayer of the Operational Creditor to initiate proceedings under Section 9 of IBC, 2016 - application dismissed.

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• 2021 (3) TMI 985
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor or not - existence of debt and dispute or not - time limitation - HELD THAT:- The claim of the applicant is not admitted by the respondent. In fact there are certain issues which should be adjudicated before ascertaining the claim of the applicant. At this stage it is immaterial to consider who will succeed. Besides this forum, in the present proceeding, is not supposed to examine the merit of the disputed claims made by the parties. Time Limitation - HELD THAT:- A financial/operational creditor will have to be vigilant while initiating proceedings under the Code and ensure that application is within 3 years from the date of default. The creditor will be unable to take the benefit of the provisions of the Limitation Act, which provide for a fresh period of limitation to run/exclusion of time in computing limitation. The same rule shall apply for the operational creditor. Existence of dispute - HELD THAT:- Existence of dispute largely depends on the facts and circumstances of each case. In the factual background of this case existence of real dispute cannot be totally overruled - That apart the respondent has placed copies of invoices for re-supply of materials in place of defective materials. The said invoices have been disputed by the applicant in its rejoinder. Therefore, there exist various questions which require a proper adjudication in order to ascertain the claim of applicant. Application is dismissed as barred by limitation.

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• 2021 (3) TMI 979
  Condonation of delay in filing claim - seeking direction to liquidator to accept and verify the claim of Applicant - Rejection of claim filed by Applicant before the liquidator appointed for the Corporate Debtor Company, which is undergoing CIRP - HELD THAT:- The contention of the Counsel for liquidator is that the Applicant filed the claim beyond the time prescribed for receiving the claims. It is true that the Applicant filed the claim after a delay of 540 days. The claim was not filed within 30 days from the commencement of liquidation process. The undisputed fact is that there was an abnormal delay in filing the claim before the liquidator. The applicant has not furnished any justifiable reasons for the delay. The amount claimed by the Applicant is substantial. It is not convincing to believe that a person who is to get substantial amounts is not keeping a track of the happenings in the corporate debtor. Application dismissed.

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• 2021 (3) TMI 978
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Financial Creditor or not - pre-existing debt and dispute or not - HELD THAT:- The grounds stated by corporate debtor will not prevent the financial creditor from initiating CIRP against corporate debtor. There are grounds to admit the petition. No tenable objections are raised by the corporate debtor about the debt. The financial creditor suggested the name of the IRP and filed his consent in Form-2. The petition is complete and therefore deserves to be admitted. Petition admitted - moratorium declared.

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• PMLA

• 2021 (3) TMI 1027
  Seeking grant of Bail - corruption and abuse of high public office - HELD THAT:- The Hon ble Supreme Court of India in the decision reported in [ 2019 (9) TMI 286 - SUPREME COURT ], has considered the scope of bail in economic offences involving corruption and abuse of high public office and in paragraph nos.18 to 23 has observed that basic jurisprudence relating to bail is that bail is the rule and refusal is the exception, etc., Though gravity of offence is an important factor and economic offences as in present case are considered grave, consideration for grant of bail would depend upon facts of each case and taking into consideration all the facts and circumstances, has enlarged P.Chidambaram, on bail, subject to certain conditions . Granting of bail is a discretional relief and it is a well settled position of law that bail is the rule and jail is the exception. Though the respective learned counsels appearing for the parties has placed reliance upon the above said judgments, in the considered opinion of this Court, there cannot be any precedent in the matter of granting bail and the consideration to grant or refuse to grant bail, have to be decided on case to case basis and depends upon the facts and circumstances of each case. The petitioner shall execute a bond for a sum of Rs. 1,00,000/- with two sureties each for a like sum to the satisfaction of the Court of Principal City Civil and Sessions Judge, City Civil Court, Chennai - Bail is granted subject to conditions imposed - application allowed.

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• Service Tax

• 2021 (3) TMI 1026
  Classification of services - commercial/industrial service or not - services provided to educational trust - contract works - HELD THAT:- The petitioner had carried out the contract works for the second respondent. There is no doubt that the second respondent is an educational trust that is enjoying exemption under the Income Tax Act. The petitioner s stand from the beginning is that the service provided to such an educational trust cannot be called as commercial or industrial service. The stand of the petitioner s counsel is that the first respondent being an authority subordinate to the Tribunal is squarely bound by such a decision and that it is not open to him to go beyond it. The petitioner s counsel would state that the entire issue will have to be re-visited by the first respondent by associating the second respondent by invoking the power under Section 14 of the Central Excise Act, 1944 - That was a case arising under ESI Act. The authority had initiated the proceedings against the employer. But then, the employees were not associated either in individual or representative capacity. The Court felt that the statute is for the benefit of workmen and that therefore, they will have to be necessarily made a party. Thus, non-impleading of the second respondent in the adjudicating proceedings is really a serious defect. That vitiates the entire proceedings. That apart, it is evident from the record that the petitioner had also paid the service tax for the period from 01.07.2012 onwards. Rs. 8,40,563/- was paid by the petitioner on 27.03.2013 and 31.03.2013. This was well before passing of the impugned order. The first respondent does not appear to have taken note of the remittance made by the petitioner herein. The matter is remitted to the file of the first respondent to pass orders afresh in accordance with law - petition allowed by way of remand.

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• 2021 (3) TMI 1018
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Deduction of amount of pre-deposit made at any stage of appellate proceedings during the course of enquiry, investigation or audit, made while issuing statement indicating the amount payable by the declarant - HELD THAT:- The Estimation as made in Form SVLDRS-2 at Annexure-C dated 28.11.2019 is set aside with a direction to the respondent Authority to make a fresh Estimate in SVLDRS-2. Consequently, the Statement under Section 127 as per Annexure-G dated 27.02.2020 is set aside. The first respondent to re-work the statement in SVLDRS-3 after taking into credit of the admitted deposit of Rs. 3,81,513/- as already indicated in the SVLDRS-3 enclosed at Annexure-G and also to take a decision as regards the other two pre-deposits of the petitioner stated to be available for appropriation of Rs. 8,48,618/- and Rs. 8,48,617/- as per the Challans dated 22.03.2013 and 30.04.2013 respectively and accordingly re-consider the declaration in Form No.1 at Annexure-B. It is made clear that the Authority while considering the same is to limit itself in exercising its power strictly within the provisions of the Scheme and cannot enter into any adjudicatory exercise - the respondent-Authority is directed to issue the Discharge Certificate in terms of Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019. Petition disposed off.

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• 2021 (3) TMI 1017
  Levy of service tax - renting of immovable property Service - case of the petitioner in this writ petition is that it is a charitable institution recognised under the provisions of the Income Tax Act, 1961 and therefore the petitioner cannot be saddled with service tax liability even if the petitioner was renting out its premises to business entities on the income generated by it is used for carrying out its charitable activities - HELD THAT:- If the petitioner was of the view that it was not liable to tax in terms of the above notification, it could have ignored the aforesaid letter/communication. The said communication was an innocuous communication merely nudging the petitioner to obtain registration and pay service tax or any alternative avail the benefit of the Voluntary Compliance Encouragement Scheme, 2013. However, the petitioner approached the first respondent for an individual exemption and thereafter filed the said writ petition. Pursuant to the aforesaid order in the said writ petition, the impugned order has been passed. There was no necessity on the part of the petitioner to have filed the said writ petition and invited the above observation. If the petitioner felt that it was not liable to pay tax for renting of its immovable property based on the above Notification No. 25/2012-ST dated 20.6.2012, it should have ignored the persuasion of the officers of the Service Tax Department - petitioner shall thereafter give its reply explaining the reasons as to why it is not liable to pay service tax for renting of immovable property to the banks in terms of Notification No. 25/2012-ST dated 20.6.2012. The jurisdictional officer shall adjudicate the show cause notice without getting influenced by any of the observations in the impugned communication of the 1st/5th respondent which stands quashed. Petition disposed off.

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• 2021 (3) TMI 1007
  Refund of service tax paid - the only ground on which refund has been rejected is that the said specified services are not included in the Default List and services approved by the Development Commissioner of SEZ - Notification No.12/2013-ST dated 01.07.2013 - HELD THAT:- There is no dispute that the said services have been used by the appellant for authorized operation in the SEZ. Further, not mentioning the said services in the Approved List is only a technical defect and it should not debar the substantive benefit to the assessee who has utilized those services for carrying out authorized operation. It is noted that both the input services have been subsequently included by the Development Commissioner of SEZ in the List of default services. The impugned order is not sustainable in law - Appeal allowed - decided in favor of appellant.

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• 2021 (3) TMI 1006
  100% EOU - refund of unutilized Cenvat credit - Rejection on the ground of non-compliance of para 2 (h) of the Notification No. 27/2012 C.E. (N.T.) dated 18.06.2012 - stand taken by the appellant is that though it had not debited the Cenvat credit ledger which was not maintained by it, it had debited the same from its service tax ledger under the heading service tax receivable - HELD THAT:- Going by the case record it is demonstratively established by the ld DR that an e-mail claiming such debit was sent to the adjudicating authority just two days prior to passing of the Orider-in-Original on dated 04.12.2015,which was not placed on record and learned Commissioner (Appeals) has clearly placed in his order at para 9 that he found no debit entry made in any of the ST-3 returns. More importantly, on perusal of ST-3 return of 25.04.2014 also in page No. 41-42 of the Appeal Memo, utilization of Cenvat credits for the period were shown as Zero in all its refund columns. More importantly, on perusal of ST-3 return of 25.04.2014 also in page No. 41-42 of the Appeal Memo, utilization of Cenvat credits for the period were shown as Zero in all its refund columns. In response to the submissions of Learned Authorised Representative, it has also been conceded by the learned Counsel for the appellant that till the date of argument such debit was not made from the Cenvat credit ledger as not maintained by them. It can be said that the appellant has tried to tune the legal procedure to the point of no return in not preferring to make the necessary debit even on a future day thought Notification No. 27/2012 had made it obligatory to debit the same while filing refund application - appellant is not entitled to get the refund as claimed by it for non compliance of the procedure. Appeal dismissed - decided against appellant.

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• 2021 (3) TMI 1005
  Refund of service tax - business of chit funds - foreman commission was introduced in the Finance Act, 2015 - HELD THAT:- The levy of service tax on foreman commission was introduced in the Finance Act, 2015 and there was no liability for payment of service tax on foreman commission till 31/03/2015. The appellant has produced Chartered Accountant certificate even before the authorities below but the learned Commissioner(Appeals) rejected the same without any legal basis. The certificate issues by the Chartered Accountant certifies that the incidence of service tax claimed has not been passed on directly or indirectly to any other person and the said amount of tax claim as refund was actually paid by the service provider. The appellant has proved that the incidence of service tax has not been passed on to anyone - the denial of refund for the period prior to 31/03/2015 is not sustainable in law - Appeal allowed - decided in favor of appellant.

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• 2021 (3) TMI 1002
  100% EOU - Refund of unutilized CENVAT Credit - scope of input services - denial of refund on the ground of lack of nexus with output services of export - Rule 5 of CENVAT Credit Rules, 2004 read with Notification No.27/2012-CE (NT) dated 18.6.2012 - HELD THAT:- In the impugned order, Commissioner (A) has wrongly relied upon the old circular of 2010 whereas the definition of input service has been amended with effect from 1.4.2011 and vide Notification No.27/2012-CE (NT) dated 18.6.2012 one-to-one correlation is not required to be established. Further, the appellant has given detailed reasons explaining the nexus between the input service and the output service exported by the appellant. Moreover, the department has not questioned the CENVAT credit availed by the appellant at the initial stage and the same cannot be questioned at the time of claiming of refund. Since all the input services involved in the present cases except those four services viz., Business Support Service, Management, Maintenance and Repair Service, Recovery for Gym and supply of tangible goods have been held to be input services by various decisions, the appellant is entitled to refund of CENVAT credit on all these input services. Interest on delayed refund - HELD THAT:- Apex court in the case of UOI vs. Hambard L(Waqf) Laboratories [ 2016 (3) TMI 68 - SUPREME COURT ], have held that the assessee is eligible for interest on refund amount sanctioned, in case, there is a delay beyond the stipulated period of three months as prescribed under the law - Hence, the appellant is entitled for the interest on the delayed sanction of the refund. Appeal allowed in part.

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• Central Excise

• 2021 (3) TMI 1039
  Refund of Excise Duty - benefits under the Northeast Industrial Policy - N/N. 20/2008-Central Excise dated 27.03.2008 - refund at special rates provided in the said notification in respect of the different categories of goods - HELD THAT:- As the Notification dated 27.03.2008 provides for a legal right to the assessee to claim for a special rate to be fixed in the event of there being any add-ons to the goods manufactured, we are of the view that without an appropriate decision being taken on such claim for special rate, it would be inappropriate for the department to proceed against the petitioners as per the rates provided in the Notification dated 27.03.2008. This petition stands disposed of by directing the Principal Commissioner of GST Guwahati to consider the aforesaid application of the petitioner dated 20.05.2020 claiming for a special rate to be fixed on the basis of the add-ons made to the goods manufactured - Petition allowed.

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• 2021 (3) TMI 1029
  Recovery of excess duty collected at the Depot on the revised rates - refinery/depots/installations of the respondents, extended arms of the respondent company - single entity or not - liability to pay to Government on the invoice raised at the depot of the respondent against its buyer which reflected the excise duty collected - HELD THAT:- The issue has already been dealt with by the Hon ble Division Bench of this Court in the case of COMMR. OF C. EX., COIMBATORE VERSUS HINDUSTAN PETROLEUM COPRN. LTD. [ 2015 (10) TMI 726 - MADRAS HIGH COURT] where it was held that in terms of Section 11D of the Act, the demand can only be made from the manufacturer of the goods and if any duty amount is collected in any manner as representing duty of excise. The learned senior standing counsel sought to distinguish the said decision. However, such an attempt has to fail because the impugned order was a common order passed in three cases concerning the Oil Companies, namely, HPCL, IOCL, BPCL -As noted by the Division Bench, the facts were common and the challenge by all the Oil Companies, namely, IOCL, HPCL and BPCL were identical before the Tribunal, and thus fully applicablr to present case. The appeal filed by the revenue is dismissed - the substantial questions of law are answered in favour of the assessee.

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• CST, VAT & Sales Tax

• 2021 (3) TMI 1033
  Revisional powers to enhance the penalty levied by the Commercial Tax Officer exercising discretionary powers vested in him under Section 53 (12) of the KVAT Act, 1957 by three times - Whether the order passed by the Commercial Tax Officer imposing minimum penalty exercising discretionary powers vested in him as per Section 53(12) of the KVAT Act is erroneous? - HELD THAT:- Section 53(2)(b) of the Act casts an obligation on the owner or person in charge of the goods vehicle to carry with him such documents as may be prescribed in respect of the goods carried in the goods vehicle. The consequences of non-compliance are prescribed under Section 53(12)(a) of the Act. The Commercial Tax Officer has power to levy penalty double or triple the amount of tax leviable in respect of the goods under transport, in case sufficient cause is not shown. Thus, the Commercial Tax Officer has discretion in the matter of imposition of penalty and the question of imposition of penalty is not automatic. In the instant case, the appellant, in reply to the notice issued to him proposing to levy penalty, has stated that one of his relatives in Kannur, Kerala had expired and therefore he had to rush to Kerala and was unable to raise a tax invoice or generate e-sugam before commencement of movement of goods. The appellant undertook to produce the books of accounts and to discharge the tax liability thereon. The aforesaid explanation was accepted by the Commercial Tax Officer as well as by the First Appellate Authority - thus, Revisional Authority exceeded its power in interfering with the concurrent findings of fact recorded by the Commercial Tax Officer as well as by the First Appellate Authority and in imposing three times the penalty on the amount of tax, merely on the ground that the assessee had contravened the provisions of Section 53(2)(b) of the Act. Appeal allowed - decided in favor of appellant.

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• 2021 (3) TMI 1032
  Levy of penalty under Section 53(12)(a)(i) of the KVAT Act - Non-reporting at the Checkpost in terms of Section 53(2) of the KVAT Act despite the Petitioner showing sufficient cause - presumption is that the Petitioner had attempted to transport the goods the State of Tamilnadu which was in fact stock transferred to the branch situated at Attibele supported with all the prescribed documents - levy of penalty while the Petitioner complied with the requirements of Section 53(2-A) by entering the stipulated details in the official website of the Commercial Taxes Department and generating E-Sugam much before the commencement of movement of goods - HELD THAT:- Various contentions raised by the appellant have not been considered. The levy of penalty is not automatic, but is discretionary in nature. Therefore, the matters which have a material bearing on the issue of levy of penalty have not been considered either by the Commercial Tax Officer or by the First Appellate Authority and the Tribunal. Therefore, in the facts of the case, it is deemed appropriate to remit the matter for consideration afresh and to take a decision on the stand taken by the petitioner, supra, by a reasoned order. The matter is remitted to the Tribunal for decision afresh after affording opportunity of hearing to the parties and taking note of the submissions made on behalf of the petitioner - Petition allowed by way of remand.

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• 2021 (3) TMI 1024
  Input Tax Credit - coal, alum, caustic soda, and other consumables used for generation of electricity - credit of tax paid on purchase of coal, alum, caustic soda and other consumables etc. against the tax payable on sale of finished product i.e. aluminum, aluminum ingots and sheets etc. - reasonable cause of escapement present or not - penalty under Section 43(2) of the OVAT Act. Input Tax Credit - HELD THAT:- Coal, alum, caustic soda and other consumables purchased from market on payment of tax and used for generation of electrical energy in the Captive Thermal Plant of the petitioner which is used in the process of manufacture of finished product viz. aluminum, aluminum ingots and sheets etc. taxable under the OVAT Act are input as defined under Section 2(25) of the OVAT Act and the tax which has been paid on such purchases can be claimed as input tax credit under Section 2(27) of the OVAT Act against the tax payable on sale of finished products i.e. aluminum, aluminum ingots and sheets etc. - demand raised in the assessment orders disallowing the input tax credit in respect of tax paid on coal, alum, soda, and other consumables used for generation of electrical energy is quashed. Whether imposition of penalty under Section 43(2) of the Orissa Value Added Tax Act, 2004 (OVAT Act) can only be levied if the escapement is without any reasonable cause ? - HELD THAT:- The Court notes that under Section 42 (5) of the OVAT Act the penalty levied is equal to twice the amount of tax assessed under Section 42(3) or 42(4) pursuant to an audit assessment - There is no discretion with the Assessment Officer (AO) to reduce this amount of penalty. On the other hand, Section 43(2) of the OVAT Act is under the heading Turnover escaping assessment , and is differently worded - The Court, therefore, finds merit in the contention of the learned counsel for the Petitioner that the observation in the judgment dated 9th October 2012, on the aspect of penalty under Section 42 (5) of the OVAT Act was not warranted. All that was required to be observed was that since the question had been rendered academic in view of the finding on issue No.1, the imposition of penalty under Section 43 (2) of the OVAT Act, was not automatic and that there is a discretion in the AO in this regard upon finding that there has been an escapement or under assessment of tax. Review petitions are allowed.

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• 2021 (3) TMI 1023
  Compounded rate of tax - ceiling limit of Rs. 50,00,000/- was breached - lifting of Corporate Veil - fraudulent transfer of properties - HELD THAT:- The properties that were purchased by Saraswathy way back in the year 1981-1984 cannot of course be proceeded against. Likewise there is no question of passing any Garnishee order against M/s.MRF Limited as far as M/s.Sree Saraswathy Tyres is concerned - However till the liability as mentioned is liquidated by Saraswathy, the attachment order in respect of Saraswathy s immovable properties will remain. It is open to Saraswathy to pay the monetary value and get them raised. The assessing authority is directed to effect recovery of the sales tax arrears of M/s.Iyyappa Tyres in terms of the undertaking now given by Tmt.M.Saraswathy before this Court - Petition allowed.

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• 2021 (3) TMI 1022
  Initiation of Reassessment proceedings - sale of diesel, purchased on concessional rate or otherwise to anyone including its contractor or sub-contractor, or not - HELD THAT:- In considered opinion of this Court, the fact that the diesel has been sold for consideration, is an assertion of fact by the Assessing Officer and the initial burden thereof lies upon him. The Assessing Officer is obliged to bring at least prima facie evidence before this Court to satisfy that the exercise of jurisdiction is legit, particularly when this Court is seized of the matter and has stayed the proceedings. This Court is of the prima facie opinion that exercise undertaken by the respondents on the allegation that the petitioner Company has sold diesel is not based on any cogent-evidence or material; respondents No.2 to 4 are attempting to conduct a fishing and roving enquiry - powers of reassessment or escaped assessment cannot be exercised in the manner attempted to by the respondents No.2 to 4. Application rejected.

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• 2021 (3) TMI 1021
  Re-assessment order - main thrust on which the learned counsel for the Revision Petitioner is seeking for setting aside the order passed by the KAT is that the order passed by the Commissioner of Commercial Tax did not authorise the AA for re-assessment but was only limited to the extent to the verification of refund claimed - HELD THAT:- It is seen that though the Commissioner of Commercial Tax ordered for verification of claim of refund by the revision petitioner, what is method that is adoptable to verify the refund claimed is not mentioned in the said order. Further, the order also reads that the authorities were invested with the power on assessment, re-assessment and other related statutory proceedings. In the absence of any direction particularly to carry out the verification of refund claimed by the revision petitioner, the assessment officer has verified the books to find out whether the claimed refund is in order or not. It is at this juncture, the FAA incidentally verified the books of accounts of the revision petitioner. Learned counsel for the revision petitioner vehemently contended that the AA did not have the right to reassess the accounts of the revision petitioner as there was no specific order by the Commissioner of Commercial Taxes for reassessment - said submission made on behalf of the revision petitioner cannot be accepted for more than one reasons. Firstly, from the translation copy made available in respect of the order passed by the Commissioner of Commercial Tax did invest the power for the AA for verifying the refund claimed by the revision petitioner. How exactly the claim of refund should be reassessed is not mentioned. Under the circumstances, the AA did verify the books of accounts of revision petitioner to verify the refund claimed. It is in that process, the irregularities have been noticed by the AA and Secondly, learned counsel is unable to point out what is the illegality committed by the AA when he has noticed the irregularities committed by the revision petitioner while claiming refund. Nor, the learned counsel for the revision petitioner is in a position to point out which of the provisions of the Act is violated by the AA while carrying out such an exercise. It is an admitted fact that the revision petitioner did not mention the charging and collection of the taxes in the individual invoices. Therefore, these aspects of the matter, have been dealt by the FAA and the KAT while recording the finding that the process and procedure adopted by the AA is factually correct and there is no illegality committed. Revision petition dismissed.

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• Indian Laws

• 2021 (3) TMI 976
  Breach of agreement entered into for sale of residential project - nearing completion project - Complainant Association has stated in the Complaint that the common facilities viz. Boundary wall, Medical Centre, Staff quarters, STP, Roads and Gardens which were promised are still not constructed and no effort was made by the Respondent Promoter to improve the infrastructure - complainant are seeking to enforce that the Promoter M/s. Serene Senior Living Pvt. Ltd. will complete the project as planned and provide residents with all infrastructure facilities - complainant also seeking relief in other complaints like Common facilities including club house, gardens should be handed over to the Association as per RERA Rules and also to attend warranty complaints. HELD THAT:- It is seen from the copy of the Construction Agreement for Flat No.C-104 in this Real Estate Project (attached with the Complaint as Annexure-I) that Para-21 of the Construction Agreement states that M/s. Serene Senior Care Pvt. Ltd (2nd Respondent) will provide services to the purchasers and also to other residents of Serene Rose for which a separate Services Agreement will be signed by the purchasers, the SSC (2nd Respondent) as well as the DEVELOPER (1st Respondent) along with this Agreement. This Construction Agreement with the Allottee Thiru A.K. Ragothaman has been executed on 16.09.2015 - It is also seen that the 1 st Respondent Promoter as Power of Attorney Holder of the lands on which this Project is developed has sold 25,746 sq.ft. of undivided share of land to the 2nd Respondent the Service Provider and executed the sale deed dated 27.10.2017. This act of sale by the 1st Respondent Promoter is not only in contravention of the Section 17 of the RERA Act, but also against the provision in the Construction Agreement in para-22, 23 and 24 specifying the eligible person to whom the undivided share in the project can be sold. It is also seen from the Construction Agreement executed with the Allottees of this Project that the Club House is a common facility and the sale consideration paid for the construction of the flat and common amenities and facilities includes the Club House. The Brochure for the Serene Rose Real Estate project specifically mentions the Club House as one of the facilities for the Allottees - Therefore, the ownership of the Club house as well as the undivided share of the land on which the superstructure of the Club House is located has to be vested with the Association of Allottees only. It is for the 1st Respondent to ensure that the undivided share of the land measuring 25,746 sq.ft. and the Club House are conveyed to the Association of Allottees before 28.02.2021. For this purposes, the 1st Respondent Promoter shall pay back to the 2nd Respondent the sale consideration collected by them as Power of Attorney Holder from the 2nd Respondent towards undivided share of land and the 1st Respondent Promoter shall also repay the construction cost of the Club House which was paid by the 2nd Respondent to the 1st Respondent Promoter - With these payments, the 1st Respondent Promoter should get the ownership of the undivided share of land and the Club House and convey in favour of the Association of Allottees before 28.02.2021. This Complaint is disposed of.

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