TMI Tax Updates - e-Newsletter
March 29, 2022

Case Laws in this Newsletter:

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

Articles

1. Blocking of electronic credit ledger of recipient dealer on account of fault of supplier dealer lacks any statutory authority. Post decisional hearing required to be provided to aggrieved taxpayer within 2 weeks from date of order blocking the ECL.

   By: Gaurav Gupta

News

1. THE FINANCE BILL, 2022 (AS PASSED BY LOK SABHA ON 25.03.2022)

2. India’s aim is to become world’s largest Startup destination: Shri Piyush Goyal

3. More than 37,000 users joined UPI123Pay since its launch on 8th March 2022

4. Gross non-performing assets (NPAs) improves from 11.33% in FY 2017-18, to 13.52% in FY 2018-19, to 14.69% in FY 2019-20

5. Season’s first consignment of Alphonso and Kesar mango exported to Japan.

6. Quarterly Report on Public Debt Management for the quarter ended December 2021

7. Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates (UAE) Unveiled

8. Shri Parshottam Rupala calls for creation of animal disease free zones for boosting value-added meat products

Notifications

GST - States

1. S. R. O. No. 291/2022 - dated 25-3-2022 - Kerala SGST

Amendment in Notification G.O.(P) No.66/2020/TAXES. dated 14th May, 2020

2. 223/2022/16(120)/XXVII(8)/2021/CT-39 - dated 22-3-2022 - Uttarakhand SGST

Appointing the 1st day of January, 2022, as the date on which the provisions of sections 2,3 and 7 to 15 of the Uttarakhand Goods and Services Tax (Amendment) Act, 2021 (Uttarakhand Act No. 22 of 2021) shall come into force

3. 222/2022/16(120)/XXVII(8)/2021/CT-38 - dated 22-3-2022 - Uttarakhand SGST

Notifying the 1st day of January, 2022, as the date from which the provisions of rule 3, rule 4, clause (i) of rule 7 and rule 8 of Uttarakhand Goods and Services Tax (Ninth Amendment) Rules, 2021, shall come into force.

4. 43/2022/15(120)/XXVII(8)/2021/CTR-15 - dated 11-1-2022 - Uttarakhand SGST

Seeks to amend Notification No. 525/2017/9(120)/XXVII(8)/2017 dated the 29th June 2017

5. 42/2022/15(120)/XXVII(8)/2021/CTR-14 - dated 11-1-2022 - Uttarakhand SGST

Seeks to amend Notification No. 514/2017/9(120)/XXVII(8)2017 dated the 29th June, 2017

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CDMRD/DMP/P/CIR/2022/36 - dated 28-3-2022

Product specifications pertaining to the Electronic Gold Receipts (EGR) segment in India

Highlights / Catch Notes

GST

• Court Rules Electronic Cash Ledger Refunds Must Offset Future Tax Liabilities Amid Fraud Probe Under CGST Act Sections 73 & 74.

  Case-Laws - HC : Refund of amounts lying in the petitioner's electronic cash ledger - investigation is pending against large scale fraudulent availing of credit on the strength of fake and fictitious invoices - the amount lying in the Electronic Liability Register of the petitioner can be refunded only the manner in the law. It cannot be ordered to be refunded. It can however be utilised by the petitioner for discharging tax liability against future supplies to be made/effected by the petitioner provided of course prior to such supply, the tax to be paid by the petitioner is adjudicated and determined and appropriated in the proposed proceedings under Section 73/74 of the CGST Act, 2017, in which case, Section 79 of the CGST Act, 2017 can be pressed into service. - HC
  Visit to Get Source

  ---

• Medical Instruments Placement at Hospitals Classified as "Supply" u/s 7 of CGST Act, Rules AAAR.

  Case-Laws - AAAR : Supply or not - placement of specified medical instruments by the appellant at the premises of unrelated hospitals, labs etc. in pursuance of the agreement for their use for a specific period - movement of goods otherwise than by way of supply or not - Section 7 of the CGST Act, 2017 - It is well settled principle that a taxing statute must be interpreted in the light of what is clearly expressed; it cannot imply anything, which is not expressed, it cannot import provisions in the statute so as to supply any assumed deficiency. - Thus, it is evident that the activity or transaction undertaken by the appellant qualifies to be categorised as "supply" - AAAR
  Visit to Get Source

  ---

• GST Advance Ruling Rejected: Cannot Address Supplies Made Before Application Filed, Per GST Act 2017.

  Case-Laws - AAR : Scope of Advance Ruling application - Exemption from GST - As the question posed by the applicant is related to supplies undertaken by them prior to the date of filing of the application for advance ruling, no ruling can be given on the questions. Hence, the subject application for advance ruling made by the applicant is not maintainable and rejected under the provisions of the GST Act, 2017. - AAR
  Visit to Get Source

  ---

Income Tax

• High Court Upholds Quashing of Reassessment Notices Under New Sections 147 and 148A; Finance Act 2021 Changes Effective April 1.

  Case-Laws - HC : Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - Comparison between old and new provisions for reassessment - In our understanding by virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. - In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. - HC
  Visit to Get Source

  ---

• No Penalty for Assessee: Reasonable Cause Justified u/s 273B for Loans via Journal Entries, Not Cheques.

  Case-Laws - AT : Penalty u/s 271D - contravention of provisions of Sections 269SS - assessee has accepted loans and deposits from various sister concerns through journal entries, as such, loans were not taken through an account payee cheque or account payee bank drafts - it could be safely concluded that these entries were passed out of business constraints and exigencies and for administrative convenience with no malafide intent to evade payment of tax. In our considered opinion, this business constraint and exigency and administrative convenience itself constitutes reasonable cause within the meaning of section 273B - No penalty - AT
  Visit to Get Source

  ---

• Court Rules in Favor of Assessee on Bad Debts Without Ledger Write-Off, Ensuring Debt Recovery Rights Intact.

  Case-Laws - AT : Bad debts - Provision for doubtful debts and doubtful advances - Assessee has not written off the provision for doubtful debts in the individual ledger account of the sundry debtors for the reason that it will lose it right in the Civil proceedings for recovery of its dues from the sundry debtors. This argument of the Ld. A.R was not controverted by the Ld. DR for the assessee at the time of hearing. - Claim allowed - AT
  Visit to Get Source

  ---

• Income Surrender u/s 133A Deemed Involuntary; Additions Deleted Due to Mistaken Belief of Facts and Law.

  Case-Laws - AT : Surrender of Income during Survey u/s 133A - Surrender is voluntary or under influence of revenue (coercion) - The retraction is supported by evidence confronted to the A.O. CIT(A) and relied upon before the ITAT remains unrebutted till date, it clearly brings out a case that the surrender was made based on facts as confronted which resulted in the action of surrender. - the surrender admittedly on facts was made on mistaken belief of facts and law and in the face of the voluminous plethora of evidences countering each of the factors considered relevant by the Revenue for addition, we have found that reliance is only placed upon statement of the Director and the employees. The additions are directed to be deleted. - AT
  Visit to Get Source

  ---

• Penalty Upheld for Cash Loans from Directors Violating Income Tax Act Section 269SS; Section 271D Invoked for Non-Compliance.

  Case-Laws - AT : Penalty u/s 271D - loan amount obtained in cash from Directors in emergency - violation of provision of section 269SS - the assessee that on the different dates assessee has obtained cash from the two directors and there was no repayment made by the assessee during the year, the aforesaid accounts cannot be said of the nature of current account as claimed by the assessee. The assessee has not brought any material to substantiate that assessee has not committed any violation of section 269SS of the act - Levy of penalty confirmed - AT
  Visit to Get Source

  ---

Customs

• Appeal Dismissed After Waiver Request Denied; Pre-Deposit Requirement Upheld by Courts Despite Financial Hardship Claim.

  Case-Laws - AT : Requirement of pre-deposit - The appellant has not made the pre-deposit and has filed an application seeking waiver because of financial constraints and for the reason that the appellant has a good case on merits - As the law relating to pre-deposit has been settled by the Supreme Court and the High Courts, it would also not be possible to accept the prayer made by the learned counsel for the appellant that the application should not be decided at this stage as the matter in the case of a co-noticee, after his plea for waiver of pre-deposit had been rejected by the Tribunal and the High Court had maintained the order of the Tribunal, is pending in Supreme Court. - The application filed for waiver of pre-deposit is rejected - As the application has been rejected, the appeal stands dismissed - AT
  Visit to Get Source

  ---

• SAD Refund Claim Rejected Due to Time Limits; Contested u/s 27 of Customs Act for Special Notifications.

  Case-Laws - AT : Refund claim of Special Additional Duty (SAD) - rejection on the ground of time limitation - Merely because Section 27 of the Customs Act provides for a period of limitation for filing refund claim, it cannot be held that even for the purposes of claiming refund in terms of the Notification, the same limitation has to be applied. - AT
  Visit to Get Source

  ---

Corporate Law

• Court Blocks Zee Entertainment Shareholders from Holding EGM; Affirms Shareholder Rights Under Companies Act Sections 160 and 169.

  Case-Laws - HC : Restraint on shareholders of Zee Entertainment Enterprises Limited from calling for and holding an Extra Ordinary General Meeting - The procedure for appointment of Independent Directors - The power given to shareholders of a Company by Section 160 and more importantly, the proviso thereto, cannot go unnoticed. In the teeth of the aforesaid provision, we cannot appreciate how the Ld. Single Judge agreed “on all counts” with Zee’s submission that “In the scheme of the Companies Act, shareholders do not get to choose individual independent directors.” - Section 160 does not make any distinction whatsoever between an Independent Director or otherwise. On a plain reading of Section 160, a shareholder of a Company clearly has the right to propose the appointment of an Independent Director. - Zee’s submission cannot be accepeted by defeating corporate democracy and ignoring the safeguards provided to shareholders under Section 160 and 169 of the Act. - HC
  Visit to Get Source

  ---

IBC

• Supreme Court Sends Insolvency Case Back to NCLT for Reassessment Due to Inadequate Response Opportunity to New Evidence.

  Case-Laws - SC : Initiation of CIRP - pre-existing dispute or not - NCLT rejected the application - NCLAT allowed the application admitting the additional evidences - the impugned order allowing the appeal and even admitting the application u/s 9 of the Code cannot be sustained on a short point that the said additional documents were taken on record only while finally deciding the appeal and without adequate opportunity of response to the corporate debtor. However, at the same time, due consideration of the said documents also appears requisite and the documents i.e., the said e-mails, cannot be removed out of consideration only because they were not on record before NCLT. - Application restored before NCLT - SC
  Visit to Get Source

  ---

Service Tax

• Revenue Sharing in Film Screenings Not Subject to Service Tax Without Clear Service Provider Relationship.

  Case-Laws - AT : Business Auxiliary services - revenue sharing agreement - business of exhibiting cinematographic films across India in theatres owned by it or taken on rent - As the appellant was screening films on revenue sharing basis, the appellant was not liable to pay service tax on the payments made to the distributors for screening the films - This apart, a revenue sharing arrangement does not necessarily imply provision of services, unless the service provider and service recipient relationship is established. - AT
  Visit to Get Source

  ---

• Well-Digging Services for Farmers Exempt from Service Tax, Vital for Irrigation and Agriculture Under Negative List.

  Case-Laws - AT : Exemption from Service Tax or not - service of digging wells and bore-wells were directly provided to the farmers for their agriculture operations - The agriculture/cultivation includes irrigation or watering of the plants, as due to lack of irrigation, it is very difficult to have any agriculture produce - the activities carried out by the appellant is covered in the Negative List, which are exempt from tax - AT
  Visit to Get Source

  ---

Central Excise

• Court Rules Against Respondents for Delays in Show Cause Notices, Citing Prejudice to Petitioner Due to Years of Inaction.

  Case-Laws - HC : Validity of SCN - gross delay in adjudicating the show cause notices - Since the respondents were totally responsible for gross delay in adjudicating the show cause notices issued by the respondents causing prejudice and hardship to the petitioner and have transferred the show cause notices to call book and kept in abeyance without communication to the petitioner for more than 7 to 11 years, the respondents cannot be allowed to raise alternate remedy at this stage. - HC
  Visit to Get Source

  ---

• Refund Rejection Criticized for Breaching Judicial Discipline; Authorities Ignored Final Bench Order, Violating Judicial Hierarchy.

  Case-Laws - AT : Refund claim - rejection on the ground of time limitation - judicial discipline - The authorities have erred in rejecting the refund especially when the order of this Bench has become final. This is a clear case of judicial indiscipline and contrary to the prevalent judicial hierarchical system, which cannot be sustained. - AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2022 (3) TMI 1205
  Refund of amounts lying in the petitioner s electronic cash ledger - investigation is pending against large scale fraudulent availing of credit on the strength of fake and fictitious invoices - HELD THAT:- As far as refund of any amount lying unutilised in the Electronic Liability Register is concerned, such refund is governed by Section 54 of the CGST Act, 2017 read with provisions of Chapter X of the CGST Rules, 2017. This is not a case where the amount has been attached in terms of Section 83 of the CGST Act, 2017 read with Rule 159 in Chapter XVIII of the CGST Rules, 2017 - If the payment was coerced to be paid into the Electronic Liability Register of the petitioner by obtaining a letter from the petitioner, it may be ingenious way of creating liquidity crunch to ensure such amount is not frittered away. Whether the payment was under compulsion or otherwise, cannot be decided in this summary proceeding. It is for the petitioner to work out the remedy under law for refund of the amount under Section 54 of the CGST Act, 2017 read with provisions of Chapter X of the CGST Rules, 2017. Even if the respondent has forced the petitioner s client to pay the tax directly into the petitioner s Electronic Liability Register, the amount has not been appropriated or debited towards tax, interest, penalty, late fee or any other amount. The amount is to be debited at a future date towards tax liability of the petitioner. Even, if the petitioner s client was asked to pay the amount into the aforesaid Electronic Liability Register, the amount has not been debited towards any tax liability or penalty under the Act. If the amount has to be refunded, it has to be refunded in accordance with provisions of the Act. Considering the fact that the respondent is investigating, the case, which commenced during the month of August-September, 2021, respondent is directed to complete investigation within a period within a period of 3 months from today and issue appropriate Show Cause Notice under Section 73 or 74 of CGST Act, 2017 - the amount lying in the Electronic Liability Register of the petitioner can be refunded only the manner in the law. It cannot be ordered to be refunded. It can however be utilised by the petitioner for discharging tax liability against future supplies to be made/effected by the petitioner provided of course prior to such supply, the tax to be paid by the petitioner is adjudicated and determined and appropriated in the proposed proceedings under Section 73/74 of the CGST Act, 2017, in which case, Section 79 of the CGST Act, 2017 can be pressed into service. Though, it is quite possible for the petitioner to establish that the letter was obtained from the petitioner under coercion to ensure that the petitioner s client to pay the amount into the aforesaid Electronic Liability Register, it is to be decided elsewhere and not here. As the amount has not been debited and since it has not been appropriated so far, there is no scope for granting any relief to the petitioner in this writ petition - petition dismissed.

  ---

• 2022 (3) TMI 1204
  Supply or not - placement of specified medical instruments by the appellant at the premises of unrelated hospitals, labs etc. in pursuance of the agreement for their use for a specific period - movement of goods otherwise than by way of supply or not - Section 7 of the CGST Act, 2017 - HELD THAT:- The GST liability is attracted when there is a supply of goods or supply of services. In order to determine the fact in issue, the first condition to be verified is that whether the activity qualifies to be classified under the term supply as specified under section 7 of the Act. Further it is to be verified that whether the activity is supply of goods or Supply of services. It is noticed that the definition of the term supply is very wide and inclusive one. It includes all forms of supply such as sale transfer, barter, exchange, licence, rental, lease or disposal. From the contention raised by the appellant, it reveals that they place their specified medical equipments to identified hospitals or laboratories as per the terms and conditions of the Reagent supply and Instrument use agreement. Accordingly, the hospitals or laboratories where the equipments are installed have the right to use the machine during the period of contract; but the title and ownership of the instrument continues to be with the appellant and the customer has to return the instruments to the appellant at the end of the specified period or at the earlier termination of the agreement - there is provision of transferring right to use the instruments from appellant to hospitals/labs for a fixed tenure. As per the provisions contained in Sl. No: 1(b) to schedule II of the Act, it is specified that any transfer of right in goods or of undivided share in goods without the transfer of title thereof is a supply of services. Hence, the activity of the appellant prima facia qualifies to be categorized as supply of services vide Schedule II to the Act. It is well settled principle that a taxing statute must be interpreted in the light of what is clearly expressed; it cannot imply anything, which is not expressed, it cannot import provisions in the statute so as to supply any assumed deficiency. Thus, it is evident that the activity or transaction undertaken by the appellant qualifies to be categorised as supply as defined in Section 7 of the CGST Act, 2017. Accordingly, it is concluded that the placement of specified medical instruments to unrelated customers like Hospitals, labs etc for their use the appellant constitutes supply of services under CGST Act, 2017.

  ---

• 2022 (3) TMI 1203
  Exemption from GST - composite supply of goods and services - assigning/sub-letting the contracted work to a sub-contractor - composite supply of goods and services for the Central Government, State Government or Union Territory or Local Authority or a Government Authority or a Government Entity only - applicability of Clause 3A of the Notification No. 02/2018-Central Tax (Rate) dated 25.01.2018 - HELD THAT:- On examination of the Notice Inviting Tender (NIT NO. 30/2021-22) provided by the applicant, it is found that it was simply a tender document having general details of work description, estimated cost, earnest money, cost of tender document, tender processing fee, period for O M, important dates of events and eligibility /technical criteria. There is nowhere mention about scope of work to be done by the applicant. In the absence of clear scope of work to be performed by the applicant in the said project (i.e. Operation and Maintenance of Integrated Ramganjmandi Pachpahar Water Supply Project- Transmission Part), we are not in the position to ascertain whether the work to be awarded to the applicant by the principal contractor will be either wholly or partially or of goods service both or only goods or only service - in the absence of aforesaid information/ documents, we are not enough capable to examine whether the work to be allotted to the applicant will have all components of composite supply, works contract, immovable property etc. and will satisfy the elements of the Clause 3A of the Notification No. 02/2018-Central Tax (Rate) dated 25.01.2018. In the case at hand, the applicant had not furnished any documentary evidence to substantiate their proposed scope of work, mode of supply (i.e. whether supply of goods or service or both) in the form of any work Order, quantum of goods or service or both to be supplied or any documentary evidence to prove the proposed supply of the applicant, i.e., any correspondences with the proposed principal suppliers with whom they intend to enter into transactions or contract/agreements/Purchase orders for supply. In this situation, without the specifics of the proposed supply, substantiated with the material facts, this authority is constrained to not to rule on the applicability of 3A of the Notification No. 02/2018-Central Tax (Rate) dated 25.01.2018.

  ---

• 2022 (3) TMI 1202
  Scope of Advance Ruling application - Exemption from GST - supply of services of construction of residential houses under affordable housing scheme under Chief Minister s Awas Yojana - Applicability of Sl. No 10 of the Notification No. 12/2017-Central Tax (Rate), dated 28-06-2017 - HELD THAT:- The scope of the Advance ruling for Authority for Advance Ruling (AAR) is limited to the transactions being undertaken or proposed to be undertaken - In the instant case, the application seeking advance ruling was filed on 06.07.2021 before the AAR with respect to supplies undertaken for the period from 01.04.2019 to 31.03.2021. Hence the case is out of the purview of the Advance Ruling. The subject application for advance ruling made by the applicant is not maintainable and rejected under the provisions of the GST Act, 2017.

  ---

• Income Tax

• 2022 (3) TMI 1201
  Assessment u/s 153A or u/s 147 - HELD THAT:- The pertinent assertion of learned counsel Shri Gargieya is that the assessing authority could not have adopted the procedure provided under Section 148 of the Income Tax Act for reopening the assessment of the petitioner because such action was taken on the basis of facts revealed to the assessing authority during the assessment of DRA Group at Ahmedabad and the proceedings, if any, would have to be conducted under Section 153A read with Section 153C of the Income Tax Act. In view of the facts noted above, it is hereby directed that all proceedings in furtherance of the impugned notice dated 31.03.2021 (Annexure-P/1) shall remain stayed.

  ---

• 2022 (3) TMI 1200
  Validity of Reopening of assessment u/s 147 - retraction of the statement - HELD THAT:- As noticed that for the purpose of re-opening the assessment in terms of Section 148, the only reason is the statement of the husband of the petitioner which admittedly has been retracted. This court while dealing with similar question has observed under similar circumstances that retraction of the statement had resulted in absence of any material to warrant re-opening of the case against the assessee. As there is no material available on record for initiating the proceedings under Section 148, the impugned order at Annexure- N is set aside and consequently the notice at Annexure- E is set aside. - Decided in favour of assessee.

  ---

• 2022 (3) TMI 1199
  Stay of demand - Intimation issued u/s 245 - HELD THAT:- It is borne out from the records that the adjustment has already been resorted to by the Department pursuant to the intimation under Section 245 - Considering that the petitioner has made out his objections to the notice under Section 245, copies of which are found at Annexure-K Series, it would be appropriate to relegate the matter back to the Authority for reconsideration of the aspect relating to notice under Section 245 and orders to be passed regarding the same after considering the objections of the petitioner referred to above. Accordingly, the action of the respondents in adjusting the refund as regards to the subject matter of intimation at Annexure-C issued under Section 245 of the Act is set aside. The matter is relegated to the respondents to reconsider as regards the intimation under Section 245 after considering the objections of the petitioner at Annexure-K Series. The entire process to be completed within a period not later than six weeks from the date of release of this order. In the event the petitioner is entitled for refund, the same to be made expeditiously.

  ---

• 2022 (3) TMI 1198
  Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - Comparison between old and new provisions for reassessment - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - Whether after introduction of new provisions for reassessment of income by virtue of the Finance Act, 2021 with effect from 01.04.2021, substituting the then existing provisions, would the substituted provisions survive and could be used for issuing notices for reassessment for the past period? - HELD THAT:- As decided in own case SUDESH TANEJA WIFE OF SHRI CP TANEJA [ 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT] no indication of surviving the past provisions after the substitution and in fact an active indication to the contrary, inescapable conclusion that we must arrive at is that for any action of issuance of notice under Section 148 after 01.04.2021 the newly introduced provisions under the Finance Act, 2021 would apply. Mere extension of time limits for issuing notice under section 148 would not change this position that obtains in law. Extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. Even otherwise it is extremely doubtful whether the explanation in the guise of clarification can change the very basis of the statutory provisions. If the plain meaning of the statutory provision and its interpretation is clear, by adopting a position different in an explanation and describing it to be clarificatory, the subordinate legislature cannot be permitted to amend the provisions of the parent Act. Accordingly, these explanations are unconstitutional and declared as invalid. We are unable to persuade ourselves to accept this analysis of the situation. In our understanding by virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed.

  ---

• 2022 (3) TMI 1197
  Disallowance u/s 14A r.w.r 8D - assessee contended that since there is no new investment in shares made by the assessee company during the year under assessment disallowance interest in respect of expenses as per Rule 8D(ii) is not sustainable - HELD THAT:- As perused the order passed by the CIT(A) who has thrashed the facts in detail and when there is no fresh investment by the assessee company in shares during the year under assessment Rule 8D(ii) is not attracted. So the assessee company has rightly made suo-moto disallowance @ 0.5% of the average investment. So we find no scope to interfere into the findings returned by Ld. CIT(A), hence ground No.1 raised by the Revenue is hereby dismissed. Adjustment of LTCL against the LTCG of the property sold during the year - AO has disallowed on the ground that when the income includes loss, the loss is arising out of sale of shares/mutual funds which are subjected to STT also are not part of the total income and as such assessee is not entitled for adjustment of LTCL against its LTCG - HELD THAT:- When the assessee company has merely sought direction from the Ld. CIT(A) for allowing of carry forward of speculation loss on the commodity exchange during the year and claimed carry forward in the subsequent years profit, the Ld. CIT(A) has directed the AO to verify the amount of speculation loss in accordance with the law, if any speculation loss is there the same may be set off against any speculation income in the future. Since the AO has been given the liberty to proceed as per law only to set off speculation loss that too in accordance with the law against any speculation income of the assessee in future, no ground is made out to interfere into the findings returned by the Ld. CIT(A), hence ground is also determined against the Revenue.

  ---

• 2022 (3) TMI 1196
  Estimation of income - bogus purchases - HELD THAT:- The claim of the assessee that assessee has discharged its complete onus as well as the entire addition has been made purely on the basis of the assumptions and surmises is purely devoid of any merit. The assessee failed to produce the parties from womb assessee has purchased the goods. The claim of the assessee that it has already disclosed higher gross profit margin at the rate of 18.5% the further addition at the rate of 12.5% of the bogus purchase is not justified, does not have any merit. The assessee when it has sold the goods to the third parties and obtained bogus purchase bills of those goods naturally there would be certain expenditure that assessee has incurred for obtaining such accommodation entries and therefore no infirmity can be found in estimating the profit at the rate of 12.5% of such bogus purchases. Even before the learned CIT A assessee agreed four addition to the extent of 5% of bogus purchases. There is no justification for retaining profit at the rate of 2% of such bogus purchases as addition. Therefore, we also reject the arguments of the assessee of restricting the profit only to 2 percentage.

  ---

• 2022 (3) TMI 1195
  Assessment u/s 153A - whether no incriminating material was discovered? - HELD THAT:- We note that at the time when the search operations were carried out on 15-06-2011, the original assessment proceedings had been finalized. We also note that during the course of search operation no fresh material or incriminating evidence was found by the Department - The assessment was not pending when the search took place in this case. The assessment therefore did not abate as per the provisions of second proviso to section 153A(1) - It is a settled position of law that in case of unabated assessment to be made u/s.153A of the Act no addition could be made de-hors the material found during the search. If there is no fresh and incriminating material found during the search, the previously made assessment is to be reiterated. In view of the above factual and legal position, in our view, the Pr. CIT has erred in law and in fact in initiating proceedings u/s. 263 of the Act. The ground of appeal raised by the assessee is thus allowed. Revision u/s 263 - expenditure of foreign exchange rate difference and addition u/s 14A - HELD THAT:- CIT noted that the assessee had debited foreign exchange rate difference in its profit and loss account but it had not shown any export income and nor had incurred any expense towards import of goods or services. The Assessing Officer had further allowed the aforesaid expenditure of foreign exchange rate difference. Second point noted by the ld. Pr. CIT was that the assessee had debited interest expense in the profit and loss account but as per balance sheet assessee had made an investment in equity shares of Kutch Salt Allied Industries Ltd. which was an investment yielding exempt income. The assessee had however not disallowed any part of the expenditure u/s.14A in the statement of total income. AO has also not made any disallowance u/s. 14A - Pr. CIT accordingly in view of the above two issues issued show cause notice u/s. 263 and proceeded to pass orders u/s. 263 holding that the order passed by the Ld. A.O. u/s. 143(3) r.w.s. 153A(1)(b) is erroneous and prejudicial to the interest of the Revenue. - Decided in favour of assessee.

  ---

• 2022 (3) TMI 1194
  Exemption u/s 11(2) - whether the AO/Ld. CIT(A) have erred in not granting the exemption under section 11(2) of the Act despite satisfying the conditions by the assessee as laid down under section 11(2) of the Act while processing the return of the income under section 143(1)? - HELD THAT:- When the assessee has submitted form No.10 within time in compliance to Rule 17, the AO has erred in denying the benefits claimed by the assessee under section 11(2) of the Act. At the same time, the Ld. CIT(A) has also erred in dismissing the appeal filed by the assessee challenging the order under section 154 of the Act passed by the AO. It is also brought to the notice of the Bench by the assessee that for the earlier years AO allowed such rectification application vide order dated 25.02.2020. In these circumstances, Revenue Authorities were required to follow the rule of consistency instead of generating unnecessary litigation. We are of the considered view that rectification application filed by the assessee before the AO and the appeal filed before the Ld. CIT(A) were liable to be allowed. Hence appeal filed by the assessee is accepted and AO is directed to rectify the order by allowing the claim admissible to the assessee under section 11(2) of the Act after due verification of the facts claimed by the assessee.

  ---

• 2022 (3) TMI 1193
  Correct head of income - treatment to be given to the profit arising to the assessee from the transactions in shares whether capital gain or business income? - assessee has mainly relied on Circular No.6/2016 dated 29.02.2016 issued by the CBDT in which the guidelines have been provided for dealing with the issue as to whether the profit arising from the transactions in shares is to be assessed as business income or capital gain - HELD THAT:- Since the applicability of the said circular as well as the decisions of the Hon ble jurisdictional High Court in the two cases cited by the learned Counsel for the assessee to the facts of the present case is required to be verified/examined as rightly contended by the learned DR, we set aside the impugned order of the CIT(A) on this issue and restore the matter back to the file of the Assessing Officer for fresh consideration in the light of CBDT Circular No. 6/2016 dated 29.02.2016 and the decisions in the case of PCIT vs. Ramniwas Ramjivan Kasat [ 2017 (6) TMI 351 - GUJARAT HIGH COURT] and PCIT vs. Bhanuprasad D. Trivedi [ 2017 (9) TMI 840 - GUJARAT HIGH COURT] . AO is directed to verify the relevant facts of the case and decide the issue afresh in accordance with law after giving the assessee proper and sufficient opportunity of being heard. Appeal of the assessee is treated as partly allowed for statistical purposes.

  ---

• 2022 (3) TMI 1192
  Exemption u/s 11 - Claim denied Government grants holding that it is corpus fund received towards specific projects to achieve objects of the trust without appreciating the fact that the case of the assessee is clearly falling under the proviso (1) (2) of section 2(15) - assessee, in the present case, is a trust which is established with the main object to provide facilities for testing, calibration and consultancy for achieving quality of electronic products and equipments including computers, communication equipment instrumentation, process, control instruments and electrical equipments - HELD THAT:- CIT(A) allowing the claim of the assessee for the grants received from the Government of Gujarat as its Corpus Fund is upheld by the Tribunal while deciding Ground No.1 of the Revenue s appeal, the direction given by the learned CIT(A) to the Assessing Officer on this issue of his impugned order is fully justified as a necessary corollary. Assessee has also agreed with this proposition. As contended that the Revenue, as a matter of fact, cannot be said to have any grievance by the direction given by the learned CIT(A) on this issue to the Assessing Officer as the CIT(A) has not given any material relief to the assessee by giving this direction. In any case, since the impugned order of the learned CIT(A) on the main issue in allowing the claim of the assessee that the grants issued by the Government of Gujarat represented its Corpus Fund is upheld by us, we are of the view that the direction given by him on this consequential issue is fully justified and there is no infirmity in the same calling for any interference. We accordingly uphold the impugned order of the learned CIT(A) on this issue and dismiss Ground No.2 of the Revenue s appeal Depreciation on assets whose cost had been allowed as application of income for charitable purposes under Section 11(1)(a) of the Act - HELD THAT:- As agreed by the learned representatives of both the sides, this issue is squarely covered in favour of the assessee by the decision in the case of CIT Vs. Rajasthan Gujarati Charitable Foundation Poona [ 2017 (12) TMI 1067 - SUPREME COURT] wherein it is held that the assessee is entitled to depreciation under Section 32 of the Act on assets whose cost has been allowed as application of income for charitable purpose under Section 11(1)(a) of the Act. As further held by the Hon ble Supreme Court, the amendment in Section 11(6) of the Act brought by Finance (No.2) Act, 2014, which became effective from the Assessment Year 2015-16, prohibiting the allowance of depreciation in such case is prospective in nature. Since the Assessment Year involved in the present year is AY 2014-15, we respectfully follow the decision of the Hon ble Supreme Court in the case of CIT Vs. Rajasthan Gujarati Charitable Foundation Poona.[ 2017 (12) TMI 1067 - SUPREME COURT] and direct the Assessing Officer to allow the claim of the assessee for deduction on depreciation. - Decided in favour of assessee.

  ---

• 2022 (3) TMI 1191
  Penalty u/s 271D - contravention of provisions of Sections 269SS - assessee has accepted loans and deposits from various sister concerns through journal entries, as such, loans were not taken through an account payee cheque or account payee bank drafts - whether behaviour of the assessee would constitute reasonable cause u/s 273B? - HELD THAT:- As decided in M/S. MACROTECH DEVELOPERS LTD., (SUCCESSOR TO M/S. BELLISSIMO CROWN BUILDMART PVT. LTD. [ 2022 (1) TMI 76 - ITAT MUMBAI] actual narration and the basis of passing journal entries by the assessee in its books that these entries are merely passed for squaring up of transactions or adjustment of entries. This categorical finding given by the ld. CIT(A) in his order has not been controverted by the Revenue before us. Yet another categorical finding recorded by the ld. CIT(A) which remain uncontroverted by the Revenue before us is that these transactions were not made by the assessee with a malafide intent to evade tax and that there is no evidence brought on record to even remotely suggest that the assessee company by passing the aforesaid journal entries had sought to introduce its unaccounted income into the system. These are genuine transactions carried out in the normal course of the business of the assessee. Hence, if the aforesaid transactions are looked into from the perspective of the object and intention behind introduction of provisions of section 269SS and 269T of the Act , then the provisions of section 269SS and 269T of the Act cannot be made applicable to the facts of the instant case. Moreover, from the detailed explanation of the aforesaid transactions together with the purpose for which those journal entries were passed, it could be safely concluded that these entries neither reflect any receipt of loan nor repayment of loan. Assessee has given complete explanation of the transactions by way of detailed explanation together with the purpose of passing a journal entry including relevant journal entry passed in the books of accounts of the assessee company. The same are not reiterated for the sake of brevity herein as they are already forming part of the records. Hence it could be safely concluded that these entries were passed out of business constraints and exigencies and for administrative convenience with no malafide intent to evade payment of tax. In our considered opinion, this business constraint and exigency and administrative convenience itself constitutes reasonable cause within the meaning of section 273B of the Act . Hence no penalty could be invoked for the same can be invoked - Decided in favour of assessee.

  ---

• 2022 (3) TMI 1190
  Disallowing Employees Stock Option Expenses (ESOP) - HELD THAT:- We find that Co-ordinate Bench of ITAT Delhi has already taken view in favour of the assessee in the case of ACIT vs. People Strong HR Services (P.) Ltd. [ 2021 (12) TMI 553 - ITAT DELHI] . Neither side, in the present appeal before us, has brought any relevant facts or circumstances for our consideration to distinguish the present case before us from the facts and circumstances of ACIT vs. People Strong HR Services (P.) Ltd. (supra). Further, the issue has been decided in favour of the assessee in the aforesaid precedents in the cases of Pr. CIT vs. New Delhi Television Ltd. [ 2020 (6) TMI 409 - ITAT DELHI] , CIT vs. Lemon Tree Hotels Ltd. [ 2018 (4) TMI 1680 - DELHI HIGH COURT] ; Biocon Ltd. [ 2020 (11) TMI 779 - KARNATAKA HIGH COURT] Neither side has brought any facts and circumstances for our consideration to distinguish the present case from the facts and circumstances of the aforesaid circumstances. - Decided in favour of assessee.

  ---

• 2022 (3) TMI 1189
  Revision u/s 263 by CIT - PCIT has raised the issues of Short Term Capital Gain, Long Term Capital Gain, exemption u/s 10(36) of the Act and deduction claimed u/s 57 - HELD THAT:- We have duly considered the assessment orders in all the four cases and at the very outset it can be seen that all the issues which were the subject matter of the show cause notices issued by the PCIT had already enquired into by the Assessing Officer and he, after duly considering the voluminous documents and evidences furnished by the assessees, reached a conclusion after due application of mind. It is a matter of record that specific queries were raised by the AO and voluminous details were filed in respect of Long Term Capital Gain . Complete details regarding unsecured loans were also called for and duly furnished by the assessees. Similarly, details with regard to sale and purchase of gold coin, income from house property and deduction u/s 57 of the Act were duly called for by the AO and the assessee made due compliance in this regard too. It is also not the case of the Department that the assessees did not discharge their onus before the AO. It is also seen that the claim/s u/s 57 have consistently been allowed in the earlier as well as later assessment years by raising specific queries and no specific reasons have been given for setting aside this issue to the file of the AO. It is also borne out from records that the offer for surrender on account of Long Term Capital Gain for AY 2013-14 and 2014-15 had been retracted as is evident from the Order - Therefore, we are unable to concur with the view taken by the Ld. PCIT that the AO had not conducted necessary enquiries prior to the passing of the assessment orders. We also do not agree with the argument advanced by the Ld. CIT DR that there was a non-application of mind on the part of the AO. In the present cases, no such inquiry has been carried out by the PCIT and he has simply directed the AO to carry out detailed inquires. In our considered opinion, PCIT, without making further inquiries on his own account, has simply stated in the impugned orders that the AO was required to make more inquiries. The Ld. PCIT has not pointed out as to what further inquiries was the AO required to make and as to how without those inquires the ordesr of the Assessing officer were erroneous in so far as prejudicial to the interest of the Revenue. In the present cases A.O. made the requisite enquiries, therefore, these are not cases of no enquiry and if the Ld. Pr. CIT was not satisfied with the enquiries made by the AO, he should have conducted the enquiries himself to record the findings that the assessment orders were erroneous and he should not have simply set aside the orders passed by the AO directing him to conduct the further enquiries. AO asked the assessee to furnish the relevant details relating to Long Term Capital Gain, Short Term Capital Gain, exemption u/s 10(36) of the Act, deduction u/s 57 of the Act and unsecured loans and the assessees furnished all the relevant documents which were examined by the AO who has taken a possible view. Therefore, it is our considered view that there was a due application of mind on the part of the AO in all the four cases and adequate and proper enquiries had been conducted by the AO in this regard and, therefore, the impugned orders passed u/s 263 of the Act have no feet to stand on. Accordingly, we hold that the proceedings u/s 263 of the Act were bad in law in all the captioned four appeals and we quash the revisionary proceedings for the reason that the AO had made adequate enquiries is all the four cases and further the PCIT had not conducted any independent enquiry on his own before coming to an incorrect conclusion that the assessment orders were erroneous as being prejudicial to the interest of the revenue and were liable to be set aside. - Appeal of assessee allowed.

  ---

• 2022 (3) TMI 1188
  Bad debts - Provision for doubtful debts and doubtful advances - CIT-A disallowed claim as assessee has not written off the amount of bad debts in the ledger account of individual parties and the same cannot be allowed as a deduction merely on the basis of the provision for doubtful debts and doubtful advances - HELD THAT:- There is no dispute to the fact that the assessee has claimed deduction under the head provision for doubtful debts and doubtful advances by debiting the profit and loss account and simultaneously making adjustments in the sundry debtors account and advances account as reflected in the balance sheet as on 31/03/2010 Whether the assessee can claim a deduction for the provision of doubtful debts without giving adjustment in the individual ledger account of the sundry debtors? - This issue has been decided in favour of the assessee by this Tribunal in the case of Vidras India Ceramics (Pvt.) Ltd.[ 2019 (5) TMI 1884 - ITAT AHMEDABAD] wherein granted relief to the assessee for the provision made with respect to doubtful debts. Respectfully following the same we hold that assessee is eligible for deduction on account of provision for doubtful debts in the given facts and circumstances. It is for this reason that the assessee in the present case has written off the provision of doubtful debts in the profits and loss account and also has given effect in the balance sheet of the assessee. Thus to our understanding the principle laid down by the Hon ble S.C in the case Vijay Bank [ 2010 (4) TMI 46 - SUPREME COURT] cannot be denied for its application merely on the reasoning that the word provision for doubtful debts has been used by the assessee in its Financial Statements. Assessee has not written off the provision for doubtful debts in the individual ledger account of the sundry debtors for the reason that it will lose it right in the Civil proceedings for recovery of its dues from the sundry debtors. This argument of the Ld. A.R was not controverted by the Ld. DR for the assessee at the time of hearing. Accordingly, we hold that the assessee is entitled to the deduction for the provision of doubtful debts in the given facts and circumstances. - Decided in favour of assessee.

  ---

• 2022 (3) TMI 1187
  Deffered payment guarantee commission - taxation in which year? - HELD THAT:- We are of the considered view that the entire deffered payment guarantee commission though received in advance by the assessee bank cannot be taxed during the year of receipt but has to be spread to the relevant years to which it belongs. We fail to understand when the issue is no longer res-integra having been decided by the Tribunal numerous times in favour of the assessee and order decided by the Tribunal has also been given effect to, then why the issue has been raised time and again only for the purpose of generating unnecessary litigation. So ground No.1 of assessee s appeal is allowed. Disallowance of depreciation on matured security on the ground that since the provision made by the assessee is not ascertained liability and it also cannot be taken that there is actual change in the market value of security. The Ld. CIT(A) upheld the disallowance made by the AO - HELD THAT:- Following the consistent orders passed by the Tribunal in favour of the assessee, which have been confirmed by the Hon ble Jurisdictional High Court [ 2016 (8) TMI 1441 - BOMBAY HIGH COURT ] we are of the considered view that the Ld. CIT(A) has rightly decided this issue against the assessee, hence ground No.2 is decided against the assessee. Disallowance u/s 14A - HELD THAT:- We are of the considered view that in the instant case disallowance to the extent of 1% of the exempt income under section 14A is to be made. So we accordingly direct the AO to disallow 1% of the exempt income under section 14A. Disallowance claimed by the assessee on account of depreciation on leased assets - HELD THAT:- Following the order passed by the co-ordinate Bench of the Tribunal for A.Y. 2003-04 2004-05, we are of the considered view that since the issue has already been decided against the assessee of the assessee s appeal are decided against the assessee. Disallowance of deduction claimed by the assessee under section 36(1)(vii) qua write off of non rural advances - HELD THAT:- By following the various decisions rendered by Hon ble Supreme Court in cases of The Catholic Syrian Bank Ltd. [ 2012 (2) TMI 262 - SUPREME COURT ], CIT vs. Vatika Township (P.) Ltd. [ 2014 (9) TMI 576 - SUPREME COURT ], DCIT vs. Karnataka Bank Ltd. [ 2013 (2) TMI 40 - SC ORDER ], Hon ble High Court of Delhi in case of Punjab Sind Bank vs. ACIT [ 1999 (7) TMI 60 - DELHI HIGH COURT ] and in case of CIT vs. City Union Bank Ltd. [ 2007 (2) TMI 187 - MADRAS HIGH COURT ], we are of the considered view that the assessee is entitled to deduction under section 36(1)(vii) of the Act on account of bad debts (other than in respect of rural advances). Addition by reducing depreciation/taxing appreciation in the value of securities held as available for sale (AFS) having been held for trading category (HFT) - HELD THAT:- Since this issue has already been decided in favour of the assessee by the Tribunal in A.Y. 2004-05 A.Y. 2008-09, which has been accepted by the Revenue, we are of the considered view that the AO as well as the Ld. CIT(A) have erred in making disallowance of depreciation/reducing of depreciation on appreciation in the value of securities held as available for sale by treating the same for trading category. So ground No.6 is determined in favour of the assessee. Disallowing allowing the deduction for the education cess on income tax paid for the year - HELD THAT:- As relying on Sesa Goa Ltd. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT ] we are of the considered view that education cess on income tax paid by the assessee is an allowable deduction, hence AO is directed to allow the same. Payment to various schools towards reservation of seats for the children of the bank officers by including the same in staff welfare expenses - HELD THAT:- When this issue is no longer res-integra having been consistently decided in favour of the assessee by the co-ordinate Bench of the Tribunal right from A.Y. 1992-93 to A.Y. 2008-09 no distinct facts have been brought on record, moreover appeal filed by the Revenue against the order passed by the Tribunal allowing this issue in favour of the assessee for A.Y. 1996-97 has also been dismissed. Nature of expenses - broken period interest paid on purchase of securities - HELD THAT:- We are of the considered view that this issue has already been decided by the Tribunal in favour of the assessee in A.Y. 1991-92 to A.Y. 1994-95 and A.Y. 2003-04 to A.Y. 2004-05 [ 2021 (10) TMI 608 - ITAT MUMBAI ] by relying upon the decision rendered by the Hon ble Bombay High Court in case of American Express International Banking Corporation [ 2002 (9) TMI 96 - BOMBAY HIGH COURT ] by considering the decision rendered by case of Vijaya Bank Ltd. [ 1990 (9) TMI 5 - SUPREME COURT ] No distinguishing facts have been brought on record by the Ld. D.R., hence we find no scope to interfere into the findings returned by the Ld. CIT(A). Hence, ground No.4 is also determined against the Revenue. Allowance of taxing of interest on securities on due basis - assessee bank has been following mercantile system of accounting and as such interest on securities is to be accounted for on accrual basis while arriving at the book profit - HELD THAT:- As decided in assessee s own case for A.Y. 2001-02 we uphold the order of the learned CIT(A) on this issue by dismissing the ground raised by the Revenue. Security as stock in trade and loss on revaluation as revenue expenditure - HELD THAT:- Issue decided in favour of the assessee by the co-ordinate Bench of the Tribunal from A.Y. 1996-97 to A.Y. 2004-05 and order passed by the Tribunal in A.Y. 1996-97 and A.Y. 1997-98 has been confirmed by the Hon ble Bombay High Court [ 2016 (8) TMI 1441 - BOMBAY HIGH COURT ] in favour of the assessee.

  ---

• 2022 (3) TMI 1186
  Reopening of assessment u/s 147 - applicability of Section 2(22)(e) - change of opinion - HELD THAT:- AR brought to our notice that in the reasons for reopening it is mentioned that J.M.Cotton Ginning Pressing Co. Pvt. Ltd., is 100% subsidiary of the assessee and Krishin Dhan Cattle Feeds Pvt. Ltd. has 81.45% shareholding of the assessee, these facts the AO has mentioned from the assessment records of the original assessment. AR further pointed that in the Audit Report it is clearly mentioned that J.M.Cotton Ginning Pressing Co. Pvt. Ltd., is subsidiary and Krishin Dhan Cattle Feeds Pvt. Ltd., is a related party. CIT(DR) has not rebutted the claim of assessee. Also, in the reasons, the AO has not claimed that it has received the information regarding shareholding of the assessee company in the lender companies after the original assessment was completed. Therefore, the prima facie, we have to accept the submission of the ld.AR of the assessee that shareholding of the appellant company in the lender company were submitted during the original assessment proceedings. Thus, during the original assessment proceedings, the AO was having knowledge that assessee company has taken loans from J.M.Cotton Ginning Pressing Co. Pvt. Ltd., and Krishi Dhan Cattle Feeds Pvt. Ltd. AO was also having knowledge about shareholding of the assessee company in these lender companies. During the original assessment proceedings, the appellant had submitted the Balance Sheets of the lenders companies. AO had specifically asked the questions about the unsecured loans. Thus, after considering the submission AO arrived at the decision. Therefore, in this scenario it will be inappropriate to say that the AO has not considered the applicability of Section 2(22)(e) As observed that all the facts, which are required to decide applicability of section 2(22)(e)were in the knowledge of the AO. Therefore, initiating reopening proceedings on the same facts, is nothing but change of opinion. Thus, we are of the considered opinion that in this case the reopening proceeding was merely based on the change of opinion. Therefore, the notice u/s 148 dated 29/10/2012 is without jurisdiction and we set aside the same. - Decided in favour of assessee.

  ---

• 2022 (3) TMI 1185
  Exemption u/s 11 - expenditure on advertisement was legitimate expenditure incurred for the purpose the objects of the society - whether the ld. CIT(A) was correct in holding that the expenditure on advertisement was a legitimate expenditure incurred for the purpose of object of the society? - Whether funds of the society were not applied or used or diverted for the benefit of the persons referred to section 13(3) of the Act in violation of condition laid down u/s 13(1)(c) and 13(2)(c)? - HELD THAT:- As decided in Shri Balaji Society [ 2017 (6) TMI 1363 - ITAT PUNE] Clause (c) of sub-section 2 of Section 13 of the Act can be invoked, if any amount is paid by way of salary, allowance or otherwise to any person referred to in sub-section 3 out of resources of the Trust for services rendered to the Trust and the amount so paid is in excess of what may be reasonably paid for such services. Thus, essential requirement for invoking the said provision is that the amount paid was in excess of what may be reasonably paid for the services. In the present case, the CIT(A) and the Tribunal have elaborately examined the accounts of the assessee, the payments made to the SBC, the payments made to other agencies for similar work, comparative rates of payments and came to the conclusion that no excess payment was made to the related person. Essentially, this is a pure question of fact. Two authorities concurrently held in favour of the assessee.

  ---

• 2022 (3) TMI 1184
  Additional depreciation in case of acquisition and installation of new machinery or plant by an Assessee after 31 March, 2005 - Only 50% of the additional depreciation was allowed in AY 2012-13 and balance 50% of the Additional Depreciation is claimed in the AY 2013-14 - HELD THAT:- As decided in M/S. DAMODAR JAGANNATH MALPANI [ 2021 (10) TMI 416 - ITAT PUNE] appellant is eligible to claim the balance additional depreciation in AY 2013-14 on the new assets purchased in AY 2012-13 but only half the additional depreciation were claimed by the appellant in AY 2012-13 as the assets were used for less than 6 months. Thus, the appeal in Ground No. 1 of the assessee is allowed. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- We find that there is exempt income earned by the appellant. No new facts have been brought to our notice. Therefore, the order of the ld. CIT(A) is confirmed. Accordingly, the appeal in Ground No. 2 of assessee is dismissed.

  ---

• 2022 (3) TMI 1183
  Surrender of Income during Survey u/s 133A - Surrender is voluntary or under influence of revenue (coercion) - recovery of cash from debtors by merely relying on the statement during survey action - HELD THAT:- The allegation of unrecorded salaries and wages, we have seen is not supported by any document showing that the number of employees found working were more than the actual number as per record nor has any statement of any employee been recorded from where it can be seen that part salary was recorded and part was unrecorded. No such question was put to any of the employees and no evidence has been referred to. Similarly for the expenses of cutting oil etc. the Director does not question the basis of the assertion made in Q. No. 21. It appears that he does not know as he may not have been responsible as argued by ld. AR for the day today functioning of the business, the fact that ultimately it was shown that this stood paid by the other unit by cheque, all this remain unrebutted on record. The retraction is supported by evidence confronted to the A.O. CIT(A) and relied upon before the ITAT remains unrebutted till date, it clearly brings out a case that the surrender was made based on facts as confronted which resulted in the action of surrender. So these facts lead to forming of belief for making the surrender no doubt voluntarily, but admittedly was based on confusion and mis-appreciation of facts. We have taken into consideration the definition of coercion as available under Section 15 and undue influence as available in Section 16 of the Indian Contract Act. We have also taken into consideration the legal position which places the burden on the one who pleads that he has been coerced the onus to demonstrate it is on that person. The assessee possibly uses the terms coercion loosely alongwith pressure and not coercion per se. We are not so convinced with the claims advanced on behalf of the Revenue that there was no pressure whatsoever on the assessee while making the surrender, however, for the purposes of the present proceedings, we have held that the surrender admittedly on facts was made on mistaken belief of facts and law and in the face of the voluminous plethora of evidences countering each of the factors considered relevant by the Revenue for addition, we have found that reliance is only placed upon statement of the Director and the employees. The additions are directed to be deleted.

  ---

• 2022 (3) TMI 1182
  Reopening of assessment u/s 147 - Addition on account of peak amount of investment - HELD THAT:- No doubt that the assessee remained absent during the assessment proceedings and not fully cooperated and made compliance to various notices. Keeping in view the complexity of various entries of commodities transaction, which has material bearing on the addition made by the AO and the facts that before ld CIT(A) the assessee specifically claimed that in all transaction transacted through Anand Rath Commodities Ltd, Globe Commodities Ltd and Religare Commodities ltd, the assessee made a meagre investment and that there was no such investment as added by AO, all such facts are not verified by lower authorities. Therefore, keeping in view the principles of natural justice, the issue is restored back to the file of AO. The assessee is directed to explain all the transactions qua the investments through Anand Rathi Commodities Ltd, Globe Commodities, and through Religare Commodities Pvt. Ltd. The assessee is further directed to comply all the notices of AO and to provide all necessary evidence and information without further delay and not to seek the adjournment without any valid reasons. Accordingly, the appeal of the assessee for A.Y. 2010-11is allowed for statistical purposes.

  ---

• 2022 (3) TMI 1181
  Late deposit of employees contribution to ESI PF - Scope of amendment - HELD THAT:- CIT(A) has referred to the amendment brought in by the Finance Act, 2021 wherein an explanation has been introduced to Sections 36(1)(va) and u/s. 43B of the Income Tax Act. It is a consistent position across various Benches of the Tribunal including Chandigarh Benches [ 2021 (11) TMI 1017 - ITAT CHANDIGARH] that the amendment which has been brought in by the Finance Act, 2021 shall apply w.e.f. assessment year 2021-22 and subsequent assessment years and the impugned assessment year being assessment year 2018-19, the said amendment cannot be applied in the instant case. Considering the entirety of facts and circumstances of the case and following the decisions of various High Courts as well as Coordinate Benches of the Tribunal referred above, the addition made by way of adjustment while processing the return of income u/s. 143(1) so made by the CPC towards the deposit of employees contribution towards ESI and PF paid before the due date of filing of the return of income u/s. 139(1). Appeal of the assessee is allowed.

  ---

• 2022 (3) TMI 1180
  Late payments towards EPF and ESI under section 36(1)(va) - payment before furnishing the return of income under section 139(1) - HELD THAT:- It is not in dispute that the assessee deposited the contribution of PF ESI belatedly in terms of section 36(1)(va) of the Act. However, the said deposits were made prior to filing of return of income u/s. 139(1) of the Act. It is noticed that an identical issue having similar facts has already been adjudicated in RAJA RAM [ 2021 (11) TMI 370 - ITAT CHANDIGARH] wherein addition on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s. 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee.

  ---

• 2022 (3) TMI 1179
  Estimation of net profit - Rejection of books of accounts - HELD THAT:- It is an undisputed fact that assessee did not produce the books of accounts and bill vouchers before the AO and in such a situation, AO had no other option but to estimate the profit of the assessee. As in the show cause notice, AO asked the assessee to show casue as to why the profits be not estimated @ 8% of the gross receipts but however the AO finally estimated the profits @ 15% of the gross receipts. We find that no opportunity was given to the assessee for explaining his stand with respect to the estimation of profit @ 15% of the gross receipts. AO was not justified in estimating the profit @15% in the gross receipt. Before us, AR has submitted that the estimation of profits @ 8% of gross receipts as specified in show-cause notice by AO would be acceptable to assessee. In such a situation, we direct the AO to estimate the profits on the basis of 8% gross receipt as per the show-cause notice issued by him to the assessee. We thus direct the AO accordingly. Thus the ground of the assessee is partly allowed.

  ---

• 2022 (3) TMI 1178
  Penalty u/s 271D - loan amount obtained in cash from Directors in emergency - violation of provision of section 269SS - HELD THAT:- After perusal of the material on record, it is noticed that during the year under consideration directors of the assessee company, Anish Nagpal has given and other director Shri Amit Purswani different dates as per the copies of ledger account placed in the paper book filed by the assessee. We have considered the fact and material on record and noticed from the copy of ledger account submitted by the assessee that on the different dates assessee has obtained cash from the two directors and there was no repayment made by the assessee during the year, the aforesaid accounts cannot be said of the nature of current account as claimed by the assessee. The assessee has not brought any material to substantiate that assessee has not committed any violation of section 269SS of the act, we do not find any infirmity in the decision of ld. CIT(A) in sustaining the penalty levied u/s. 271D of the act, therefore, this ground of appeal of the assessee is dismissed.

  ---

• 2022 (3) TMI 1158
  Revision u/s 263 by CIT - According to Ld. PCIT A.O. accepted the claim of the agricultural income without examining the expenses incurred to earn the said agricultural income and the estimated gross receipt from agricultural holding @ 52,000/- per acre was accepted as net income without considering the expenditure - HELD THAT:- Case of the assessee was selected for limited scrutiny under CASS for the issue relating to the agricultural income. The A.O. issued the Questionnaire to the assessee, in response to which, the assessee furnished the replies to the A.O. In the said replies it has been stated that the assessee was holding 41 Acres of agricultural land in the name of his family member and was used to take approximately 60 acres of agricultural land on lease (Theka) on the said land, cash crop like potato, vegetable, fodder etc. were grown. The assessee was also cultivating crop of wheat, paddy which were sold through Kaccha arathia in Raikot namely M/s Gupta Trader Raikot. The assessee furnished the copies of J Form in support of the claim for sale of wheat paddy - The assessee also furnished an affidavit from the Sarpanch of the village, before the A.O. in support of the above contention, the contents of the said affidavit were duly verified by Sarpanch of the Village Tajpur, District Ludhiana Therefore it cannot be said that the A.O. had not applied his mind or had not asked the assessee about the agricultural income declared. A.O. framed the assessment after making the proper enquiry and applying his mind. In our opinion, when the assessment is framed after making the inquiries and by considering the relevant details relating to the issue on which the case was selected for scrutiny then it cannot be said that the assessment so framed was erroneous or prejudicial to the interest of the Revenue. CIT(A) exercised his jurisdiction under section 263 of the Act on the issue which was considered in depth by the A.O. while framing the assessment order, therefore the impugned order passed by the Ld. CIT(A) has no legs to stand, as the assessment order was passed by the A.O. under section 143(3) of the Act after due verification and application of mind on the issue relating to the agricultural income shown by the assessee. On the basis of the same agricultural income the Ld. Pr. CIT considered the assessment order as erroneous and prejudicial to the interest Revenue. Show cause notice was issued by the Ld. PCIT on the basis of the audit objection copy - As relying on SOHANA WOOLLEN MILLS. [ 2006 (9) TMI 157 - PUNJAB AND HARYANA HIGH COURT] PCIT was not justified in exercising his power to invoke the provision of Section 263 of the Act on the basis of audit objection by the Audit Wing of the Department. Appeal of assessee allowed.

  ---

• Customs

• 2022 (3) TMI 1177
  Maintainability of appeal - requirement of deposit of the required percentage of duty demanded before filing the appeal as contemplated under section 129E of the Customs Act, 1962 not complied with - HELD THAT:- It would be seen from a bare perusal of section 129E of the Customs Act that after 6.8.2014 neither the Tribunal nor the Commissioner (Appeals) have the power to waive the requirement of pre-deposit, unlike the situation which existed prior to the amendment made in section 129E on 06.08.204 when the Tribunal, if it was of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship, could dispense the said deposit on such conditions as it deemed fit to impose so as to safeguard the interest of the Revenue. The Supreme Court in Narayan Chandra Ghosh vs. UCO Bank and Others [ 2011 (3) TMI 1478 - SUPREME COURT ], examined the provisions contained in section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 relating to pre deposit in order to avail the remedy of appeal. The provisions are similar to the provisions of section 129E of the Customs Act. The Supreme Court emphasised that when a Statue confers a right to appeal, conditions can be imposed for exercising of such a right and unless the condition precedent for filing appeal is fulfilled, the appeal cannot be entertained. The Supreme Court, therefore, held that deposit under the second proviso to section 18(1) of the Act, being a condition precedent for preferring an appeal, the Appellate Tribunal erred in law in entertaining the appeal. The Supreme Court also held that the Appellate Tribunal could not have granted waiver of pre-deposit beyond the provisions of the Act. The Madhya Pradesh High Court in ANKIT MEHTA VERSUS COMMISSIONER, CGST INDORE [ 2019 (3) TMI 1342 - MADHYA PRADESH ] also dismissed the Writ Petition that had been filed against the order of the Tribunal dismissing the appeal for the reason that the required pre-deposit was not made. The contention that was advanced before the Tribunal and before the Madhya Pradesh High Court was that the appellant was not in a position to make the pre-deposit due to financial constraints. The appellant has not made the pre-deposit and has filed an application seeking waiver because of financial constraints and for the reason that the appellant has a good case on merits - As the law relating to pre-deposit has been settled by the Supreme Court and the High Courts, it would also not be possible to accept the prayer made by the learned counsel for the appellant that the application should not be decided at this stage as the matter in the case of a co-noticee, after his plea for waiver of pre-deposit had been rejected by the Tribunal and the High Court had maintained the order of the Tribunal, is pending in Supreme Court. The application filed for waiver of pre-deposit is rejected - As the application has been rejected, the appeal stands dismissed.

  ---

• 2022 (3) TMI 1176
  Refund claim of Special Additional Duty (SAD) - rejection on the ground of time limitation - HELD THAT:- The facts are not in dispute and admittedly, the appellant importer has filed refund claim after more than one year or may be by few days more, from the date of payment of SAD. The appellant is entitled to the refund, as their right to claim refund of duty in terms of the Notification has accrued only when the sale took place after import. The findings of the Hon ble Delhi High Court in SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS [ 2014 (4) TMI 870 - DELHI HIGH COURT] clearly show understanding of the department with regard to clause of limitation, provided in the Notification. The condition of limitation was not the part of the original notification. It was only with the introduction of Circular No. 6/2008-Cus. and Notification No.93/2008, the department started insisting on the limitation period (of one year) prescribed with effect from 1.8.2008, became applicable - Merely because Section 27 of the Customs Act provides for a period of limitation for filing refund claim, it cannot be held that even for the purposes of claiming refund in terms of the Notification, the same limitation has to be applied. Appeal allowed - decided in favor of appellant.

  ---

• Corporate Laws

• 2022 (3) TMI 1175
  Restraint on shareholders of Zee Entertainment Enterprises Limited from calling for and holding an Extra Ordinary General Meeting - alleged illegalities in the resolutions proposed - Section 100(2)(a) of the Companies Act, 2013 - HELD THAT:- On a literal and plain reading of Sections 98 and 100, there are no discretion / power vested with the Board of a Company to sit in judgment over any matter for consideration of which the meeting is requisitioned. On a plain reading, the Board of a Company is mandatorily obliged to requisition a meeting if the requirements specified in sub-sections (2) and (3) of Section 100 are satisfied. Needless to state, whether or not the proposed requisition should be given effect to, is to be decided by the shareholders at the general meeting - the language used in the aforesaid Sections aid corporate democracy and protect the rights of shareholders. Section 100(4) in fact provides shareholders with an additional right to proceed to call for and hold an EGM despite an unwilling Board. This intent and object of the legislature cannot be ignored whilst construing the relevant provisions of the Act. The decision in Cricket Club of India vs. Madhav L. Apte [ 1974 (8) TMI 75 - HIGH COURT OF BOMBAY ] applies squarely to the facts of this present case, where it was held that this Court has opined is that the word valid is restricted only to the satisfaction of the numerical and procedural requirements. Further, and more importantly, that the word or the adjective valid in Section 169 has no reference to the object of the requisition but rather to the requirements in that Section itself. Lastly and most importantly, that even if the requisition was illegal or invalid, the Board was still obliged to call for the meeting. Whether or not an Injunction could be passed against a shareholder restraining the holding of an EGM? - HELD THAT:- The Ld. Single Judge has restrained a shareholder of a Company from calling or holding an EGM. Such an injunction is in the teeth of the decision of the Supreme Court in LIC vs. Escorts [ 1985 (12) TMI 289 - SUPREME COURT ] - the Ld. Single Judge could not have deviated from the law laid down by the Supreme Court in LIC vs. Escorts and proceeded to restrain a shareholder by way of an injunction from calling or holding an EGM. Consequences of interfering with Corporate Democracy - HELD THAT:- In the present case itself, the Appellants, being shareholders of Zee, have been unable to call for and hold an EGM despite the Requisition being addressed as early as on 11th September, 2021, i.e., over 6 months ago. For the past 6 months, the contesting parties have been arguing the alleged illegalities contained in the Requisition, whilst shareholders of Zee suffer an injunction - there are no precedent resulting in such drastic consequences derailing the democratic functioning of Companies across India owing to the non-cooperative and obstructive conduct of the Board of Directors. Jurisdiction - HELD THAT:- In the face of the absolute bar contained in Section 430, we cannot appreciate how the Ld. Single Judge could have granted the present injunction. The scheme of Sections 96 to 100 makes it clear that the subject of calling of a meeting of a Company has exhaustively been treated under them. So far as meetings of Companies other than Annual General Meetings are concerned, the law is governed by Section 98, which kicks in if it is for any reason impracticable to call such meeting. Section 100 gives a right to the requisitionists of an EGM to themselves call a meeting for consideration of the matter of their requisition, if the Board does not, within twentyone days, proceed to call a meeting. In the case on hand, as the facts have transpired, it is now clearly a case of the Appellants in the face of the Board s stand vis- -vis their Requisition, though they would be within their rights to call and hold the requisitioned EGM, it is impracticable for them to hold such meeting and accordingly, they pray for an order of the NCLT to do so under Section 98 - We do not see how such a matter would not fall within the purview of the NCLT and if it does, how a Civil Court could interfere by passing an order of injunction, which would have the effect of preventing the NCLT from considering the Appellants prayer. We find no credence on the reasoning based on the NCLT Rules or Schedule of Fees. Considering that the Impugned Judgment has in effect restrained a shareholder of a Company from calling for and holding an EGM, which injunction is in the teeth of the decision of the Supreme Court in LIC vs. Escorts, the appeal is allowed. Alleged illegalities in the proposed Resolutions - HELD THAT:- The law as prevalent in India does not entitle the Board of a Company to refuse a requisition calling for an EGM if such requisition satisfies the numerical and procedural requirements set-out under Section 100 of the Act - Zee takes advantage of its own wrong and argues that in the absence of such permission, the proposed resolutions are illegal and therefore, an injunction must be granted. This is another illustration as to why Courts must uphold corporate democracy and not indulge incumbent Boards in restricting the democratic functioning of Companies. The procedure for appointment of Independent Directors - HELD THAT:- The Requisition proposes the appointment of 6 persons as Independent Directors. To this, Mr. Chinoy objects by submitting that the provisions of the Act make detailed provisions which are mandatorily required to be followed for appointment of an Independent Director and these provisions make it clear that a member cannot propose himself or someone else for appointment as an Independent Director, merely by giving notice in writing of his candidature, or of his intent to propose another member as candidate for election as an Independent Director at the general meeting - In the present case, the proposed resolutions under the Requisition are to appoint ordinary Directors and not additional or alternate Directors. Therefore, from a reading of Sections 150(2) and 152(2), even in case of an Independent Director of a listed Company, the appointment will be made at the general meeting and not by the Board of Directors. The power given to shareholders of a Company by Section 160 and more importantly, the proviso thereto, cannot go unnoticed. In the teeth of the aforesaid provision, we cannot appreciate how the Ld. Single Judge agreed on all counts with Zee s submission that In the scheme of the Companies Act, shareholders do not get to choose individual independent directors. - Section 160 does not make any distinction whatsoever between an Independent Director or otherwise. On a plain reading of Section 160, a shareholder of a Company clearly has the right to propose the appointment of an Independent Director. Zee s submission cannot be accepeted by defeating corporate democracy and ignoring the safeguards provided to shareholders under Section 160 and 169 of the Act. Regulation 17 of the SEBI LODR - HELD THAT:- The expression optimum combination means the presence of one woman director and at least fifty percent of the Board of Directors shall comprise of non-executive Directors. Regulation 17 does not prescribe the maximum number of non-executive Directors but only the maximum number of executive Directors. Likewise, Section 149 of the Act provides that a listed company must have at least one-third of its Board comprising of Independent Directors. No other Regulation of the SEBI LODR or Section of the Act has been brought to our notice that prescribes a maximum number of Independent Directors. Thus, the proposed resolutions contained in the Requisition are neither illegal nor incapable of being lawfully implemented and consequently, set-aside all of the Ld. Single Judge s findings in this regard on all counts. Appeal disposed off.

  ---

• 2022 (3) TMI 1174
  Seeking approval for Scheme of Arrangement - Section 230 to 232 of the Companies Act, 2013 - HELD THAT:- Considering the entire facts and circumstances of the case and on perusal of the Scheme, reports of the Regional Director, Official Liquidator, and reply/undertakings of the Petitioner Companies thereon and the documents produced on record, the Scheme of Arrangement appears to be fair and reasonable and is not contrary to public policy and not violative of any provisions of law. All the statutory compliances have been made under Section 230 to 232 of the Companies Act, 2013. The Scheme of Arrangement is hereby sanctioned - Application allowed.

  ---

• Insolvency & Bankruptcy

• 2022 (3) TMI 1173
  Initiation of CIRP - pre-existing dispute or not - NCLT rejected the application - NCLAT allowed the application admitting the additional evidences - Section 3(11) read with Section 5(21) of the Code - HELD THAT:- the impugned order allowing the appeal and even admitting the application under Section 9 of the Code cannot be sustained on a short point that the said additional documents were taken on record only while finally deciding the appeal and without adequate opportunity of response to the corporate debtor. However, at the same time, due consideration of the said documents also appears requisite and the documents i.e., the said e-mails, cannot be removed out of consideration only because they were not on record before NCLT. After taking the said documents on record, for the appropriate process of adjudication in the matter, it is also considered just and proper that the order dated 06.10.2020 passed by NCLT be also set aside and the NCLT be directed to re-consider the application under Section 9 of the Code as filed by the applicant-respondent while taking into consideration the additional documents now taken on record and at the same time, while extending an adequate opportunity of hearing to the corporate debtor. In any case, in the present matter, the impugned order was passed on 15.12.2021 and admittedly, no other steps had been taken in the matter including that of appointment of resolution professional. In the given set of facts, we overruled the objections raised by the learned senior counsel for the respondent - The application under Section 9 of the Code in CP(IB) 841(ND) of 2020 stands restored for reconsideration by the Adjudicating Authority keeping in view the observations and requirements foregoing. Appeal allowed.

  ---

• 2022 (3) TMI 1172
  Vesting of right to use of the trade mark CONCEPT Educations to Corporate Debtor - accounting for the benefits received by it by use of the trade mark CONCEPT Educations till date and pay such sum to the account of the Corporate Debtor in terms of Section 48(c) of the Code - appointment of an independent expert to assess evidence relating to the value of the trade mark CONCEPT Educations - HELD THAT:- There was a partnership agreement dated 01/02/2019 between the CD and the Respondent no 1 whereby they agreed to carry on a business in the name of Potential and Concept Educations. Subsequently, there is a deed of Agreement dated 08/02/2019, a week after, in which the right to use of the above Trade Mark CONCEPT Education for 15 years is transferred in favour of the R1 for a mere Rs. 10 Lakhs Furniture, fixtures and Electronics were also transferred in favour of R1 - Further, there is a Deed of Reconstitution of Partnership dated 19/09/2019 by which the CD is ousted and the spouse of the Respondent no 2 and 3 are inducted as partners. The submissions of the Respondent No. 3 that the RP has not followed the provision of the Code as well as Regulations and even after bared by limitation, the application has been filed by the RP without supporting any condonation application do not carry much substance as he himself, as a Suspended Director of the CD has not been co-operating with the RP in completing the process of CIRP - However, the delay in filing this petition by the RP is justified due to Covid Restrictions and non-availability of all financial papers to the Transaction Auditor and the RP from the Suspended Management. Both the R1 and R3 have agreed and given in writing that the RP has given wrong impression that Trade Mark has been sold to the Respondent No. 1. In fact, both the Respondents have confirmed that the CD has still ownership right over the Trade Mark CONCEPT EDUCATION and only right to use the Trade Mark is given for 15 years to R1 against payment of Rs. 10.00 lacs and imparting education for 300 students of the CD for a year - Return of trademark to CD is the part of the Resolution Plan. Hence the right to use of the trade mark CONCEPT Educations is required to be cancelled. There is no liability or any obligations from either side in relation to the use of Trademark from today but it is made clear that the matters of non-cooperation of the Suspended Management, their agreements with the Potential Coaching Institute Pvt. Ltd for use of Trademark for Rs. 10.00 lacs for fifteen years and subsequent withdrawal from the partnership shall be heard along with other IAs filed by the RP under Sections 19, 43, and 66 of IBC 2016 - petition disposed off.

  ---

• 2022 (3) TMI 1171
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- Existence of debt is above One Crore - Debt is due, payable and defaulted; Credit Information reports as generated from Trans Union CIBIL has been filed. Application has been filed within the limitation period, as the date of default is 27.12.2018, when the Application under Section 7 of the IBC has been filed by the FC i.e. Indian Bank on 23.09.2021; Debt Liability has been acknowledged on 22.03.2016, 24.01.2017 and 04.12.2018 - Copy of the Application filed before this Bench has been sent to the Corporate Debtor, though returned but the notice was published in two News Papers for the appearance of the Respondent and the application filed by the Applicant Bank under Section 7 of the IBC is found to be complete for the purpose of initiation of Corporate Insolvency Resolution Process in respect of the Corporate Debtor; Hence, the present IB Petition is admitted. Petition admitted - moratorium declared.

  ---

• 2022 (3) TMI 1170
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- As per the Petitioner, the subject work order was dated 25.09.2013 and the time limit for completion of work was extended until 28.02.2015, vide the Amendment Agreement dated 26.12.2014. Since, the instant CP filed on 09.01.2018 i.e. within three years from the date of expiry of the extended time line which was 28.02.2015, the CP is well within the period of limitation. Even otherwise the Respondent/Corporate Debtor in Annexure A3 Audit Report pertaining to the Petitioner enclosed to its statement of objections filed in the CP, admitted that the extended date of completion of the subject work order was 28.02.2015. Hence, it cannot be said that the CP is barred by the period of limitation. It is a settled principle of law that the relevant date for consideration of existence of any dispute between the parties is the date of issuance of Demand Notice under Section 8 of the IBC. In the instant case, the Petitioner issued the Demand Notice on 27.11.2017. It is the specific case of the Respondent that vide letters dated 12.09.2014 and 03.03.2016 (Annexure A2 of the Statement of Objections) they have raised various disputes about the defects and delayed work of the Petitioner and hence the C.P. is liable to be dismissed on the ground of pre-existing dispute - On the other hand, the Petitioner also admitted the receipt of the letter dated 03.03.2016 from Respondent where under various defects and deficiencies were raised by the Respondent and also where it was stated that if the Petitioner fail to complete the said works they will deploy other agencies and get the work done. The Petitioner further admitted that he has replied to the said letter dated 03.03.2016 expressing its willingness to complete the work demanded, however subject to payment of acknowledged debts. There were pre-existing disputes between the parties before the issuance of the Demand Notice by the Petitioner - petition dismissed.

  ---

• Service Tax

• 2022 (3) TMI 1169
  Violation of principles of natural justice - grant of personal hearing to the petitioner - HELD THAT:- The respondent having issued the Show-Cause notice, it is their duty to take the the said Show-Cause notice to its logical conclusion by adjudicating upon the said Show-Cause Notice within a reasonable period of time. In view of gross delay on the part of the respondent, the petitioner cannot be made to suffer. This Court accordingly was pleased to quash and set aside dated 16 th September 2005 in that matter. Petition allowed.

  ---

• 2022 (3) TMI 1168
  Refund of CENVAT Credit - input services - renting of immovable property for want of registration - Restaurant services - Accommodation services - General Insurance Auxiliary services - Photography services - Air Travel Agent services - Maintenance and Repair Service - Telecommunication service - denial of credit on the ground of nexus - period from October, 2014 to March, 2016 - HELD THAT:- As can be seen from the order passed by the learned Commissioner (Appeals), arguments were led in that direction like Air Travel services and Hotel Accommodation services were taken for attending meetings/conferences/seminars with various clients of the company and for annual meetings etc. but as could be seen from the last para of point 6.4(b) of the order passed by the learned Commissioner (Appeals), he had distinctly observed that relevant documentary trail, and not invoices alone, can establish the purpose of use of the services if for personal or business. This being the facts on record, it would be just and proper to remand the matter to the Commissioner (Appeals) for such examination of additional proof concerning availment of input services by the Appellant except for Renting of Immovable property which is held in favour of the Appellant. The Appellant is entitled to get refund on CENVAT credit of Rs. 77,53,479/- +1,27,340/- = Rs. 78,80,819/- on Renting of Immovable property with applicable interest and for ascertainment of its eligibility for availment of CENVAT credit concerning Restaurant services, Accommodation services, General Insurance Auxiliary services, Photography service and Air Travel Agent services matter is remanded back to the Commissioner (Appeals) for further examination of documents and Appellant is duty bound to produce the documentary proof before him upon notice - Appeal is allowed by way of remand.

  ---

• 2022 (3) TMI 1167
  Refund of service tax - services provided to Military Engineering Services (MES) for the miscellaneous works at various stations of army, across the country - period 06.07.2015 to 25.04.2016 - section 102 of the Finance Act, 1994 - HELD THAT:- The appellant is entitled to refund with respect to the service tax paid in respect of the four work orders, where the financial bids were opened prior to 1.3.2015. Accordingly, it is held that the appellant shall be entitled to proportionate refund with respect to the four contracts, where the financial bids were opened prior to 1.3.2015. It is held that the appellant shall be entitled to proportionate refund out of the amount of Rs. 11,32,049/- relating to four works, where the financial bids was opened prior to 1.3.2015. The Adjudicating Authority is directed to work out the proportionate amount of refund and granted the same to the appellant within a period of 60 days from the date of receipt of this order along with interest under Section 11 BB of the Central Excise Act - Appeal allowed - decided in favor of appellant.

  ---

• 2022 (3) TMI 1166
  Classification of services - Business Auxiliary services - business of exhibiting cinematographic films across India in theatres owned by it or taken on rent - revenue sharing agreement - It was alleged that the agreement between the appellant and the distributors created an Association of Persons so as to undertake jointly the activities of screening of the films - HELD THAT:- It would be seen from the agreement that PVR Pictures Limited is a producer/distributor engaged in the business of production and distribution of films, while the appellant is an exhibitor engaged in the business of exhibition of films and owns/operates a chain of multiplex theatres. The exhibitor decides which screens would play the motion picture, the numbers of shows, the show timings and the ticket pricing including the right to decide on a week to week basis, whether or not to continue to exhibit the motion picture. The distributor/producer had granted the exhibitor the non exclusive license to exploit the theatrical rights of a motion picture and each party was entitled to conduct its business in its absolute and sole discretion. What also needs to be noticed is that if the appellant was providing such a service, it would be the producers/ distributors who would be making payments to the appellant, but what comes out from a perusal of the Agreement is that in consideration for the distributor agreeing to grant to the appellant the license to exploit the theatrical rights of a motion picture, the appellant would have to pay such revenue share to the distributor as provided for in the said clause. In fact, the distributor agreed to grant to the Appellant the non exclusive license to exploit the theatrical rights of a motion picture during the term. This issue had come up for consideration before a Division Bench of the Tribunal in M/S PVS MULTIPLEX INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I [ 2017 (11) TMI 156 - CESTAT ALLAHABAD] . The Bench observed that as the appellant was screening films on revenue sharing basis, the appellant was not liable to pay service tax on the payments made to the distributors for screening the films - This apart, a revenue sharing arrangement does not necessarily imply provision of services, unless the service provider and service recipient relationship is established. It is not possible to sustain the confirmation of the demand by the order dated February 06, 2015 passed by the Commissioner - Appeal allowed - decided in favor of appellant.

  ---

• 2022 (3) TMI 1165
  Exemption from Service Tax or not - service of digging wells and bore-wells were directly provided to the farmers for their agriculture operations - inclusion in negative List regime or not - Section 66 D(d)(i) of Finance Act - HELD THAT:- The appellant had stated, at the first instance, during the course of inquiry, that Income Tax, TDS have not been deducted as the activities of digging of bore wells of the farmers do not attract deduction of tax at source. The appellant had also led evidences by filing the copies of the land records of service receivers as well as affidavits from the service receivers. Further, services were supported by the certificates issued by Sarpanch of the Village Panchayat, wherein the Sarpanch included the list of the names of the farmers/service receivers, who have received the services of digging of borewells and well, and the amount paid by each individual farmers - such evidences led before the Court Below have not been found to be untrue. Thus, it is held that the Court Below have rejected the evidences arbitrarily and against the Scheme of the Finance Act read with the Rules thereunder. The agriculture/cultivation includes irrigation or watering of the plants, as due to lack of irrigation, it is very difficult to have any agriculture produce - the activities carried out by the appellant is covered in the Negative List, which are exempt from tax - Appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2022 (3) TMI 1164
  Short paid Central Excise Duty - misdeclaration of maximum packing speed of pan masala pouch packing machines installed at petitioner s factory premises - Section 11A (4) of the Central Excise Act, 1944 read with Section 174 of the Chhattisgarh Goods Service Act, 2017 - Circular dated 10.2.2015 - HELD THAT:- From the pleadings made in writ petition, it is clear that petitioner got installed different PMPMs of different MRPs at its factory premises. Main grievance raised by learned Senior Counsel for petitioner is with respect to jurisdiction of authority issuing impugned show-cause notice to petitioner. Perusal of impugned show-cause notice would show that detailed investigation has been conducted by respondent before issuing show-cause notice to petitioner. Investigation was conducted based on intelligence information. In show-cause notice, there is specific mention about difference in speed of PMPM; giving wrong information in report of Chartered Engineer regarding number of funnels in PMPM than that of number of funnels as per report of manufacturer of machines. In case of ORYX FISHERIES PRIVATE LIMITED VERSUS UNION OF INDIA [ 2010 (10) TMI 660 - SUPREME COURT] where it was held that It is obvious that at that stage the authority issuing the charge- sheet, cannot, instead of telling him the charges, confront him with definite conclusion of his alleged guilt. If that is done, as has been done in this instant case, the entire proceeding initiated by the show cause notice gets vitiated by unfairness and bias and the subsequent proceeding become an idle ceremony - In view of above dictum of Hon ble Supreme Court, if the facts of present case are considered, it would reveal that respondent conducted investigation based on intelligence information. Upon detailed investigation, as appearing in show-cause notice, it revealed that there was mis-declaration by petitioner, based upon which show-cause notice is issued to petitioner calling upon petitioner to submit reply within a particular period. Respondent has been authorized under Circular dated 10.2.2015 to issue show-cause notice. Hence, in the considered opinion of this Court, impugned show-cause notice cannot be stated to be issued by an authority not having jurisdiction. The respondent was having jurisdiction to issue notice as per Circular dated 10.2.2015. In impugned notice reasons for issuing show cause notice have been discussed in very detail - this writ petition at this stage is pre-mature, it is liable to be and is hereby dismissed.

  ---

• 2022 (3) TMI 1163
  Delay in adjudicating the show cause notices - seeking prohibition on respondents from adjudicating the said show cause notice against the petitioner - delay on the part of the respondent no.2 in proceeding with the said show cause notice - HELD THAT:- It is an admitted position that there was no communication received from the respondent no.2 by the petitioner for any date for personal hearing since 17th February, 2006 till 19th February, 2019. The petitioner was never informed by the respondents about the objection raised by the respondents to the query raised by the office of the Comptroller and Accountant General. The respondents also did not inform the petitioner that the said show cause notice was transferred to call book at any point of time - There was thus gross delay of more than 12 years in adjudicating upon the said show cause notice dated 17th February, 2006. If the Respondent would have informed the Petitioner about the said show cause notice in the year 2005 itself, having been kept in call book, the Petitioner would have immediately applied for appropriate reliefs by filing the appropriate proceedings. It is not expected from the assessee to preserve the evidence/record intact for such a long period to be produced at the time of hearing of the Show-Cause Notice - In view of the gross delay on the part of the Respondent, the Petitioner cannot be made to suffer. A perusal of the record indicates that for more than 10 years there was no communication from the respondents to the petitioner about the objection alleged to have been raised by the respondents to the query raised by the Comptroller and Accountant General. Petition allowed.

  ---

• 2022 (3) TMI 1162
  Validity of SCN - gross delay in adjudicating the show cause notices - whether SCN is void in view of non-adjudication after a lapse of nearly 10 years from the date of issuance of first show cause notice? - HELD THAT:- This Court in case of PARLE INTERNATIONAL LIMITED VERSUS UNION OF INDIA AND OTHERS [ 2020 (11) TMI 842 - BOMBAY HIGH COURT] after considering the identical facts has held that that a show cause notice issued a decade back should not be allowed to be adjudicated upon by the revenue merely because there is no period of limitation prescribed in the statute to complete such proceedings. Larger public interest requires that revenue should adjudicate the show-cause notice expeditiously and within a reasonable period. It is held that keeping the show-cause notice in the dormant list or the call book, such a plea cannot be allowed or condoned by the writ court to justify inordinate delay at the hands of the revenue. Since the respondents were totally responsible for gross delay in adjudicating the show cause notices issued by the respondents causing prejudice and hardship to the petitioner and have transferred the show cause notices to call book and kept in abeyance without communication to the petitioner for more than 7 to 11 years, the respondents cannot be allowed to raise alternate remedy at this stage. Petition disposed off.

  ---

• 2022 (3) TMI 1161
  Refund claim - rejection on the ground of time limitation - periods April 2013 to June 2013 and July 2013 to September 2013 - HELD THAT:- The Revenue having accepted the directions of this Bench, has to adhere to the same and the said directions cannot be ignored or diluted indirectly by the authorities. This Bench in its Final Order in AUTOFIT CAR INTERIORS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL TAX CENTRAL EXCISE, COCHIN [ 2019 (5) TMI 211 - CESTAT BANGALORE] had clearly held that the refund claim filed by the appellant was within the period of limitation and thus the appeal of the appellant came to be allowed with consequential relief of interest on delayed refund as per the decision of the Hon ble Apex Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] . The authorities have erred in rejecting the refund especially when the order of this Bench has become final. This is a clear case of judicial indiscipline and contrary to the prevalent judicial hierarchical system, which cannot be sustained. The adjudicating authority is directed to grant full refund in terms of the directions of this Bench (supra) with consequential relief if any, including interest under Section 11BB ibid - appeal allowed.

  ---

• 2022 (3) TMI 1160
  CENVAT Credit - input services - outward GTA - place of removal - period prior to 01.04.2008 - Board of Circular No. 97/8/2007-ST dated 23.08.2007 - HELD THAT:- Prior to 01.04.2008, the services related to removal of the goods was amended with effect from 01.04.2008 and allowed up to the place of removal . Therefore, the Cenvat credit prima facie is available in case of outward transportation for the services availed from the place of removal up to the customers place. Learned Authorized Representative also agreed upon that Board has prescribed certain conditions for allowing credit which need to be satisfied. Since the adjudicating authority have not verified the fact that, whether the said conditions of Board Circular have been complied with or not, the matter needs to be reconsidered. Appeal is allowed by way of remand to the Adjudicating Authority for passing a fresh order after verifying the documents whether the appellant has fulfilled the condition as prescribed in the Board of Circular No. 97/8/2007-ST dated 23.08.2007.

  ---

• Indian Laws

• 2022 (3) TMI 1159
  Maintainability of petition - availability of alternative remedy of appeal - appropriate forum - whether the writ court can decide the question of maintainability of the writ petition itself on the ground that there is an alternative remedy is the question raised in two writ petitions? - HELD THAT:- The impugned orders in these two writ petitions are the orders passed by the Consumer Dispute Redressal Forum. This Court in CONTROLLER OF EXAMINATIONS VERSUS SREYA [ 2021 (9) TMI 1363 - KERALA HIGH COURT] held that the writ court need not entertain the writ petition challenging orders passed by the consumer forums because the Consumer Protection Act is a complete code in which there is a hierarchy of forums mentioned to challenge the orders passed by the Consumer Dispute Redressal Forums. Once a writ petition is admitted and an interim order is passed, simply because several years elapsed after the admission of the writ petition, the question of maintainability cannot be raised or decided. Usually, in writ petitions, interim orders are passed at the admission stage. At that time, there may not be an appearance for the respondents in all the cases. This Court is admitting a writ petition based on prima facie finding. Prima facie finding regarding the maintainability of the writ petition cannot be taken advantage of by the petitioners at the time of the final hearing especially because it is a finding without hearing the other side. The respondents in the writ petitions are free to raise the question of maintainability based on the argument that there is an alternative remedy, even at the time of final hearing also - Each case has to be decided on the basis of facts in that case. But it is to be declared that, simply because a writ petition is admitted and a stay is granted at the admission stage, there is no rule that the question of maintainability in the light of alternative remedy available cannot be raised at a later stage of hearing the writ petition, even if several years elapsed after the admission of the case. If an order is passed by the National Commission, that order can be challenged even before the Apex Court directly. When such a hierarchy of courts is mentioned in Consumer protection Act, this Court need not entertain a writ petition filed challenging the orders passed by the District Forum or state Commision. But it is a settled position that even if there is alternative remedy, the High Court can entertain a writ petition under Article 226 of the Constitution of India, if the justice demands for the same. When a writ petition came up for admission challenging the orders passed by the Consumer Forums constituted as per the Consumer Protection Act, normally this Court will not entertain the same, unless there is an extraordinary situation to entertain such a writ petition. This Court will not entertain a writ petition filed in a routine manner against the orders passed by the Consumer Forums. Therefore, each case has to be decided on its own merit. Petition disposed off.

  ---