Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 3, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Input tax credit - transitional credit - entering the details in wrong column of GST-Tran-1 form - His only grievance is that he is being denied the benefit of input tax credit for having entered the details in wrong column. - Concerned officer of the GST Department directed to verify the facts - HC
Income Tax
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Reopening of assessment u/s 147 - There was live link or direct nexus between the material which suggested the escapement of income and information on the basis of which, it could be said that, the income has escaped assessment. Assessing Officer has acted on specific information and after collecting the available material as referred to above has opened his mind through reasons and formed a belief that, the income has escaped assessment. - It is settled law that, at the stage of Section 148 of the Act, what is required is “reason to believe”, but not the established fact of escapement of income. - HC
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Computation of short term capital gain - deemed sale consideration u/s 50C - we are unable to comprehend as to on what basis an appeal had been filed by the assessee with the CIT(A) against the refusal on the part of the A.O to make a reference to the Valuation Officer. No such right to prefer an appeal against a declining on the part of the A.O to make a reference to the Valuation Officer within the meaning of Sec. 50C of the Act can be deciphered from Sec. 246A . - AT
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Disallowance being 30% of the total advertisement expense - that merely because of the fact that advertisement expenditure incurred by the taxpayer has benefited the third party, the same cannot be disallowed; and that disallowance of any expenditure on ad hoc basis is not permissible in law, hence ordered to be deleted. - AT
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Orders passed by CIT-A without proper jurisdiction - the very action of then Ld. CIT(A)in ignoring the binding directions given by DGIT and proceeding to pass orders results serious lapse on his part in administering justice. We also notice that all the orders impugned in these appeals have been passed between 5.7.2018 and 13.7.2018, numbering around 50 orders, involving different Assessees and different issues, which is difficult task for any appellate authority. Hence we agree with the submission of Ld. Standing Counsel that the interests of revenue is prejudiced by the said action of the then Ld. CIT(A) - AT
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Accrual of income - Year in which income is taxable - Receipt of Security Deposit - Addition on account of sale of development rights by the assessee - the fulfillment of the obligation to construct and develop the project within the stipulated time was a condition precedent for the assessee to the satisfaction of the PCL as mentioned in the assignment agreement Dated 21.07.2006. Therefore, the security deposit received by the assessee for conditional transfer could never be treated as an income of the assessee. - AT
Customs
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Classification of imported goods - betel nut (Areca-nuts) - classified under CTH 21069030 or under CTH 08028010? - prohibited goods or not - Since the import goods are ‘betel nuts whole’, these would merit classification under Chapter 8 and specifically under Chapter 08028010 as classified by the department. We cannot refrain from stating that the Commissioner (Appeals) has made detailed discussion of facts and the law and arrived at the correct classification. - AT
Indian Laws
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Dishonor of Cheque - insufficient funds - validity of FIR by the Accused against the complainant - when the impugned FIR is nothing but an abuse of process of law and to harass the appellants-accused, we are of the opinion that the High Court ought to have exercised the powers under Article 226 of the Constitution of India/482 Cr.P.C. and ought to have quashed the impugned FIR to secure the ends of justice. - SC
IBC
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Initiation of CIRP when winding up petition was pending before the High Court - Any “suppression” of the winding up proceeding would, therefore, not be of any effect in deciding a Section 7 petition on the basis of the provisions contained in the IBC. Equally, it cannot be said that any subterfuge has been availed of for the same reason that Section 7 is an independent proceeding that stands by itself. As has been correctly pointed out by Shri Sinha, a discretionary jurisdiction under the fifth proviso to Section 434(1)(c) of the Companies Act, 2013 cannot prevail over the undoubted jurisdiction of the NCLT under the IBC once the parameters of Section 7 and other provisions of the IBC have been met. - SC
Service Tax
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CENVAT Credit - duty paying documents - the main allegation is that the description of services in the documents on which credit has been availed is not correct - At this juncture, it needs to be pointed out that the Department has no dispute with the Service Tax collected from the appellant by the dealer and remitted to the Government. The assessment of Service Tax paid at the dealer’s end has not been disturbed/questioned by the Department; only the credit availed at the service recipient’s end has been questioned by issuing the present Show Cause Notice. - AT
Central Excise
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Condonation of delay of 367 days in filing the appeal - Non-receipt of order - By issuing the certified copy of impugned order on 25.11.2019, respondent department itself agrees that the impugned order in appealable form was in fact served on 25.11.2019. If that was not case and the department was of the view that the impugned order had been served on the appellants when it was issued on 23.08.2018, they should have proceeded to recover the sums due from the appellant after expiry of the period of appeal. On the contrary department chose to stay mum - thus, there is definitely delay in filing of the appeal but delay has been explained by the appellants in their affidavit. - Delay condoned - AT
VAT
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Classification of goods - seat covers - cycle locks - if it appears that items in issue can be/are used both for cycle rickshaw and cycles also, then they will have to be considered as "parts" unless specifically excluded by the statute and the benefit of the rate of tax under Entry-12 will have to be given to the items in question notwithstanding that they may also be used for cycle/bicycle also - It is a well settled proposition of law that the words used in a statue must be understood in the ordinary and popular sense and not in any technical sense. - HC
Case Laws:
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GST
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2021 (3) TMI 61
Refund of IGST - zero-rated supply - Section 54 of the Central Goods and Service Tax Act, 2017 - opportunity of personal hearing not availed - principles of natural justice - HELD THAT:- Taking note that an opportunity of personal hearing was not availed, in the interest of justice, it would be appropriate if the petitioner is afforded an opportunity of personal hearing to substantiate the detailed replies made, as per the acknowledgements at Annexures-F and F1. Accordingly, the orders at Annexures-A and A1 are set aside. Petitioner to be present for availing of opportunity of personal hearing, when such an opportunity is granted while disposing of the application of the petitioner and a common date may be fixed in order to avoid conflicting orders to be passed as the factual matrix is similar and question of consideration is also identical - petition disposed off.
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2021 (3) TMI 60
Attachment of the bank accounts - Section 83 of the CGST Act, 2017 - HELD THAT:- The orders of attachment are of February, 2020. One year period will come to an end within next one week. Till this date there has not been any further extension. Even otherwise, the statutory life of an order of attachment of bank account under Section 83 of the CGST Act is one year unless the authority deems fit to extend it further. Let NOTICE be issued to the respondents returnable on 01.03.2021.
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2021 (3) TMI 59
Release of detained goods - validity of the E-Way Bill expired - It is the case of the petitioners that owing to the farmers protest around Delhi, the validity of the E-Way Bill issued on 27th November, 2020 and whereunder the goods were being transported, expired - HELD THAT:- We, in exercise of jurisdiction under Article 226 of the Constitution of India cannot be drawn into these factual controversies and are not satisfied that the appellant, owing to the aforesaid, is deprived of the remedy of appeal. The petition is disposed of with liberty to the petitioners to prefer the appellate remedy before the Additional Commissioner and which if preferred shall be decided in accordance with law and it will be open to the petitioners to take all the aforesaid pleas also in the appeal and the Additional Commissioner shall return a finding on merits thereon.
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2021 (3) TMI 58
Input tax credit - transitional credit - entering the details in wrong column of GST-Tran-1 form - primary stand taken by the respondents is that the petitioner was specifically given time till 27.12.2017 to set right any mistake that might have been committed by them - HELD THAT:- As rightly pointed out by the learned counsel for the writ petitioner, the factual matrix obtaining in TARA EXPORTS VERSUS THE UNION OF INDIA, GOODS AND SERVICE TAX COUNCIL, THE PRINCIPAL COMMISSIONER OF CGST AND CENTRAL EXCISE, THE PRINCIPAL SECRETARY/COMMISSIONER OF COMMERCIAL TAXES, THE ASSISTANT COMMISSIONER (ST) , THE CENTRAL GST OFFICER AND THE ASSISTANT COMMISSIONER, CGST AND CENTRAL EXCISE [ 2018 (9) TMI 1474 - MADRAS HIGH COURT] is quite different from the case on hand. In Tara Exports, the dealer had not even filed TRAN-1 in time. After missing the bus, he came to the Court seeking relief on the ground that his vested right cannot be taken away. That is not the contention urged before me. The petitioner had filed FORM GST TRAN-1 in time. His only grievance is that he is being denied the benefit of input tax credit for having entered the details in wrong column. Therefore, I am of the view that grant of interim stay by the Hon'ble Division Bench in Tara Exports' case cannot be put against the petitioner. The third respondent will verify the correctness of the averments set out in communication of the jurisdictional Assistant Commissioner to the Commissioner of Central Taxes Central Excise, Madurai - The second respondent is directed to forward the petitioner's application to the third respondent forthwith and without any delay. Petition allowed.
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Income Tax
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2021 (3) TMI 57
Valuation proceedings u/s 142A - estimation of value of assets by Valuation Officer - period of limitationas contemplated in Section 142 A (6) of the Act of 1961 wherein six months period has been prescribed for Valuation Officer to submit valuation report to the Assessing Officer - HELD THAT:- Section 250(5) of the Act of 1961 enlarges the scope of hearing of appeal because Commissioner may allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if Commissioner is satisfied that omission of that ground from the form of appeal was not willful or unreasonable. Some how similar spirit is echoed in Explanation of sub-section (2) of Section 251 of the Act of 1961, therefore, wide powers are available to the Commissioner (Appeals) as appellate authority. Exercising such power, Commissioner (Appeals) directed the Assessing Officer to obtain valuation report vide letter dated 20-03-2018 (Annexure R/2). In pursuance thereof, District Valuation Officer has issued the notice which is the bone of contention in the matter. When appeal is pending consideration before Commissioner (Appeals) and appellate authority has wide powers to look into the dispute as referred above then assessee/petitioner is always at liberty to raise this ground also in appeal even if the petitioner has not raised the same so far, in the appeal memo about limitation as provided under Section 142A of the Act of 1961. This Court does not intend to venture into the arena to preempt the controversy. Commissioner (Appeals) shall take into consideration the plea of limitation as raised by the petitioner in the case in hand as one of the grounds of appeal as expeditiously as possible preferably within three months from the date of receipt of certified copy of this order and pass an appropriate order taking into consideration the interplay of different provisions of the Act of 1961 in accordance with law and shall decide this point at the first instance, if not already decided. No further indulgence can be shown except to issue above-mentioned directions.
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2021 (3) TMI 56
Reopening of assessment u/s 147 - disallowance u/s 14A - Reopening after four years - HELD THAT:- All the material facts relating to Section 14(A) of the Act were before the Assessing Officer during the course of the original assessment and now, he could not reopen the assessment after 4 years where there is no failure on the part of the assessee to disclose fully and truly all the facts necessary for assessment. It is settled by the Apex Court in the case of CIT Delhi Vs. Kelvinator of India Limited. [ 2010 (1) TMI 11 - SUPREME COURT ] that the existence of tangible material is essential to safeguard against the arbitrarily exercised of power. Therefore, as discussed above, at the time of recording the reasons, there were no fresh materials on which the Assessing Officer could have formed a requisite belief with regard to the escapement of the assessment. The record further indicates that, the assessee had disclosed all materials fully and truly before the respondent at the time of original assessment. Even on merits, it is settled that, disallowance under Section 14A of the Act cannot exceed the exempt income of the assessee. Thus, the twin conditions as provided under Section 147 of the Act, which are condition precedent for reopening of the assessment made after 4 years are not satisfied. As proposed amount is exceed the exempt income of the assessee. In that view of the matter on merits, invoking the provisions for reopening of the assessment under Section 147 of the Act is bad in law. There was no basis or jurisdiction for assessing officer to form a belief that, any income of the assessee chargeable to tax for the year under consideration had escaped assessment within the meaning of Section 147 of the Act and the reasons recorded could not have led to formation of any belief that income had escaped assessment within the meaning of the aforesaid provision. - Decided in favour of assessee.
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2021 (3) TMI 55
Reopening of assessment u/s 147 - material before the assessing Officer to reopen the assessment or not ? - borrowed satisfaction or independent application of mind by AO - HELD THAT:- AO has initiated the proceedings not only on the basis of the information received from the concerned Department, but based upon his independent satisfaction and other available materials to form a belief with regard to the escaped assessment of income. The reasons recorded further establish that, the prop. of R S enterprise is the husband of Smt. Harshaben Gosai having financial transactions with the R.S Enterprise and Marshal Enterprise and all these entities including JK enterprise and P M Co. have no business activities and were managed to provide accommodation entries and routed the money through bank transactions showing the transactions as sale and purchase issuing bogus invoices without actual delivery of goods. There was live link or direct nexus between the material which suggested the escapement of income and information on the basis of which, it could be said that, the income has escaped assessment. Assessing Officer has acted on specific information and after collecting the available material as referred to above has opened his mind through reasons and formed a belief that, the income has escaped assessment. It is settled law that, at the stage of Section 148 of the Act, what is required is reason to believe , but not the established fact of escapement of income. Thus it cannot be said that there was no material before the assessing Officer to reopen the assessment and he proceeded mechanically based on the information received from the Income Tax Department, Ahmedabad. The information of Smt. Bhavnaben Gosai has some relevance with the transactions reflected in the bank account of the assessee. Therefore, it cannot be said that, the Assessing Officer has mechanically relied on the third party information and the proceedings being initiated for verification and inquiry. Proceeding has been initiated after four years and the sanction accorded by the authority as contemplated under Section 151 of the Act is not legal and valid - The sanction order has n ot been placed on record by the assessee. The intimation letter cannot be termed as approval given by the authority. Therefore, in absence of any other evidence indicating that, the authority concerned has mechanically accorded the sanction as contemplated under Section 151 of the Act, the contention raised by the writ applicant cannot be accepted. As examined the order of disposing the objections by the authority. By going through the said order, we find that, the objections submitted by the assessee has been extensively dealt with and detailed order came to be passed. Therefore, the decision arrived at by the authority to reopen the assessment is just and proper. Thus it cannot be said that, the impugned notice issued under Section 148 of the Act is without jurisdiction and contrary to Section 147 of the Act and/or bad in law. - Decided in favour of revenue.
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2021 (3) TMI 54
Nature of expenditure - expenses of Technical Know How Fees paid to its parent company - capital or revenue expediture - HELD THAT:- As decided in asseessee' own case [ 2018 (6) TMI 399 - ITAT DELHI] assessee is already engaged in the business of manufacturing paper machine fabrics and other industrial fabrics and related products. The assessee -obtained a technical know-how in respect of manufacturing of paper maker felts and other industrial fabrics. According to the agreement entered into by the assessee the remuneration was paid for at the rate of 5% on the sale price of the product The Ld. CIT(A) has considered the various clauses of the agreement and held that the know-how was to remain the sole and exclusive property of the provider and the appellant company is required to fully exploit the same. Technical know-how was also in relation to the sales affected by the assessee company, it Is also required to be noted that assessee is engaged in the same business for which technical know-how is by the assessee and it is not at its an altogether a new line of business which is developed. DR could not point out any infirmity in the order of the Ld. CIT(A). In view of above facts we do not find any reason to disturb the finding of the Ld. CIT(A) in allowing the claim of the assessee of technical know-how fees paid to its parent company as revenue in nature - Decided in favour of assessee.
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2021 (3) TMI 53
TP Adjustment - adjustment in the arm's length price of the international transaction of payment of royalty - Rejection of economic analysis undertaken by the Appellant - HELD THAT:- As the order of the DRP for A.Y 2011-12 [ 2021 (1) TMI 472 - ITAT MUMBAI] that was relied upon by the panel while disposing off the objections of the assessee as regards the issue pertaining to the transfer pricing adjustment made by the TPO towards payment of royalty by the assessee to its AE, viz. Dow AgroSciences BV, Netherland had been set aside by the Tribunal, we thus concurring with the view therein taken respectfully follow the same. Accordingly, we herein direct the A.O/TPO to vacate the transfer pricing adjustment as regards the royalty paid by the assessee to its AE. TP adjustment - Intra-Group Services received by the assessee from its AEs, viz. information technology services, financial and treasury support services, financial and accounting support services and legal and administrative support services - HELD THAT:- In its aforesaid order for A.Y 2011-12 [ 2021 (1) TMI 472 - ITAT MUMBAI] , the Tribunal while vacating the transfer pricing adjustment made by the A.O/TPO as regards the intra-group services received by the assessee from its AEs had observed the details as regards the services rendered by Mr. Jeorge La Roza to the assessee, as well as the basis of the charge so raised formed part of the additional evidence that was filed by the assessee with the DRP. In fact, no adverse inference as regards the aforesaid payment made by the assessee company finds any mention in the order of the DRP. In our considered view, as there is no justifiable reason for drawing of any adverse inferences as regards the payments that were made by the assessee to the aforesaid person, we, thus, not being able to persuade ourselves to subscribe to the claim of the ld. D.R that there was no material available on record which would justify the basis of the costs to the AE, reject the same. Computation of short term capital gain - why the stamp duty valuation may not be adopted as the deemed sale consideration u/s 50C for the purpose of computing the capital gain on the sale of the property in question? - HELD THAT:- in a case where the assessee had neither disputed the value so adopted by the stamp duty valuation authority for the purpose of payment of stamp duty in respect of a capital asset, being land or building or both, in any appeal or revision nor made any reference before any other authority, court or the High Court then, on an objection raised by the assessee to the adoption of the stamp duty valuation as the deemed sale consideration for the purpose of computing of the capital gain for the property in question within the meaning of Sec. 50C of the Act, the A.O is obligated to make a reference to the Valuation Officer for carrying out the valuation of the capital asset in question. Accordingly, we are unable to persuade ourselves to subscribe to the view taken by the A.O that de hors any objection raised by the assessee to the valuation adopted by the stamp valuation authority at the time of valuation, it was divested of its right to seek reference to the Valuation Officer for valuation of the property in question. At the same time, we are unable to comprehend as to on what basis an appeal had been filed by the assessee with the CIT(A) against the refusal on the part of the A.O to make a reference to the Valuation Officer. No such right to prefer an appeal against a declining on the part of the A.O to make a reference to the Valuation Officer within the meaning of Sec. 50C of the Act can be deciphered from Sec. 246A . Assessee before us had neither disputed the value so adopted by the stamp duty valuation authority for the purpose of payment of stamp duty in respect of the property in question, in any appeal or revision nor made any reference before any other authority, court or the High Court, had however, admittedly objected to the adoption of the stamp duty valuation as the deemed sale consideration by the A.O for computing the capital gains within the meaning of Sec. 50C of the Act thus, we herein direct the A.O to make a reference to the Valuation Officer for the purpose of valuation of the property in question for the purpose of Sec. 50C of the Act. Ground allowed for statistical purpose. Short credit of TDS - HELD THAT:- As assessee had filed a rectification application as regards the issue in question, which however is pending before the A.O. It was submitted by the ld. A.R that the A.O may be directed to look into the aforesaid grievance of the assessee. As the adjudication of the aforesaid issue would require verification of the records, we herein direct the A.O to verify the same and redress the aforesaid grievance of the assessee. Interest liability u/ss. 234A and 234B - HELD THAT:- As claimed by the assessee that as it had filed its return of income for the year in question within the due date contemplated in Sec. 139(1) of the Act thus, no interest u/s 234A was liable to be imposed on it. It is further stated by the assessee that the A.O had erred in levying interest u/s 2434B of the Act. It was submitted by the ld. A.R that the assessee s application u/s 154 in context of both the aforesaid issues was pending before the A.O. It was submitted by the ld. A.R that suitable directions may be issued to the A.O. We have given a thoughtful consideration and in the backdrop of the aforesaid claim of the assessee we direct the A.O to consider its aforesaid grievances while giving appellate effect to our order. Ground allowed for statistical purpose.
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2021 (3) TMI 52
Bogus LTCG - addition u/s 68 - share application money treated as unexplained in the hands of the assessee - HELD THAT:- Assessee proved identity of the Investors and also furnished sufficient documentary evidences to prove creditworthiness of the Investors, genuineness of the transaction in the matter. Therefore, initial onus upon the assessee to prove ingredients of Section 68 of the I.T. Act, 1961 stands discharged. The decisions relied upon by the Ld. D.R. have also been considered in the Group cases as above and did not find in favour of the Revenue because the assessee has been able to prove creditworthiness of the creditors and genuineness of the transaction. Therefore, the decisions relied upon by the Ld. D.R. would not support the case of the Revenue. Considering the totality of the facts and circumstances of the case and above discussion, we are of the view that entire addition made by the authorities below of ₹ 6.7 crores is wholly unjustified and is liable to be set aside. In view of the above, we set aside the Orders of the authorities below and delete the entire addition. All the grounds raised by the assessee are allowed. Deemed dividend u/s 2(22)(e) - HELD THAT:- Since the assessee is NBFC Company registered with RBI and as per assessment order itself the nature of business of assessee is financing and investment and the details submitted by Learned Counsel for the Assessee clearly show that assessee is mainly engaged in finance business for giving loans and advances and earn interest thereon, would clearly prove that assessee is mainly in the business of lending of money to others, therefore, business transaction would not attract the provisions of Section 2(22)(e) of the I.T. Act and as such the case of the assessee would fall to the exception provided in sub-clause-(ii) of Section 2(22)(e) of the I.T. Act, 1961. In view of the above, we set aside the Orders of the authorities below and delete the addition - Ground of the appeal of the Assessee is allowed.
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2021 (3) TMI 51
Addition u/s 68 - unexplained share application money - AO has made the addition on the basis that despite sending notices/summons, none of the directors of the assessee company nor the directors of the share subscribing companies appeared before him, therefore he made an addition - HELD THAT:- There was no sum of money/cash was involved in the transaction of allotment of shares to M/s SKJ Coke Industries Ltd. Therefore provisions of section 68 of the Act [unexplained cash credit] is not attracted as held by Hon ble Madras High Court in M/s V R Global Energy Pvt. Ltd. vs. ITO [ 2018 (8) TMI 866 - MADRAS HIGH COURT] AND JATIA INVESTMENT CO [ 1992 (8) TMI 16 - CALCUTTA HIGH COURT] . So, looking from any angle addition u/s 68 was not factually or legally sustainable and so in the facts and circumstances as discussed above the addition was not warranted. Therefore, we do not find any infirmity in the order of Ld. CIT(A) and therefore we confirm the order of Ld. CIT(A) and do not find any merit in the revenue appeal, so, the grounds of appeal raised by the revenue are dismissed.
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2021 (3) TMI 50
Addition u/s 68 - 'unsecured loans received by the assessee as unexplained loans received by the assessee - AO took the view that the assessee has introduced its unaccounted cash through the bogus loans - HELD THAT:- As decided in own case [ 2018 (8) TMI 1766 - ITAT MUMBAI] and [ 2019 (2) TMI 835 - ITAT MUMBAI] AO had no valid basis for treating the unsecured loans as accommodation entries . There is nothing on the record to show that the assessee admitted at any point of time to have procured accommodation entries of loans. - Decided in favour of assessee. Disallowance of loss on of sale shares - As per AO company was not financial sound as per the valuation of the company and did not have real business activity - CIT-A deleted the addition - HELD THAT:- There is no cogent and convincing evidence on record to hold this fact that the business loss in the impugned scrip is bogus. It is also not apparent on record that the appellants name was appearing in any of the SEBI investigation in the impugned scrip. No evidence on record to which it can be assumed that the appellant had connived with any entry operator for executing the share transaction. What adverse information was received from the wing of Calcutta/investigation wing Mumbai against the assessee is not apparent on record. The evidence adduced by the assessee was not rebutted by the AO. AO also took the contradictory stand by taxing the profit on the penny stock but disallowed the loss. No proper opportunity was given to the assessee to cross-examination of the witness as well as to rebut the other evidence on record. Taking into account of all the facts and circumstances mentioned above, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is decided in favour of the assessee against the revenue.
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2021 (3) TMI 49
Bogus LTCG - unexplained credit under section 68 - Treating receipt of share application by the assessee in its books of account as unexplained credit - application for admission of additional evidence - HELD THAT:- Additional evidence now sought to be filed is required to be admitted as it is necessary for deciding the issue in controversy. As we have already seen the only basis on which the addition is made is clause 2 of the agreement dated 02.02.2010. If there is no actual payment as recited in clause 2 of the agreement dated 02.02.2010, then the impugned addition under section 68 of the Act cannot be sustained. Since the contention of the assessee is that there was no actual payment but there was only a mere book entry and since this is sought to be proved with the help of the additional evidence and since such evidence has not been examined by the AO, we deem it fit and proper to remand the issue for fresh consideration in the light of the additional evidence produced by the assessee before the Tribunal. Assessee appeal allowed for statistical purposes.
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2021 (3) TMI 48
TP Adjustment - determining ALP of project management services - HELD THAT:- In the instant case, assessee has brought on record plethora of evidence for availing of the technical services and payment made for technical services received on the basis of USD 1600 per man-month on actual time spent by the relevant personnel, copy of technical services agreement between the taxpayer and the Huawei, China and also brought on record invoices filed on sample basis for availing technical services, but all these documents have not been examined by the TPO/DRP rather benchmarked the technical services/project management services availed of by the taxpayer from its AE at nil by mechanically dealing with the issue by applying the benefit test and commercial expediency test and has not provided opportunity of being heard to the taxpayer at the time of abruptly applying the other method. So, in the given circumstances, we are of the considered view that this issue is liable to be remitted back to the TPO to decide afresh by examining all the evidences brought on record by the taxpayer and to decide the issue in the light of the decisions discussed in the preceding paras and by following the rule of consistency as in the earlier years i.e. in AY 2004-05 onwards, TPO himself has accepted availing of technical services at arm s length price as determined by the assessee. Disallowance being 30% of the total advertisement expense - Declining assessee's contentions that these advertisement expenses have been incurred wholly and exclusively for the purpose of taxpayer s business and not for any benefit to any group company or to a third party - HELD THAT:- As relying on J.J. Enterprises vs. CIT [ 2001 (9) TMI 6 - SUPREME COURT] disallowance of 30% of the advertisement expenses by the AO and confirming the same by the ld. DRP is not sustainable for the reasons inter alia that commercial expediency of any expenditure incurred by the taxpayer has to be examined with businessman standpoint and not with the perspective of tax authority; that advertisement expenses are revenue in nature; that merely because of the fact that advertisement expenditure incurred by the taxpayer has benefited the third party, the same cannot be disallowed; and that disallowance of any expenditure on ad hoc basis is not permissible in law, hence ordered to be deleted. Disallowance of provision for customer claim - Addition on the ground that the amount provided by the taxpayer pertaining to actual delays/defaults occurred as per the terms of the contract entered between the taxpayer and its customers and as such is an ascertained liability - HELD THAT:- Provision for customer claim is a liability which can be used only by using a substantial decree of estimation. When the taxpayer has brought on record ample evidence in the form of credit memo in relation to liquidated damages and details of liquidated damages, chart showing trend and utilization of provision of customer claims from AYs 2010-11 to 2014-15 and extract of audited financials for AYs 2010-11 to 2016-17, to show that the details of customer claims and extract of contract entered into between the taxpayer and the customer claims, available from pages 6 to 26 of the convenience paper book, this provision has to be measured by using substantial decree of estimation. Moreover, historical trend brought on record by the taxpayer also shows the actual use of provision for customer claim. As relying on Rotork Controls India P. Ltd [ 2009 (5) TMI 16 - SUPREME COURT] evidence brought on record by the taxpayer shows that required conditions have been fulfilled and as such, provision made qua the amount provided by the taxpayer pertaining to actual delays and defaults occurred in terms of the contract entered into between the taxpayer and its customers is to be considered as ascertained liability . So, AO/DRP have erred in making disallowance on account of provision for customer claims. So, it is ordered to be deleted subject to verification of data brought on record by the taxpayer as discussed in the preceding paras. Addition of advances written off - as contented once the advance has been written off in the books of account, it is sufficient to claim the deduction of the advances written off u/s 37 of the Act and taxpayer is not required to prove that the advances written off is irrecoverable as per section 37(1) of the Act - HELD THAT:- Hon ble Supreme Court in case of TRF Ltd [ 2010 (2) TMI 211 - SUPREME COURT] held that, After 1st April, 1989 it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. The taxpayer has given complete detail of advances given at page 30 of the convenience paper book in tabulated form. So, in view of the matter, we are of the considered view that let this issue go back to AO to verify the facts if these advances were given for business purposes and decide afresh in the light of findings returned hereinbefore by providing opportunity of being heard to the taxpayer.
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2021 (3) TMI 47
Dismissal of appeal by CIT-A on no representation on behalf of the assessee - denial of natural justice - non-adjudication of issues on merits by the CIT(A) - HELD THAT:- A bare perusal of the impugned order shows that the Ld. CIT(A) did not refer to any merits of the assessee's claim but merely because of the absence of the assessee, the appeal was dismissed in limine. Absence of assessee will not deter the first appellate authority from disposing of the appeal on merits It is as well available to the Ld. CIT(A) to look into the papers that are available on record and appraise the merits of the case to reach a reasonable conclusion determining the just tax liability of the assessee. CIT(A) should have considered the fact that in the absence of assessee also the papers will speak for themselves. Instead of dismissing the appeal in limini, the Ld. CIT(A) should have taken little more effort and care to delve deeper into the merits of the case and should have recorded the for reasons to dismiss the appeal. This exercise should have been undertaken by the Ld. CIT(A) because being a statutory appellate authority, it is not open for him to dismiss the appeal for default which power is not available to him. Thus even in the absence of the assessee, it is always open for the Ld. CIT(A) to look into the matter and to find whether or not any reasons are there either to confirm or reverse the conclusion of the A.O. on the claim of assessee - Appeal of the assessee is allowed for statistical purposes.
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2021 (3) TMI 46
Unexplained investment - whether assessee has executed sale deed less than Jantri rate or whether assessee has made on-money payment as alleged by the A.O. or not? - addition has been made on the basis of information received from the Investigation Wing of the Department at Mehsana that there has been escapement of income on the ground that actual deed was executed at ₹ 95 lacs whereas the agreement to sell for the same land was entered at ₹ 10,95,58,873/- and hence sale deed was executed at undervalued consideration - HELD THAT:- Revenue has not given any comparable and moreover matter was not referred to the DVO for ascertaining actual cost of the land. In our considered opinion, the appropriate person was DVO who would have been able to ascertain the actual cost of the land, but Ld. A.O. has not exercised such practice and same is amounting to miscarriage of justice. Merely on the ground of information, addition cannot be sustained and for making any addition there has to some corroborative evidences as well on the basis of surmises and conjectures addition cannot be sustained. The assessee has filed an assessment order in assessee's own case for A.Y. 2011-12 wherein assessee has sold that land at ₹ 1,25,00,000/- in 2020 meaning thereby that assessee earned profit of ₹ 30 lacs in three years and same contention has been accepted by the Ld. A.O. with regard to same land when department has accepted the sale price of the said land at ₹ 1,25,00,000/- how that land could be alleged to have been purchased at ₹ 10,95,58,873/- and department has not brought anything on record to controvert the finding of the Ld. CIT(A). Thus, in view of the above, we are not inclined to interfere in the order passed by the Ld. CIT(A). - Appeal filed by the Revenue is dismissed.
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2021 (3) TMI 45
Addition u/s 68 - unexplained cash deposits - HELD THAT:- Regarding cheque deposit of ₹ 6,50,000/-, there cannot be any addition on this count, since there is confirmation letter given by Sri Madhu Sukumaran. For cash deposit being gift, the assessee filed confirmation letter from Chetan Sharma cash stating that he has given a sum of ₹ 2 lakhs by way of cash as a gift on 10.08.2010 to his son out of love and affection and confirmation letter from Nidhi Sharma a sum of ₹ 2 lakhs gift by way of cash on 18.8.2010 to her son out of love and affection. In our opinion, the cash gift of ₹ 4 lakhs from the assessee's parents is to be accepted as source of deposit as explained, to that extent there cannot be any addition Assessee explained that mutual advisory income, the assessee deposited ₹ 4,77,346 into his bank account. However, the assessee offered income u/s. 44AD only to the extent of ₹ 3,53,740. Hence the balance amount of ₹ 1,23,603 not offered to tax. Being so, as per assessee's income in revised return 100% of the turnover to be considered as income of the assessee. Accordingly, on this count, ₹ 1,23,606 out of ₹ 4,77,346 to be taxed separately. Regarding garment sale assessee has explained that ₹ 92,54,462 is out of previous withdrawals and sale of garments and pleaded that it is to be excluded from the taxation. The assessee has not furnished any evidence to establish the nexus between the earlier withdrawals and deposits into various bank accounts. In such circumstances, we are not in agreement with the assessee's counsel that it is from the earlier withdrawals. In our opinion, these receipts are to be considered as from unknown sources to bring into taxation. Therefore these deposits of ₹ 92,54,462 to be considered as unexplained deposits from 'income from other sources'. It is ordered accordingly. Unexplained deposit into bank account cannot be considered as income u/s. 68 of the Act and it should be u/s. 69/69A - In our opinion, mentioning the wrong section is not fatal, we have to see only the substance not the form. Being so, inter alia, we confirm the addition on this count at ₹ 92,54,462.
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2021 (3) TMI 44
Orders passed by CIT-A without proper jurisdiction - As stated CIT(A)-11, Bangalore who passed all the impugned orders committed serious lapses and he was directed by the Director General of Income Tax, Investigation, Karnataka Goa, Bengaluru, by direction dated 18/06/2018 not to pass any further appellate orders during pendency of the explanation sought on the lapses in adjudicating the appeals - plea of the revenue that all the orders impugned in these appeals were passed after 18.6.2018 and are therefore orders passed without jurisdiction and on that ground are liable to be set aside - Further plea of the revenue that by notification dated 16.07.2018, issued u/s. 120 of the Act, by the Principal Chief Commissioner of Income Tax, Karnataka Goa, the appeals pending before CIT (Appeals) - 11 were transferred to Commissioner of Income Tax (Appeals) - 12, Bengaluru and CIT (Appeals) - 11 disregarding the directions issued by the Principal CCIT, has passed orders that are impugned in all these appeals. HELD THAT:- It is undisputed that the impugned orders in all the appeals were passed after 18.6.2018 order dt. 18.6.2018 by which Director-General of Income Tax (Investigation), Karnataka and Goa, Bengaluru, directed the then CIT(A)-11, Bengaluru, not to pass any further appellate orders during pendency of the explanation sought on the lapses in adjudicating the appeals. The CIT(A) had no jurisdiction to pass any orders in appeal on or after the aforesaid date. The order passed by him contrary to the directions of the superior officer cannot be said to be an order passed by a person having proper jurisdiction. There is prima facie material on record to show that the orders purported to have been passed after 18.6.2018 and prior to 16.7.2018 were pre dated, which he offered to submit it in sealed cover. Though we declined to look into it, yet, considering the conduct of the then Ld. CIT(A)-11, the stand taken by the revenue appears to be probable. In any case, the very action of then Ld. CIT(A)-11 in ignoring the binding directions given by DGIT and proceeding to pass orders results serious lapse on his part in administering justice. We also notice that all the orders impugned in these appeals have been passed between 5.7.2018 and 13.7.2018, numbering around 50 orders, involving different Assessees and different issues, which is difficult task for any appellate authority. Hence we agree with the submission of Ld. Standing Counsel that the interests of revenue is prejudiced by the said action of the then Ld. CIT(A)-11. All these factors, in our view, would vitiate the appellate orders passed by him after 18-06-2018, even if the allegation of pre-dating of orders is not accepted/proved. Hence the impugned orders, in our view, is not curable and sustainable in the eyes of law. We set aside the orders of the CIT(A) to the respective jurisdictional CIT(A) to decide the appeals afresh in accordance with law after due opportunity of hearing to the parties. The additional grounds of appeal are accordingly allowed.
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2021 (3) TMI 43
Deduction u/s. 80P(2)(a)(i) - HELD THAT:- Since the facts prevailing in the instant case needs to be examined afresh in the light of the principles enunciated by Hon Tale Supreme Court in THE MAVILAYI SERVICE COOPERATIVE BANK LTD. ORS. VERSUS COMMISSIONER OF INCOME TAX, CALICUT ANR. [ 2021 (1) TMI 488 - SUPREME COURT ] we are of the view that the issue of deduction u/s. 80P(2)(a)(i) of the Act requires fresh examination at the end of the A.O. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of the A.O. for examining it afresh as discussed above. Deduction claimed u/s. 80P(2)(d) in respect of interest income earned from fixed deposits kept with co-operative bank - HELD THAT:- We modify the order passed by Ld. CIT(A) and direct the A.O. to allow deduction of proportionate cost, administrative and other expenses from the interest income earned from bank deposits assessed under the head income from other sources . Applicability of TDS provisions on interest income paid to non-regular members - While considering the issue of deduction claimed u/s. 80P(2)(a)(i) of the Act, definition of the term member given in section 80P(2)(a)(i) of the Act has to be understood in the light of definition of that expression as contained in the concerned co-operative societies Act. Hence this issue also requires fresh examination as the definition of the term member has to be examined as per the definition given in the concerned Cooperative societies Act. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of the AO for examining it afresh.
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2021 (3) TMI 42
Penalty u/s 271(1)(c) - proceedings under section 153C were conducted against the assessee - Defective notice - non specification of charge - as submitted that for A.Ys. 2010-11, 2011-12 2012-13 additional income that was disclosed before the Settlement Commission amounting to ₹ 1 lakh in each year was added by the AO and on such addition, penalty was imposed - HELD THAT:- As decided in own case [ 2021 (1) TMI 840 - ITAT DELHI] Inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted - notice under Section 271(1)(c) r.w.s. 274 of the Act itself is bad in law. - Decided in favour of assessee.
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2021 (3) TMI 41
Disallowance u/s. 14A r.w.r. 8D - Addition on account of interest under Rule 8D(2)(ii) and indirect expenses under Rule 8D(2)(iii) - HELD THAT:- As far as the disallowance of interest expenses under Rule 8D(2)(ii) of interest is concerned, from the copy of Balance Sheet placed by the assessee we find that the interest free funds of the assessee in the form of Share Capital and Reserves and Surplus as on 31.03.2013 are in the region of ₹ 59 crores as against the investments of around ₹ 1 crore meaning thereby that the interest free funds are more than the investments. On the issue of presumptions that when interest free funds available with the assessee are in excess of investments and then the investments are presumed to be out of interest free funds,. We find that Hon'ble Bombay High Court in the case of HDFC . [ 2014 (9) TMI 1042 - BOMBAY HIGH COURT] held that there is now no need for the assessee to establish with evidence that the amounts which has been invested in the tax free securities have come out of interest free funds available with it. This is because once the assessee is possessed of interest free funds sufficient to make the investment in tax free securities, it is presumed that it has been paid for out of the interest free funds - we are of the view that no disallowance of interest under Rule 8D(2)(ii) is called for in the present case. Disallowance of indirect expenses under Rule 8D(2)(iii) before us, Learned AR fairly admitted that the maximum disallowance can be to the extent worked out under Rule 8D(2)(iii). We therefore, uphold the action of AO as far as the disallowance of ₹ 50,565/- under Rule 8D(2)(iii) is concerned. Thus the ground of appeal of the assessee is partly allowed.
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2021 (3) TMI 40
Accrual of income - Year in which income is taxable - Receipt of Security Deposit - Addition on account of sale of development rights by the assessee - assessee entered into an agreement known as Agreement cum Nominations Agreement with Emmar MGF Land Ltd. (Emmar), wherein the assessee transferred the development right to Emmar for a consideration - in the opinion of the assessee since the agreement dated 21.07.2006 with Emmar was subject to fulfillment of certain conditions, therefore the consideration being the sale of development rights, was not liable to be taxed in the year under consideration - AO was of the view that since the assessee was following the mercantile system of accounting, therefore even if in the year under consideration, no consideration in monetary terms have been received/passed on sale of such development right, even than it constitute the income of the year in which such agreement is signed - CIT-A held that no income accrued to the assessee of the impugned amount in assessment year under appeal, therefore, addition were deleted - HELD THAT:- What was transfer by the assessee was, what it got and not anything which it never acquired or owned. No amount was paid in assessment year under appeal for transfering the development right. The rights assigned through agreement Dated 21.07.2006 was conditional in nature. It was also agreed that all the terms and conditions of the agreement Dated 28.04.2006 shall apply to the assignment agreement also. It was also agreed that what was being paid by EMMAR was a refundable/adjustable security deposit which was to be adjusted only according to terms and conditions mentioned in the agreement. In case EMMAR would not have perform its obligation, the said security deposit would have stood forfeited. Therefore, the fulfillment of the obligation to construct and develop the project within the stipulated time was a condition precedent for the assessee to the satisfaction of the PCL as mentioned in the assignment agreement Dated 21.07.2006. Therefore, the security deposit received by the assessee for conditional transfer could never be treated as an income of the assessee. All the conditions of the original agreement shall have to be satisfied and completed by EMMAR only. Then income would accrue to the assessee. Assessee also explained that it has followed POCM method and in A.Ys. 2009-2010, 2010-2011 and 2011-2012 assessee has recognized the income and offered for taxation. In A.Y. 2009-2010 even the A.O. has accepted the similar explanation of assessee in scrutiny assessment under section 143(3) of the I.T. Act. It is also interesting to note that in A.Y. 2009-2010 the same A.O. passed the same assessment order under section 143(3) of the Act in the case of the assessee on the same day. The A.O. accepted the explanation of assessee after recognizing the income based on both the agreements and accepted the explanation of assessee without making any addition. But, in assessment year under appeal, the same A.O. on the same day took a different view against the assessee which is not permissible in Law. It is well settled Law that Income Tax Authorities shall have to follow the Rule of Consistency. But, in the present case, the A.O. did not do so. - Decided against revenue.
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2021 (3) TMI 22
CIT(A)-1 Noida jurisdiction over appeals filed under Income Tax Act pertaining to Noida-1 and Noida-2 - allegation in the FIR that Sri S.K. Srivastava claimed to have passed 104 orders as CIT(A)-1 and CIT(A)-2, Noida during December, 2018 but prima facie passed in the Month of June, 2019 - HELD THAT:- It is not in dispute that Sri S.K. Srivastava then CIT(A)-1, Noida got compulsorily retired with effect from 11.06.2019. It is also not in dispute that on the complaint filed by Ms. Anuja Sarangi, Directorate General of Income Tax (DGIT-Vigilance) FIR was registered by Central Bureau of Investigation (CBI), Anti Corruption Branch (ACB), Ghaziabad against Sh. S.K.Srivastava then CIT(A)- 1 and 2 Noida u/s 120 B, 420, 468 IPC and Section-7 of the Prevention of Corruption Act, 1988 (as amended in 2018) for having indulged in Acts of Omission and Commission adversarial to the interest of revenue. As brought on record by the Vigilance Inspection Team of Income Tax Department qua the work and conduct of CIT(A)-Noida it has come on record CIT(A)-I, Noida has decided Income Tax Appeals referred to in preceding para no. 7 pertaining to Ghaziabad Jurisdiction over which he has no jurisdiction purportedly on 31.12.2018 whereas it is proved on record that all these appeals were disposed of in the month of June, 2019 after his compulsory retirement. It is also proved on record that all the impugned orders have been uploaded on ITBA system between 11th June to 13th June, 2019 after his demitting the office by Sri S.K.Srivastava, CIT(A)-1 and2 Noida. It is also proved that he has uploaded the impugned orders to the Central Server using his RSA token only after his retirement. All these facts to go to prove that the impugned orders have been passed by SriS.K.Srivastava, CIT(A)-1 and 2 Noida after his compulsory retirement with effect from 11.06.2019, because the moment he ceases to hold his office he has become functus officio. Hon ble Supreme Court in case of United Commercial Bank Ltd. [ 1951 (4) TMI 25 - SUPREME COURT] in the identical situation held that Jurisdictional defect strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of the parties. Also see KANWAR SINGH SAINI [ 2011 (9) TMI 960 - SUPREME COURT] and FATMA BIBI AHMED PATEL [ 2008 (5) TMI 691 - SUPREME COURT] We are of the considered view that the impugned orders suffer from jurisdictional defect which is not curable having been passed by Ld. CIT(A)-1 and 2 Noida after his compulsory retirements with effect from 11.06.2019, when he was functus officio, are not sustainable in the eyes of law, hence, nullities. So question framed is answered in affirmative.
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Customs
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2021 (3) TMI 36
Seeking provisional release of imported goods - articles of gold i.e. images of different deities which are decorative images made out of gold sheets - Classification of goods under dispute - HELD THAT:- The petitioner had earlier moved the adjudicating authority for provisional release of the imported goods under section 110A of the Customs Act, 1962 on 03.03.2020 but to no avail - it is also found from the writ petition that for import of identical goods for the period from 09.03.2017 to 23.12.2017 and again for the period from 13.01.2018 to 14.06.2018 bills of entries of the petitioner were cleared by accepting identical classification declared by the petitioner. Though a dispute was raised in respect of bill of entry No. 7262799 dated 18.07.2018, however at the intervention of the Commissioner, the imported goods were cleared on bond without insisting on any bank guarantee. It would be in the interest of justice if a decision is taken by the proper officer for release of the imported goods of the petitioner for home consumption either on the basis of provisional assessment or under section 110A of the Customs Act, 1962 - Let such decision be taken within a period of two weeks from the date of receipt of a copy of this order - Stand over to 16th March, 2021.
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2021 (3) TMI 32
Provisional release of goods - Seeking to allow clearance of used MFDs imported by the petitioner - HELD THAT:- Mr. Shankhesh Mehta, the Joint Commissioner is in contempt of this Court. Mr. Mehta should not have sat in appeal over the order passed by this Court. He could not have been wiser than what has been observed by this Court in the order dated 11th January 2021. If there was any doubt in his mind as regards the correctness of the order of this Court, then he should have consulted Mr. Vyas, the learned Additional Solicitor General of India and Mr. Vyas, in turn, could have preferred an appropriate application before this Court seeking review or modification of the order. However, the Joint Commissioner on his own could not have taken the view that the goods cannot be released. Mr. Mehta, the Joint Commissioner owes an explanation in this regard. Let Notice be issued to the opponents, returnable on 24th February 2021. The opponents shall be served directly through Email. Regular Direct Service is also permitted.
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2021 (3) TMI 31
Maintainability of petition - HELD THAT:- Since an order has been passed against the order which is sought to be implemented in the present writ petition, nothing survives for adjudication in the present writ petition. Therefore, this Writ Petition is liable to be dismissed as infructuous. This Writ Petition stands dismissed as infructuous.
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2021 (3) TMI 27
Classification of imported goods - betel nut (Areca-nuts) - classified under CTH 21069030 or under CTH 08028010? - prohibited goods or not - According to appellants the raw betel nut obtained from tree has been subjected to boiling and made ready for human consumption - HELD THAT:- The betel nuts which are whole nuts and classifiable under CTH 08028010 are prohibited for import if the CIF value of the goods is lesser than ₹ 251/- per kg. The declared quantity of the goods in appeal filed by Ayush Overseas is 79,520 tons valued at ₹ 89,63,892/- @ ₹ 112.75 per kg. Thus, if the classification is under Chapter 8, the import of these nuts would be against the provisions of law. It is not the case of the appellants that the betel nuts are not whole . In other words, appellants do not have a case that the imported goods are broken or crushed betel nut. They have imported betel nut in the whole form and only contention is that nuts have been subjected to certain processes of manufacture and therefore would fall out of Chapter 8. Though several stages/ process are claimed to be done in the write up given by supplier, during the argument the process undertaken was mainly confined to boiling in water and drying in sun light. Even if some stage of drying or rehydrating or treatment is done for preservation / stabilization or maintaining the appearance, as long as the nuts retain the character of dried nuts, they fall under Chapter 8. The counsel for appellants had placed before us samples of dried whole betel nut (without husks) as well as sample of the imported goods. We were able to see that the imported goods are also whole but more dried. It can be seen that CTH 21069030 takes in the items betel nut product known as suprai . To be more clear what is described therein is betel nut product and not betel nut whole as seen in Chapter 8. Chapter Note 2 of Chapter 21 also speaks about betel nut product and not betel nut whole . As per Chapter Note 2 of Chapter 21 betel nut product means any preparation containing betel nut, but not containing lime, katha and tobacco. It may or may not contain cardamom, copra, or menthol. The appellants do not have a case that their goods contain cardamom, copra or menthol or any additives. Counsel for appellants has made much effort to contend that after boiling though whole the betel nut becomes betel nut product . Since betel nut has retained its character of being whole and it does not contain any other ingredients such as cardamom, copra or menthol, it cannot be said that impugned goods are preparations containing betel nut or betel nut product/supari so as to fall under tariff heading 21069030. Hon ble Supreme Court in the case of Crane Betel Nut Powder Works Vs CC CE Tirupathi [ 2007 (3) TMI 6 - SUPREME COURT ]. The facts of the case before Hon ble Apex Court was that the assessee was marketing betel nuts after cutting into different sizes and adding essential / non-essential oils, menthol, sweetening agents etc. The assessee classified the items under Chapter 21 and cleared by paying excise duty. Later, they revised classification to be under Chapter 8 taking the view that crushing betel nuts and adding the above ingredients did not amount to manufacture . The Hon ble Apex Court reversed the Tribunal decision to hold that the said process would not amount to manufacture . The process involving manufacture does not always result in the creation of a new product and the classification was held to be under Chapter 8. Since the import goods are betel nuts whole , these would merit classification under Chapter 8 and specifically under Chapter 08028010 as classified by the department. We cannot refrain from stating that the Commissioner (Appeals) has made detailed discussion of facts and the law and arrived at the correct classification. Appeal dismissed - decided against appellant.
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Insolvency & Bankruptcy
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2021 (3) TMI 39
Maintainability of application - initiation of CIRP - unpaid Operational Debt - pre-existing debt or not - Adjudicating Authority has rejected the application mainly on the ground that the Applicant has failed to prove the Operational Debt and its default and further on the ground of pre-existing dispute - it was held by NCLAT that Ld. Adjudicating Authority has rightly dismissed the application filed under Section 9 of IBC - HELD THAT:- There seems no need to interfere with the order of the National Company Law Appellate Tribunal - appeal dismissed.
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2021 (3) TMI 38
Initiation of CIRP when winding up petition was pending before the High Court - Overriding provisions of IBC over Companies Act - seeking direction to Provisional Liquidator to handover physical possession of the said Mortgaged Property - HELD THAT:- Given the object of the IBC as delineated in paragraphs 25 to 28 of Swiss Ribbons (P) Ltd. v. Union of India, [ 2019 (1) TMI 1508 - SUPREME COURT ], it is clear that the IBC is a special statute dealing with revival of companies that are in the red, winding up only being resorted to in case all attempts of revival fail. Vis- -vis the Companies Act, which is a general statute dealing with companies, including companies that are in the red, the IBC is not only a special statute which must prevail in the event of conflict, but has a non-obstante clause contained in Section 238, which makes it even clearer that in case of conflict, the provisions of the IBC will prevail. In Allahabad Bank v. Canara Bank, [ 2000 (4) TMI 757 - SUPREME COURT ], this Court had to deal with whether the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 [RDB Act] was a special statute qua the Companies Act, 1956. This Court held that the Companies Act is a general Act and does not prevail against the RDB Act, which was a later Act and which has a non-obstante clause that clearly excludes the provisions of the Companies Act in case of conflict. A petition either under Section 7 or Section 9 of the IBC is an independent proceeding which is unaffected by winding up proceedings that may be filed qua the same company. Given the object sought to be achieved by the IBC, it is clear that only where a company in winding up is near corporate death that no transfer of the winding up proceeding would then take place to the NCLT to be tried as a proceeding under the IBC. Short of an irresistible conclusion that corporate death is inevitable, every effort should be made to resuscitate the corporate debtor in the larger public interest, which includes not only the workmen of the corporate debtor, but also its creditors and the goods it produces in the larger interest of the economy of the country. It is, thus, not possible to accede to the argument on behalf of the Appellant that given Section 446 of the Companies Act, 1956 / Section 279 of the Companies Act, 2013, once a winding up petition is admitted, the winding up petition should trump any subsequent attempt at revival of the company through a Section 7 or Section 9 petition filed under the IBC. While it is true that Sections 391 to 393 of the Companies Act, 1956 may, in a given factual circumstance, be availed of to pull the company out of the red, Section 230(1) of the Companies Act, 2013 is instructive - As per Section 230(1) of the Companies Act, 2013, a compromise or arrangement can also be entered into in an IBC proceeding if liquidation is ordered. However, what is of importance is that under the Companies Act, it is only winding up that can be ordered, whereas under the IBC, the primary emphasis is on revival of the corporate debtor through infusion of a new management. On the facts of this case, though no application for transfer of the winding up proceeding pending in the Bombay High Court has been filed, the Bombay High Court has itself, by the orders dated 28.11.2019 and 23.01.2020, directed the provisional liquidator to hand over the records and assets of SRUIL to the IRP in the Section 7 proceeding that is pending before the NCLT. No doubt, this has not yet been done as the IRP has not yet been able to pay the requisite amount to the provisional liquidator for his expenses - Any suppression of the winding up proceeding would, therefore, not be of any effect in deciding a Section 7 petition on the basis of the provisions contained in the IBC. Equally, it cannot be said that any subterfuge has been availed of for the same reason that Section 7 is an independent proceeding that stands by itself. As has been correctly pointed out by Shri Sinha, a discretionary jurisdiction under the fifth proviso to Section 434(1)(c) of the Companies Act, 2013 cannot prevail over the undoubted jurisdiction of the NCLT under the IBC once the parameters of Section 7 and other provisions of the IBC have been met. Appeal dismissed.
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2021 (3) TMI 28
Constitution of CoC - CoC only constituted Operational creditors - Appellant claims that the Impugned Order suffers as certain guiding yardsticks for consolidation were absent with regard to the DCCL - HELD THAT:- It appears from record and the Adjudicating Authority has painstakingly written the Impugned Judgment and succinctly put relevant facts on record. The Adjudicating Authority found that WAML had agreed to the consolidation. As records DCCL in Paragraph 7, Adjudicating Authority noted that DCCL was incorporated for running and maintaining Dasve Convention Centre at the premises leased to it by Respondent No. 2- LCL and for this purpose the Lease-Agreement dated 30th September, 2010 was executed which was not duly stamped and registered and was cancelled by the Resolution Professional of Respondent No. 2. It is to be noted that the CIRP in LCL had started on 30th August, 2018 while CIRP in DCCL started on 05th February, 2019. The Adjudicating Authority noted that in the three CIRPs Resolution Plans were received only in the matter of LCL and none was received in the other two CIRPs. It was also noticed that in the Resolution Plans submitted with regard to the LCL, the Applicants wanted pre-condition that entire group debt with respect to LCL group of Companies should be extinguished instead of stand-alone debt of LCL. There is no dispute that LCL has about 49 subsidiaries or joint-ventures. There are no error in the Impugned Order consolidating the three CIRPs. The subsidiary DCCL appears to have been created for running the Convention Centre and it does appear to be linked with the business of Respondent No. 2-LCL with annual rent of token Re. 1. The Appellant who is only an Operational Creditor of DCCL is trying to find fault with the consolidation Order the object of which is Resolution of the Companies while the Appellant appears to be more concerned that its money as Operational Creditor should be protected. Appeal dismissed.
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2021 (3) TMI 26
Seeking directions upon Respondent No. 2 to defreeze the Account of petitioner - It is argued that the Adjudicating Authority failed to exercise jurisdiction vested in it and to invoke section 238 of I B Code, 2016 - HELD THAT:- It is rightly submitted by appellant that the freezing of Account by the Respondent No. 1 is not maintainable and the Liquidator cannot be made to run to the parties and Authorities under the Sales Tax Act to get the Account defreezed - also appellant rightly says that Liquidation Proceedings are time-bound to maximize the value and all the Creditors are entitled to get their dues only in terms of Section 53 of I B Code, 2016 and different Creditors cannot be allowed to resort to different proceedings and enactments only because they are Authorities under earlier enactments considering the Provision of Section 238 of I B Code, 2016. The Adjudicating Authority has failed to exercise jurisdiction vested in it to give relief to the Appellant in the context of the position of law under Section 238 of IBC. Appeal allowed - decided in favor of appellant.
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2021 (3) TMI 25
Seeking exclusion of period of lockdown to complete Corporate Insolvency Resolution Process - Section 12 (2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It seems that RP as well as the CoC have taken needful steps as per the IBC for inviting potential Resolution Plans. However, the CoC and RP could not able to act effectively for some time due to the Nationwide lockdown and even the during phase of unlock. Therefore, we are of the view that this the present I.A. seeking exclusion of time of CIRP deserves to be allowed. Hence, it is hereby allowed. Further, the period of CIRP during the promulgation of lockdown needs to be exempted (excluded) pursuant to the notification of Central Govt. read with new amendment which took place in the Regulation of the IBBI and also by following the decision of the Hon ble NCLAT passed in suo-moto Company Appeal (AT) (Insolvency) No. 01 of 2020 dated 30.03.2020. Hence, such period is excluded - It is also a settled legal position that the period consumed in filing of the present application till its disposal can be exempted for counting of the CIRP period. The period of pendency of the present application from the date of its filing 02.07.2020 till 25.02.2021 its disposal is hereby exempted for counting of the CIRP - application allowed.
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FEMA
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2021 (3) TMI 34
Offence under FEMA - Review Petition - Correction of clerical errors - respondent Sakunthala had received payment unauthorisedly in her residential premises - respondent Sakunthala that her husband Muthupal Chettiar was a partner in Kumaran and Co in Malaysia - The Appellate Board had found that there was a accidental slip and held in paragraph No.7 that ''After giving careful thought to the contentions of the parties, I find this to be a fit case where benefit of doubt should be given to the appellant at S.No.1 and 2 and therefore, hold that the charge against her have not been established'' - HELD THAT:- Appellate Board upon satisfying that the accidental slip had occurred in the order attributable to an over-sight that the non-receipt of ₹ 75,000/- by the appellant at S.No.2 in the order conflicting with the conclusion reached in Appeal No.110 of 1984. Thus giving the benefit of doubt to the appellant at S.No.2, the Appellate Board has set aside the earlier order passed imposing punishment of fine. The said order is now under challenge in the present Civil Miscellaneous Appeal by the Enforcement Directorate contending that the Appellate Board has no power to review its onw order, as it is not a clerical or arithmetical error. Clerical or arithmetical mistakes in any decision or order passed by the Appellate Board or the adjudicating officer under this Act, or errors arising therein from any accidental slip or omission may, at anytime, be corrected by the Appellate Board or the adjudicating officer or his successor in office, as the case may be. But the order in the review was passed only after hearing the authorities also. The appellant is also not able to say what had happened after filing of the appeal. Whether the amounts are paid and whether the Petitioner is alive or not? Though the vakalath has been filed on behalf of the respondent, there is nobody appearing on behalf of her either in person or through counsel despite more than three chances have been given. Other than the above order, there is no other papers in the bundle. Therefore, we are constrained to confirm the order passed by the Appellate Board while dismissing the above Civil Miscellaneous Appeal
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Service Tax
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2021 (3) TMI 33
Maintainability of petition - availability of alternative remedy of appeal - impugned order has been passed, without giving proper reasons, without dealing with the submissions of the petitioner and applying Rule 6A of the Service Tax Rules, 1994 which was not even in force at the relevant time - HELD THAT:- The appellate provision cannot be obviated for such reasons. Though the senior counsel for the petitioner, relying on EAST INDIA COMMERCIAL CO. LTD., CALCUTTA VERSUS COLLECTOR OF CUSTOMS, CALCUTTA [ 1962 (5) TMI 23 - SUPREME COURT] has contended that writ petition is maintainable when the judgment of the Supreme Court has been ignored, but we are still of the opinion that if at all the petitioner, after availing of the remedy of appeal, is not in a position to comply with the mandatory requirement of pre-deposit and/or has any other ground for waiver thereof, the remedy of the petitioner is to apply at that stage under Article 226 of the Constitution of India, making averments in that regard and writ petitions cannot be entertained negating the statutory remedy of appeal provided. This writ petition is rejected with liberty to the petitioner to avail of the remedy of appeal and of the remedy if any, if entitled, as aforesaid qua the pre-deposit - petition dismissed.
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2021 (3) TMI 24
CENVAT Credit - duty paying documents - credit availed by General Insurance Companies on the basis of invoices issued by dealers of motor vehicles containing description of services which were never provided by them - allegation of the Department is that no services have been provided by the dealers to the appellant as per the invoices and therefore, the appellant is not eligible to avail credit of the Service Tax reflected in this invoices - HELD THAT:- The case of the Department is that the payout paid by the appellant to the dealers on the OD premium collected by the dealers from the customers is camouflaged as service provided by the dealers to the appellant; that therefore, the services contained in the invoices have actually not been provided by the dealers to the appellant and thus, CENVAT Credit is not eligible. Though in the Show Cause Notice the main allegation is that the description of services in the documents on which credit has been availed is not correct, at the time of adjudication, the main finding is that no services have been provided by the dealers to the appellant and that therefore credit is not eligible. At this juncture, it needs to be pointed out that the Department has no dispute with the Service Tax collected from the appellant by the dealer and remitted to the Government. The assessment of Service Tax paid at the dealer s end has not been disturbed/questioned by the Department; only the credit availed at the service recipient s end has been questioned by issuing the present Show Cause Notice. The impugned order cannot sustain and requires to be set aside - Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (3) TMI 23
Condonation of delay of 367 days in filing the appeal - Appellant is a Government body whereas respondent is a Central Government in a matter of taxation - delay sufficiently explained - service of order in dispute - adjudication order passed even without hearing the appellant - HELD THAT:- Hon ble Supreme Court has in case of THE STATE OF MADHYA PRADESH AND ORS. VERSUS BHERULAL [ 2020 (10) TMI 1231 - SUPREME COURT] has held that i t is the right time to inform all the government bodies, their agencies and instrumentalities that unless they have reasonable and acceptable explanation for the delay and there was bonafide effort, there is no need to accept the usual explanation that the file was kept pending for several months/yea₹ 4 due to considerable degree of procedural red tape in the process. The government departments are under a special obligation to ensure that they perform their duties with diligence and commitment. Condonation of delay is an exception and should not be used as an anticipated benefit for government departments. The law as stated by the Hon ble Apex Court is very succinct and clear that while examining the applications for condonation of delay, some leeway should be given to the government bodies and agencies, however this does not imply condoning the inordinate and unexplained delays. Further in all the cases decided by the Hon ble Apex Court, as above the appellant government is against the private persons, none of the case is one where the Appellant is one government body and the respondent is the Central Government in a matter of taxation. Undoubtedly, Appellant here seeking condonation of delay is Thane Municipal Corporation, a government body constituted under Article 243 of the Constitution and the respondent is Central Government. When both Appellant and Respondent are Government and government body the above said decisions do not decide the issue. It is also found that huge demand of ₹ 46,17,13,528/- (Service Tax) + ₹ 46,17,13,528/- (Penalty)+ Interest has been made against the appellant even without receiving any reply or conducting an effective personal hearing in the matter. Appellant was nowhere aware of the completion of adjudication proceedings and the order passed against them. On the passing of the order as per the affidavit filed by the appellant, they for first time came to know about the order when the same was forwarded to them as attachment to email dated 14.01.2019, i.e. more than three from the date of order i.e. 17.08.2018 or 23.08.2018 shown as date of dispatch. So the appellants were definitely not in position to act on the order - By issuing the certified copy of impugned order on 25.11.2019, respondent department itself agrees that the impugned order in appealable form was in fact served on 25.11.2019. If that was not case and the department was of the view that the impugned order had been served on the appellants when it was issued on 23.08.2018, they should have proceeded to recover the sums due from the appellant after expiry of the period of appeal. On the contrary department chose to stay mum - thus, there is definitely delay in filing of the appeal but delay has been explained by the appellants in their affidavit. The delay is condoned - COD application allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (3) TMI 35
Levy of Administrative Charges - post GST situation - sale and supply of molasses under the provision of the U.P. Sheera Niyantran Adhiniyam, 1964 - the contention is that once the realization of tax has been subject to maintenance of separate accounts, the demand by the respondents of GST, as also Administrative Charges, would again amount to double taxation - HELD THAT:- The issue is decided in the case of U.P. DISTILLERS' ASSOCIATION THROUGH IT'S SECRETARY GENERAL VERSUS UNION OF INDIA THROUGH SECY. FINANCE REVENUE NEW DELHI ORS. [2018 (5) TMI 274 - ALLAHABAD HIGH COURT] where it was held that as an interim measure, we provide that the respondents shall not demand any Administrative Charges, provided the petitioner continues to deposit GST as demanded both by the Central and the State Government under the said enactments. Similar interim reliefs is granted to the petitioner in the present case - List and connect with Writ Petition in U.P. Distillers' Association v. Union of India and others.
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2021 (3) TMI 30
Benefit of exemption of entertainment tax - benefit of exemption is available only to the owner of a multiplex or it can be extended to a lessee as well? - HELD THAT:- Indisputably, an alternative remedy is available to the petitioner against the impugned order. However, it is noteworthy that this petition despite availability of that remedy was entertained by this Court way back on 28.07.2014. The question involved in the present matter is legal in nature and no factual inquiry is required. In our opinion, after almost six years from the date present petition was entertained, it will not be proper to relegate the petitioner to avail the alternative remedy. The notification dated 07.10.2008 was issued in exercise of powers conferred by Section 7 of the Act of 1936. On the same date, an executive instruction in the shape of policy (Annexure P/2) was issued clauses of which were heavily relied upon by Shri Bhargava. Indisputably, neither the notification dated 07.10.2008 nor the policy which is issued as executive fiat contains any definition of proprietor (Lokeh). Thus, to ascertain the meaning and definition of proprietor, the Court needs to look into the definition clause contained in the Act of 1936 namely; Section 2(f). In the considered opinion of this Court, if present petitioner is covered by definition of 2(f), he can certainly claim the benefit of exemption. The reason for depriving the petitioner from the benefit of exemption is that in the exemption order, the name of M/s Satyam Cineplexes does not find place or the exemption certificate is not a certificate in favour of M/s Satyam Cineplexes Ltd. This finding is factually incorrect. The relevant portion of exemption order dated 16.03.2012 Annexure P/12 reproduced hereinabove leaves no room for any doubt that exemption was indeed issued in favour of M/s Satyam Cineplexes Ltd. Pertinently, the impugned order dated 05.05.2014 does not contain any opinion of the Commercial Tax Officer that petitioner being a lessee is not entitled to get exemption and such benefit is confined to proprietor/swami only. The only reason assigned is that the exemption notification/certificate was not issued in favour of M/s Satyam Cineplexes Ltd. This is trite law that validity of an order of a statutory authority must be judged on the basis of grounds mentioned therein and it cannot be supported by assigning different reasons in the Court by filing counter affidavit. The petitioner/lessee is entitled to get the benefit of exemption of Entertainment Tax as per law - Petition allowed.
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2021 (3) TMI 29
Classification of goods - seat covers - cycle locks - whether covered by Entry-12 of Part-A of the Schedule-II and are taxable @4% and 5% or are they covered under the Fifth Schedule and are instead taxable @12.5% and 13.5%? - Whether, the Commissioner of Taxes, Assam while passing the impugned order dated 15-07-2013, has awarded the issue in the correct perspective and followed the law relating to taxing statute in respect of interpretation of items under the Act of 2003? - HELD THAT:- The items mentioned in the Entry-12 are bicycle, tricycle, cycle rickshaws and tyres and tubes used for bicycles, tricycles, cycle rickshaws and wheel chair. However, it is not clear as to whether the expression parts thereof is relative to all the items mentioned therein or is it specifically relative only to cycle rickshaws - there is no specific definition attributed to the items parts thereof and accessories in the Assam Value Added Tax Act, 2003 or the Rules framed thereunder and/or in any other circular/notification issued by the department. It is well settled principle of judicial proposition that when there are no definition provided in the statute book, recourse will have to be taken to derive the meaning/attribute from the common parlance as understood in the trade concerned. In order to do that it will be necessary to examine how a cycle and a cycle rickshaw is understood in common parlance as trade. As the said items are not defined in AVAT Act 2003, recourse will have to be taken to the dictionary meanings provided, in order to to make an attempt to determine the Legislative intent that can be attributed to the expression parts thereof . Taking recourse to the doctrine of common parlance it can be accepted that cycle/bicycle which is ordinarily sold in the market comes with all accessories/parts like handle, brakes, mudguards, paddles, bell and seat etc. In common parlance unless the cycle/bicycle is fitted with such items, it is unlikely to be purchased by customer. In other words when a customer comes to the market to purchase a cycle/bicycle, the cycle comes with such necessary parts/fittings enabling a customer to make use of the cycle immediately after purchase without having to fit any other parts in order to effectively use the cycle. This however, does not include the additional fittings that any customer may like to add to the cycle as per their personal taste and/or requirements - when a Bicycle is ordinarily sold to the customer, then it is sold with all necessary fittings/parts in order that the customer can make complete and immediate use of the Bicycle purchased. There is no requirement of adding any parts to the Bicycle before it can be effectively used. Viewed from this perspective the expression parts thereof used by the Legislature in Entry 12, will be rendered redundant in respect of Bicycle/Tricycle unless the term parts thereof can be permitted to be used to mean and include the term accessories as used by the Commissioner of Taxes. For the purpose of rendering the term parts thereof meaningful in respect of all the items in Entry 12 including Bicycle and Tricycle, the term accessories must be understood to be included within the expression parts thereof . The Legislative intent in respect of parts thereof appears to be relative only to the item cycle rickshaw in Entry 12 of Schedule II Part-A. If that meaning is to be attributed then there has to be a proper finding on facts by the Commissioner of Taxes in its clarificatory order that the items which are sold by the petitioner and which are in issue in the present proceeding are exclusively used only for cycle but not for cycle rickshaws. And are therefore not included in the expression parts thereof . However if it appears that items in issue can be/are used both for cycle rickshaw and cycles also, then they will have to be considered as parts unless specifically excluded by the statute and the benefit of the rate of tax under Entry-12 will have to be given to the items in question notwithstanding that they may also be used for cycle/bicycle also - It is a well settled proposition of law that the words used in a statue must be understood in the ordinary and popular sense and not in any technical sense. It is evident that these findings on which facts were necessary have not been considered by the Commissioner of Taxes while passing the impugned order dated 10-07-2013. Unless such finding on facts are undertaken by the Department, the conclusion of the Commissioner of Taxes that cycle seat covers and cycle locks are accessories but not parts in the context of Entry 12, will have to be declared to be erroneous. In view of the fact that besides the lack of factual details necessary to arrive at such a finding by the Commissioner of Taxes it is also noticed that the Commissioner of Taxes being an authority declared under the AVAT Act, 2003, has brought in or made use of the term accessories which is alien to Entry 12 itself of the AVAT Act, 2003. The Commissioner of Taxes being an authority declared under the AVAT Act, 2003 cannot bring any term/expression to decide upon the question of imposition of rate of tax without there being any reference/definition provided for, such item(s)/expression(s) in the Act by the Legislature. The finding arrived at by the Commissioner of Taxes that the items in issue relating to Entry 12 of AVAT Act, 2003 are 'accessories' is contrary to the settled provisions of law. It is also well settled in law that taxing statute must be interpreted in the light of what is fairly expressed. Importation of provision into taxing statute to supply any assumes deficiency is not permissible. The impugned order dated 10-07-2013 passed by the Commissioner of Taxes under section 105 of Assam Value Added Tax Act, 2003 has been rendered without a proper finding of fact necessary to arrive at the conclusion that cycle seat covers and cycle locks are accessories and not parts . There is no finding in the impugned order that in the context of Entry 12 the items which can/will be considered to be parts thereof and as to why, in the context of the present proceedings, the expression accessories should not be included/considered as interchangeable as parts. The Commissioner of Taxes cannot introduce a new terminology accessories when the same is not defined under the Act of 2003. Such exercise will have to held to be beyond the power of Commissioner of Tax delegated under the Act of 2003. Accordingly, the impugned clarificatory order dated 10-07-2013 is interfered with set aside and quashed - The quasi judicial functions of the Deputy Commissioner of Taxes cannot be cannot be held to have been exercised independently with due application of mind and therefore the impugned assessment orders dated 20-07-2013 and the revisional order dated 02-03-2015 confirming the Assessment orders will also have to be held in be bad in law and therefore, the same are also set aside and quashed. The quasi judicial functions of the Deputy Commissioner of Taxes cannot be cannot be held to have been exercised independently with due application of mind and therefore the impugned assessment orders dated 20-07-2013 and the revisional order dated 02-03-2015 confirming the Assessment orders will also have to be held in be bad in law and therefore, the same are also set aside and quashed - Petition allowed by way of remand.
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Indian Laws
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2021 (3) TMI 37
Dishonor of Cheque - insufficient funds - validity of FIR by the Accused against the complainant - contractual dispute - the private respondent-complainant has filed an application under Section 156(3) Cr.P.C., which is pending before the learned Magistrate, the impugned FIR is lodged with the same allegations - HELD THAT:- As per Section 210 Cr.P.C., when in a case instituted otherwise than on a police report, i.e., in a complaint case, during the course of the inquiry or trial held by the Magistrate, it appears to the Magistrate that an investigation by the police is in progress in relation to the offence which is the subject matter of the inquiry or trial held by him, the Magistrate shall stay the proceedings of such inquiry or trial and call for a report on the matter from the police officer conducting the investigation. It also provides that if a report is made by the investigating police officer under Section 173 Cr.P.C. and on such report cognizance of any offence is taken by the Magistrate against any person who is an accused in the complaint case, the Magistrate shall inquire into or try together the complaint case and the case arising out of the police report as if both the cases were instituted on a police report. It also further provides that if the police report does not relate to any accused in the complaint case or if the Magistrate does not take cognizance of any offence on the police report, he shall proceed with the inquiry or trial, which was stayed by him, in accordance with the provisions of Cr.P.C. - merely because on the same set of facts with the same allegations and averments earlier the complaint is filed, there is no bar to lodge the FIR with the police station with the same allegations and averments - However, at the same time, if it is found that the subsequent FIR is an abuse of process of law and/or the same has been lodged only to harass the accused, the same can be quashed in exercise of powers under Article 226 of the Constitution or in exercise of powers under Section 482 Cr.P.C. In that case, the complaint case will proceed further in accordance with the provisions of the Cr.P.C. As observed and held by this Court in catena of decisions, inherent jurisdiction under Section 482 Cr.P.C. and/or under Article 226 of the Constitution is designed to achieve salutary purpose that criminal proceedings ought not to be permitted to degenerate into weapon of harassment. When the Court is satisfied that criminal proceedings amount to an abuse of process of law or that it amounts to bringing pressure upon accused, in exercise of inherent powers, such proceedings can be quashed - The statute saves the inherent power of the High Court, as a superior court, to make such orders as are necessary (i) to prevent an abuse of the process of any Court; or (ii) otherwise to secure the ends of justice. Same are the powers with the High Court, when it exercises the powers under Article 226 of the Constitution. The impugned FIR is nothing but an abuse of process of law and can be said to be filed with a view to harass the appellants - when the impugned FIR is nothing but an abuse of process of law and to harass the appellants-accused, we are of the opinion that the High Court ought to have exercised the powers under Article 226 of the Constitution of India/482 Cr.P.C. and ought to have quashed the impugned FIR to secure the ends of justice. Appeal allowed.
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