Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 30, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Application for Refund of GST - New undertaking in respect of receipt of foreign exchange remittances included in the GST-RFD-1-Form
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Procedure in respect of seized goods. - Power of disposal of goods in certain cases given to "Proper officer", earlier it was with the "Commissioner"- Rule 141 of the Central Goods and Services Tax Rules, 2017
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Recovery of refund of unutilised input tax credit or integrated tax paid on export of goods where export proceeds not realised - Rule 96B of the Central Goods and Services Tax Rules, 2017
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Refund of integrated tax paid on goods or services exported out of India - Meaning and scope of the conditions for not availing exemption under certain notifications - Rule 96 of the Central Goods and Services Tax Rules, 2017 as amended
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Order sanctioning refund - Amount of refund (other than refund related to zero rated supply) u/s 54(5) to be paid in Cash or Re-credited to Credit Ledger as the case may be - Rule 92 of the Central Goods and Services Tax Rules, 2017 as amended
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Refund of Tax - Meaning of Turnover of zero-rated supply of goods - Rule 89 of the Central Goods and Services Tax Rules, 2017
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Electronic Credit Ledger - Re-credit of amount wrongly claimed as refund earlier if found otherwise eligible - Rule 86 of the Central Goods and Services Tax Rules, 2017 as amended
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Annual return - Rule 80 of the Central Goods and Services Tax Rules, 2017 - Relaxation from filing of Audit and GSTR-9C for the FY 2018-19 where aggregate turnover does not exceed 5 crores
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Manner of determination of input tax credit in respect of capital goods and reversal thereof in certain cases - Rule 43 of the Central Goods and Services Tax Rules, 2017 as amended
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Physical verification of business premises in certain cases - Rule 25 of the Central Goods and Services Tax Rules, 2017 as amended
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Verification of the application and approval - consequences of failure of authentication of Aadhaar number - Rule 9 of the Central Goods and Services Tax Rules, 2017 as amended
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Application for registration - authentication of Aadhaar number for grant of registration - Rule 8 of the Central Goods and Services Tax Rules, 2017 as amended
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Rates of Tax on Goods - Schedule 4 - IGST @ 28% - CGST @ 14% - SGST / UTGST @ 14% - GST
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Rates of Tax on Goods - Schedule 3 - IGST @ 18% - CGST @ 9% - SGST / UTGST @ 9% - GST
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Rates of Tax on Goods - Schedule 2 - IGST @ 12% - CGST @ 6% -SGST / UTGST @ 6% - GST
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Rates of Tax on Goods - Schedule 1 - IGST @ 5% - CGST @ 2.5% - SGST / UTGST @ 2.5% - GST
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Place of supply for certain services notified as per Section 13(13) of IGST Act. - Notification as amended
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Non-reimbursement of differential tax amount - Scope the mutual agreement between the parties - situation post change in tax regime from Value Added Tax (VAT) to Goods and Service Tax (GST) with effect from 01.07.2017 - grievance of the petitioner is that in view of the introduction of the GST, petitioner is required to pay tax which was not envisaged while entering into the agreement - he petitioner shall make a comprehensive representation before the appropriate authority.
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Provisional attachment of Current Bank Accounts - Section 83 of GST - The authorities have acted in a blatantly highhanded and illegal manner - the action is clearly in violation of the petitioners’ rights for carrying on business under Article 19(1) of the Constitution of India and under Article 300A of the Constitution of India wherein the petitioners have been deprived of their property without authority of law - the actions of the Revenue in acting in contravention of Section 83(2) is condemnable, and accordingly costs are required to be imposed.
Income Tax
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Offence u/s 276(c)(2) - accused has not paid the huge tax liability at the time of filing the return of income for the FY 2012-13 - Petitioner had paid the entire tax amount on 13.03.2018 and the respondent had also acknowledged the same by the acknowledgment dated 24.03.2018. Therefore, the offence under Section 276(c)(2) of the Income Tax Act is not at all attracted as against the petitioner herein, and the entire criminal proceedings pending against the petitioner is nothing but clear abuse of process of law.
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Income accrued in India - Salary income - services rendered outside India - AO objected that evidence was not produced for receiving the foreign allowance outside India and the bank account of the assessee maintained abroad was not produced is not relevant because the facts of the case establishes that the salary and the foreign allowance was received in India for the services rendered abroad and by virtue of DTAA and the Act, there is no bar in law for receiving the money in India - No additions.
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Penalty levied u/s.271(1)(c) - concealment of income - the conclusion of the AO that amount was not finding mention in the regular books of accounts is over-sweeping over statement, because the fact remains that the books of accounts were not “closed”, then as the year was yet not over - The year in the case of the assessee being the first year of operation, it cannot even be implied that that the amount pertained to earlier year(s) of its business. - No penalty.
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The amount of tax paid in a foreign country which is not eligible for benefit u/s 91 of the Act, is expenditure eligible for deduction u/s 37(1) of the Act. It is because such tax was paid in the course of the business and the corresponding business receipts were made to tax in India. We hold that the assessee is eligible for deduction for the amount of foreign tax credit which was not allowed as tax relief u/s 91 of the Act.
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Unexplained cash credits u/s.68 - Penny stock purchases - The modus operandi involving operators, intermediaries and the beneficiaries have already been detailed in the investigation report prepared and disseminated by the Kolkata Investigation Directorate. Similar investigations were also conducted by the Directorate of Investigation at Mumbai and Ahmedabad. - Additions confirmed.
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Revision u/s 263 - addition u/s 68 - merely because CIT does not agree with the manner of enquiry conducted by the AO he cannot substitute his own reasons and held the order to be erroneous and prejudicial to the interest of the revenue
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Addition on sale of Transferable Development Rights (TDR) - AO noted that despite receiving income the assessee has not offered the same to tax - assessee had to surrender 27% of the vacant plot and in lieu thereof subsequently it got TDR - CIT(A) deleted the additions - CIT(A)’s order is nonspeaking and laconic cannot be sustained.
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Deduction u/s.10AA - SEZ unit - Business of proprietary concern was taken over by the partnership firm - fresh approval from SEZ in respect of the partnership firm - deduction is undertaking (unit) specific and the same could not be denied on the ground that undertaking has a new owner - Benefit of exemption allowed.
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Disallowance u/s 40 (a)(i) - failure to deduct TDS for the AY 2012-13 - AO is directed to allow the deduction of expenses on being satisfied that the tax has been deducted and paid during the previous year relating to AY 204-15 towards expenses in controversy. It shall be open to the assessee to support its claim before the AO in this regard with proof of payment of taxes in the light of aforesaid observations.
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Bogus purchases - assessee has already offered GP of 26% - no more addition is warranted because when this IDS tax also is added to the GP of the assessee, then it will come to 30% GP. Therefore, no separate addition on the undisclosed amount of profit is warranted since it is not the case that AO/Ld. CIT(A) could unearth any hidden profit which was discovered as investments/cash/bullion etc.
Customs
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It is repeatedly held by the Hon’ble Supreme Court and other Judicial Authorities that CBEC circulars are binding on the departmental offices, thus inspite of clear instructions revenue has preferred this appeal in violation of said instruction in circular dated 28.04.2008 and by doing so revenue has wasted time of this court.
Indian Laws
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Rate of Tax on Services - CGST / UTGST / SGST / IGST - GST
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Situation arising out of lockdown ordered as a precaution for prevention of Coronavirus spread - extension of dates of courts to approach the courts of law - All interim orders passed by the High Court of Judicature at Allahabad as well as at Lucknow, all the District Courts, Civil Courts, Family Courts, Labour Courts, Industrial Tribunals and all other Tribunals in the State over which this Court has power of superintendence, which have been expired subsequent to 19th March, 2020 or are due to expire within a period of one month from today, will continue to operate upto 26th April, 2020
Service Tax
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Club or Association Service - Mutuality of Interest - distinct entities or not - providing various facilities and advantages only to its members and collects amounts from them in the form of subscriptions, tennis fee, billiards fee, games fee, gym fee, building fund, rent for roof garden etc. - Demand set aside.
Central Excise
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Maintainability of appeal - error apparent on the face of record or not - It is manifest that the matter would require a long-drawn process of reasoning on a point on which there may conceivable be two opinions. Under the circumstances, it cannot be said that the order dated 26.09.2019 suffers from any error apparent on the face of the record, warranting interference.
Case Laws:
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GST
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2020 (3) TMI 1180
Non-reimbursement of differential tax amount - Scope the mutual agreement between the parties - situation post change in tax regime from Value Added Tax (VAT) to Goods and Service Tax (GST) with effect from 01.07.2017 - grievance of the petitioner is that in view of the introduction of the GST, petitioner is required to pay tax which was not envisaged while entering into the agreement - HELD THAT:- The petitioner shall make a comprehensive representation before the appropriate authority within four weeks from today ventilating the grievance. If such a representation is filed, the authority will consider and dispose of the same, in the light of the aforesaid revised guidelines dated 10.12.2018 issued by the Finance Department, Government of Odisha, as expeditiously as possible, preferably by 30.04.2020 - No coercive action shall be taken against the petitioner till 30.04.2020. Petition disposed off.
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2020 (3) TMI 1179
Provisional attachment of Current Bank Accounts - Jurisdiction to pass order - Section 83 of the Central Goods and Services Tax Act, 2017 - time limitation of validity of order passed. Whether the Principal Additional Director General, DGGI and Additional Director General, DGGI are competent to pass orders under Section 83 of the CGST Act, 2017? - HELD THAT:- On a bare perusal of the CGST Act, 2017, it is absolutely clear that Section 3 equates the Principal Commissioner of Central Tax as the Principal Additional Director of Central Tax and the Commissioner of Central Tax as the Additional Director General of Central Tax . One need not quibble with the wording as the meaning is plain and unambiguous. Furthermore, the fresh orders of provisional attachment has been passed by Principal Additional Director of Central Tax who is the superior officer and therefore, as per Section 5(2) of the CGST Act, 2017 she possesses the power to pass the provisional attachment orders under Section 83 - the issue answered in favour of the Revenue. Whether an order passed under Section 83 of the CGST Act, 2017, remains valid after the expiry of one year from the date of the order? - HELD THAT:- The authorities have acted in a blatantly highhanded and illegal manner by keeping the provisional attachments in a state of continuance for the period from 5th June, 2019 (when the first order of provisional attachment ceases to operate) till 31st October, 2019 (when fresh order for provisional attachment was passed). Section 83(2) is crystal clear that the provisional attachment shall cease upon expiry of one year. It was therefore incumbent on the authorities to either release the provisional attachment by informing the bank or by issuing a fresh order of provisional attachment, if the law so allowed. The failure to do the above is nothing short of being an act of highhandedness. Such actions of the authorities is an obloquy and reprehensible. No explanation has been provided for the same either in the affidavits filed in the earlier writ petitions or by counsel appearing on behalf of the respondent authorities during hearing of arguments - the action is clearly in violation of the petitioners rights for carrying on business under Article 19(1) of the Constitution of India and under Article 300A of the Constitution of India wherein the petitioners have been deprived of their property without authority of law - the actions of the Revenue in acting in contravention of Section 83(2) is condemnable, and accordingly costs are required to be imposed. Whether the authorities can issue fresh order of provisional attachment/multiple orders under Section 83 of the CGST Act, 2017? - HELD THAT:- On a perusal of Section 83, it is evident that Section 83 does not provide for an extension of an order for provisional attachment and any such extension shall be dehors the statute. Section 83 empowers the competent authority to issue an order for provisional attachment of property including bank accounts if it is of the opinion that such a step is necessary for protecting the interest of government revenue. It is palpably clear that Section 83(2) permits continuation of a provisional attachment order for a period of one year from the date of order after which it ceases to remain in effect. However, there is nothing in the section which indicates that upon completion of the prescribed period, a fresh order cannot be issued - In the view point of the Court, after the expiry of the time period, the appropriate authority may be of the opinion that such an attachment is further required to protect the interest of government revenue, and may therefore, issue a fresh order upon compliance of the formalities in Section 83(1). Petition disposed off.
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2020 (3) TMI 1178
Seizure of documents - proceeding under Section 70 of the OGST Act - grievance of the petitioner is that, since the documents called for by the OGST Authority has been seized by the CGST Authority, he is not in a position to supply the documents to the OGST Authority - HELD THAT:- This writ petition is disposed of, directing the petitioner to apply for copies of the Documents required by him before the CGST authority within 15 (fifteen) days from today. If such an application is filed, the copies of the documents sought for shall be supplied within a period of three weeks from the date of his application. Petition disposed off.
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Income Tax
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2020 (3) TMI 1177
Liability to pay interest tax on the interest earned - HELD THAT:- Controversy involved in the present case would clearly stand covered by the decision of this court in the case of Asman Investment Limited v. Assistant Commissioner of Income Tax [ 2018 (2) TMI 1966 - GUJARAT HIGH COURT] Under the circumstances, it is not necessary to deal with the facts and contentions in detail. Question is answered in the affirmative, that is, in favour of the revenue and against the appellant assessee. It is held that in the facts and under the circumstances of this case, the Income Tax Appellate Tribunal was right in law in holding that the appellant is liable to pay interest tax on the interest earned by it.
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2020 (3) TMI 1176
Stay petition - applications for interim stay - Demand of the assessment as per the provisions of Section 220(6) - HELD THAT:- This court while dealing in such matters, have come across many writ petitions preferred by the assessees, seeking intervention of this court under Art.226 for issue for direction and taking up applications for interim stay filed along with pending appeals. Even this court was apprised that the Appellate Authority are taking up the appeals, considering the predicament of such assessees including the petitioner, the directions having been issued, for consideration of at least interim In the instant case appeal filed has not been taken up rather the interim application, in such circumstances availed the remedy under Sec.220(6) 1961 Act, which resulted into impugned order Ext.P7, the order prima facie do not reflect any application of mind except reference to the contentions. The officers who are competent to pass orders, are enjoined obligations to pass reasoned orders, which, according to the affected party, may not be sustainable in accordance with law. But such orders, if are passed in routine, cannot escape from the judicial scrutiny of this court. Be that as it may, in order to prevent further mis-carriage of justice and in the interest of justice, deem it appropriate issuing directions to the 2nd respondent to take a call on the application for interim stay in support of the appeal Ext.P5 and take a decision thereon after affording an opportunity of hearing to the petitioner in accordance with law.
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2020 (3) TMI 1175
Offence u/s 276(c) (2) - willful failure on the part of the petitioner for non payment of huge tax liability - accused has not paid the huge tax liability at the time of filing the return of income - intention from the petitioner for willful evading of payment of tax - HELD THAT:- On perusal of the documents, it is seen that the last date for filing the returns for the financial year 2012-2013 was on or before 05.08.2013. The respondent did not hand over the book of accounts seized from the petitioner ill 05.08.2013. Therefore, there is three months delay in payment of income tax and the petitioner filed return of income on 31.01.2014. Thereafter, it was returned on 31.03.2015 directing the petitioner to pay a sum of ₹ 4,08,04,345/-. Thereafter, the petitioner paid tax as demanded by the respondent on 13.03.2018, for which the respondent also issued a letter on 24.03.2018 acknowledging the receipt of tax. Provision to punish the accused, there must be wilful attempt to evade payment of tax, he must be in possession of the book with false entries, the person should have made false entries in the book of accounts and omitting any entry in the statement of accounts. The petitioner voluntarily disclosed the undisclosed income to the respondent on the inspection conducted u/s 132 on 18.12.2012. Therefore, there is no intention from the petitioner for willful evading of payment of tax. Admittedly, the respondent on the inspection dated 18.12.2012, had seized the relevant book of accounts and as such the petitioner could not able to file the return of income on or before 05.08.2013. Therefore, the petitioner had no wilful intention to evade tax as alleged by the respondent. Petitioner had paid the entire tax amount on 13.03.2018 and the respondent had also acknowledged the same by the acknowledgment dated 24.03.2018. Therefore, the offence under Section 276 (c ) (2) of the Income Tax Act is not at all attracted as against the petitioner herein, and the entire criminal proceedings pending against the petitioner is nothing but clear abuse of process of law. As such it cannot be sustained as against the petitioner and it is liable to be quashed - criminal original petition is allowed.
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2020 (3) TMI 1174
Stay petition - recovery proceedings - Freezing of bank account - petitioner's appeal is pending before the Commissioner of Income Tax (Appeals) and the petitioner was required to deposit 20% of the outstanding amount - HELD THAT:- As stated that applications were preferred on 10/2/2020 and 28/2/2020 informing the Commissioner of Income Tax that 20% of the outstanding demand has already been recovered by the Department and, therefore, the other bank accounts may not be freezed. Respondent Department has fairly stated before this Court that some breathing time be granted to the Department to decide the applications preferred in the matter. Resultantly, the present petition is disposed of with a direction to the respondent Department to pass appropriate order keeping in view the amount already recovered and the outstanding amount which is outstanding against the petitioner. The Commissioner shall decide the aforesaid applications by taking into account the CBDT Circular dated 29/2/2016 and 31/7/2017 within a period of 3 days from the date of receipt of certified copy of this order.
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2020 (3) TMI 1173
Penalty u/s 271(1)(c) - non specification of charge - HELD THAT:- Legal requirement of making a clear cut reference to the applicable limb of clause (c) of section 271(1) of the Act, is not met by the Assessing Officer while initiating and levying the penalty u/s 271(1)(c) of the Act. Thus, the satisfaction of the Assessing Officer suffers from ambiguity in his mind. Considering the above referred binding judgments, we are of the view that such penalty is unsustainable in law legally. It is a settled legal proposition that AO is under obligation to specify the appropriate limb of clause (c) of section 271(1) of the Act at the time of initiation as well as at the time of levy of penalty. In view of the above deliberation on this issue, without going into the merits of the case, we set-aside the order of the CIT(A) and direct the Assessing Officer to delete the entire penalty imposed by him. Accordingly, the grounds raised by the assessee are allowed on legal issue.
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2020 (3) TMI 1172
Income accrued in India - Claim of deduction u/s.90 - tax the salary income and the foreign allowance received by the assessee for services rendered outside India - Article 15(1) of India Austria DTAA agreement and section 90 and section 5(2) of the Act - bar in law for receiving the money in India - HELD THAT:- From the facts of the case it is apparent that during the previous relevant to AY 2014-15, the assessee qualifies as a non-resident in India and as a tax resident in Austria. The salary and allowances are earned by the assessee in respect of employment rendered in Austria due to his foreign assignment. Hence, the first two conditions enumerated under Article 15(1) of the India-Austria DTAA stands satisfied. Therefore, the assessee s claim of exemption in regard to his salary income as per the provisions of Article 15(1) of the India-Austria DTAA in the return of income filed by him is appropriate. In the case of DIT Vs. Prahlad Vijendra Rao [ 2010 (11) TMI 803 - KARNATAKA HIGH COURT] on which reliance placed by the assessee, the Hon ble Karnataka High Court held that under section 15 of the Act even on accrual basis salary income is taxable i.e. it becomes taxable irrespective of the fact whether it is actually received or not; only when services are rendered in India it becomes taxable by implication. However, if services are rendered outside India such income would not be taxable in India. Other objections raised by the Ld. AO that evidence was not produced for receiving the foreign allowance outside India and the bank account of the assessee maintained abroad was not produced is not relevant because the facts of the case establishes that the salary and the foreign allowance was received in India for the services rendered abroad and by virtue of DTAA and the Act, there is no bar in law for receiving the money in India - We direct the Ld.AO to delete the tax imposed on the assessee with respect to his salary income which includes foreign allowance earned by him outside India during the relevant assessment year. - Decided in favour of assessee.
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2020 (3) TMI 1171
Penalty levied u/s.271(1)(c) - concealment of income - disclosure of on- money income was made only due to the survey action by the Department and the on-money income was not accounted for in the regular books of account of the assessee on the date of survey - HELD THAT:- Assessee had offered the amount as additional business income pursuant to survey operation for the ongoing year, which was duly incorporated in the books of accounts and in the regular return of income with taxes duly paid. Since the Assessing Officer was of the view that the unaccounted income of ₹ 3.8 crores was offered to tax by the assessee. As the same came to the surface only because of survey and that had there been no survey, then that amount could not have been brought to tax. Therefore, it was held that the onmoney received was unaccounted income which was admitted by the assessee when it was confronted with the diary during the survey. However, we are of the view that the conclusion of the AO that amount was not finding mention in the regular books of accounts is over-sweeping over statement, because the fact remains that the books of accounts were not closed , then as the year was yet not over. It was not the case of the Revenue that the books were completed, accounts were audited and returns were filed and thereafter only the unaccounted income of ₹ 3.8 crores came to the surface because of the survey by the Department. This particular facts, according to us, is the inherent disability/challenge in any disclosure if it pertains to the ongoing financial year . The year in the case of the assessee being the first year of operation, it cannot even be implied that that the amount pertained to earlier year(s) of its business. See R UMEDBHAI JEWELLERS PVT. LTD [ 2016 (9) TMI 9 - GUJARAT HIGH COURT] - Decided against revenue.
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2020 (3) TMI 1170
Disallowance of interest expenditure u/s 36(l)(iii) - diversion of interest bearing fund - HELD THAT:- Admittedly, the own fund of the assessee as on 31st March 2012 was excess to the amount of investment as evident from the Balance Sheet of the assessee - investment was made by the assessee for ₹ 2.43 crores out of its own funds despite the fact that the payment was made by the assessee out of the HDFC OD account as discussed above. In holding so we place our reliance on the judgment of the Hon ble Gujarat High Court in the case of CIT vs. Amod Stamping (P.) Ltd. [ 2014 (7) TMI 753 - GUJARAT HIGH COURT] - we direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Foreign Tax Credit claimed by the Appellant u/s 91 disallowed - whether rate of tax in foreign country needs to be determined after considering the gross receipts or the net receipts/profit embedded in such gross receipts? - HELD THAT:- It is revealed that the amount of tax/super tax needs to be divided by the whole amount of income to work out the rate of tax. The word used whole amount of income denotes the income which signifies after the expenses. The word gross receipts have not been used therein. Even under the normal parlance, the income denotes only to the net profit i.e. gross receipts minus the expenses. Thus in our considered view, it is the only profit which should be considered while determining the rate of tax in the foreign country and the same needs to be compared with the rate of tax in India. In the case on hand, we also note that the assessee has not given any working about the expenses incurred in the foreign country against the gross receipts. Thus in the absence of sufficient details, the AO had no alternate except to work out the proportionate amount of income eligible for relief under section 91 of the Act. Accordingly we do not find any infirmity in the order of the authorities below. We note that there is force in the alternate argument of the learned AR for the assessee claiming for the deduction of the taxes paid in the foreign country as expenditure under section 37(1) of the Act. The amount of tax paid in a foreign country which is not eligible for benefit under section 91 of the Act, is expenditure eligible for deduction under section 37(1) of the Act. It is because such tax was paid in the course of the business and the corresponding business receipts were made to tax in India. We hold that the assessee is eligible for deduction for the amount of foreign tax credit which was not allowed as tax relief under section 91 of the Act. Hence the ground of appeal of the assessee is partly allowed.
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2020 (3) TMI 1169
Unexplained cash credits u/s.68 - Penny stock purchases - HELD THAT:- Additions made by Assessing Officer on account of detailed enquiries being carried out by Kolkata Investigation Directorate with regard to 84 penny stocks company as well as SEBI. The modus operandi involving operators, intermediaries and the beneficiaries have already been detailed in the investigation report prepared and disseminated by the Kolkata Investigation Directorate. Similar investigations were also conducted by the Directorate of Investigation at Mumbai and Ahmedabad. After thorough investigation, the Assessing Officer concluded in his order at paragraph Nos.4.8 and 4.9. Even before us, no new facts or circumstances have been placed on record and the orders passed by the revenue authorities have also gone unrebutted, therefore, we find no reason to interfere into or to deviate from such findings of the authorities below and we uphold the findings of the Ld.CIT(A) and reject the ground raised by the Assessee.
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2020 (3) TMI 1168
Penalty levied u/s 271(1)(c) - furnishing inaccurate particulars of income or not? - disallowance/addition on account of gratuity expenses - HELD THAT:- Regarding the claim of the assessee for the gratuity expenses, we note that the auditor in his tax auditor report has clearly mentioned that the impugned expenses are not allowable under the Act. But despite that the assessee did not make any disallowance in the computation of income and also contested for the deduction of the same till the learned CIT-A. It is transpired that there was the disclosure made by the tax auditor in the tax audit report furnished in form 3 CD. Thus it cannot be that the assessee deliberately furnished inaccurate particulars of income. Similarly, the AO got information about the disallowance of the provision for gratuity from the tax audit report only. AO has not carried out any investigation for detecting the claim of the assessee towards the provision for gratuity which was not allowable as deduction. See PRICE WATERHOUSE COOPERS (P.) LTD. VERSUS COMMISSIONER OF INCOME-TAX, KOLKATA - I [ 2012 (9) TMI 775 - SUPREME COURT] - we hold that the assessee has not furnished any inaccurate particular of income deliberately. Accordingly he cannot be visited with the penalty under section 271(1)(c) of the Act, in the given facts and circumstances. Disallowance of the exhibition expenses under the provisions of section 40(a)(i) r.w.s. 195 - We note that claim of the assessee was not doubted by the authorities below. As such, the assessee has incurred expenses for the purpose of the business but the same was disallowed by virtue of the provisions of section 40(a)(i) r.w.s. 195 - Accordingly the same was deemed as income of the assessee by the operation of law. But the controversy arises whether the assessee has furnished inaccurate particular of income by claiming the deduction on account of exhibition expenses which was disallowed on account of nondeduction of TDS under section 195 - term inaccurate particular has not been defined under the Act. However various court including the Hon ble Apex court defined the term as the details of claim made are not accurate, not according to the truth, not exact or erroneous. See RELIANCE PETROPRODUCTS PVT. LTD. [ 2010 (3) TMI 80 - SUPREME COURT] - assessee has not furnished any inaccurate particular of income deliberately. Accordingly he cannot be visited with the penalty under section 271(1)(c) - Decided in favour of assessee.
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2020 (3) TMI 1167
Revision u/s 263 - addition u/s 68 - reopening of assessment u/s 147 - HELD THAT:- We find the AO in the instant case has reopened the assessment on the basis of the information received from the Investigation Wing that assessee has received accommodation entry of ₹ 40 lacs from M/s. Sri Amarnath Finance Pvt. Ltd., a company controlled by Sh. Surinder Kumar Jain and Sh. Virender Kumar Jain who are known entry operators. AO during the course of assessment proceedings has called for information from the assessee who filed the requisite documents such as the ITR, bank statement, PAN number, confirmation etc. of the lender company. We find the AO had issued notice u/s. 133 (6) to M/s. Sri Amarnath Finance Pvt. Ltd. who responded to such notice and filed the requisite documents as called for by the AO. Force in the arguments advanced by the Ld. Counsel for the assessee that the AO has examined the documents / confirmation in detail and adopted a possible view that the assessee has established the identity and creditworthiness of the lender and the genuineness of the transaction. It has been held in various decisions that action u/s. 263 can be taken only when there is lack of enquiry or no enquiry. However, in the instant case necessary enquiry was conducted. Therefore, merely because CIT does not agree with the manner of enquiry conducted by the AO he cannot substitute his own reasons and held the order to be erroneous and prejudicial to the interest of the revenue. See DWARKADHIS BUILDWELL PVT. LTD C/O N.K. JAIN, ADVOCATE NAYA BAZAR, BHIWANI VERSUS CIT HISAR [ 2019 (9) TMI 91 - ITAT DELHI] - Decided in favour of assessee.
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2020 (3) TMI 1166
Disallowance of bad debts and advances written off - HELD THAT:- We find that this Tribunal in assessee s own case for A.Y. 2006-07 set aside the issue of disallowance on account of write off of advances - In CIT vs. Calcutta Agency Ltd. [ 1950 (12) TMI 4 - SUPREME COURT] it was held that the burden of proving the necessary fact in order to entitle the assessee the claim exemption was on the assessee. Bad debts written off - we find that the issue is settled by Hon'ble Apex Course in the case of TRF Ltd. Vs. CIT [ 2010 (2) TMI 211 - SUPREME COURT] . It was held in the said case that writing off of advances in the aforesaid account is sufficient compliance for provisions of the Act. However, in the present case, it was noted that the assessee has not furnished names of the debtors to the Assessing Officer, hence we remit this issue also to the file of the Assessing Officer if details of bad debts actually written off in the books are available the same is to be allowed as per ratios emanating out of the order of Hon'ble Supreme Court as above. Disallowance of expenditure incurred on fixing barricades while computing capital gains - HELD THAT:- Both the authorities are making contradictory remarks only based upon their surmises. Learned CIT(A) has further erred in observing as to how barricades can improve the quality of land and cause to improvement of any kind. Here we find that as submitted by the assessee the barricades were necessary to earmark land to be sold. That lands are demarcated by barricades is well known phenomena. In the present situation everybody wants his land to be demarcated by identified barricades. People do not generally sit idle and go by demarcation of land in revenue records. It is naive to assume that people rest upon demarcation of land in land records without making barricades of their own for the various purposes of protection of land, ease in selling it and saving from encroachment etc. Authorities below have totally erred in this regard and impugned expenditure is allowable. Hence, we set aside the orders of the authorities below and decide the issue in favour of the assessee. Addition on sale of Transferable Development Rights (TDR) - AO noted that despite receiving income the assessee has not offered the same to tax - assessee had to surrender 27% of the vacant plot and in lieu thereof subsequently it got TDR - CIT(A) deleted the additions - HELD THAT:- AO observed that it is the contention of the assessee that receipt on sale of TDR is on surrender of land in earlier years and the capital gain on such transfer of land has already been offered by the assessee in the year in which transfer took place. He rejected the assessee s contention that since the cost of such TDR is nil, there is no capital gain. He noted that the assessee is having the ownership of the plot and on sale of such plot the assessee received the sale consideration as well as other benefit in the form of TDR on such plot of land, which is just like a receipt of bonus shares in respect of shares held. With promulgation of development control rules (DCR) it acquired right of putting up additional construction through transferable development rights (TDR). Instead of utilizing this right itself, the assessee decided to transfer the same to a developer for construction of new building. This right created by the DCR was held to be not giving rise to any capital gains. We note that on the other hand the facts of the present case are that it was in lieu of surrender of 27% of vacant plot to MHADA that the assessee received TDR. Hence, facts of the present case are totally different and the cost is very much evident therein as the assessee had to surrender part of the plot owned by it. Furthermore other decisions referred by learned Counsel of the assessee are also in the same background. Distinguishing feature of the present case is that the assessee had to surrender 27% of the vacant plot and in lieu thereof subsequently it got TDR. Hence CIT(A) s order is nonspeaking and laconic cannot be sustained. We deem it appropriate to remit this issue to the file of the learned CIT(A). Learned CIT(A) is directed to consider the issue afresh after taking into account actual facts arising in this case and thereafter decide as per law. The assessee is at liberty to make further submission before learned CIT(A) in support of its case - Appeals are partly allowed for statistical purposes.
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2020 (3) TMI 1165
Reopening of assessment u/s 148 - no notice under section 143(2) of the Act was issued before the completion of assessment - HELD THAT:- DR has stated that no return was filed by the assessee in response to notice u/s 148 and notice u/s. 143(2) is only mandatory, where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142 or in response to notice u/s. 148 whereas in this case no return was filed by the assessee and therefore, the contention of the Ld. DR requires verification at the level of the AO and thereafter, the AO may frame the assessment Denovo , as per law, after giving adequate opportunity of being heard to the assessee for which both the parties were agreed. The the assessee is at liberty to file any evidence in support of his claim before the AO. - Appeals filed by the Revenue stand allowed for statistical purposes.
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2020 (3) TMI 1164
Disallowance u/s.14A - AO noticed that assessee had borrowed money from various parties and interest thereof - HELD THAT:- We find that various Courts as well as Tribunals have taken a consistent view that when assessee has not made any claim for exemption of any income from the payment of tax, therefore, there cannot be any disallowance u/s.14A of the Act. In this respect, we also relied upon the decision of Hon ble Delhi High Court in the case of Cheminvest Ltd. CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT] wherein it was held that section 14A of the Act envisages that there should be an actual receipt of income which is not includible in total income. Since in the present case also, the assessee has not made any claim for exemption of any income from payment of tax, therefore while relying upon the decision(s) in the case of Cheminvest Ltd. vs. CIT(supra) and CIT vs. Corrtech Energy (P.) Ltd. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] we are also of the view that no disallowance u/s.14A of the Act ought to have been made by the Ld.AO. - Decided in favour of assessee.
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2020 (3) TMI 1163
Deduction u/s.10AA - SEZ unit - Business of proprietary concern was taken over by the partnership firm - fresh approval from SEZ in respect of the partnership firm - CIT(A) noted that the deduction of section 10AA is unit specific and it is not dependent upon the ownership - HELD THAT:- Assessment unit is the same. There is change in the ownership from sole proprietorship to partnership. Earlier unit was under the proprietorship of Mr. Albert Kallati and same was taken over by the partnership firm namely Lorey Jewel wherein the partners were Mr. Albert Kallati and his daughter. Nature of business carried out from the unit remains same. Unit remains approved by the SEZ authority. No case has been made out the SEZ authorities have revoked approval. Similar issue has been dealt with by Hon'ble Allahabad High Court in the case of in the case of CIT Vs. Bullet International [ 2012 (5) TMI 187 - ALLAHABAD HIGH COURT] - On similar issue of deduction u/s. 10A for change in constitution from proprietorship to partnership firm, Hon'ble High Court relied upon Circular issued by CBDT and allowed the claim. Similar view was taken by the ITAT in the case of Samsung India Software Operations P. Ltd. [ 2012 (6) TMI 632 - ITAT, BANGALORE] . Grounds for relief were that deduction is undertaking (unit) specific and the same could not be denied on the ground that undertaking has a new owner. In our considered opinion issue from these case laws are squarely applicable under the facts of the present case also. Decided against the Revenue
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2020 (3) TMI 1162
Disallowance u/s 40 (a)(i) - expenses were incurred towards payments made to a party M/s Hexaware - company failed in its obligations to deduct appropriate tax on such payments before making remittance - HELD THAT:- We agree with the proposition made on behalf of the assessee on first principles for reversal of disallowance carried out u/s 40(a)(i) of the Act for the assessment year 2012-13 in the assessment year 2014-15 on actual payment of withholding taxes. The proviso to sec.40(a)(i) of the Act enables the AO to allow deduction of expenses in computing the income of the previous year in which withholding tax have been actually paid by the deductor. Hence, having adjudicated the issue of allowability of expenses claimed in the year of deduction in favour of the assessee on first principles, we however, consider it as just and expedient to restore the issue back to the file of the AO for verification of actual payments of TDS at applicable rates on made to M/s Hexaware as noted above. AO is directed to allow the deduction of expenses on being satisfied that the tax has been deducted and paid during the previous year relating to assessment year 204-15 towards expenses in controversy. It shall be open to the assessee to support its claim before the AO in this regard with proof of payment of taxes in the light of aforesaid observations. The assessee shall also file an undertaking before the AO for withdrawal of claim in AY 2012-13 on its allowability on actual payment basis. - Decided in favour of assessee for statistical purposes.
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2020 (3) TMI 1161
Bogus purchases - purchases made from grey market - HELD THAT:- Since assessee has already offered GP of 26% on the purchases and sales booked as per the P Account which has not been tinkered with by the AO/Ld. CIT(A) and that as the assessee has also offered the cost of procuring the accommodation bills amounting to ₹ 56.75 lakhs @ 4% which comes to ₹ 2.33 lakhs in the IDS and offered tax for the undisclosed amount. So according to us, no more addition is warranted because when this IDS tax also is added to the GP of the assessee, then it will come to 30% GP. Therefore, no separate addition on the undisclosed amount of profit is warranted since it is not the case that AO/Ld. CIT(A) could unearth any hidden profit which was discovered as investments/cash/bullion etc. so in the aforesaid facts and circumstances, the addition made is deleted. - Decided in favour of assessee
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2020 (3) TMI 1160
Corrigendum to an order - Typographical error in the name of the assessee in the order - Asessee seeks to add the ld. AR names of Mr. Percy Pardiwalla and Mr. Nitesh Joshi - HELD THAT:- We issue this corrigendum and direct to read the names of ld. AR as Mr. Bipin Dhodia, Mr. Percy Pardiwalla and Mr. Nitesh Joshi. There is a typographical error in the name of the assessee in the order dated 27/09/2019 passed by the Tribunal in the aforesaid appeal. The correct name of the assessee is M/s. UPS Express Private Limited (Formerly known as M/s.UPS Jetair Express Private Limited), however, it has wrongly been typed as M/s. UPS Jetair Express Private Limited (Formerly known as Jetair Express Private Limited) in the cause title of the aforesaid order. Therefore, we hereby issue this corrigendum and direct that the name of the assessee be read as M/s. UPS Express Private Limited (Formerly known as M/s. UPS Jetair Express Private Limited).
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Customs
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2020 (3) TMI 1159
Detention of goods - levy of Anti-Dumping Duty - non-finalization of provisional assessment - HELD THAT:- There would be no useful purpose in seeking counter or keeping the writ petition pending, in view of the notification dated 14.06.2017 and corrigendum dated 25.01.2019 which is co-relating to the name of the exporter/producer in the invoices. The 2nd respondent to take decision on the series of representations referred to Ext.P10 to P16 in accordance with law, after affording opportunity of hearing to the petitioners - Petition disposed off.
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2020 (3) TMI 1158
Refund of SAD - N/N. 102/2007-Cus dated 14.09.2007 - rejection on the ground of unjust enrichment - CBEC Circular No.6/2008-Cus dated 28.04.2008 and Circular No.18/2010-Cus dated 08.07.2010 - HELD THAT:- As per the Circular dated 28.04.2008, a certificate issued by the statutory auditor who certifies the annual accounts of the importer, that the burden of 4% SED has not been passed on by the importer to the buyer was sufficient for satisfying the principals of unjust-enrichment. Such requirement was fulfilled by the appellant and therefore the present ground are in violation of circular No.6/2008-Cus. It is repeatedly held by the Hon ble Supreme Court and other Judicial Authorities that CBEC circulars are binding on the departmental offices, thus inspite of clear instructions revenue has preferred this appeal in violation of said instruction in circular dated 28.04.2008 and by doing so revenue has wasted time of this court. Application of Revenue dismissed.
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Corporate Laws
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2020 (3) TMI 1157
Winding up of Company - Recovery of outstanding dues - HELD THAT:- It appears that in compliance of the order dated 10.05.2018, the OL had called upon the meeting of the creditors, but it seems that, none of the creditors remained present in the meeting. From the report filed by the OL, it transpires that respondent No.4, who is unsecured creditor has a claim of ₹ 30,000/ , which has been settled by the petitioner. The petition is allowed.
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Service Tax
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2020 (3) TMI 1156
Club or Association Service - Mutuality of Interest - distinct entities or not - providing various facilities and advantages only to its members and collects amounts from them in the form of subscriptions, tennis fee, billiards fee, games fee, gym fee, building fund, rent for roof garden etc. - relevant period 16.06.2005 to 31.03.2009 - HELD THAT:- There is no doubt that the service has been rendered and amounts have been received for the service from the members - This specific question of law was decided by the Hon ble High Court of Jharkhand in the case of RANCHI CLUB LTD. VERSUS CHIEF COMMISSIONER OF CENTRAL EXCISE SERVICE TAX [ 2012 (6) TMI 636 - JHARKHAND HIGH COURT] ) and it was held that club is formed on the principle of mutuality and therefore if the club provides services to its members, it is not a service by one legal entity to another and is not liable to service tax. Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (3) TMI 1155
Maintainability of appeal - challenge on the ground that the question involved in the appeal had a direct bearing on the rate of duty and value of goods for the purposes of assessment - error apparent on the face of record or not - section 35G read with section 35L of the Central Excise Act, 1944 - HELD THAT:- In the present case, the applicant has invoked the review jurisdiction of this court on the ground that there is an error apparent on the face of the record. The Supreme Court in MEERA BHANJA VERSUS NIRMALA KUMARI CHOUDHURY [ 1994 (11) TMI 440 - SUPREME COURT] has held that an error apparent on the face of the record must be an error which must strike one on mere looking at the record and would not require any long-drawn process of reasoning on points where there may conceivably be two opinions. It may be pertinent to note that the learned senior standing counsel has not pointed out any error apparent on the face of the record in the order dated 26.09.2019, the only ground which is urged in the memorandum of application is that the decision of the Supreme Court in COMMISSIONER OF CUSTOMS, BANGALORE-1 VERSUS M/S MOTOROLA INDIA LTD. [ 2019 (9) TMI 229 - SUPREME COURT] could not be shown to the court. Moreover, nothing has been pointed out as to how the order dated 26.09.2019 passed by this court is not in consonance with the above decision. It is manifest that the matter would require a long-drawn process of reasoning on a point on which there may conceivable be two opinions. Under the circumstances, it cannot be said that the order dated 26.09.2019 suffers from any error apparent on the face of the record, warranting interference. Application dismissed.
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CST, VAT & Sales Tax
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2020 (3) TMI 1154
Permission for withdrawal of petition - Input tax credit - time limitation - validity of the prescription of entitlement of credit of input tax being limited within a time prescription as contained in Rule 117 of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- The petition is dismissed as withdrawn.
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2020 (3) TMI 1151
Imposition of penalties u/s 10-A of the CST Act - purchase of High Speed Diesel - allegation that High Speed Diesel purchased by the petitioners for manufacturing process, were not being used fully in the manufacturing process, rather they were being used for other purposes also - offence under section 10(d) of the Central Sales Tax Act - HELD THAT:- The impugned orders passed by the Appellate Authority cannot be sustained in the eyes of law, as the matter of deletion of High Speed Diesel from the CST registration of the petitioners was not sub-judice before the Appellate Authority. The only matter that was sub-judice before the Appellate Authority was the imposition of penalty upon the petitioners under Section 10-A of the CST Act. Both these issues are separate issues, and it cannot be said that the decision in the appeals filed by the petitioners would depend upon the decision of the High Court in the other pending writ applications. Irrespective of the results in the writ applications filed challenging the deletion of High Speed Diesel from the CST registration, the legality or otherwise of the penalty imposed under Section 10-A of the CST Act may be adjudicated. There appears to be no reason for dismissing the appeals awaiting the decision of the High Court. The impugned orders are prima-facie not sustainable in the eyes of law - matters are remanded back to the Appellate Authority for adjudication of the appeals filed by the appellants on their own merits - application allowed by way of remand.
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Indian Laws
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2020 (3) TMI 1153
Situation arising out of lockdown ordered as a precaution for prevention of Coronavirus spread - extension of dates of courts to approach the courts of law - HELD THAT:- Only with the view to ensure that citizens are not deprived of their right to approach the Courts of law, we propose to exercise our jurisdiction under Articles 226 and 227 of the Constitution of India by issuing certain directions. The directions are required to be issued to ensure that litigants should not suffer on account of their inability to approach the Courts of law. All interim orders passed by the High Court of Judicature at Allahabad as well as at Lucknow, all the District Courts, Civil Courts, Family Courts, Labour Courts, Industrial Tribunals and all other Tribunals in the State over which this Court has power of superintendence, which have been expired subsequent to 19 th March, 2020 or are due to expire within a period of one month from today, will continue to operate upto 26th April, 2020 - Considering the fact that it will be practically impossible for the citizens to approach the Courts for redressal of their grievances for a period of twenty-one days specified in the order of the Ministry of Home Affairs dated 24th March 2020, we sincerely hope that the State Government, Municipal Authorities and the agencies and instrumentalities of the State Government will be slow in taking action of demolition and eviction of persons.
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2020 (3) TMI 1152
Vires of Rules 9, 10 and 11 contained in Resolution No.73 of 2010 in Part-VI, Chapter-III of the Bar Council of India Rules - holding of the All India Bar Examination - issuance of certificate of Right to Practice - demand of fee above ₹ 750/- for purposes of enrollment - HELD THAT:- Rules 9, 10 and 11 contained in Resolution No.73 of 2010 in Part-VI, Chapter-III of the Bar Council of India Rules only provide for the holding of the All India Bar Examination. It further provides that an advocate enrolled under Section 24 of the 1961 Act would be entitled to practice only after successfully clearing the All India Bar Examination conducted by the Bar Council of India. It also provides the manner in which the All India Bar Examination is held and issuance of certificate of Right to Practice within 30 days of successful passing of the said examination. As far as the challenge to the above All India Bar Examination as inserted by Resolution No.73 of 2010 is concerned, the question is already sub-judice before the Hon'ble Supreme Court to be considered by the Constitution Bench vide order dated 18th March, 2016 passed in Special Leave Petition (Civil) No.22337 of 2008 [ 1771842 ]. Demand of fee above ₹ 750/- for purposes of enrollment - HELD THAT:- The power to admit persons as advocates is provided under Section 24 of the Advocates Act, 1961 - The State Bar Council and the Bar Council of India are empowered to make rules under Section 28 read with Section 49 of the Act of 1961 in given circumstances. The increase in the rate of fees is properly and adequately justified. Further, even by applying the principles of harmonious construction of the provisions also, it is clear that there is no conflict between the provisions of the Act of 1961 and its Rules. The Act of 1961 provides entitlement to levy enrollment fees for enrollment as an advocate. Prescribing the right to levy fees be considered to be fundamental and it cannot be whittled by any rule. Prescribing the rate of fees is merely ancillary and can be modified by the Rules as apparent from Section 49 of the Act of 1961. The harmonious construction between the Act and the Rules which governs the field of operation of both the provisions is that the rate as mentioned in Section 24 is to be treated as bare minimum fees which is always amenable for further increase. Since the petitioner has not challenged the validity of either the provisions of Section 24 or 49 of Act of 1961 or Rules framed thereunder, both the provisions shall prevail under the law. Petition dismissed.
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